Chinese market entry strategy for the Turner’s Ice Cream

The Turner’s Ice Cream in brief

The Turner’s Ice Cream was founded in 1950. Two years later, “Verona” rang of flavoured ice cream was
introduced. By 1960, the company had over 30 outlets along the south coast of England, and by 1988, there
were 250 Turners’ shops around the UK. The company has recently launched a franchise option, and there
are now 14 franchisees operating near key tourist centres in England, Scotland, and Wales.
Turner’s ice cream has justifiable acquired a high quality, upmarket image, and the company has continued
to emphasise traditional values, traditional products, and traditional ingredients.
From 2004 to 2006, the company’s sales stood at around 1.5 m GBP, trading profit reached 1.1 m GBP. The
company’s profile looks OK, but there is no doubt that times are getting harder. The UK ice cream market
previously is dominated by three large players – Walls, Lyons, and Cadbury – Schweppes. The competition
has been highly stiffer all the time, and things are becoming even worse with more and more global varieties
of ice cream find their way to the UK.

Chinese market for ice cream

Just about a decade ago, ice cream, especially high-end ones, is regarded as luxurious snack in China. Now,
with dynamic economic growth, and disposable incomes growth for ordinary consumers, eating out is
becoming increasingly affordable and is increasingly popular, especially in the cities. However, Ice cream
sales in China are highly fragmented. With the exception of key national players, such as Inner Mongolia
Yili Industrial Group Co Ltd, Wall's (China) Co Ltd, Inner Mongolia Mengniu Group, Nestlé (China) Ltd
and Bright Food Co, the rest of the ice cream players are mainly regional players with value shares of less
than 2% in 2009. According to Euromonitor International , Volume sales of ice cream are expected to record
robust growth of 46% in the next four years, to reach 4.1 billion litres by end 2013. This is predicted to see a
continued emphasis on new launches, whilst the strengthening of retail distribution will also drive volume
sales of ice cream. Trade sources have indicated that ice cream consumption is increasingly less seasonal,
and this is likely to drive overall sales of ice cream. The development of the retail market, with the
expansion of modern retail channels such as supermarkets/hypermarkets and chained convenience stores, is
also expected to enhance the retail presence of ice cream on a national level, thus boosting sales.
The Turner’s Ice Cream SWOT analysis
Although the Turner’s is doing currently OK, but facing the intensive competition, the limited UK ice
market is seen more and more hard. Under this circumstance, it is necessary to consider developing new
market. This section analyses the company in terms of Chinese ice cream market by adopting SWOT approach.

Strengths Weaknesses
Strong brand name Products innovation
High quality products Poor operate system

Opportunities Threats
Positive outlook for the Chinese snack food market Low-end products
Growing natural ice cream market Product innovation
Increasing demand for organic healthy food products Rising raw material prices

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Strengths
Strong brand name
The company has marketed a UK well known brand throughout the years. This is perhaps the reason why
the consumers still willing to buy its products even there has been no innovation and high price. This means
that the brand to a certain extent represents a high quality product. This gives the company the chance and
confidence to develop new products and entry to new market.
High quality products
“Verona” rang of flavoured ice cream products are known as high quality. It is this which helps the company
holding its competitive advantages. This value will undoubtedly make easy to the company developing its
new market.
Weaknesses
Products innovation
The company is known as a traditional value keeper, with its traditional products and traditional ingredients.
It does pay attention to suiting consumers’ life style needs. This could result in a situation where it will loose
its segment consumer group like children.
Poor operate system
The tightly control over the overheads has been a major weaknesses that prevents the company growth. The
company’s investment in research is extremely low. In 2004 and 2005, it spent only 1,000 GBP on research,
which holding a per cent as low as less 0.1. Meanwhile, its advertisement costs are also seen as the lowest
among its competitors. In addition, the company’s management system is also seen as poor example.
Opportunities
Positive outlook for the Chinese snack food market
China's accession to the WTO will have a positive impact on the ice cream industry overall. There will be
more foreign imports of advanced technology, and traditional machinery will be replaced. The quality of
products will improve as a result. Urban consumers will be exposed to more foreign brands and will be
tempted to be more adventurous in trying out these products. Improvements to the distribution infrastructure
will benefit sales of ice cream products, as they become more widely available, even in remote areas. With
the further opening up of the retail ownership system, more international brand launches are expected
through foreign-owned channels.
Marketing plan for the Turner’s

To develop Chinese ice cream market has never been easy as analysed above. However, this does not mean
there is no chance to success. Being have the good reputation in this industry, the Turner’s ice cream could
still win the campaign if following an appropriate marketing strategy. This includes a general strategy and
step by step plans. The general strategy refers to the regenerative innovation with respect to the company’s
traditional values. This calls for the new strategy on product innovation, distribution channel, sales
promotion, and new market development as well. The entry to Chinese ice cream market, in particular,
requires properly prepared plan as presented below.

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Learning Chinese business culture
The process of globalisation has witnessed the rapid growth of international activities . Once a firm expands
its operations outside the borders of its own nation-state and outside the dominance of its own home culture,
the influence of the host countries’ national cultures becomes reality. Conducting business across
international boundaries requires interaction with people and their organizations nurtured in different
cultural environments. Therefore the need for knowledge and understanding of the social-cultural difference
between host country and home country becomes of paramount importance.
For most western people, China is still a mystic country owing to its cultural features being completely
different from those of western countries. Indeed, the traditional Chinese culture, in which Confucian
philosophy is dominant, is a high context culture, which is opposite to western culture which is low context.
It also has its own incredibly complex Chinese condition (guo qing), which always confuses western people.
All of these make western negotiators feel difficult and confused when they negotiate with Chinese
negotiators. Many failed negotiations are caused by the poor understanding of Chinese culture or lacking of
awareness of the Chinese business negotiation style. This is why more and more scholars are studying Sino-
Western Business Negotiation in order to be more effective in negotiations with Chinese.
Choosing appropriate entry strategy
To compare with its counterparts, the Turner’s has missed an early chance to develop the Chinese market.
However, it may enjoy the advantages over the follower strategy in terms of initial market costs and
questionable effectiveness. Indeed, for pioneer entrants, some factors such as demand uncertainty, entry
scale, advertising intensity, entry time of followers, and the scope of the economy are all risk. Now for the
Turner’s, it is more easily to develop effective entry strategy into the emerging market in China. Moreover,
studies have demonstrated that those innovative late entrants grow faster than pioneers and have higher
market potentials and repeat sales rates. Moreover, they can slow the pioneer’s growth and reduce its
marketing spending effectiveness.
Nonetheless, in doing so as innovative late entrants, apart from the above mentioned general innovation
strategy, the company needs to study how to build its distribution channel in short order and to develop it
market share. In so doing, an effective way is to set up joint venture through the Turner’s find an appropriate
counterpart to merge it and use its distribution channel and factories. This strategy has been evidenced by
many examples.
Q1. Evaluate the situation through Porters five force framework.
Q2. Develop a business plan for Turner Ice-cream, for example Product, Price, Place & Promotional strategy
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