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Executive summary
Founded in 1994, Haidilao International Holdings Co., Ltd.(referred to as Haidilao in this report)
operates hotpot cuisine and has grown into an internationally renowned catering enterprise after more
than 20 years of development. Over the years, Haidilao has successfully created a high- quality hotpot
brand with high credibility and integrated hotpot features. Haidilao differentiates itself with its
competitors by marketing its supreme service for customers and high employee loyalty. As a large-scale
chain catering enterprise with a global business, Haidilao adheres to the concept of loyalty management,
which provides customers with intimate services and extraordinary food quality. As of June 30, 2019,
Haidilao has owned 43.8 million members and 88,378 employees from 593 direct-operated stores all
over the world. According to Haidilao prospectus, it has the largest market in China, with 2.2% hotpot
market share in 2017 and maintained its market share until now. However, compared with the rapid
growth in the previous years, Haidilao is facing decreasing profitability and sluggish growth due to
fierce competition and change of consumer lifestyle. Therefore, an innovative marketing plan is
proposed to solve the current dilemma.

Situation Analysis
1. Customer Analysis
1.1. Customer Characteristics
1.1.1. Geographical & Personal
The geographic distribution of Haidilao showed their current customer location. Till 2018, 106
restaurants were built in Tier 1 cities, 207 restaurants were built in Tier 2 cities and 117 were built in
Tier 3 cities (Appendix 1 Fig 1). A high density of restaurants represents high customer dense for
Haidilao in cities with strong purchasing power. (Appendix 1 Fig 2) The majority of customers for
Haidilao are in the mid-to-high-end group who work in CBDs of their cities with average annual income
over 163 thousand RMB. The average expense for consumers of Haidilao purchase in Tier 1, 2, 3 cities
is RMB 106.1, 94.8, 92.1 respectively. (Reference 1)
1.1.2. Social
Most of the customers to Haidilao are grouped. According to the questionnaire results, 83.1% of them
had been to Haidilao for party-with-friends purpose. (Appendix 1 Fig 3) The good reputation of Haidilao
can be easily passed on to others around them by Word-of-mouth influence.
1.1.3. Psychological
Most people (60%) choose Haidilao due to its meticulous service rather than the food itself. (Appendix
2) By providing considerate and personalized service for customers in each contact point of the dining
experience, Haidilao establishes the image of first in terms of the dining experience in the Chinese
restaurant market and provides their customers a sense of priority. More than 68% of Haidilao customers
visit at least once a month because of the advantages of their service. (Reference 1)
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1.2. The trend of Customer change
The regional distribution of floating population in the east and the middle western regions experienced
a diffusion process from rapid growth to steady decline that more population float to Tier 2 cities around
Tier 1 (Reference 4). The economy is developing rapidly with the accelerated pace of life in modern
society, more than 50 percent of consumers eat out more frequently and 80% of consumers eat out
within 60 minutes with more than half of their spending between 50 and 200 RMB. According to the
research, 51.8% of respondents have increased the frequency of eating out in recent years, while only
10.7% decreased the frequency. (Reference 5)
Net generation of the 1990s is becoming the main force and their demand for mobile online ordering,
waiting and payment continues to grow, while the demand for convenience, personalization, and
branding of catering consumption are also increasing. (Appendix 1 Fig 4) Haidilao does a great job in
dimensions of improvement of user consumption experience and integration of online and offline
services. Because of the popularity of the Internet, people are more connected, especially for youngsters.
Young generations like to follow social network celebrities. As generation Y has more consumption
intentions than their parents, they like to imitate the consumption of celebrities, taking photos and
posting them online to gain social recognition. The proliferation of web celebrity stores in the mainland
during recent years can attest to this trend.
Consumer tastes have also changed over time, with people preferring sweet, spicy and salty flavors.
(Appendix 1 Fig 5)

1.3. Gap Analysis for Customer Needs

Haidilao pays too much attention to the quality of services but ignores the impact of interior decoration
on consumers. The interior light of Haidilao is insufficient and the overall tone is mainly grey. Plus, the
common way of laying out dishes, it is difficult to take textured photos. Hence, Haidilao fails to satisfy
the identification needs of customers. Haidilao is also at odds with consumers on price setting. Many
consumers think Haidilao is overpriced and lacks a discount offer that they barely pay for the salaries
for waiters but not their food. (Appendix 1 Figure 6) Over 30% of respondents indicate they will buy
other food, mainly for beverage and dessert (Appendix 1 Fig 7&8), after eating at Haidilao shows the
poor diversification of products provided by Haidilao.

2. Market analysis
2.1. Market Size
The catering market is a huge market in China, which generated annual revenue of 4271.6 billion yuan
in 2017(Reference 11). The catering market in China can be roughly divided into two parts, which are
Chinese catering and the others. Chinese catering market generated annual revenue of 3192 billion yuan
in 2017, which was 74.72% of the whole catering market in China. Furthermore, hotpot is the largest
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portion of the Chinese catering industry, which had a market share of 13.7% in the whole Chinese
catering market in 2017. Hotpot market is expected to grow fast at an annual rate of 10.36% from 2018,
which is around 482.6 billion yuan in 2018. (Reference 13)

2.2. Hotpot market characteristics

Hotpot, as known to the public, has various styles and flavors, among which Sichuan spicy hotpot takes
up around 64%, Northern hotpot takes up 14% and Cantonese hotpot takes up 12% (Reference 13). The
hotpot service model is relatively easy to standardize, which makes it the best market for big
corporations, while it enjoys the benefits of flexibility in flavors. Sichuan spicy hotpot comes out on
top because of the addictive nature of spicy tastes (Reference 11) (Appendix 1 Fig 9).
The hotpot market has another outstanding feature of high sociability. Due to its flexibility in tastes and
raw materials, long business hours and so on, people love to come in groups to enjoy some party time
with friends or chill moments with family members. This is another reason why the Hotpot market can
gain the highest market share.

