Irriena Sandy 1340000405 MA1-13T3

7-11 in Taiwan

Introduction: Founded in 1927, Dallas, Texas selling ice blocks; then selling milk, egg, bread In 1946, opening time: 7am 11pm, brand name changed to 7-eleven In 1962, extended opening time to 24hrs in Austin, Texas. First international store: Canada 1969 Late 1970s early 1980s, opened in Australia, Sweden, Taiwan, Hong Kong, Singapore, Guam, Malaysia and the Philippines (2.500 stores) Largest retailer and franchisor Annual sales $62 billion

7-Eleven in Taiwan First store: 1980 Dense population Vertical zoning Unique growth Guaranteed footfall

7-Eleven Taiwan Service Differentiation: Phase 1: Imitation Phase 2: Localization (local food, store location, travel planning) Phase 3: Innovation (Pre-ordering, Delivery and Pick-up, Telecom, i-Cash, Coffee Counter, Seating Area, Taxi Services)

Differentiation between 7-Eleven Taiwan and 7-Eleven US stems from a fundamental difference in what the management envisions a convenience store to be.

7-11 in US Offers food + household product 24/7 Location tends to be rural population density low Areas where people concentrated e.g. street corner Products are basic to modern living: fast food, frozen food, instant noodles,

7-11 in Taiwan Social gathering place Myriad of services Local products (tea egg, baozi, fantuan, biandang..) Location in high density places, mainly in the residential communities Central hub for productivity

newspapers, magazines, and cigarettes U.S. VS Taiwan Model Position U.S. Created the concept of convenience stores Opening 24 hours Customer groups whitecollars: less time to go shopping Products and services make daily lives easier Taiwan Chain of high-end stores, target consumer: housewives No longer target to the pricesensitive housewives but young urban professionals Reinforces the concept at the level of technology Store Design U.S. Standard format areas: 2,400 ~ 3,000 square meters floor plan. Taiwan Difficult to conform to the U.S. model of stores of standard size, format and floor plan Average area smaller, at 700 square meters, of the store areas in U.S.

Market selection China is the 2nd economy of the world with 13 billion populations and annual growth of GDP is about 9%. Therefore, many companies want to invest this market. Moreover, 7-11 plans to enter China market due to market characteristics below: Political: China wants to improve its commerce, and develop its domestic market in every industry; consequently, it encourages foreign capital to invest and expand the scale of economy. Economic: The convenience retail market of China is still in developing. Moreover, China has large profits from domestic demands.

Social: 7-11 expands very fast, and it has changed the customers behavior. Moreover, the local convenience retail market has compressed by 7-11, which means profits of local competitors will be reduced.

Legal: In 1992, the government of China permitted foreign convenience retail to invest in China.

Competitive advantages 1. Market segmentation and Taiwanese experienced store operation. 7-11 not only sells products but high quality of services; consequently, consumers would like to shop at 7-11. Moreover, it has the same background; therefore, 7-11 can blend into China culture quickly. 2. Efficient logistics. Depending on powerful logistics system with advanced software and hardware. 7-11 can defeat small scales chain convenience stores easily.

International Strategy (Think Global, Act Local) A company accepting an international strategic orientation makes no differentiation between domestic and foreign market opportunities, searching to serve an essentially same market appearing in many countries around the world and developing global strategies to compete with other international companies

Porter 5 Forces: Competitive rivalry The convenience store industry in Taiwan is very concentrated, with the top 5 companies having more than 95% of market share. Besides, many new strategies, such as free gifts, e-wallet and e-commerce, are easily to be copied. Hence, companies have to keep developing new strategies for increasing their competitiveness.

The power of buyer Chain convenience stores are industry of domestic demand, their downstream are consumers. Their role of the market is to offer convenience at shopping and service. So, they have more advantages on pricing than other retailers, which means they do not have to make discount for consumers.

The power of supplier Chain stores have the advantages of last mile; every supplier has to compete with others, and convenience stores can set a high slotting fee. In addition, every company begins to develop the products of private brand; therefore, the power of suppliers is not a threat.

