Tsingtao Final Marketing Plan 4951f

_Filipino TsingTao_ Brandon Martin, TJ jeffris, Sevag Sepetjian, and Amanda LeCave December 3rd, 2014

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Table of Contents Executive Summary…………………………………………………………………………………3 Global Mission Statement…………………………………………………………………………...4 Vision Statement…………………………………………………………………………………....4 Company Background……………………………………………………………………………...4 Core Global Competencies………………………………………………………………………… 4 SWOT Analysis…………………………………………………………………………………….5 Philippines Environmental Scan…………………………………………………………………...5-7 Financial and Non-Financial Objectives…………………………………………………………...7-9 Market Segmentation and Target Markets……………………………………………………….910 Filipino Beer Industry Analysis and Market Needs………………………………………………....10 Filipino Buyer behavior………………………………………………………………………….....11 Filipino Competitor Analysis…………………………………………………………………….… 11 Tsingtao Company Business Portfolio…………………………………………………………..1112 Product-Market Analysis……………………………………………………………………....1213 International Marketing Mix……………………………………………………………………1320 International Resources Required………………………………………………………………2021 The Problem with Our Plan………………………………………………………………………..21 The Solution…………………………………………………………………………………...2122

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Action/Timing: Gantt Chart………………………………………………………………………...22 Estimated Budget……………………………………………………………………………....2223 Organization Chart………………………………………………………………………………...23 International Business Data to Monitor……………………………………………………………..24 Frequency to Check Results……………………………………………………………………….24 Marketing Mix Modification……………………………………………………………………….24 Works Cited…………………………………………………………………………………...2526 Appendix A: Survey…………………………………………………………………………….....27 Appendix B: Beer Label…………………………………………………………………………...28 Appendix C: Event Fliers…………………………………………………………………..……… 29 Appendix D: Event Coupon……………………………………………………………………..… 30

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Executive Summary Tsingtao brewery is a Chinese brewery that has been around since 1904. It was founded by The Anglo-German Brewery Co. Ltd., an English-German t stock company based in Hong Kong, who owned it until 1916. Tsingtao currently has fifty-six beer subsidiaries around the world, and is one of a few Chinese branded products that are recognized worldwide. Tsingtao will be introducing their Pale Lager Beer to the Filipino Market. We chose to enter the Philippines because it is geographically close to China, and is financially saving because it has no tariffs on foreign goods. There is a large populace of loyal beer consumers who match our target profile behaviorally and psychographically. We will have a test market in the capital city, Manila, due to its twelve million population, its famous nightlife and its high percentage of 18-25 year olds. We chose to introduce Tsingtao Pale Lager as our first beer because of its similarities of the current two top selling beers in the Philippines. Our three year plan of action it starts with creating a relationship, and an alliance, with San Miguel Brewery. San Miguel owns 95% of the Filipino beer market and will aid our launch by associating our beer with a very well-known and loved brand. In the first year, we will build a relationship with San Miguel we will obtain all available and outstanding shares. We will assist San Miguel by selling them our cheaper resources for a little higher than we purchased them to gain a little profit while helping them in the process. San Miguel will allow Tsingtao to use their distribution in exchange for some of our distribution. Tsingtao will sell a 11 oz. glass bottle of beer for $0.67 each to undercut San Miguel prices by 10%. In the second year, we will offer a t-venture make the contract in writing. We will then share brewery facilities, with each other to produce each other’s beer eliminating some costs. Tsingtao will send a manager to make sure our beer is being produced with quality. In the third year, we will then purchase all the rest of available shares, evaluate profits and debts and then offer to acquire San Miguel. Once San Miguel is acquired, and our initial investment is paid off after our three year plan, Tsingtao hopes to set its sight on other opportunities in the International market. Tsingtao would like to eventually expand its products reach to all over the Asia-Pacific.

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Tsingtao Mission Statement Brewing popular beer with ion and inspiring lust for life.

vision To be an international company with brands that have global influence

Tsingtao Background The Tsingtao Brewery was founded in 1904 by The Anglo-German Brewery Co. Ltd., an English-German t stock company based in Hong Kong who owned it until 1916. It is one of the few branded products from China that is recognized worldwide and is the #1 consumer product exported from China. Over the past 100 years Tsingtao has built its brand to the prestigious position it is today. It has created invaluable networks, distributions, and sales connections, and is now a huge player in the global economy. With both it’s German quality origins, and Chinese distribution and manufacturing methods, it has become one of the most prominent brewery company in the world.

Core Global Competences Tsingtao Beer has a pleasant aroma and a well-balanced taste. It has high-malty flavor and well-hopped character. Tsingtao is produced with spring water from Laoshan, a mountain area famous for the purity of its water. The domestically-grown hops used to brew Tsingtao are of such high quality that they are also exported to European breweries. Tsingtao also uses the finest yeast and barley imported from Australia and Canada in its brewing process. Each Tsingtao beer created is brewed to utter perfection with the exact same ingredients and flavor. Every sip precisely tastes like the beer the world loves.