2.3. Trends and opportunities

The reason why traditional Chinese cuisines are hard to be expanded to a large scale is that they are
very difficult to be standardized as their quality and tastes are mostly determined by an individual chef.
However, hotpot is the most feasible cuisine to be standardized using supply chain management, which
allows Haidilao to grow rapidly in different cities all over the nation. Haidilao directly or indirectly
controls 8 representative companies to cover its whole industrial chain, including hotpot shop,
ingredient, food raw material, supply chain, technology, decoration, and training. Therefore, it
incorporates the advantages of retailing, by selling standardized and identical services with high quality
to customers all over the nation.

2.4. Threats
Food safety is the utmost important issue for all catering service restaurant. However, it is even more
important for a hotpot restaurant. Since raw food is directly served to customers’ table, food safety and
freshness is extremely crucial. As for a widely expanding brand like Haidilao, it must spare no effort to
be cautious and ensure the food safety and quality during their expansion, otherwise, even a small
scandal could easily destroy all the brand images accumulated by it before.
Besides, due to the lack of product differentiation - similar dishes and similar forms of dining, customer
stickiness for a single hotpot brand is relatively low compared with other catering markets. It is more
difficult to establish customer loyalty towards hotpot brands.

3. Competitor Analysis
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This section will identify and analyze two key competitors’ market strategies and objectives of Haidilao
in the original hotpot market (XiabuXiabu, Xiao Long Kan) and analyzed their strengths and
weaknesses based on their characteristics and perceived values.

3.1. XiabuXiabu
3.1.1. Competitor Objectives and Strategies
Positioned at "one person, one pot" type casual small hot pot with low cost and convenient characters,
XiabuXiabu sets its target customers to the middle to low-end single groups. With the advantages of
light assets of the main layout along the street facade, rapid store expansion is achieved in Tier 3 and 4
cities. (Reference 7)
The company uses sub-brands "Fresh feeding" "Boiling feeding" to enter the takeaway food market
which is expected to experience continuous growth in the next few years. By entering the food delivery
market, XiabuXiabu further expands its consumption scenarios, highlights its convenient features.
Company newly launched brand "Coucou" apart from its original position to enter the high-end market
which means to form a new "high + low" company's market positioning to broaden the customer base.
The launch of the "Hotpot with teatime" mode is also a manifestation of the company's development
from low-end to high-end markets.
3.1.2. Competitor Strengths and Weakness
Because the main product for XiabuXiabu is a single hotpot, customers can spend a shorter time on
food at lower price comparing with Haidilao. However, because of the lower pricing, the company
suffers from a lower gross margin. (Appendix 1 Fig 10) High table-turnover rates mean lower service
quality and dining experience for customers. The company's transition to the high- end market may lead
to confusion among customers and the loss of some existing customers.

3.2. Xiao Long Kan

3.2.1. Competitor Objectives and Strategies
Xiao Long Kan defines itself as the first authentic Sichuan hotpot restaurant in China (Sichuan is famous
in China for its spicy flavor). It targets their customers to people who are middle and high- end income,
interested in social media and like spicy food thus they developed many stores in Sichuan.
Xiao Long Kan will innovate dishes according to the festival season and other time nodes. After the
launch of these new products, Xiao Long Kan will use social media like WeChat and Weibo to
repeatedly promote which means to attract more new customers. They will then use membership
recharging to retain customers. Xiao Long Kan has launched incentive activities like “Pay one get two
in your membership account” on the anniversary of the store to encourage customers to recharge
consumption. (Reference 9)
3.2.2. Competitor Strengths and Weakness
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Xiao Long Kan has great advantages over competitors in the decorating style. Its choice of furniture
incorporates many traditional Sichuan elements, such as brick walls, wooden tables, and artificial water
flows. They added a story in the choice of wallpaper, telling the four great classical novels in the
romance of The Three Kingdoms into the plot. Meanwhile, as a Sichuan- style hotpot, its spicy pot is
much more attractive than Haidilao one and has been recognized by the local people in Sichuan.
In May 2018, Xiao Long Kan was exposed by the media for repeatedly using spicy pot ingredients. In
the follow-up inspection process, Xiao Long Kan was found to have problems with food classification
and storage. (Reference 10) A series of incidents let Xiao Long Kan's consumer reputation plummeted,
while it was forever labeled as poor food hygiene.

