Harvard Case - Roly International: Consumer Licensed Products in China
"Roly International: Consumer Licensed Products in China" Harvard business case study is written by David J. Arnold, Shivani Chand. It deals with the challenges in the field of Marketing. The case study is 13 page(s) long and it was first published on : Nov 15, 1999
At Fern Fort University, we recommend that Roly International implement a comprehensive strategy to enter the Chinese market for consumer licensed products. This strategy should focus on leveraging existing brand recognition, adapting products for local preferences, establishing strategic partnerships, and utilizing digital marketing to reach target consumers.
2. Background
Roly International, a US-based company, is a leading manufacturer and distributor of consumer licensed products, specializing in toys, apparel, and home goods. They are seeking to expand into the lucrative Chinese market, leveraging their established brand recognition in the US. The case study highlights the challenges Roly faces, including navigating cultural differences, understanding consumer preferences, and adapting their business model for the Chinese market.
The main protagonists are:
- Roly International: The US-based company seeking to expand into China.
- Mr. Lee: The CEO of Roly International, tasked with developing a successful China market entry strategy.
- The Chinese market: A complex and dynamic environment with unique consumer behaviors, regulatory landscape, and competitive landscape.
3. Analysis of the Case Study
To analyze Roly's situation, we utilize a framework combining SWOT analysis, PESTEL analysis, and Porter's Five Forces to understand the internal and external factors influencing their decision.
SWOT Analysis:
- Strengths: Strong brand recognition in the US, established manufacturing and distribution network, expertise in product development and licensing.
- Weaknesses: Lack of experience in the Chinese market, limited understanding of local consumer preferences, potential cultural barriers.
- Opportunities: Large and growing Chinese consumer market, increasing demand for licensed products, potential for strategic partnerships with local companies.
- Threats: Intense competition from local and international brands, potential regulatory challenges, economic volatility.
PESTEL Analysis:
- Political: Stable political environment with government support for foreign investment.
- Economic: Rapidly growing economy with increasing disposable income.
- Social: Young and tech-savvy population with increasing demand for western brands.
- Technological: Rapidly developing technology infrastructure, increasing adoption of e-commerce and mobile payments.
- Environmental: Growing awareness of environmental sustainability.
- Legal: Complex regulatory environment with specific requirements for foreign companies.
Porter's Five Forces:
- Threat of new entrants: High due to the ease of entry and low barriers to entry.
- Bargaining power of buyers: High due to the large number of consumers and availability of substitutes.
- Bargaining power of suppliers: Moderate, with some dependence on local suppliers for raw materials and manufacturing.
- Threat of substitutes: High due to the availability of similar products from local and international brands.
- Competitive rivalry: High, with intense competition from both local and international brands.
4. Recommendations
Roly International should implement the following recommendations to successfully enter the Chinese market:
1. Adapt Products and Branding:
- Product Adaptation: Conduct thorough market research to understand local consumer preferences, including design, functionality, and cultural sensitivities. Adapt existing products or develop new ones specifically for the Chinese market.
- Brand Positioning: Develop a clear and compelling brand positioning that resonates with Chinese consumers. Consider using a localized brand name or tagline to enhance appeal.
2. Strategic Partnerships:
- Joint Ventures: Partner with established Chinese companies to leverage their local expertise, distribution networks, and consumer insights.
- Licensing Agreements: License existing brands to local companies for manufacturing and distribution, reducing risk and capital investment.
3. Digital Marketing Strategy:
- E-commerce Platform: Establish a strong online presence with a user-friendly e-commerce platform tailored to Chinese consumers.
- Social Media Marketing: Utilize popular social media platforms like WeChat and Weibo to engage with consumers, build brand awareness, and drive sales.
- Influencer Marketing: Collaborate with influential bloggers and social media personalities to promote products and reach target audiences.
4. Pricing Strategy:
- Competitive Pricing: Conduct thorough market analysis to determine competitive pricing strategies. Consider offering introductory discounts or promotional offers to attract new customers.
- Value-Based Pricing: Emphasize the value proposition of Roly products, highlighting quality, innovation, and brand reputation.
5. Customer Relationship Management:
- Customer Service: Provide excellent customer service in Mandarin to enhance customer satisfaction and loyalty.
- Loyalty Programs: Develop loyalty programs to reward repeat customers and encourage repeat purchases.
6. Manufacturing and Distribution:
- Local Manufacturing: Consider establishing local manufacturing facilities to reduce transportation costs, improve product quality, and enhance responsiveness to local demand.
- Strategic Distribution Network: Partner with established logistics providers to ensure efficient and reliable product distribution across the Chinese market.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Roly's strengths, weaknesses, opportunities, and threats in the Chinese market. They are consistent with Roly's core competencies in product development and licensing, while addressing the unique challenges of the Chinese market.
The recommendations consider the needs of external customers, including their preferences, purchasing power, and cultural sensitivities. They also take into account the needs of internal clients, including Roly's management team and employees.
The recommendations are attractive in terms of potential return on investment (ROI), considering the large and growing Chinese market for consumer licensed products. They are also aligned with the latest trends in digital marketing, e-commerce, and consumer behavior in China.
6. Conclusion
Roly International has a significant opportunity to expand into the Chinese market for consumer licensed products. By implementing a comprehensive strategy that combines product adaptation, strategic partnerships, digital marketing, and a focus on customer experience, Roly can achieve long-term success in this dynamic and lucrative market.
7. Discussion
Other alternatives not selected include:
- Direct Market Entry: This option would involve establishing a wholly-owned subsidiary in China, which would require significant capital investment and operational expertise.
- Exporting: This option would involve exporting products from the US to China, but it would be less cost-effective and could face challenges with logistics and customs regulations.
The recommendations presented are based on the assumption that Roly is willing to invest the necessary resources and time to develop a successful China market entry strategy. They also assume that the Chinese market will continue to grow and offer significant opportunities for consumer licensed products.
8. Next Steps
To implement the recommendations, Roly should take the following steps:
- Phase 1 (Months 1-6): Conduct thorough market research, identify potential partners, develop a pilot product for the Chinese market, and establish a digital marketing presence.
- Phase 2 (Months 7-12): Launch the pilot product, build brand awareness, and gather customer feedback.
- Phase 3 (Months 13-18): Expand product offerings, optimize marketing strategies, and establish a local manufacturing and distribution network.
By following these steps, Roly can successfully enter the Chinese market and capitalize on the significant opportunities available.
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Case Description
In this case Roly International, the largest Disney apparel licensee in China, considers how to adapt their distribution channel strategy to the downturn in the Chinese market.
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