Swot Analysis

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Strengths Most of the Tsingtao beer production is done in China, resulting in lower labor costs, which in turn frees up more capital in other areas. There is an extremely high growth rate with many distribution and sale networks throughout the Eastern-Asian region. Tsingtao is the top selling Chinese beer in the United States, which is the largest beer market in the world. Tsingtao beer s for more than 50% of China’s labor exports, it is also the number one consumer product exported from China. Since the history of Tsingtao has German roots, the quality of the beer can also have that association. Weaknesses Tsingtao retails only three types of beer, because of this, the company has lower capital investment ability compared to other foreign brands in the market. Normally, when consumers think of beer, the country of China is not usually associated with the beverage. opportunities Tsingtao has the unique opportunity to expand through acquisition in other markets in Asia, such as San Miguel in the Philippines. With this expansion, new products and services can be expanded with the product line. Now that popular beers are being acquired, the products will be easy to market. Threats Tsingtao should become more concerned about other competitors in the home market, such as Zhujiang and Yanjing. Another issue that needs to be addressed, is the rising cost of raw materials to manufacture the beer.

Philippines Environmental Scan Social There is a massive growth in the beer market in the Philippines. With a high literacy rate, Filipino citizens are well educated. Socially, consumers are outgoing in the nightlife scene and are always looking for the next trendy product to consume. However, crime rate has doubled in the country, which will cause an increase in necessary security. The Philippines is a collectivist society always working together, as well as a feminine society, that values relationships and human interaction

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Economic From a microeconomic standpoint, Tsingtao beer has an elasticity of price with the main competitor in the country; San Miguel. There has been an increase in price due to the increase in price margin in the excess tax of 12%. Macroeconomically, the income tax of 44% will inevitably hurt the profits of Tsingtao. There has been an decrease in unemployment, which correlates with an improved economy in the Philippines. Competitive Currently, there is high competition in the market because San Miguel has essentially monopolized the Filipino beer market. Of the top ten beers in the Philippines, San Miguel owns seven of them. The other competitor is Asia brewery, which focuses on licensing foreign beers and selling them in the market. This hurts Tsingtao’s secondary market of tourists. Political In 2010, Benigno Aquino was elected President, which created political stability in the Philippines. In 2012, the government ed laws for anti-corruption, which protects whistleblowers in companies. This will ensure Tsingtao’s competitors to operate ethically. Stricter drunk driving laws have also gone into effect resulting in less consumer alcohol consumption, which will inevitably hurt Tsingtao’s profits. Technological The Philippines already possess the technology necessary to build and start breweries. Distilleries, bottling plants, and water purification are all up to standards that could be used to produce immediately. The infrastructure of roads along with electricity, are all modernized in the Philippines. REgulatory According to a report from Manila Times, starting a business improved from 16 steps and 36 days in 2012, to 11 steps and 11 days this year. For dealing with construction permits, from 29 steps and 84 days, it improved to 17 steps and 61 days. From five steps and 50 days, getting electricity now only takes 4 steps and is processed in 36 days. The number of steps when ing property remains at eight, but the number of days decreased from 39 days to 23 days. The number of tax payments was decreased to just 14 payments per year, a vast difference from 47 payments in 2012. Before, seven documents were needed for exports, now the number has been lowered to five documents, while the number of days needed for processing

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remains at 15. Imports improved from 8 documents and 14 processing days to 6 and 12, respectively. (Tutaan, par. 5-6) Increase excess tax on alcohol (12%) At the end of 2012, Philippine President Benigno Aquino signed into law a measure dubbed the “Sin Tax Reform 2012” which will increase the rate of excise tax charged on wines and fermented liquor (including beer) as of January 1, 2013. (Singian, pg. 1) There is no import tariff with China regarding beer because of the ASEAN-China Free Trade Area. (Republic, pg.1) NAtural Disasters The Philippines has to regularly deal with natural disasters such as typhoons and flooding. These natural events could annihilate the infrastructure of Tsingtao’s breweries in the country.

Financial & NON-Financial Objectives Our objective is to offer a new affordable yet, quality, beer to the Philippine market. Tsingtao is a very reputable and respected brand in China. For the past 100 years it has evolved, and has been incorporated in the Chinese culture. Today it is the leading beer in China, and it’s number one export. We are confident that Tsingtao will not only thrive in the Philippines, but also become its leading beer there as well. Our product is based on its heritage and ancestry. While it has culturally been a Chinese beer, it is also deeply rooted to its German origins. When the world thinks of quality beer it thinks of , however, having this aspect connected with Tsingtao make its the perfect candidate to enter new markets with strong presence. Having one of the largest beer markets in the world, the most consumed beverage in the Philippine is beer. This shows that good quality beer is highly demanded, and that the beer industry itself is massive. While we are confident this beer can do well in the Philippines, one major constraint of the market is that it is entirely monopolized by the San Miguel Brewery. In order to overcome this major constraint, we have developed both Financial and Non-Financial objectives for Tsingtao. Our main Non-Financial objective is to penetrate the Filipino market with the classic Tsingtao beer. Like mentioned earlier, one thing that separates Tsingtao from their competitors is their ancestry. After a century of masterful experience in the brewing industry, and building

