Marketing For Management


The Chinese beer market has grown at a shocking pace over the past few

Years, driven by an increasing foreign investment in the market the total volume sale of beer has reached 43 billion liters in 2008 (Euromonitor International). Huge increase in foreign investment, changing of consumer lifestyles and rise in income levels of the consumers have played an important part in the growth of the Chinese market. China has already overtaken USA, to become the world's largest national beer market. There is a huge potential for Aire Valley Breweries (AVB) to invest in China as the per capita beer consumption continues to be relatively low and the market has much room for many new opportunities.

1.1 The Company: Aire Valley Breweries is a medium sized UK brewing company that manufactures premium-bottled beers, lagers and stouts. The company uses both on-trade and off-trade channels to sell their products. AVB has a high cost structure, which needs to be improved by reducing its basic costs much more effectively than its competitors. AVB market share in UK:

1.2 Competition Scenario: The Chinese beer market is marked by intense competition, the market is really appealing to foreign companies due to its size and growth rate and this gives a threat of many new entrants as many multinationals are investing in the market. The potential competitors of AVB in the Chinese beer market are Anheuser-Busch Brewing Corp, SAB Miller, Tsingtao Brewery Co Ltd, Molson Coors Brewing Company and Beijing Yanjing. The top 3 companies in the market accounted for 53.6% of total volume sales in 2008 (Datamonitor). There is high competition from substitute products such as spirits and wines. Bargaining power of consumers is high in China especially in an off-trade market.

Market Analysis

Market Segmentation:

Geographic: Consumer spending is high in densely populated regions such as Beijing, Shanghai and Guangdong and most foreign brewers have targeted these areas as the consumers are sophisticated and influenced by western culture. However, majority alcoholic drinks consumers remain in areas outside the cities, and therefore AVB should target both the rural and the urban market.

Demographic: China currently has a population of over 1.3 billion and is still growing at approximately 0.6%. As the population and the economy continue to grow there will be more consumption of beer. Consumers of alcohol in China are primarily male but there has been a substantial increase in female consumers over the years (, October2008). The traditional consumers prefer to buy the local brands whereas the young consumers are attracted to foreign brands and lifestyle.

Psychographic: Local brands have an edge over the foreign brands, as most consumers in China are not giving up Chinese brands in favor of foreign products. Therefore, main local brands are succeeding in many parts of China. To succeed in the Chinese beer market, AVB should be able to change the perception of the consumers to quality of the product rather than the origin.

Behavioral: In China, drinking is generally a social activity like something done while dining or at banquets however the trend seems to be shifting in major cities to drinking in pubs, night clubs and bars. Therefore,AVB must follow both on-trade and off-trade channels in the Chinese beer market.


Market Trends:

Rising disposable income of the consumers in China has boosted the sale of beer in both on-trade and off-trade channels. Sale of dark beer is almost negligible, .20% volume (datamonitor,2008) because of its bitter taste and high price, this is a big disadvantage for Aire Valley Breweries as three of their products i.e. Camelot, Ark Royal and Pot of Gold, are dark beers. The new trend in the beer market is of beers with low calorie and low sugar content. Alcoholic content of 4.0-4.5% is the most common in Chinese beer sector but the market trend is shifting to lower alcoholic content due to increase in female consumers.

Market Growth:

China has become the world's biggest beer market, its growing urban middle class consumers are driving this growth as they are highly influenced by western tastes and there is a shift from traditional spirits to beer consumption. The Global economic crisis did affect the sales in 2009 but China's beer market is expected to see a rapid growth in volume over the forecast period, with an anticipated CAGR of 6.7% for the five-year period 2008-2013:

Figure 4: Forecast of Volume Growth in the Chinese Beer Market


Maintain positive and steady growth in market.

AVB must focus on sale of lager beer, as the sale of dark beer is negligible in China and to build a strong brand image in the market.

Increase in new customers who are then turned into long-term customers.

Target market:

The target market for AVB should be the young and changing Chinese generation who are highly influenced by western culture. Foreign companies in China have mainly targeted the main cities but the major drinking population lies in areas outside the cities and therefore the company should also target the rural market.

Financial Objective:

To achieve at least 5% market share in the Chinese beer market for the first year even if the return on investment is low. The main goal must be to grow in the market as fast as possible in terms of product and revenue.

Marketing Mix

Product: Beer is a homogeneous product as most of the beers are made of same ingredients. Product line of AVB:

All the products are premium-bottled beers and are of specific sizes. AVB needs to innovate in packaging of the beer and include cans, large sized bottles and mini barrels of different sizes in their range of products. Market for dark and stout beer is negligible in China and standard lager dominate the Chinese beer market, generating 81.2% of the market's overall revenues (datamonitor,2008) therefore AVB should develop a new product line to succeed in the Chinese beer market.

Price: The average price of a lager is $ 1.39 USD in China and they differ from region to region ( The prices of beer in China are really low compared to UK and USA. Beer manufacturers are suffering from decreased margins due to the increase of competition in the Chinese beer market. Most manufacturers are targeting increase in market share by reducing list price of their products. To minimize transportation costs, AVB must choose a centralized location for manufacturing like Tianjin and Beijing. AVB should fix its prices of products in such a way so that they have a low cost advantage over its rivals and are able to under-price their competitors.