4. SWOT analysis
4.1. Strength
4.1.1. Perfect catering service
The most apparent and significant strength of Haidilao Hotpot is its almost perfect and unprecedented
service. For example, customers will be given a small transparent plastic bag to put their phones in to
prevent their phones from getting dirty by the oil. If they eat the hotpot alone, a big doll will put in front
of them in case they feel lonely eating alone. Haidilao is dedicated to providing services that exceed
customers' expectations, beyond food safety, taste and the speed of delivery. About 99.3% of customers
are satisfied, and 68.3% visit the restaurant at least once a month, and 98.2 percent of customers said
they would like to come back.
4.1.2. Excellent employee management
Since services are provided and implemented by Haidilao’s employees, it is crucial for Haidilao to have
a well-developed employee management system, including training and welfare. First, regarding the
training program, the company designed a comprehensive standard for employees’ appearance and
behavior, including their hairstyles, clothes, shoes, fingernail, the way they walk, talk, shaking hands
and picking stuff on the ground. Second, regarding the employee’s welfare system, according to its
financial statements, the average salary expense of the company’s employee is 62,000 per year
(Reference 12), which is 1.68 times as the competitors’. It also established a transparent and promising
promotion system, which assesses employees based on exams including theory and practice. The core
criteria are customers’ satisfaction, meaning that the more times that an employee makes customers
happy, the higher the chance that he/she will get promoted.

4.2. Weakness
4.2.1. Highly rely on the high table turn over
Although Haidilao has achieved substantial higher profit than its competitors in the past few years, its
profit is highly dependent on its high table turnover, which is around 5 table turnover rate (Reference
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12) which is significantly higher than the industry average (2-3). Researchers have estimated that if
Haidilao’s table turnover rate reduces to 2.5, it is expected to have a net loss (Reference 13). On the
other hand, the high table turnover rate is maintained by its best service. For example, the employee
will help the customer to boil the ingredient to speed up and shorten their eating process. However, this
could potentially affect customer experience and give the customer a negative impression that the
employee is trying to “force” them to eat.
4.2.2. Relatively High Price
Haidilao Hotpot mainly targets at relatively high income and group customers. Therefore, the average
price is relatively high among the hotpot market, which is 100 – 200 yuan per person. Compared to
Xiabuxiabu, which targets at relatively low income and individual customers and average consumption
per person is around 50 yuan, Haidilao’s price is much higher, so it must continuously provide higher
customer value to maintain a premium pricing strategy.

4.3. Opportunities
4.3.1. Homogenous product in hotpot market
Basically, all hotpot restaurants only provide a homogenous product, which includes similar hotpot,
similar food, similar flavor and so on. Even though Haidilao is able to differentiate from its competitors
using its services, it is hard to maintain its advantage in the long-run, as services may be imitated by its
competitors. Therefore, if Haidilao is able to design a brand-new product line as we recommend, it will
be a great opportunity for the company to maintain its advantageous market position.
4.3.2. Promising market
Hotpot is one of the most historical Chinese dishes, which is deeply embedded in Chinese culture and
people. It provides an addictive and inclusive dining experience due to its flexible features. It provides
2 or even 4 flavors simultaneously, and it is compatible with basically any kind of food material
according to different food preferences. With the huge progress of economic development and
urbanization in China, hotpot has become one of the most popular choices for all generations to dine
out together with friends or family, especially in cold seasons, as it provides warm and unity. Therefore,
it is believed that the hotpot market is still a promising market with huge long-term growth potential.

4.4. Threats
4.4.1. Highly dispersed and competitive market
The Hotpot market is highly dispersed, Haidilao only shares around 3.6% of the whole hotpot market
in 2018, despite it is the largest hotpot brand. All of the other hotpot brand share less than 1% of the
hotpot market. In addition, it is also the largest Chinese catering brand globally, with only a 0.5% market
share in the Chinese catering market (Reference 13). Therefore, it is difficult for Haidilao to monopolize
and control the hotpot market as the entry barrier for a new hotpot brand is not that high.
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Recommended marketing objectives and marketing strategy
In the past few years, Haidilao’s momentum as the leader of the hotpot industry is unstoppable. While
as the expansion of branches all over the world, the risk is growing as well. A more cautious approach
to gaining market share is to focus more on increasing the competitiveness of each existing branch from
two dimensions— quantity and price.

5. Product features
SeaSweet Hotpot is originated from the concept of fondue popular in western countries. A SeaSweet
Hotpot set consists of heating liquid sauces of different flavors and corresponding fruits, ice cream,
marshmallows, and assorted desserts. Customers can dip them into the bubbling hot sauce that later
solidifies on the surface of the food, creating a distinctive, sweet crust. Two base sauces, chocolate, and
cheese would be provided during the first launch. There would be further options like Champagne
chocolate, Rose chocolate, Matcha chocolate, sea salt cheese, or salted egg cheese.
In terms of taste, the sweetness can neutralize the feeling of spicy in the stomach and the intense numb
feeling on the tongue. In terms of playfulness, customers will be provided with colored sugar balls or
powder, and a variety of cute decorations to add on the dessert after dipping in the sauce, so that they
can DIY a unique cute look for their desserts, which perfectly fulfills the contemporary youth's habit of
posting photos on social media. The final product has the property of so-called “ig-able” which
amplifies SeaSweet’s exposure on social media and its propagation efficiency.