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powerful distribution and selling connections around the world, Tsingtao is the leading beer in the Chinese market. Our foremost objective is to establish a brewery in the Filipino market. This will establish our first presence in the Philippines, slowly getting the name Tsingtao to the Philippine market. Shipping expenses to the Philippines are extremely costly due to the fact that it is a country of multiple islands. It is not just one shipment to one country, but a shipment that has multiple stops and difficult waters to navigate. This also increases the insurance costs for shipping the product. After the brewery is established and our beer is in the market, we will immediately increase our market share in China. This will ensure that the Chinese market remains in our control, while we build our brand in the Philippine market. Also, because of the merger with San Miguel it is crucial to continually increase our market share whenever possible. This will ensure that even though they will use our breweries and distribution channels to sell their beer in China, they won’t be able to capture parts of our Chinese market while doing so. Once significant market share is captured, and Tsingtao feels confident in it’s position in the Philippine market, we will slowly start acquiring San Miguel. Because San Miguel Brewery has nearly total control of the beer industry in the Philippines, once Tsingtao acquires them, all those breweries, connections, and networks will belong to Tsingtao. By this point the Tsingtao beer will already be a leading beer in the industry, and through the acquisition of San Miguel it will become the number one beer in the Philippines. Finally the last objective will be, Tsingtao investing more into its R&D department to have a more diversified product line, once acquisition is acquired. To financially reach our objectives the cost of certain factors of production and distribution, must be taken in . The first evaluation is the purchase of San Miguel Corp stocks. To acquire 51% of the company we must purchase 7,833,117,112 shares at $0.586 which would equal to $4,590,206,67.70. This will give us the majority share of the company making Tsingtao’s position during the merger much better. Once that position is established certain distribution costs must also be evaluated. These materials included glass, beer ingredients, and labeling materials. An estimate from freight expenses including all these materials is normally $1,224,657,663. However, there is an 8% increase in freight expenses so $1,224,657,663 x 0.008 = $9,797,260. If we add the 8% increase into our total amount our final estimate will be $1,234,454,924.304. This number does seem fairly high for distribution alone, however, we must for the unique geographic structure of the Philippines. As we stated earlier, the

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Philippines is not one large island, but a combination of many small ones. Shipping these materials to our breweries from island to island will be a significant expense to take into . Finally, after evaluating all these variables our total budget comes out to $5,511,221,887.70. After analyzing the numbers, one of our main objectives financially, is to break even by the end of the second year, and begin making a profit the beginning of the third. We realize that acquiring such a large company like San Miguel will not show immediate profit. In fact this acquisition is a long-term investment for Tsingtao. The numbers that were evaluated will take a manageable toll on the company, however, because Tsingtao was acquiring all outstanding stock throughout the merger process, it will ensure the company doesn’t tank. Within the very first year we will immediately increase the price per bottle of our beer. This step is crucial because we must be able to recover from the acquisition, and turn a profit, quickly. By the end of the first year, and the beginning of the 2nd, we will slowly increase our R&D department to create new product lines. This will help us, not only expand to different markets, but also our profits at the end of that year. Furthermore by the end of the third year we would hit our projected break even point. Lastly, by the beginning of our third year Tsingtao would begin making a profit. Tsingtao at this point would have a firm grasp over the Filipino beer industry, and by already leading the beer industry in China, the company can set their sights on new endeavours such as the Japanese market.

Market Segmentation The target market that we are entering is laid out in the chart below. Specifically we are looking for the young demographic from the ages of 18-25, both male and female. This is the social and outgoing crowd, that like to spend their nights at clubs, bars, and other social festivities. Their lifestyles tend to be satisfying and extravagant while affordable, and they consistently look for the next “hot thing” in the market.

MArket Segmentation Chart

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Basis of Segmentation

Variables

Breakdown

Geographic

Region

Manila

Demographic

Psychographic

Behavioral

City Size

12 million

Statistical Area

Metropolitan

Media-television

Television, Internet, Application

Density

Urban

Gender

Male, Female

Age

18-25

Marital Status

Single

Income

$902

Occupation

Any

Personality

Extrovert, outgoing, social

Values

Entertainment, fun

Lifestyles

Cheap, satisfying, extravagant

Needs

Affordable, accessible

Direct Marketing

Television, festivals

Product Features

Brand name, cheap, light

Usage Rate

Regular, responsible

Usage status

First time , regular

Filipino Beer Industry Analysis and Market Needs The Philippines comes in as the 22nd largest beer market in the world, with beer as the most consumed beverage in the country. 70% of the alcoholic beverage market in the Philippines is made up of beer, which also showed the fastest growth rate in the world at 15.6%. Over the past year, the consumption rate rose from 1.22 to 1.41 million liters. In fact the average Filipino will end up drinking on average, 20L of beer a year.

Filipino Buyer Behavior A 7.8% economic growth in the Philippines has contributed to an increase in consumer confidence in the market. This in turn will generate jobs and higher salaries, and give consumers more income to spend on leisure activities. Filipino consumers are looking for the “next big thing”. Whatever is popular in the western markets, becomes just as popular in the Filipino market 3-5 years later. In looking at consumption rates in the country, consumers tend to spend

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more towards the end of week, and the end of the year, in correlation with the receiving of paychecks and the holiday season.

