1

Important note:

This marketing plan sample mainly illustrates the structure of your marketing
plan. But do not follow its content too much because of its deficiencies (e.g.
incomplete macroenvironmental analysis and insufficient analysis of the company
itself).
2

INTRODUCTION TO MARKETING
Marketing Plan Report







3


Content pages

1. Executive summary.p.3

2. Situation analysis..p.3

3. SWOT analysis..p.8

4. Goals..p.13

5. Marketing strategyp.15

6. 4Ps analysis.p.19

7. Conclusionp.21



4


1. Executive Summary
Recently, there is a fiasco in the China milk powder market. Most of the famous
local milk powders have been found melamine, which has caused many deaths.
As it is observed that there is in lack of a safety and affordable milk powder for
the ordinary households in China, as being a socially responsible cooperation, we
decided to plan to produce a safety and reasonably affordable milk powder to the
mainlands babies. Also, because our company is planning to further expand our
business in the mainland China, we have decided to make use of this opportunity,
which is to innovate such a new milk powder.



2. Situation Analysis
The Vitasoy International Holdings Ltd (abbreviated as Vitasoy), founded in
1940 as a soymilk manufacturer, has been providing nutritious food and
beverages to both local and international consumers who are highly
health-conscious. Currently our products are marketed under two major brands:
VITASOY for soy drink and tofu, and VITA for other categories ranging from dairy
milk products, juice, and teas to carbonated drinks and distilled water. The brands
have already obtained a significant market share in Hong Kong, and are
expanding progressively in North America, Mainland China, South East Asia and
Australia etc. Vitasoy is about to enter into the milk powder market in Mainland
China by launching a new brand, VitaMilk, targeting parents in both Hong Kong
and the Mainland.

2a) Market Summary
We have collected relevant information about the latest development of the
powdered milk manufacturing industry. This information is leveraged to meet the
needs of our target customers. Specific segments targeted include low- to
middle-class parents in the mainland.

2a.1) Market Demographics
This section focuses on the customer profile of VitaMilk in terms of geographic,
5

demographic, psychographic and behavioral factors:

Geographic
- Our immediate geographic markets are Hong Kong, Beijing, Shanghai, Guangzhou
and 10 other major cities in the mainland, with a total population of
approximately 1.1 billion
- A total of 17 million new born babies per year in the targeted area, with the
population in need of our product estimated at 20% of the total, i.e. 3.4 million

Demographics
- Female
- Married
- Have just given birth
- Age range of 25 to 45 years, with a median age of 30
- Have an average monthly household income of RMB3,686 (low- to
middle-income group)
Psychographics
- Safety is the first priority
- Evidence, i.e. test results supporting the claim of free of melamine and other
harmful additives is important to boost her confidence
- She is a modern mother who cares about the growth and development of her
new-born child, and is willing to opt for the best for her daughter/ son in order
not to let him/ her lag behind the others at the first stage of lifelong competition,
bearing the common belief of most mainland parents:


Behaviors
- She will demand infant milk formula which provides better brainpower
development and nutritional value in the long run
- She would rather feed her child with breast milk or employ a nursing mother for
breastfeeding in case no safe powdered-milk products are available in the market

2a.2) Market Needs
Vitasoy has always been providing its customers a wide variety of beverages of
high nutritional benefits and customer value. It is the first time for our company
to enter the powdered milk market, producing in particular the infant milk
formula. In fact after the Sanlu scandal of illegal addition of melamine, there is a
strong market need of safe, melamine-free milk powder for infants, and this
6

creates many opportunities for us as new entrants. In addition to the safety
need, we also notice the following market demands:
- Selection: a variety of milk powder with different tastes and nutritional benefits,
e.g. strawberry favor for better Vitamin C value; chocolate favor for high energy
value
- User-friendly design: The milk powder is stored in traditional cylindrical
container for easy storage. We are also developing a new
design in which the milk powder is stored in the form of
individual packets with each packet containing the
appropriate amount of powder for producing one
standardized bottle of milk. Customers therefore need not
carry a bulky container for outdoor use of VitaMilk.
- Competitive pricing: As our target segments are low- to middle-income parents,
our selling price is set at a comparable level as the existing
mainland competitors offering products in the same
segments, with slightly higher prices because of the better
quality of our brand.