6. Marketing Objectives
This marketing plan is decided on the basis of the following three business objectives: Firstly, to
consolidate Haidilao’s market position as one of the leading premium restaurant brands in China. With
the rapid growth in business scope and scale, Haidilao's service-oriented brand image will be impacted
by the lack of control on each service touchpoint and supervision on the overall quality of food. This
may shake the competing power of Haidilao at its core. Alternatively, starting from the two dimensions
of quantity and price, this plan aims to comprehensively improve the existing competitiveness of each
branch restaurant. Quantity is directly related to the Table Turnover Rate. Although the turnover rate of
Haidilao has reached two or three times the industry average, there is still room for improvement in the
turnover rate during afternoon non-peak hours(13:00-17:00). Meanwhile, price is reflected by the
average per customer transaction value. To improve per customer transaction, the launch of new
products, especially products that can be consumed apart from Hotpot, would be a proper option.
SeaSweet Hotpot, being either an afternoon leisure food or with-meal dessert, can fulfill the
requirements from both dimensions.
Secondly, to expand to a new market for larger market potential and diversified revenue streams.
Haidilao has sought breakthroughs in bubble tea and other beverages in the past, with little success.
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China's bubble tea beverage industry is already too saturated, and any approach in this area would
encounter great resistance. Dessert is relatively a broad and inclusive industry, while dessert hot pot is
consistent with the characteristics of Haidilao, suitable as a new revenue stream.
Thirdly, to satisfy the growing demand of contemporary young consumers to pursue trendy fancy food
and desserts. Services that go with this will also be available to enhance the customer experience. Once
again, the image of Haidilao as a high-quality service catering brand and its popularity among young
people are consolidated.

7. Marketing Strategy
Based on previous analysis, in this section, the company is suggested to target on young generation
from mid-to-high income levels and deliver a “lean-luxurious and stylish experience” of sweet hotpot
to its target customers. The competitive advantages and final positioning is also explained.

7.1. Segmentation
A hybrid segmentation method is adopted. Firstly, the market and customers can be divided on a
geographic base. As shown in the market and consumer analyses, Haidilao’s popularity and profitability
can be related to the location— Tier 1, Tier 2 or Tier 3 cities. Secondly, according to purchasing power,
the market can be divided into “low-income class” “mid-to-high income class” and “high-end class”.
Age is also an important factor, dividing the market into 3 segments of “0-17 years old” “18-30 years
old” “31-50 years old” and “51 and above”. Lastly, in terms of psychographic aspects, the customers
can be categorized as “extroverts” who like to party or join social events and “introverts” who prefer to
have meals with closest friends and family members. Based on these four aspects, special names are
assigned to 6 different groups which can be Haidilao’s potential target, displayed in the table below.

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Among the six segments, Haidilao is recommended to target “Trendy young adults” for SeaSweet
Hotpot and the rationale would be displayed in 3.3.2.

7.2. Targeting
The segment “Trendy Young Adults” is recommended for three reasons. First of all, people belonging
to this group have suitable purchasing power for SeaSweet Hotpot. They are mostly from Tier 1 & 2
cities. According to the aforementioned research on the market and company itself, Haidilao enjoys the
greatest popularity and profitability in Tier 1 and Tier 2 cities. Correlated to this factor, these citizens
are also likely to be in the mid-to-high income level groups. Both factors contribute to their appropriate
purchasing power for the SeaSweet Hotpot. While for Youngsters and Inactive Young Adults, these
consumers may find SeaSweet not affordable enough, though rather cost-efficient than Haidilao original
dishes.
Secondly, “Trendy Young Adults” have great power to spread and propagate SeaSweet leveraging social
media and the internet. They are in 18-30 years age group, where most social media influencers stay.
Others, though not that active online, still commonly share pictures and sending comments on mass
platforms, which helps with the implementation and promotion of SeaSweet Hotpot. SeaSweet's fancy
outlook fits well with the trend-chasing habits of this group, thus targeting the product at them can
amplify the effect of word-of-mouth. Young adults’ vivid and energetic image also conforms to the
brand image of SeaSweet Hotpot.
Lastly, Trendy Young Adults like to dine out for party-related purposes with a group of friends. They
are social “extroverts” according to the previous definition. SeaSweet is supposed to serve a group that
enjoys some chill sweet time together, therefore not in the interests of Inactive Affluent Seniors and
Inactive Young Adults.

7.3. Competitive Advantage and Positioning

The most essential and distinctive competitive advantage of Haidilao Hotpot lies in service
differentiation. They offer high-quality services and immersive dining experience, such as manicure
service, ramen show, birthday celebration ceremonies and so on. This should be regarded as the unique
selling proposition, that any new product line should not break the brand image of high service standards.
Haidilao also has a mature regulatory and reward mechanism to ensure the best service at each contact
point, resulting in superb stability of high-quality service and great people differentiation compared to
competitors. Apart from the fantastic dining experience, most consumers are very confident about
Haidilao's food safety. Haidilao occasionally opens its kitchen to visit. They also contract every link of
the food supply chain to the most reputable and large-scale suppliers to ensure that there will be no food
safety problems arise from regulatory flaws.
The suggested value proposition of SeaSweet is decided based on four measures— luxurious, fusion,
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stylish and experiential. The most mentioned reason for not choosing Haidilao is cost-inefficiency. The
taste of the hotpot is also not professional compared to some taste-oriented competitors. A solution
could be switching to a fusion restaurant to a mild extent through the launch of new dessert lines.
Meanwhile, the relatively affordable price and fancy appearance of dessert hotpot can grab the attention
of young people, making Haidilao more stylish. Appendix Fig 12 is the positioning maps of SeaSweet
in comparison with other competitors and Haidilao’s original position. SeaSweet is proposed to be most
stylish and experiential in the hotpot market, with more affordable prices and a bit sense of fusion,
contributing to the image to our target trendy young adults— a “lean-luxurious stylish experience” of
sweet hotpot together with friends.

