Almazar, Erika | Caunin, Paul MANSTRA

TC001

Cristobal, Kris Angelo | Faundo, Dave February 20,

2019

Eu Yan Sang (Hong Kong) Limited: Analysis

I. Objectives of the Firm

Eu Yan Sang (Hong Kong) Limited wanted to put advantage on

the increasing consumer interest in Traditional Chinese Medicine

among a new generation (Lau, N.D.). The target market is females aged

between mid twenties to late thirties, which is the largest age segment

in Hong Kong.

They need to have salespeople who are informative about certain

product benefits and well trained in recommending suitable products

towards customers.

They need to create and apply a strategy that would lead to

competitive advantage because of the growing Traditional Chinese

Medicine in Hong Kong. It is important that the competitors won’t be

able to imitate their strategy.

Eu Yan Sang wants to maintain their reputation through their

brand image and quality products, the new packaging retained an

 “ancient Chinese” image because of the colors that they used which

was gold and red. In their culture, those colors symbolizes royalty and

good fortune. They also have been upgrading their efforts in gaining

greater “shelf” presence in the pharmaceutical chain.

They need to adapt immediately with the changes in the

environment especially when there’s a lot of new developments

happening. They should be able to put use of their strengths like

having a high brand equity and renowned brand name and image.

II. Problem

Problem Statement

How will Eu Yan Sang (EYS) gain competitive advantage with the

current boom in the traditional chinese medicine (TCM) industry.

Decreasing sales is the problem. This is due to various

environment changes affecting directly in the industry environment

and affecting indirectly in the mega-environment.

Firstly, One of the environment changes is government policy,

altered in 1995 to prohibit the sale of endangered species parts. This law

abolished the products which provided steady income or profit for EYS.

Traditional Chinese Medicine is an ancient system of health and

wellness which uses uncommon ingredients where endangered animal

parts are involved.

 Secondly, Another environment change is the vast arrival of

Western vitamins and health supplements being refreshed in foremost

pharmaceutical chains’ shelves. The brand names became well known

to health-conscious customers by means of operational promotional

activities. What made these western products, specifically international

goods, more attractive is the bilingual packaging. These products are

further being promoted with the aid of sales-counter promotions.

Thirdly, Threat of new entrants is also one of the environment

changes, made possible through small local entrepreneurs who

recently participated in oral health care and TCM markets. This new

entrants offered similar EYS’ products such as pills, capsules and

sachets, and are priced competitively in modern packages.

Intense competition is considered one of the environment

changes too, with competitors Tung Fung Hong (local TCM retailer

listed in stock exchange) and Wai Yuen Tong at par with EYS. These

direct competitors also have good reputation, offering similar product

lines.

Indirect competition affects the decrease in sales as well. These

include the approximately thousand small family-owned TCM

businesses, operating in historic residential district, a strategic place

because it is near the wet markets where people shop for their daily

food.
 Lastly, a survey was also conducted to 182 respondents stating

that, while EYS’ newly designed stores were exceptional, salespeople’s

attitudes were sub-par. Moreover, these salespeople’s knowledge on

their product was nowhere near informative.

III. Areas of Consideration

Endangered species parts are no longer allowed to be sold as of 1995.

EYS products now have substitutes in other local TCM stores and well

research western pharmaceutical stores give this part of this industry a

big challenge and there is intense competitiveness among companies.

Current core customer are middle-aged housewives and elderly

women which are attracted most because of aesthetically pleasing

store layout designs.

The new store designs are targeted to attract younger and affluent

females.

Currently, the firm's strengths is having a certain portion of the market

share and maintaining it well with its quality products while on the

other hand, facing the local and western competitors, few companies

had decided to merge and venture together with reputable companies

to develop and research new modern technological advanced

medicine and EYS shows no interest in venturing on this project.

To be able to broaden their market to a global market.

Despite the other chinese herb stores and western pharmaceutical

competitors, the firm aims to build their own uniqueness, exclusive

medicine prescription, quality herb ingredient, chinese medicine

professionals serving you and our long historical reputation past

down,just like their name “Eu Yan Sang” which means “ caring for

mankind”.

Strengths: Weaknesses:

● High Brand Equity ● Conservative Management

● Renowned Brand Name Style

and Image ● Lack of vision for future

● Greater Brand, Store, and growth strategies

Image Attributes against ● Salesperson’s attitude and

major local counterparts product knowledge

(TFH and WYT) ● Slow reaction to new

developments

Opportunities: Threats:

● Hong Kong to be developed ● Numerous Competitors

into an international center (Western and Local)

for Chinese medicine. ● Substitute Products

● International Expansions - ● Government Regulations

 Eu Yan Sang International (Labeling Legislations)

Holdings (Singapore and ● Threat of New Entrants

Malaysian incorporation)

● Technological Innovations

IV. Alternative Courses of Action

A. Training Programs (Customer Relations and Knowledge of EYS’

Products) for current and future salespeople of the company

Pros Cons

Salespeople would be more Training Costs - Money and

knowledgeable of their Time
products

Salespeople would be able to Additional hours for the

handle customer inquiries and salespeople may discourage
provide proper working for the company
recommendations

B. Partnership with housing developers to build local research and

development centers

Pros Cons

Research and Development Conflict of Interests between

may lead to modernized EYS and housing developers
products - Differentiation

Stock exchange listing Additional Costs for building

facilities and development
centers
 C. Advertisements on TCM and herb mixology - Educational

Campaigns.

Pros Cons

Spark curiosity/interest to Cost and Time in Campaigns

possible customers, to raise awareness
particularly younger people

V. Recommendation

Advertisements on TCM and herb mixology - On-Site mixology.

EYS’ target market shifted from middle-aged housewives and elderly

women to the younger age group, which are a crucial segment for TCM

businesses; thus, educating them and have them engage in the practices of

herb mixology will help the industry remain relevant. Since EYS is known for

their image - “Ancient Chinese” - Educational On-Site Mixology as a form of

advertising will help engage these younger age group through immersive

brand experience.

The curiosity that this advertisement would spark among the

customers will not only attract people, leading to more profit, but also

educate them on TCM since it was also stated in the case that the younger

age group has shifted its attitude towards considering TCM as an alternative.

On-Site mixology will also, technically, educate the salespeople of the

firm since it would require them to know “what to do” and “how to do”.

References:
Lau, L. (N.D.). Eu Yan Sang (Hong Kong) Limited. Photocopy.