2a.3) Market Trends and Growth
After the recent melamine incident, it is predicted that there will be a shift in
the dominant position of the market of infant milk powder from nationally
manufactured brands to foreign brands as customers are losing confidence in
the mainland producers.

Current Market Distribution

Despite this shrink in the domestic market, the overall powdered milk market for
infants in mainland China remains aggressive in growing. According to the
publication, 2007, the infant milk production occupies a significant
portion of total milk powder industry:

7













In other words, targeting infant parents as our customers can enjoy the benefits of
the rapidly growing market.



2.b) Competitive Review
Competitors of VitaMilk, our new brand
Key competitors in the current and potential market of infant milk powder
include Mead Johnson, Dumex, Abbott, Wyeth and Nestle. All these foreign
brands have taken advantage of the Sanlu scandal by declaring their products as
free of melamine. Here is a summary of their market positions and respective
strategies:

- Mead Johnson: The market leader stresses on the high nutritional value of its
A+ series Enfapro products with DHA, ARA and Choline as major elements for
mental development of young children. It has
been in the industry for 100 years and has
established strong brand loyalty. Higher-income
groups such as middle-class parents are its major
target segments.
- Dumex: As a challenger of Mead Johnson,
Dumex follows closely behind Mead Johnson as
the second-largest milk powder producer
running several brands including Nutricia and
Mulipa. Its main selling point is the addition of
Prebio ProteQ combination for immunity system enhancement.
1.2 1.4 1.4
11.8 9.7 9.3
52.6 61.1 61.3
2004 2005 2006

(2004-2006)
:%
8

- Abbott: An international health-care company with laboratories and
pharmaceutical facilities. The IQ formula for intelligence development is its main
attraction.
- Wyeth: Similar to Abbott of which powdered milk product line is a division, the
company sells milk powder with Lutene to promote eye health.
- Nestle: Market follower along with Abbott and Wyeth. Provides a selection of
taste and texture, e.g. carrot, apple and vegetables, at different stages of the
infants development.

Their respective rankings in terms of market share in 15 major Chinese cities in 2004
to 2006 are listed below:
10 (2004-2006)
2004 2005 2006
(%) (%) (%)
1 19.62 17.66 16.41
2 10.27 14.36 13.99
3 9.33 12.63 13.97
4 6.99 11.81 12.78
5 4.82 10.45 11.07
6 4.26 4.09 4.40
7 4.23 2.79 2.38
8 3.03 2.16 2.25
2007
On the other hand, due to the melamine incident, the threat of other pre-existing
domestic brands such as Sanlu, Mengniu and Yili are relatively small since customers
have already lost confidence in their brands.

Competitors of Vitasoy, our company
Direct competitors include Watsons (Distilled water, Mr. Juicy), Swire Coca Cola (Coke,
Hi-C, Bonaqua, Qoo), Kowloon Dairy/
Dairyfarmgroup (Milk, dairy products).
Indirect competitors include other categories of
beverages such as alcoholic drinks and energy drinks,
e.g. RedBull.

2.3 Macroenvironment

- Demographic Trends: Aging population due to family
9

planning (one-child policy). The number of infants born (hence consumers) will
decrease. (See the narrowing of base of the population pyramid), which will affect
the long-run profit margin of VitaMilk.

- Socio-cultural/ Environmental Issues: Increased customer awareness of food safety
and environmental protection means that the content and packaging should be free
of toxic chemicals that pose harm to the consumers (or to the environment when the
container is disposed). The container should be recyclable.

- Legal Concerns: The Ministry of Health of the PRC government has imposed stricter
regulations on permissible melamine limits: Dairy products for infants limited to
1ppm; for adults, ceiling for chemical set at 2.5ppm.




3. SWOT analysis
SWOT Analysis
The following SWOT analysis is about key strengths and weaknesses within the
company, and describes the opportunities and threats of the firm.

Helpful Harmful
Internal Strengths Weaknesses
External Opportunities Threats




Strengths
- Vitasoy is a historical international company as it has established in 1940. This
means that Vitasoy is an experienced.
It has a popular trade mark which shows in the figure1



10

(Figure1)



From: Vitasoy Company


- Famous brand name in the world.
The company has won and Hong Kong Proud Corporate Brand Panel Judge
Award in October2007, and
VITASOY PRESENTED WITH 3 AWARDS: "AmCham Hong Kong Brands Award", the 9th
Wellcome "Top 10 Favourite Brands" and "Rising Star" in 2008


- Products released from Vitasoy are safe, nutritious and free melamine


- Various and flexible distributions

- Having development in China is a basic strategy for Vitasoy to extend their
business. The statistic is shown on figure2.

