The threat of substitutes Convenience stores are functional in present. They sell food, stationery, newspaper and magazines; moreover, they provide shipping, ATM, photocopy and laundry. There is no other industry can replace the market because convenience store depends on its powerful channel to serve customers. Consequently, the thread of substitutes is low.

The threat of entry The market of convenience store in Taiwan has saturated; therefore, the growth has become slowly. Moreover, every organization has increased large capital, and keep improving and integrating logistics system. Also, they have accumulated much experience on developing products, techniques, profits and advertising; hence, they have great advantages at economies of scale and brand value. Consequently, the newcomers are difficult to develop their market share and quality of service. Hence, the threat of new brands is low.

Competitors Analysis In the past, convenience stores in Taiwan were all single-handed operation; however, they were eliminated through competition when chain convenience stores

were coming into the market of Taiwan. In present, there are three main chain convenience stores in Taiwan, which are 7-11, Family Mart and Hi-life.

Family Mart came from Japan. In 1999, it was the second organization,which uses POS system to operate its convenience stores. Its brand value is only behind 711; moreover, it focuses on fresh food, fashion products and agency. Also, it cooperates with other industries to sell digital products for attracting more customers and increasing the image of brand. Hi-life was built by local business organization. It built it logistics system and focused on shipping. Therefore, it has good comments on shipping. Furthermore, Hilife sells its exclusive toys and received strong acceptance by the customers. Hi-life wants to become toy convenience store to differentiate the market with other convenience stores.

SWOT Analysis Strengths 24 hours a day, 7 days a week. 7-11 provides various convenient services. 7-11 has advantages at logistics because of intensive distribution. Well connection with other industry.

Weaknesses Price of products is higher than supermarket. Limited products. Great location needs high costs.

Opportunity Taiwanese pursuit efficient lifestyle. Focus on e-commerce Complex convenience store (combined with coffee shop, book store and bakery).

Threats

 Conclusion:

Saturated market. Shopping malls are booming in recent years. Consumers would not like to buy products because of recession.

o 7-11 Taiwan localized product o Range of service offered are beyond the conventional meaning of convenience store o 7-11 strengthened the concept of convenience stores o Whatever bothers customers, is our business opportunity o The operation format of 7-11 in Taiwan can be expanded to South Korea but not the UK o Cultural, geographical and economic differences or similarities should be taken into account when considering expanding business to other regions. Name : NIM : Source : Frengky 1340000310 http://prezi.com/yhzzpjqgj8eo/mktg227-7-eleven-case/

7-Eleven Key Success Factors -. Localization: local foods, store location, travel planning. -. Innovation: pre-ordering, delivery and pick up, telecom, I-cash, and coffee counter, seating areas, taxi services. U S !S "a#$an Mo%el

&ultural '#((erences

Econom#c '#((erences

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According to my opinion, 7- leven!s market position is in cash co"s. #he reason is, "hether 7- leven has high market shares, thus it market gro"th rate is lo", the price of the products are higher than other supermarket. &onclus#on #he operation format of 7- leven in #ai"an can $e expanded to %outh &orea $ut not the '&. (ultural, geographical and economic differences or similarities should $e taken into account "hen considering expanding $usiness to other regions. )ame :*yan Andrian )im : +,-....,.Store In #ai"an, seven leven ranked num$er -th that has the most stores in the country. #ai"an : ,/.01. kilometres s2uare. %o it has a %even leven %tore every 7 kilometers s2uare.

'%A : 0.134.47/ kilometres s2uare. %o it has %even eleven store every +,.14- &ilometers s2uare It has $ig differences.