Filipino Competitor Analysis Tsingtao has two main competitors in the Filipino market: San Miguel and Asia Brewery. San Miguel already owns 95% of the market share, with operations in Tsingtao’s home market in Hong Kong and other parts of Southeast Asia. San Miguel has a larger product line with 11 different types of beers. San Miguel owns six different breweries in the Philippines, and are able to continue expansion with their large backing by the entire San Miguel Corporation. Asia brewery has a similar backing being owned by the LT Grouping company. Asia Brewery’s main source of revenue stems from them licensing popular beers to be sold to Tsingtao’s potential secondary market of tourists. They have three exclusive beers in their product line, and three breweries located in the Philippines. Asia Brewery has also widened their product line by selling non-alcoholic beverages.

Tsingtao Company Business Portfolio Analysis As shown in the Growth-Share Matrix below Tsingtaos potential in market share is very high. Beginning with our cash cow, the Tsingtao beer in our Chinese market contains most of our market share. This is where we see most of revenue generated from. This is the original beer that Tsingtao produces, meaning that it has a slow market growth, because it has been around for nearly a century, however, like mentioned it contains a high amount of market share. Our rising star is the Tsingtao beer we will be introducing into the Philippine market before the acquisition of San Miguel. This product has both high market growth rate and high market share in the Philippines. We expect this product to become a cash cow, a few years after the acquisition of San Miguel. The question mark is the Tsingtao regular or dark beer in the Philippines. Because our rising star will be the light Tsingtao beer, due to popular demand, the two other types of beer offered by Tsingtao will be tested in the Philippine Market. Naturally these two products have high potential market growth rate, but low market share. Lastly, because Tsingtao only has three types of beers that

all do very well in

the market, there is

yet a dog in the

Growth-Share

Matrix.

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Product-Market Analysis Our team conducted a survey in order to see what consumers interests were when introduced to new beers, based on their respective demographics and habits. The key aspects to note from our results are that almost 70% of our respondents were female. Furthermore 90% of all respondents said that they did in fact drink beer, and about 83% responded that they look for both quality and taste in a beer. 92% said that they are open to trying new beers if presented the opportunity, and in fact almost 70% said they are interested in Chinese beer. This number is much higher than we anticipated because some of the left by the respondents who weren't open to trying Chinese beer replied by saying that, because it was chinese beer they refused to drink it. Lastly, roughly 43% of our respondents were familiar with the Tsingtao. Based off of our results were are confident that our beer will have a massive success in the new Philippine market. All these questions were tailored to the demographic of the target market that we would be entering. The full survey can be viewed on Appendix A in the back.

Survey Chart

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INternational Marketing Mix Product Tsingtao Pale Lager beer will be the product being introduced into Philippines. The Pale Lager beer type was chosen, because it is the most popular beer sold within the Asian-Pacific countries Tsingtao is currently located in. More importantly, in the Philippines, the Pale Lager is the most similar in color and flavor in comparison with the two top selling beers (Red Horse and Pale Palestine) of San Miguel Breweries. The beer itself, will be standardized with the same ingredients and flavor of the Tsingtao beer. However, we will be using discretionary product adaptation for the Pale Lager entering the Philippine’s market. Tsingtao will only change the label and parts of the packaging of its Pale Lager. The beer label, that is surrounding the well-known Tsingtao logo, will be adapted culturally to the Philippine’s market and reach out to our target market. Filipinos have national pride and loyalty for San Miguel’s beer despite its poor taste. The new label colors will consist of yellow, blue, white and red. These are the colors on the Filipino flag. The rising sun on the new label is the sun located directly on the flag. We want the new label to not only national pride, but to embrace it. The design is meant to be simple and not completely obvious to the flag’s characteristics. We want to capture the conscious and subconscious minds of our target market. The symbol of a sun represents health, warmth and fun. It is new and never seen on a beer label in the Philippines. This symbolism reaches directly to our young target market, and encourages

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the ideal that Tsingtao is the “new cool thing.” The logo can be viewed on Appendix B in the back. Some parts of the packaging will be standardized and other parts will be adapted. Filipinos mostly buy glass bottled beers, and glass bottles are acceptable for nicer settings. The beer will be bottled in 11 oz. (325 mL) clear bottles, because it is the common size beer of the Philippine. Tsingtao also uses a clear bottle for one of its other lines of beer. Tsingtao will not have to use a color bottle unfamiliar to its brand. Tsingtao will be packaged in the normal fourpacks or six-packs, when we first introduce the beer. Four-packs and six-packs are the most common size sold in the Philippines. Tsingtao will also offer a five gallon (640 oz) container of beer for restaurants, bars, and other places that want to offer the Pale Lager Beer on draft. Five gallons is considered to be on the smaller size; however, Tsingtao is an introductory beer to Manila, and will wants to keep their prices lower by regulating size. Different sizes can be introduced depending on the data collected after the launch of the beer in the market. Place Tsingtao will introduce the Pale Lager into the Philippine’s capital city, Manila, before the brewery expands. Tsingtao will have a test market in Manila because it is very expensive to export beer to the various islands of the Philippines. The city of Manila was chosen because it is the most densely populated city in the world with twelve million residents. This city is 80% urban and 56% of its population is within our target market. Manila is known for its hundreds of bars, dance clubs and restaurants. Manila’s nightlife is impeccable and well suited for our beer product. Our product will be offered and sold in a variety of places within Manila. Since Tsingtao will be merging with San Miguel, we will have access to their distributors. Tsingtao will be offered at every location San Miguel is sold. It will be sold in the bottle and on draft in bars, restaurants and dance clubs to reach our social and young target market. Tsingtao beer will be also offered within grocery stores and Sari-Sari stores. Sari-Sari Stores are convenience stores, and are placed on a corner by every neighborhood in Manila and the whole Philippines. This will give our target market consumers easy access to our product and create visual repetition.