11






Figure2 From: Vitasoy Company- 2007~2008 Vitasoy annual report



- Strong relationships with suppliers and Vitasoy produce milk products by
themselves, so it implies that Vitasoy has supplier to offer the materials. The graph is
shown on figure3


















(Figure3) From: Vitasoy Company - 2007~2008annual result announcement

- Strong merchandising and product presentation.

Weaknesses

- Lack of experience of producing milk powder. The main products of Vitasoy are
soya bean milk, water, juices and tea product, and the most related product is milk.
12






- Lack of technology to produce and develop product of milk powder.

Opportunities

- The emptiness of milk powder in China. The situation is indicated on figure4
















(Figure4) From: Mingpao 18/9/08
The marker share of milk powder in China in 2008

Obviously, the market share of milk powder in China is occupied by Chinese Brand
Milk Product
Soya bean milk product
Tea Product
54% 54% 54% 54%
46% 46% 46% 46%
Chinese Brand (E.G Chinese Brand (E.G Chinese Brand (E.G Chinese Brand (E.G
Sanl u,Yili) Sanl u,Yili) Sanl u,Yili) Sanl u,Yili)
Foregine Brand (E.G Foregine Brand (E.G Foregine Brand (E.G Foregine Brand (E.G
Friso,Nestle) Friso,Nestle) Friso,Nestle) Friso,Nestle)
13

name product and Foreign Brand name product evenly. However, when the problem
of melamine happened, half of milk powder market is in vacant due to the lost
confidence of buyers. Therefore, it is a good opportunity for Vitasoy to develop this
activity.

- Preferring foreign product or product which is not made in China
The international research company ACNielsen has conducted a research about the
recognition and guarantee of milk powder. As a result, there is less than 20% doctor
or medical worker recommend the products which are made in China.
Also, over 60% Chinese people will buy the foreign product or brand name product.

- Large and potential market in China.
Although the Chinese government implemented one-child policy, the average birth
rate is 1.8 per woman. A director of the State Population and Family Planning
Commission (Zhang Weiqing) has mentioned that the birth rate will increase to 1.87.
Hence, the number of newborns will increase from 78,000 (2008) to 140,000 (2010).
It implies that there is a large market in China in the future.

Threats

- Low confidence
The Chinese people may do not have enough confidence to accept this new product
because of the melamine problem. Therefore, they may consider not purchasing milk
powder product of Vitasoy Company under social atmosphere.


- There is an intense competition of milk powder in China. The main competitors
are foreign brand name, for example, Meadjohnson, Nestle and Friso which
occupied a half of market share in China. On the other hand, a nursing mother is
another major competitor of Vitasoy milk powder product.

(Figure 5) From: Consumer Council
http://shopsmart.consumer.org.hk/shopsmart/tr/tr_agentlist_mp.html
Abbott
Cow & Gate
Frisocare
Mead Johnson
14

Nestle
Snow
Wyeth


4. Goals
a) Marketing objectives
Before the incident of poisoned milk powder, the market share of Chinas milk
powder as follow.













The about diagram shows that domestic brands, such as Sanlu, Mengniu, and
Yili, capture over 55% of the Chinas milk powder market share. The foreign
brands, which are of just 45% market share.











Sanlu
30%
Yili
24%
Mengniu
22%
Others
24%
15




The about pie chart show the market shares of domestically produced milk
powder. As we can see from the above diagram, Mengniu, Sanlu and Yili have
over 76% market share in the domestic produced milk powder.

As a matter of fact, there are four marketing objectives.

Build up the confident of our products.
Replace the market shares of the major domestic brands, such as Sanlu, Yili
&Mengniu.
Become market leader of the Chinas milk powder.
Expand the whole milk powder market of China.


market shares
The whole milk powder market 60% are local brands
Domestic produced milk powder 76% are domestic major producers
Expected market shares 60%*76% = 45.6%

Firstly, it is reasonable to expect that our product can replace 50% the market
share of the existing three major milk powder producers in the first year. And
two years later, it is expected that we can capture nearly 100% of these
companies market share, which is 45.6% of the whole Chinas milk powder
market share.