7.4. New competitor analysis

7.4.1. Competitor Objectives and Strategies
Häagen-Dazs in providing quality ice cream products at the same time is also focused on atmosphere
creation so that the eating process has become an unforgettable experience. Häagen- Dazs successfully
connected its brand image with sweetness in love. Häagen-Dazs said its positioning is in the high-end
price, and through the rise of price offsetting the cost of services, consumer groups are differentiated.
Häagen-Dazs attaches great importance to product innovation. They developed many ice cream
derivatives like ice-cream hotpot, ice-cream cake, ice-cream beverage, etc. Continuous innovation with
advertising on television and newspaper, Häagen-Dazs keeps attracting new customers.
7.4.2. Competitor Strengths and Weakness
As a dessert ice cream store, Häagen-Dazs has great advantages in the taste ice-cream hotpot in
comparison with Haidilao’s new products as it has more completed ingredients with a more mature
management system. At the same time, they have a good customer reputation and a relatively large
dessert customer base. However, high pricing makes Häagen-Dazs cannot become daily consumption
that the price for each pot is over 200 RMB. The luxury brand image hardly attracts customer segments
besides high-end ones. To maintain high-end quality, Häagen-Dazs has to spend a lot of money on
importing raw materials, which limits its gross margin.

8. Integrated Marketing Plan

8.1. Product & Branding Strategy (Product)
8.1.1. Actual Product
As mentioned in section 3.1, SeaSweet hotpot is composed of a small fondue hotpot and a set of desserts,
which is a brand-new product in the current hotpot market. In addition to its multitudinous match
between single dipping sauce and dessert, Haidilao also offers Seasweet’s combo meal which will
further offer customers with a colorful dining experience. With all kinds of dessert sets packaged in
fancy four-layer porcelain, SeaSweet’s combo meal could let customers obtain a strong sensual pleasure
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and enjoy the satisfaction of showing this delicate dessert to their friends through social media.
Completed details about SeaSweet’s meal options and ingredients are provided in Appendix 1 Fig 13.
8.1.2. Branding Strategy
SeaSweet’s brand image is placed at a market position described as “lean-luxury”, which means its
quality can bring customers with a feeling of extravagant while its price is still lower than its
counterparts and affordable for our customers. The name SeaSweet (海甜盛宴) is a combination of
Haidilao’s “Sea” and dessert’s “Sweet”, making customers naturally associate Haidilao with
desserts. Besides, both Chinese and English versions of this product’s brand name are convenient to
pronounce and memorize. Moreover, because the product targets youngsters who want to enjoy a high-
quality life, this brand name can offer them a feeling of luxury, which can lead to greater customer
attraction. Consequently, among existing Haidilao’s customers, SeaSweet, as a new product, will be
recognized and accepted instantly.
8.1.3 Rationale
From the perspective of customers, the product is designed in line with targeted customers’ needs. Firstly,
based on section 1.3, many customers are requiring for higher-level of foods and beverages’
diversification and have shown sufficient willingness of consumption especially for desserts. Therefore,
by adding a dessert hot pot into Haidilao’s foods portfolio, not only will it achieve greater customer
delight with more various food choices, but also its good popularity and sales in the future have been
initially indicated by the survey’s result in section 1.3. Furthermore, according to the new generation’s
consumption trend reported in section 1.2, young generations, who are an important part of current main
consumer group and will continue to be so in the future, are deeply influenced by the internet technology
and enjoy following social network celebrities. Hence, by serving SeaSweet, Haidilao can firmly merge
customers’ preference into its product with SeaSweet’s interesting way of eating and its smart
appearance.
Also, from the view of Haidilao, SeaSweet has strong profitability and competitiveness. First,
SeaSweet’s main sources of cost such as ingredients and personnel arrangement will compose relatively
a minor part of its price, which is easy to manage. And with the development and maturity of SeaSweet’s
whole framework ranging from producing to serving, those main costs will become more and more
controllable, meaning there is a considerable space of profit remaining for the company. Moreover, for
Haidilao’s traditional major competitors such as Xiabuxiabu and Xiao Long Kan, both of them have not
been serving dessert hot pot and both of their customers have reflected dissatisfied dining experience
due to low diversification of foods and lower serving quality. Consequently, SeaSweet, combining with
Haidilao’s high quality service, will have strong competitiveness as a new product in the traditional hot
pot market.