Price

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Tsingtao will be using the strategy of competitive pricing in the Philippines market. Since Tsingtao’s major competitor in the Philippines owns 95% of the market, Tsingtao will undercut the Filipino Price Market by 10%. Tsingtao will only be in an alliance with San Miguel during Tsingtao’s introduction to the Philippines market. It will take time to fully merge with San Miguel. This means that Tsingtao will be competing with San Miguel for market share. San Miguel has brand recognition, and many beer lines to reach all beer consumers and loyalty. The only competitive edge Tsingtao can control is price. Making the beer cheap will attract consumers and our target market. The main goal is to get consumers to try the beer, and the quality and flavor will take care of the rest. In Manila, the average price for one bottle of beer in the Philippine Peso is PhP 30 ($0.67), so our price will be PhP 20 ($0.45) per beer. This will make the cost of one four-pack of Tsingtao beer cost PhP 80 ($1.79) and one six-pack cost PhP 120 ($2.68). The five gallons (640 oz) container for draft beer will cost PhP 1,160 ($25.89). There are no tariffs allowing Tsingtao to keep this low pricing for some time, before we have to raise prices. We want to keep this low price for a year. Positioning Tsingtao’s product positioning will be an inexpensive, but higher quality beer. Tsingtao’s target market wants cheaper beer. By having a lower cost than San Miguel, and better quality beer, this in turn will help increase sales during the introductory phase for the first few years. PRICE POSITIONING MATRIX

Promotion

(promotional

Mix) Advertising Foreign permitted in the

Advertising is not Philippines due to the 16

creation of the Philippine Foreign Investment Act of 1991. Tsingtao cannot personally buy ment space for their Pale Lager Beer in Manila, Philippines. However, Tsingtao will be hiring a Filipino Advertising agency to their foreign beer. By hiring a company within the country, it makes it possible to have Tsingtao advertising. Tsingtao will hire JWT Manila to be in charge of creating and placing advertising. JWT Manila was the first multinational advertising agency that was founded in the Philippines, and it has been successfully operating in two-hundred different countries for sixty-five years. It is the second best advertising agency in the Philippines. Tsingtao will send an advertising manager from its home office to work and oversee JWT Manila’s advertising creations and progress. This will give Tsingtao more control over how Pale Lager Beer is being portrayed. Tsingtao’s manager will also be able to learn from the local advertising agency to gain better knowledge how to have a successful product in Manila, Philippines. Tsingtao understands that the most successful launches are ed by strong advertising. The quality of launch advertising can affect the development of both brand awareness and levels of trial. As with all good advertising, it must have motivating communication and focus on branded memorability. Successful launches have three things: branded memorability, communication, and response. In order to create brand-awareness, Tsingtao will need to provide repetition of their brand’s name and logo. Every ment needs to me interesting and shockingly unique. However, the positive ideals d by Tsingtao needs to be simple for consumers to understand. This is the importance of communication. The ments need to be strong enough to persuade the consumer to try the product. This will be creating a response from our target market. This emphasizes the ment creativity, the information Tsingtao provides, and how it is provided. With the advertising goals in mind, Tsingtao will use the strategy of continuous and pulsing advertising. ments will be provided heavily and continually for the first year of the launch. The pulsing strategy will be used by increasing the amount of ments during potentially profitable times of the year. These times will be during the holiday season, basketball and boxing season and the months with large festivals or concerts. The holiday season is when Filipinos are the most social to celebrate and drink with friends and family. Basketball and boxing are the most popular sports in the Philippines and Tsingtao wants to in the months before large events that promise large attendees of our target market. Tsingtao will use