4b) financial objectives
It is expected that we can sell at least 1 billion can for the first two year, and
earn 110 billion RMB as total revenue. The following is the calculation of the
total revenue.
There are 69 million babies who between 0-3 year old, and it is released that
75% of them are lower income class. And 60% of them drink milk powder. As
16

we assume that we can replace the market share of the three major milk
powder producers, so it is reasonable to assume that 76% of the lower
income classes select our product. And it is released that a baby needs to
drink a can of milk powder, which is 900 grams, and as a result, each baby
drinks 52 can of milk powder a year. Therefore, our calculation is:
69millions*75%*60%*76%*52*$89.9=110 billion RMB


5. Marketing strategy

Considering the above analyses, some specific segments will be targeted on. Our
strategy will be based on various aspects in accordance with the present situation
of the infant milk powder market. Short-term strategy will also differ from
long-term one.

5a) Market segmentation

Geographic -- China and Hong Kong
Both regions will be under our consideration. The populations of these 2 regions
are 1.3 billion and 7 million respectively. Besides, the estimated birth rates are 17
million and 80 thousand respectively.

Demographic -- Income
In infant milk powder market, the price difference between different brands of
products is quite big. In this view, income level will be a big concern when
launching such a new product.
We divided the income level simply by 3 groups: Low, Middle and High.

5b) Targeting

The milk powder market in mainland is much bigger than that of Hong Kong, so
we are going to put more focus on Chinas market. In addition, the mainland
consumers were affected by the melamine scandal more heavily. These
consumers are looking forward to a new product from a foreign brand. Therefore,
mainland China is our major targeted segment.

5c) Profile on target segment
17


Capacity:
1997 ~2007: 100,000 tons - 495,000 tons
Growth rate: 22.96%

Babies Born:
17m per year

Market share before the melamine scandal:
High-price market: Non-local took up over 80%
Low-price market: Local took up over 50%

Needs:
Safe, out of melamine
High nutrition, good for babies development

Price Expectation:
Higher than before the melamine scandal
Most of the low-priced products have been removed

Behavior:
Spend more to ensure safety
Prefer foreign brands

Short-term target

Our short-term target will be short-middle income group. It is because high
income group is used to purchasing expensive powder produced by foreign
brands. The competition in this market is so keen that we are not planning to
enter the market so soon.
Instead, our product will enter lower-priced market. Our product Vita-Milk is
absolutely safe and the price is lower than the powder produced by foreign
brands.
Our product will act as a substitute for low-priced powder, since most of the
low-priced brands have been removed from the market.

Long-term target

18

We are so confident that the high quality of Vita-milk will produce a good
mouth-of-word in long-term. Some consumers of the high income group will
consider using our product after launching for a period of time. Then, we will
plan to launch some new products to the market to attract this group of people.
We may also develop a new production line for high-priced products.

Positioning

Non-local brand (in China)
Absolutely safe
Innovative in both products and promotion
Historical image in producing dairy products














19



6. 4Ps analysis
Vitamilk is a new milk powder product and we are going to design a marketing
mix strategy which is best-fit its features.

6a) Product
Product Name
Name in English: Vitamilk
Name in Chinese:

The meanings of the product name mean nutritious, safe and high-quality.
There are some pictures showing the package of our product.









20





For the product strategy, to satisfy most customers need and preference, we
provide a range of variety for them to choose. In a short term, we provide the
basic flavor of the powder which is known as milk taste in order to build up the
customers confidence. When the establishment of the powder is sophisticated,
we will produce some new flavors like strawberry and chocolate taste to diversify
the product variety.
The strawberry flavor powder consists of rich Vitamin C and the chocolate flavor
powder consists of rich energy. Customers can purchase different taste of powder
according to their needs and preference.

The powder is produced with nutritious ingredients- Vitamin, DHA, Protein,
Carotenes, Omega3 and Herbal (substance of getting rid of hot). They are all key
elements of babies growth. Still, we are trying to improve the quality of powder
and minimize the bubbles emitted and make it as digestible as possible.

Another main focus of the product is that the milk powder has no melamine and
chemical substance made to ensure customers safety. It is proved by WHO,
passed the by the International Standard Organization 9001 and also finished
testing by the Food and Environmental Hygiene Department.