8.2. Pricing Strategy (Price)

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8.2.1. Rationale
As a new product, several methods are combined for us to consider about the pricing. The company’s
brand positioning suggests we set the prices according to customers’ perceived value. The company is
not only providing the best food materials, but also consider services as the most important part of the
customers’ dining experiences. As dessert hotpot is relatively new in mainland China, our main
competitor is Häagen-Dazs, whose similar products have opened its market in China. Häagen-Dazs is
famous for its luxurious brand image, which is attractive to the young people these days. To catch
people’s eye to turn to our products, we spend a lot on improving our service quality, on which the
company spend a lot on. Our pricing strategy also suggest our customers that we are willing to spend
more on improving their dining experiences.
8.2.2. Cost-based pricing
As a company focusing on our services and hold the value of “regarding our customers as god”, Haidilao
not only spends money on choosing the best ingredients but also puts efforts in providing the customers
with the best dining experiences. We will provide our products in forms of “singles” and “sets”. For
singles, we will price the sauces at RMB 29 per kind, and desserts at RMB 19 per kind, after calculating
the cost of ingredients and human cost.
8.2.3. Psychological pricing
The strategy of psychological pricing can always come into effect as people see prices ending with the
number “9” more attractive than number “0” although the prices are mainly the same. Use the desserts
as an example, when the customers are paying RMB29 for a kind of sauce and RMB19 for a kind of
dessert, they feel like they are spending RMB20 and RMB10 each. This strategy can improve sales
making use of psychological factors.
8.2.4. Value-based pricing
Customers are fully convinced by the high market share of Haidilao that good services play a role in
customers’ dining experience. People are willing to pay more in return for better services. According to
our survey on how much people are willing to pay for a single dessert (Appendix 1 Fig 14), most people
value a single product at RMB20-30, which is higher than our pricing on single products. For sets which
include fruit sets, cake sets, ice cream sets, and marshmallow sets， we will price each at RMB 99 for
a normal set and RMB 129, enjoying a 20% premium for our service. We believe if we continue to
improve our service quality, people will pay more because they consider it worthy.
8.2.5. Competition-based pricing
The main competitor of our operation on desserts should be Häagen-Dazs as the potential customers
are the same group of people. After marketing researches, we find that the price of Häagen-Dazs in the
mainland is at least RMB198 for a normal set and RMB238 for a large set (Reference 14), which is a
lot higher than our pricing. At the same time, people can enjoy the benefits of our excellent service
without paying a high price premium.
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8.3. Channel Strategy (Place)
As for SeaSweet’s ordering, there is involvement of various materials and equipment, and its freshness
and delicacy should always be guaranteed to be attractive enough to customers, SeaSweet’s marketing
channel is supposed to be defined prudently.
8.3.1. General Marketing Channel
Normally, customers could order SeaSweet through the menu in Haidilao restaurants. This is the most
effective way for Haidilao to promote SeaSweet as it has fully utilized Haidilao’s numerous existing
restaurants in Mainland China and corresponding customers group, which can help SeaSweet gain
considerable popularity with relatively low promoting cost.
8.3.2. Seabar (海吧)
In addition to the general marketing channel, Haidilao is also supposed to modify their restaurants and
create a new leisure area called “Seabar(海吧)” for each restaurant. To meet nowadays younger
customers’ pursuit of online-celebrity fashion and attract more young customers to arepast in Seabar,
Seabar is supposed to have soft background music playing around, be designed with fashionable style
and decorated by materials, colors, and lightings that are suitable for taking online-celebrity style photos.
All of these specific elements will make Seabar truly become a wonderful place for young customers
to have a rest and enjoy desserts even when it is not a time for having a formal meal. To test Seabar’s
effectiveness and help it gradually gain popularity, Haidilao should initially set up two Seabars in
Beijing and Shanghai separately. After Seabar has been noticed by more customers and its profitability
has been proved, Haidilao could further construct more Seabars in other 2-Tier and 3-Tier cities and
include it in the construction of new restaurants. A specific plan about Seabar’s promotion process will
be provided in 8.5.
8.3.3 Rationale
Seabar, as a new form of marketing channel for Haidilao, will benefit the company from two aspects,
namely, the company’s profitability and its market image. Firstly, Seabar will attract numerous young
generations’ customers at unpopular time periods such as after lunch and before dinner during which
Haidilao’s traditional hot pot restaurants cannot. Therefore, Seabar will extend Haidilao’s profitable
time slot for each day, which will further increase the company’s profit. Besides, by constructing and
decorating Seabar with social network celebrities’ fashion, Haidilao will be able to transfer itself from
a brand with impression of just good service into an image that can fit and merges into nowadays young
generations lives and cultures more deeply and finally gain a higher customer equity.

8.4. Promotion Strategy (Promotion）

8.4.1. Online Marketing-Online Social Network

These days, as online applications such as WeChat, TikTok is attracting more and more young people.

14
Accordingly, the company cannot ignore the chances to propagandize their new products. Some of the
WeChat official accounts such as A group of foodies in Shanghai have accumulated lots of loyal readers,
with the number of readers at 100,000+ per passage. Haidilao can make use of these marketing accounts
to expand its influence among the youth. Such propaganda channels include Weibo, Little Red Book.
As a company in the era of Internet, taking advantage of SEO（Search Engine Optimization） is also