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the most effective types of advertising that triggers the biggest response in their target market. Tsingtao will focus on television commercials, magazine ments, online marketing through web and social media, sponsorships and promotions. Direct Marketing Tsingtao will use social media, a website, television commercials, outdoor ments, and flyers for their direct marketing. Out of all internet s in the Philippines, 63% are from our target market. Tsingtao’s target market represents 87% of all social media usage. In the Philippines, 27% of the target market owns a smartphone and the second most activity done on a smartphone is to browse Social Media. Tsingtao will make its own Facebook and Twitter page to interact with consumers and share new information. Facebook and Twitter are the two top Social Media sites used by Filipinos. The Facebook page will have pictures and videos from Tsingtao events and will offer the latest news. Twitter will be utilized the same way as the Facebook page. The Social Media pages will be used to further brand awareness and push the “cool factor” of Tsingtao beer to its target market. Tsingtao will also create a website that is interactive with the . A website catered to the Filipino market will provide a direct way to interact with the consumer. The website will have all the information about Tsingtao, and have a page where the consumer can comment ways to improve the brand or product. Plus, a total of 70% of the Filipino population watches television. Television is one of the best advertising channels to make an interesting and memorable ad to encourage brand awareness. It is also powerful enough to urge consumers to want to try the new product. Television commercials are necessary for the launching of a new product. However, not everyone owns these electronics in the Philippines. This is where outdoor ads and flyers are really important. Tsingtao will exploit billboards, the side of buses and taxis. Flyers for Tsingtao events and coupons will be handed out in the downtown area where the nightlife takes place. Sales Promotion

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When launching a new product, there needs to be some sort of an event or activity that is completely unique to capture the people’s attention. This event should build buzz and excitement for the new product. Tsingtao will have flash dances that happen two times a month for three months in Manila. The songs chosen for the flash dances will be selected from the “Philippines top 100” song list. Flash dances will be unique and exciting in Manila. This will create buzz on the internet, YouTube, and possibly some media attention. Dancing to the top listened to music will begin to label Tsingtao as the new and hip beer. After the first flashdance, an announcement would be made to “like” Tsingtao on Facebook and Twitter; by doing so it will enable consumers to seek where the next flash dance will occur in two weeks on a specific date. The first fifteen people to guess the next location correctly, by inputting their guess in the Tsingtao website, will win a music gift card and free beer. The number of guesses entered will not be d, encouraging unlimited amounts of people to “like” both of our Social Media pages and visit our website. Liking Tsingtao Social Media pages will cause them to enter people’s newsfeeds which exposes Tsingtao to all the people’s friends. The flash dance competition will be d on the Social Media pages and the website. The winners of the competition will have to go to the next flash dance to claim their prizes. Tsingtao will focus on sponsoring events to further their promotion. By merging with San Miguel, Tsingtao will be another sponsor for Oktoberfest. Oktoberfest is the biggest music and beer festival in the Philippines. Oktoberfest in Manila has non-stop music with a twelve band line-up. There will be sports, fireworks, beer and the first ever beer rain. This is an excellent way to give out free samples of beer and to offer coupons to buy more. It is the perfect venue to reach our target market with their outgoing and fun seeking behavior. Another festival Tsingtao will sponsor is called 7107. This music festival has internationally famous bands playing like Cascade and The Red Hot Chili Peppers. The festival also has many local bands in its line-up. This part of the festival’s proceeds will be donated to the victims of Typhoon Yolanda. This is an opportunity to sell beer at another social and music event. However, it more importantly, shows that Tsingtao cares and will give to those in need as CSR. This is a very positive brand image the Tsingtao will focus to further develop. Fliers for sponsored events can be viewed on Appendix C in the back. Coupons will be a promotion that Tsingtao will abuse in the beginning of the launch. Tsingtao needs to offer incentives to get consumers to buy and try their beer. Tsingtao’s target

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market responds to inexpensive and good quality beer. Coupons will appeal to their wants and needs. Coupons for the beer will be handed out after all the flash dances and in the music festivals. The coupons will also be offered on the packages of the bottles of beer and on Tsingtao’s website. This will help in successfully getting Filipinos to try Tsingtao Pale Lager Beer. A coupon for Oktoberfest can be viewed on Appendix D in the back. Personal Selling The personal selling that will be offered by Tsingtao is not traditional. Since there will not be a Tsingtao Beer store, it will be done more creatively. For the free sample stands and the beer stands at promotional events, knowledgeable staff will be able to offer insight on the Tsingtao Brewery and beer. One person will be filling up a sample or purchased draft, while another person is informing the consumer about the brand and the product. Plus, the Tsingtao representatives that are handing out coupons or flyers after the flash dances, will share knowledge about the Tsingtao brand and beer. Tsingtao wants face-to-face interaction to personalize this new brand to the Filipino people. Tsingtao wants to be a part of the Filipino society and not be considered a “foreign” beer. All Tsingtao workers and representatives will be Filipino locals to symbolize that Tsingtao is a part of the community. Public Relations Tsingtao will have a Public Relations department that will focus on being completely transparent to all publics. Tsingtao’s publics include employees, consumers, shareholders and San Miguel Brewery. The Public Relations office will be in charge for releasing an in company newsletter to all of its employees about new things within the company. There will also be emails sent out to all employees when a new significant decision has been made. The Public Relations department will organize employee aid programs, and will be the middleman that communicates information from the executives to the employees and vice-versa. Tsingtao wants the employees to feel a part of the company and develop trust and pride for the brand they work for. Public Relations will have the duty to reach out to the consumer and create a positive brand image for Tsingtao. The PR department will reach out through press releases, events, and aiding the community. The department will be in charge of organizing the promotional events like the flash dances and will be the ones providing the prizes. Public Relations will be in charge of sending a newsletter to shareholders every month. These newsletters will be filled with new company information and financial statistics to be

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completely open with the shareholders. This demonstrates genuine care and will develop and trust from the shareholders for the brand. The department of Public Relations will also be in charge with Tsingtao’s communication with San Miguel. Tsingtao wants to form a relationship, a merger, and then acquire San Miguel. Partnerships between two companies will only work when both sides are communicating clearly, and handling disputes quickly. Tsingtao cannot afford to lose this relationship, and will be relying on the PR department to proof read and approve any communication.