As for the product packaging, it is designed in different size- traditional canned
and small paper bag. Small paper bag design can make the product more
user-friendly as the mothers are able to bring the powder out easily. On the front
package, it specifies all the ingredients clearly and also shows the steps of stirring
milk with specification of amount of powder and water to teach the customers
thoroughly.

6b) Price
The pricing strategy of Vitamilk is to set a competitive price in order to compete
against the rivals like Meadjohnson and Friso. The price of Vitamilk is set as $89.9
per can after a scientific and statistics cost calculation and research on Chinas
GDP to investigate the purchasing power of Chinese family. Price of Vitamilk is
below the market giants but higher than Chinese Brand and it is believed that it is
an affordable price to general family.
21


6c) Place
The placing strategy of Vitamilk is to establish an extensive distribution network
and bring convenience to customers. A new and main selling place is hospital as it
is the easiest and most effective place to approach the target customer-mothers.
Vitamilk is also available in supermarkets, department stores, child care centers
and health care centers. Still, it is planned to set chain stores in Beijing,
Guangdong Province, Shanghai and also some rival cities. Online shopping is also
available. We will establish a website enable the customer to purchase Vitamilk
online and we will provide the delivery service by co-operation with FedEx and
DHL.


6d) Promotion
Promotion strategy is a vital element to help Vitamilk enter the China market. As
Vita is a new brand in China and Vitamilk is also a new product so we need to
make efforts on raising the awareness of the brand name and product. We
emphasize the selling points of Vitamilk and try to use different promotional
tools to deliver those messages to customer and persuade them to purchase.

The selling points are that the product is made in Hong Kong but not China to
build the confidence of customers after the issue of Melamine in China; Vitamilk
is the only milk powder without Melamine in China; Vitamilk is better than breast
milk as it is more hygienic since using nursing mother is the tradition in China and
it is our main competitor; Vitamilk is the recommendation milk of WHO. Those
selling points are emphasized via different tools.

To attract and impress more customers about our brand name and product, we
have designed a gimmick. A mascot called supermilk representing Vitamilk is
published and its mission is to fight against the Melamine monster.

We advertise our product via TV commercials, Radio and magazines. We will
publish the cartoon poster with lucky trade mark on transportation billboards like
Taxi, buses and MTR. Also, we have designed some slogans in our TV commercials.
The English version is Rescuing babies, and the Chinese version is
.

As Vitamilk is a new product to consumers in China, we will distribute the
22

samples for customers to taste in stores and free trail on site is prepared in our
stores. We will cooperate with AC Nielson, one of the largest marketing research
companies in the world, to conduct a feedback system to collect comments by
consumers after the free trail in order to improve the powder quality and meet
their expectations.

The marketing mix strategy is developed to help the Vitamilk to enter the new
market. The product is in introduction period according to the product life cycle
so the aim of marketing mix strategy is to stimulate the awareness of the product
and generate sales.


7. Conclusion
After analyzing the situation of the market, we recommend Vitasoy Company to
introduce this product (Vital Milk) in China market, because it is safe and
nutritious. Although the problem of melamine can be solved eventually, we are
still confident to keep and expand the market share in the near future.



References
1) Zhao Cheng, 2004. . China Report ,
[internet] 21 March. Available at:
http://big5.chinabroadcast.cn/gate/big5/gb.cri.cn/41/2004/03/21/107@103884.htm
[Accessed 27 November 2008].
2) Matt Rosenberg, 2008. China Population The Population Growth of The Worlds
Largest Country. About.com: Geography, [internet] 30 July. Available at:
http://geography.about.com/od/populationgeography/a/chinapopulation.htm
[Accessed 27 November 2008].
3) China.org, 2008. China Faces Baby Boom. China.org, [internet] 20 April.
Available at: http://www.china.org.cn/english/China/208057.htm [Accessed 27
November 2008].
4) Consumer Council, 2008. Milk powder. Consumer Council, [internet]. Available
at: http://shopsmart.consumer.org.hk/shopsmart/tr/tr_agentlist_mp.html [Accessed
27 November 2008].
5) Vitasoy Company, 2008. Corporate Milestones. Vitasoy Company, [internet].
23

Available at: http://www.vitasoy.com/en/cs_avg_cm.asp [Accessed 27 November
2008].
6) Weerakoon, Thilaka S., 1997. Product recall and customer loyalty : the case of
Vitasoy. Hong Kong : The Management Development Centre of Hong Kong.