a good choice. We can pay to the main search engines in mainland China such as Baidu, Sogou and 360.
When people type and search things like “desserts”, “hotpot” or “Haidilao” through these engines, our
products can be shown on top of the page, drawing people’s attention and click on it. When people gain
some concepts of our new products, they will have the curiosity to have a taste and suggest our products
to their families and friends.
8.4.2. Public Relations
It is widely acknowledged that adequate interactions with consumers are essential for effective
relationship management. Haidilao can organize offline meetings and design online surveys to know
more about customers’ thoughts about our food and service. Every time people finish their meals, the
service staff can ask the customers whether they are willing to join the “suggestion feedback group”,
which is composed of a group of loyal customers. If customers join the group, they can get a thank-you
card from the company and enjoy an extra discount when they have a meal. People in the group can
communicate with relevant staff of the company, sharing their dining experiences, giving advice to the
food and service. The company can also carry out online surveys to know people’s thoughts. The link
of the online survey can be designed as QR codes and printed and pasted on the table. When people are
asking for paying their bills, service staff can tell the customers to scan the QR code by mobile phones
and finish the survey within a few minutes, which exactly fits the time they are waiting for their bills
and changes. The company can also carry out new sets of dishes to meet the needs of varieties of
customers according to people’s feedback online and offline. New flavors can always suggest the
innovation of the company.
8.4.3. Sales Promotion
To promote customers’ loyalty and increase sales, Haidilao can carry projects such as inviting customers
to show their photos of desserts and upload them to social media such as WeChat. If they got 20+ likes,
they can get a free extra single as they like. Also, Haidilao can expands their VIP card projects to
products of desserts. Every time people come to the restaurants， they will be given points according

to the money they spend. When customers get a certain number of points, they can enjoy the company’s
bonus, which includes providing a free set of desserts and so on. When people attain a sense of being
related to Haidilao, they are more willing to propagandize to their relatives and friends, which will
accumulate the number of customers.

15
8.5. Two-year plan
Before launching, Haidilao will choose central business districts and renovate the areas in top tier-1
cities in China, namely, Beijing, Shanghai, Guangzhou, and Shenzhen. During the first three months,
Haidilao will invite KOL and internet celebrities, such as foodie official accounts in Wechat and Douyin,
to Seabar to market SeaSweet in their social media so that many potential customers who enjoy fancy
and novel products will come. At early stage, Haidilao will offer ‘buy three get one free’ at an
experimental lab and a 15% discount in its existing restaurants. If customers share Seasweet products
and Seabar decoration on their social media and receive 30 likes, they can get a 30% discount the next
time they buy SeaSweet. On Weibo, Haidilao will hold an online topic called ‘SeaSweet’, which
advocates people to share their stories in Haidilao or experimental labs. The stories not only increase
Haidilao exposure to consumers but also reinforce Haidilao brand as a ‘supreme service provider’.
Every week, the top ten users with the most ‘likes’ on Weibo will be given a free SeaSweet hotpot set.
During the first year of launch, Haidilao will also set the last Saturday of every month as ‘SeaSweat
Day’ when consumers are offered a 10% discount. If the experimental labs are successful during the
first year, more experimental labs will be established in other developed cities such as Hangzhou and
Nanjing in the second year. The same promotion will be applied to the new experimental labs.

9. Conclusion
As a conclusion, SeaSweet, as a sub brand of Haidilao, will be introduced to the market in existing
Haidilao restaurants and newly opened Seabar over the next two years, can further diversify current
Haidilao products to attract potential target, trendy young adults, to fulfill the recognition needs for
generation Y and gain more market share from competitors. The recommended marketing plan is both
comprehensive and feasible to help Haidilao address the challenges of decreasing profitability and
sluggish growth due to fierce competition, too rapid expansion of scale. and change of consumer
lifestyle so that it can maintain its dominant position in the industry as well as obtaining another revenue
stream in a brand-new dessert market. Undoubtedly, the original brand image of high-quality service
and superb customer experience will be inherited at the core of SeaSweet, being our unique selling
proposition. SeaSweet is a delicate time, a sweet memory and a lean-luxurious stylish experience. It is
expected to go beyond food.

16
Appendix 1: Figures

Fig 1: The distribution of Haidilao Chains (Data from Reference 3)

Fig 2: The annual income for Chinese citizens in different cities (Data from Reference 2)

18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
2,000
-

17
Fig 3: Purpose for dine in Haidilao (Data from Appendix 2)

Fig 4: The main reason when choosing restaurants in 2018 (Data from Reference 5)

18
Fig 5: The taste preference of mainland customers (Data from Reference 6)

Fig 6: Reason for Haidilao not being first choice (Data from Appendix 2)

19
Fig 7: Purchasing willingness after Haidilao consumption. (Data from Appendix 2)

Will you purchase other kind of food after

eating Haidilao?

Yes No

Fig 8: The type of food you will choose after purchasing Haidilao (Data from Appendix 2)

20
Fig 9: Market division of different type of Hotpot (Data from Reference 11)

Fig 10: Comparison of after-tax profit between Haidilao and XiabuXiabu

(Data from Reference 3&8)

1,800,000

1,600,000

1,400,000

1,200,000

1,000,000

800,000

600,000

400,000

200,000

2015 2016 2017 2018

21
Fig 11: Positioning map for SeaSweet

22
Fig 12: SeaSweet product list

Fig 13: Consumers’ perceived value of dessert (First research)