Place/Distribution Strategy: Beer is relatively expensive to transport considering the price at which it sells. Thus, many brewers tend to create regional production facilities to produce and distribute locally. Joint venture with a local brewing company in China can be a really good option for AVB to obtain access to local distribution system. A strong distribution network is essential to be successful in the Chinese beer market. AVB will use more of off-trade channel, where 70.50% of beer is sold in China (Datamonitor); and on-trade channels will be used mostly in major cities. Beer distribution network that follows in china, from producers to distributors, is via a set of distributors and wholesalers. Distributors purchase beers directly from the producers or from other distributors and sell them to a number of wholesalers.

Promotion: There is numerous numbers of competitors in the Chinese beer market; therefore heavy expenditure on advertising and promotion is required to appeal its products to the consumers. Promotional techniques such as, advertising campaigns in sports events, pubs and bars should take place to appeal to young consumers. To gain positive public opinion and build brand name, AVB must contribute its monetary sources to non-profit organizations, environmental advertising, etc.

Action Plan

Market Entry Through Merger or Take-Over:

Acquisition demands a lot of cash therefore; joint venture with a Chinese brewing company should be a good alternative for entry into the market and taking advantage of local distribution network, cut manufacturing costs and improve quality of the products. AVB being a middle-sized company and a merger with a Chinese brewing firm would be a valuable option. Current foreign Company mergers with Chinese Company:

7.2 Organizational Structure: To expand its operations internationally there should be some changes in the structure of the organization. AVB should appoint new management officials who have expertise in overseas expansion and operations.

Aggressive Marketing Campaign:

Getting the consumers to experiment with new products and move away from their existing brands is a difficult task therefore an aggressive marketing campaign is necessary for launching new products in the market to promote its products in the Chinese beer market AVB would have to incur huge amount of capital on its advertising and promotional activities to Build their brand image in China.

7.4 Budget:The target price times the quantity should equal to $500,000USD or higher to make manufacturing of beer in China economically practical.Expenditure on advertising and promotion would be high due to increasing number of competitors. Distribution cost is increasing due to the increase in energy prices, railways is the most prominent transportation mode used for distribution. Joint venture with a Chinese company would reduce the setting up and manufacturing cost of AVB.



In a massive, fast growing and sophisticated market like China, where the beer drinkers have strong brand loyalty and preference, AVB would have to create a unique identity and a strong consumer base for its products. Launching of dark beer in the Chinese market would be of a great risk as the market share of dark beer is less than 1%.

In order to succeed in a market like China AVB would need a reasonable market share, favorable brand awareness and a strong distribution system, which can be achieved by a successful marketing strategy.



  1. Kotler, Armstrong, Saunders & Wong, Principles of Marketing, European Edition, 5e, Pearson / Prentice-Hall 2008.
  2. Doyle & Stern, Marketing Management and Strategy, Edition - 4, Pearson - 2006
  3. McDonald, Malcolm and Harris Peter, The Marketing Plan in Colour: a pictorial guide for managers, 2000 ed, Oxford:butterworth-heinemann.
  4. Roman G. HieblingJr, Scott W. Cooper, How to write a successful marketing plan: a disciplined and comprehensive approach, NTC business books, c1990.


  1. Euro monitor GMID last accessed on 30/12/2009
  3. EBSCO Host Accessed last accessed on 4/01/2010 -
  4. ABI Global - Research report on China beer market - last accessed 02/01/2010
  6. China's Growth in the Beer Market, By Jim CohenPublished: July 6, 2009:'s-Growth-in-the-Beer-Market/ - last accessed on 28/12/2009
  7. Consumer polling website: last accessed on 1/01/2010
  9. Beer Distribution in China - Last accessed on 04/01/2010
  11. - last accessed on 2/01/2010
  12. - last accessed on 22/12/2009
  13. - last accessed on 04/01/2010
  14. - last accessed on 04/01/2010


  1. David Arnold, Mirage of Global Markets, The: How Globalizing Companies Can Succeed as Markets Localize, Published Jul 31, 2003, Financial Times Press.
  2. Baroza David, INTERNATIONAL BUSINESS; World's Largest Brewer Set To Increase China Holdings, published 9 December 2005, New York Times.
  3. China confidential, China's consumer market - the new Promised Land, Published 14 May 2009, financial times publication.
  4. Allison, R., and Uhl, K., Influence of beer brand identification on taste perception, Journal of Marketing Research, 1964.
  5. E.U. Goff and D.H. Fine, Analysis of volatile N-nitrosamines in alcoholic beverages, FdCosmet. Toxicol.17 (1979), p. 569


  1. Duke Robert (2009),Market Segmentation, lecture handout distributed in LUBS 5210M Marketing for Management. University of Leeds LS2 9JT
  2. SkarmeasDionysis (2009),Marketing Research, lecture handout distributed in LUBS 5210M Marketing for Management. University of Leeds LS2 9JT

Please be aware that the free essay that you were just reading was not written by us. This essay, and all of the others available to view on the website, were provided to us by students in exchange for services that we offer. This relationship helps our students to get an even better deal while also contributing to the biggest free essay resource in the UK!