International Resources Required We have organized a three year plan in order to merge and acquire with San Miguel Brewing Company. A visual interpretation of our plan can be seen in the Gantt chart that we have placed into our references section. In the first year there are four steps to take. First, Tsingtao should purchase all available outstanding shares. Now that Tsingtao owns a portion of the company they have reason to want San Miguel Corporation to perform well. Tsingtao should then come to San Miguel and explain that they want to help them with their materials. This will reduce San Miguel’s cost of goods sold and increase revenue for the company. Tsingtao will also most likely be able to sell the materials to San Miguel for a profit. After a level of trust has been established between the two companies, ask for permission to use their distribution channels to sell Tsingtao beer in the Philippines, and Tsingtao will do the same for San Miguel. Lastly, offer to help San Miguel gain access to the Chinese market, since they have only entered Hong Kong and one other province. In the second year there are another four steps to take. Once again purchase all available outstanding shares. Next step is to move the strategic alliance into a full t venture. A contract would definitely be crucial to make sure Tsingtao is covering its assets. If a t venture is established, the next step would be exchanging one or more managers between companies. This will allow for better integration once the companies merge. When the managers exchange, it would also benefit Tsingtao to suggest sharing brewing facilities. Tsingtao would then no longer be required to ship their beer to the Philippines and vice versa. This would be extremely beneficial to both sides. The third year requires only three steps. Once again, purchase all available outstanding shares. After that has been completed, evaluate the short and long term debts as well as the

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current assets. When this has been completed offer to buy the company from San Miguel Corporation.

The Problem with our plan Kirin Brewery has already implemented our plan. They have taken an interest in San Miguel and have acquired 48% of the company already. They began this acquisition when the stock was still publicly traded, but after Kirin acquired more than 39%, San Miguel brewing company was forced to be delisted since 10% of the total shares were not owned by the public. Now Kirin is in the final stages of their acquisition plan. The last offer they presented to stockholders was $0.44 per share. Soon, they will offer a higher price to buyout remaining shares.

The Solution Unfortunately this is one of the downfalls of business. Kirin beat us to the punch and has nearly finished their plan, ultimately making this entire project obsolete. The one shining light left to shed upon this business plan is the statistic of merger and acquisition success. When researching the web regarding merger success rate there was not one finite number. This is due to the fact that the level of success is different for every company. From what we obtained, mergers are successful roughly 50-70% of the time (Harding par.1) Our goal is to be the 50-70% statistic. Kirin is one of Tsingtao’s main competitors and is also Japanese (not very well liked by Chinese) so we are proposing that Tsingtao take the necessary actions to cause their attempted merger to fail. Since Kirin has done all the heavy lifting and has now dwindled the shares of San Miguel Company to just 51% of the San Miguel Brewing Company, it leaves an opportunity to sweep in and offer to buy only 51% of the company. Using Inbev’s acquisition of Anhe-Busch as an example, we propose that Tsingtao propose a 33% higher per share offer to San Miguel Corp. This price hike will give Tsingtao the ability to avoid a bid war with Kirin which will drastically increase the price since Kirin only needs to acquire three percent of the company. This offer is to buy the remaining 7,833,117,112 shares at $0.586 per share.

Action/Timing Gantt Chart 22

This Gantt Chart shows the the 3 year acquisition plan of San Miguel Brewery. In year 1 our primary focus is to continually buy all outstanding shares, and offer San Miguel assistance in entering China. In year 2 we will immediately offer a Venture in writing, and begin sharing all brewery facilities. In this year we will also purchase all available shares of San Miguel. By the third and final year, buy remaining shares of San Miguel and offer to buy the company.

Estimated Budget The only expense with this marketing plan is the actual purchase of the shares from San Miguel Corp. Currently there are 15,359,053,161 outstanding shares. If Tsingtao purchases San Miguel Corporation’s Shares they will be purchasing 7,833,117,112 shares (15,359,053,161*.51) at $0.586 per share for a grand total of $4,590,206,627.70. If Tsingtao acquires San Miguel Brewing Company, they will also be acquiring their debt. We determined that the total debts of the company minus the current assets is $911,218,000. Combing the purchase of shares and accumulated debt, the total estimated budget is $5,501,424,627.70 To determine the breakeven analysis we first discovered a way to determine revenue based off of a certain amount of sales. Yao explained that Tsing Tao generates roughly $520 of revenue per ton of beer sold (depending on currency exchange). According to businessweek.com Tsingtao’s total revenue in 2013 was 4,599.3 million and its net income was only 320.8 million. This means that net income represents 7% of total revenue, so every ton of beer sold creates

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roughly $36.4 of profit. This means that Tsingtao will have to sell 151,138,039.22 tons of beer to break even on this investment. While this number seems high, they produce roughly 11,000,000 tons of beer annually with a 3.7% average increase each year. If this acquisition occurs their production and sales will increase as well decreasing the allotted time it takes to pay off the investment.