23
Appendix 2: Questionnaire
Translation of Questionnaire and result (No of participation: 71)
Q1: Your gender (Single selection)
- Male (29.58%)
- Female (70.42%)
Q2: Your age (Single selection)
- Under 18 (2.82%)
- 18-25 (83.1%)
- 25-40 (7.04%)
- Above 40 (7.04%)
Q3: What do you look for most when choosing a restaurant? (Multiple selections)
-Safety of food (69.01%)
-Taste of food (88.73%)
-Diversification of dishes (56.34%)
-Cost performance (70.42%)
-Services in restaurant (52.11%)
- Others (2.82%)
Q4: Will Haidilao be your first choose when you decide to eat hot pot? (Single selection)
- Yes (56.34%)
-No (43.66%) Go to Question 6
Q5: Reason for Haidilao to be your first choice. (Single selection)
-Safety of food (5%)
-Taste of food (12.5%)
-Diversification of dishes (10%)
-Cost performance (7.5%)
-Services in restaurant (60%)
-Others (5%)
Q6: Reason for other hot pot restaurant to be your first choice. (Single selection)
-Safety of food (3,23%)
-Taste of food (45.16%)
-Diversification of dishes (3.23%)
-Cost performance (35.48%)
-Services in restaurant (6.45%)
24
-Others (6.45%)
Q7: Frequency for you to go to Haidilao. (Single selection)
-Not go to Haidilao (14.08%)
-1 time per month (71.84%)
-2-5 times per month (14.08%)
-Over 5 times per month (0%)
Q8: Average spending for you in Haidilao. (Single selection)
-Under 50 RMB per person (0%)
-50-100 RMB per person (25.35%)
-100-200 RMB per person (64.79%)
-Over 200 RMB per person (9.86%)
Q9: The main purpose for you to go to Haidilao. (Multiple selections)
-Daily meal (25.35%)
-Party with friends (88.73%)
-Party with families (29.58%)
-Company dinner (5.63%)
Q10: Will you purchase other kind of food after eating Haidilao? (Single selection)
-Yes (36.62%)
- No (63.38%) —end
*Q11: The type of food you will choose after purchasing Haidilao. (MuLtiple selections)
- Cake (26.92%)
- Beverage (69.23%)
-Ice cream (57.69%)
-Another restaurant (0%)
- Other (3.85%)

End of Questionnaire

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Appendix 3: Conceptions of SeaSweet Hotpot

1. SeaSweet Hotpot general concept

https://www.thecookierookie.com/spiked-chocolate-hazelnut-fondue/

2. SeaSweet Hotpot general concept

http://www.partytipz.com/blog/?page_id=687

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3. Different sets (Fruits, Ice-cream, Marshmallow, Small desserts)

http://gshow.globo.com/receitas-gshow/receita/fondue-dechocolate-
53a045374d38857de0000051.html
4. DIY decoration of desserts

https://www.aufeminin.com/pratique/recette-dessert-rapide-s2559368.html

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 https://itsnotcomplicatedrecipes.com/chocolatecoatedstrawberries/?utm_medium=so
cial&utm_source=pinterest&utm_campaign=tailwind_tribes&utm_content=tribes&u
tm_term=594176166_22413846_544776

http://www.bbcgoodfood.com/recipes/2807670/marshmallows-dipped-in-chocolate

28
5. Seabar interior design conception

Appendix 4: Reference list

References:
1. Haidilao International Holding Ltd. Prospectus. (n.d.). Retrieved from
https://www.haidilao.com/english/2019/07/2019071810314393561.pdf
2. Analysis of income and expenditure of urban residents, age structure of population and average
housing price trend in first, second and third-tier cities in China in 2017. (n.d.). Retrieved from
http://www.chyxx.com/industry/201706/535065.html.
3. Haidilao International Holding Ltd. 2018 Annual Report. (n.d.). Retrieved from
https://www.haidilao.com/zh/2019/08/2019080617502796064.pdf
4. Duan, C., Xie, D., & LV, D. (n.d.). Several trends of population mobility in China. Retrieved from
http://views.ce.cn/view/ent/201907/15/t20190715_32612118.html.
5. China's new catering consumption behavior in 2018. (n.d.). Retrieved from
https://www.joyhr.com/baogaobaipishu/203.html
6. 豆 丁 网 . (n.d.). The 2018 China well-off diet index. Retrieved from https://www.docin.com/p-
2177206671.html.
7. Xiabuxiabu Catering Management (China) Holdings Ltd. (n.d.). Retrieved from
29
 http://www.xiabu.com/Archives/IndexArctype/index/t_id/1.html.
8. Xiabuxiabu Catering Management (China) Holdings Ltd. 2018 Annual Report. (n.d.). Retrieved from
https://www.solomon-ir.com/00520/LTN201904231278_C.pdf
9. 小龙坎老火锅【官 网】 - 成都知 名火锅 - 四川 特色火锅 . (n.d.). Retrieved from
https://www.xiaolongkan.com/.
10. Xiaolongkan recycling "saliva oil", hygiene problems have been exposed. (2018, May 31).
Retrieved from http://www.sohu.com/a/233538258_100129659.
11. Huajin Securities. How Haidilao conquers the stomach of Chinese. Retrieved from
http://ww.hrale.cn/bbs_/a-2567835.html
12. Announcement of annual results for the year ended December 31,2018.(2018). Retrieved from
https://www1.hkexnews.hk/listedco/listconews/sehk/2019/0326/ltn20190326910.pdf
13. iiMedia Research.Market research regarding Haidilao's operating status and hotpot market trend in
2019H1. (2019). Retrieved from https://mp.weixin.qq.com/s/2UXYeAxRU-SrRPDidQM7Hw.
14. Häagen-Dazs China. (n.d.). Retrieved November 27, 2017. from https://www.haagendazs.com.cn/

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