Organization Chart This organization chart shows the hierarchical structure of our company, and also the responsibilities given to each of our team . As our CEO Brandon Martin will oversee all executive decisions of the company. The Director of Manufacturing will be Sevag Sepetjian. His responsibilities will include overseeing the San Miguel Plans in Manila and the Tsingtao Breweries in China. Our Director of Advertising will be Amanda LeCave, who will be overseeing our primary and secondary markets which are, 17-25 Age demographic and the tourists respectively. Finally our CFO will be Tj Jeffris, who will be overseeing the San Miguel t Venture, and all Tsingtao financials activities.

International Business Data The first piece of data we will consistently be monitoring is our sales. We will immediately want to see an increase of sales, both domestically and internationally. It is very crucial to track this, in our new acquired market in the Philippines. We’d also like to monitor our profitability per share. Like mentioned, we need to see profit quickly to estimate when our initial investment will be paid back. This acquisition will be an investment, and the faster we can make that investment back, and turn a profit the quicker we can move to other markets. The third data

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to monitor is our market share. We’d like to also see a significant increase in our market share, once again, both domestic and international. Lastly, we’d continually keep purchasing Kirin shares in order to fully acquire San Miguel. We are confident that because we already more than 50% of the company, acquiring Kirin will not be as hard of a challenge.

Frequency to check results For the first three years, until we see profit, we will be checking all of our results quarterly. This will ensure that we have constant data in both our new market, and the domestic one. Furthermore, checking the data quarterly will allow us to make changes in our Marketing Mix modifications quickly. This will ensure that we can respond to our community, and market effectively, while minimizing cost of doing so.

Marketing Mix Modifications After acquisition is acquired we will primarily focus on price and the increase of marginal profit. Because our market will grow tremendously, naturally sales will increase indefinitely. Furthermore, to maximize profit, we will increase per unit profit. This will also increase our market share in the Philippines as well. Lastly, in order to appeal to our female consumers, Tsingtao can adapt beer to be lighter. Because females play such a crucial role in the Philippine market appealing to this large consumer demographic will tremendously increase our sales, and profitability.

Works Cited "Beer in the Philippines." Beer in the Philippines. N.p., Sept. 2014. Web. 15 Nov. 2014. Borlaza, Gregorio C. "Security." Encyclopedia Britannica Online. Encyclopedia Britannica, 19 Aug. 2014. Web. 9 Nov. 2014.

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"Demographic Profile of Media s in the Philippines." N.p.: n.p., n.d. N. pag. EMarketer. Web. 11 Nov. 2014. . "Direct Response TV Advertising Definition | Small Business Encyclopedia." Entrepreneur. Alley NYC, 2014. Web. 10 Nov. 2014. Freisner, Tim. "Direct Marketing." Marketing Teacher. N.p., 8 May 2014. Web. 11 Nov. 2014. Harding, David. "The Mega-Merger Mouse Trap." Bain.com. N.p., n.d. Web. 19 Nov.2014. . "Media Penetration in the Philippines." N.p.: n.p., n.d. N. pag. EMarketer. Web. 10 Nov. 2014. . "Philippines: Country Profile." port. Euromonitor, n.d. Web. 19 Nov. 2014. . Koeppinger, Peter. "The Aquino istration at the mid of Its Term: Assessment of Its Policies and Achievements in Key Areas." Facebook.com. Konrad-AdenauerFoundation, n.d. Web. 19 Dec. 2014. . "Research and Development." Reference for Business. Advameg Inc., n.d. Web. 19 Nov. 2014. . "Reference for Business." Research and Development. Advameg Inc, 2014. Web. 03 Dec. 2014. Riley, Jim. "Promotion - Public Relations." Promotion - Public Relations. Tutor2u, 23 Sept. 2012. Web. 10 Nov. 2014. "San Miguel Brewing Co. Annual Report 2013." (n.d.): n. pag. San Miguel Brewery. Web. 19 Nov.

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2014. . Singian, Maria. "Philippines." International Review of the Red Cross 15.166 (2013): 39.Usda.gov. US Department of Agriculture. Web. 19 Nov. 2014. http://gain.fas.usda.gov/Recent%20GAIN%20Publications/Sin%20Tax%20Refor m%20Ushers%20in%20Higher%20Wine%20and%20Beer%20Prices%20in%202 013_Manila_Philippines_1-10-2013.pdf Tutaan J. Philippines confident on ranking improvement. Manila Times, The(Philippines) [serial online]. September 20, 2013:Available from: Business Source Premier, Ipswich, MA. Accessed December 2, 2014."Republic of the Philippines Tariff Commission." Tariffcommission.gov. N.p., n.d. Web. 19 Nov. 2014 . Yao, Yue. "Tsingtao Is a Beer Brand in China, but We Expect Competition to Intensify." Morningstar.com. N.p., n.d. Web. 19 Nov. 2014. .

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Appendix A

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Appendix b

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Appendix C

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Appendix D

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