&om-et#t#ve ,%vantage the services offered $y 7- leven stores in #ai"an did add on to the competitive advantage of the store chain $ecause it "as perceived as one stop shop "here people can purchase their daily necessities and can also use many of its stated supplementary services. #he $asic notion

$ehind adding these services "ere to ensure that the footfall in the store increases "hich the store can capitalize on and use it to increase its sales. 5ence, a consumer "ho "ants to rene" his license can use the I-6on service of 7- leven and can also purchase some necessary good for himself. #his increases the sales of the 7- leven stores and "orks as a competitive advantage to the store since this "as first of its kind experience for the #ai"anese consumer "ho had a uni2ue trait of o$session "ith immediacy.

&onclus#on o( +lo.al market o( Seven Eleven the operational format of 7- leven can $e expanded to other countries. 7ith the advent of I# and cloud servers, a consumer gets access to a range of "hole ne" experience. #his model can $e a hit since8 consumers no" "ant the service to $e 2uick and a one stop solution. #he concept of localization "ill also add to the increment in the sales since a consumer of a particular region "ill have more liking to"ards his traditional products.

Localization strategy to stretghening positioning Localization helped 7-Eleven strengthening the concept of convenience stores in Taiwan. This was mainly because it helped the convenience stores to become like retail nomads. This helped the company in reducing its capital outflow and managerial time spent in monitoring the operation. It offered greater flexi$ility in the choice of stores and location and facilitate rapid gro"th of the store $y entering the $urgeoning market place. #he ne" franchises "ere put up in the high density locations. Investment "as made in advertising in the local media. #hough the set up and the model of the 7- leven stores in #ai"an "ere those of the '%, $ut the 9%(% had taken steps to provide localization $y adding local flavors "hich "ere more preferred $y the #ai"anese consumers. #hey started selling hot micro"aved packaged food "hich a consumer could gra$ at any time of the day. 5ence, localization strengthened the concept of convenience store in in #ai"an.

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&om-et#tor analys#s

: xtended menu offerings have successfully increased the importance of convenience stores foodservice offering. #he company derives its share from its convenience stores, under the $rand 7- leven. At the end of 3..0, there "ere -,7/. outlets,; 7- leven may $e considered to $e the pioneer in introducing convenience stores fast food in #ai"an, and has since constantly innovated "ith the launch of ne" products < uromonitor international. 3.+.=. 6esides, :>amily ?art said the sale of fresh food items currently accounts for only +3 percent of its revenue. In #ai"an, the industry average is 3. percent; <6usiness "eekly. 3.+.=, compared "ith other convenience. ,%vert#sement If you watch any commercials on T for a while! you will soon be aware that it is easy to find 7-Eleven advertisements. "ecently! 7-Eleven#s commercials have increased! do these advertisements really influence the increasing of their profits$ The article indicated that %&fter several failed attempts! 7-Eleven came out with the low price 'ity 'af( in )**+. ,owever! with the success of commercial advertisements in )**7! 7-Eleven has been selling -* million cups of coffee a year. /Taiwan insights! )*0*1. 2hatever strategy does 7-Eleven used and rises up its profits$ 3ince 4ovember of )**5! the usage of hiring celebrities with different impressions to be with representatives! to have a strong stands in the coffee market. According to the article :#he *eport of *eaching @#he effect of advertisement!;<#a$le 3=, in the data of Aecem$er, 3..0, :the rank of @ ffective dose of advertisement! in coffee from chain stores and fast food restaurants, @7-++ (I#B (A>C! is on the top.; 7ith the airing +/7,1-4 times on screens 7-++ (I#B (A>C! commercial have the highest $udgets of 0,7+.,... )#A. In return, (I#B (A>C! has helped 7-++ to earn $ack a revenue of +7 times $igger than the actual costs $eing used for the campaigns. 5o"ever, >amily ?art has only an airing of 4/,47. on screens, their advertisement effect is ranked the fourth

<Liao, 3.+.=. >rom the data, "e can see 7- leven!s commercial on the screen increases their profits.

Conclusion &fter the research of 7-Eleven! we can understand the 7-Eleven#s background and there are many kinds of strategies behind them. The 7-Eleven#s parent company 6ni-7resident Enterprise 'orporation /67E'1 has a lot of subsidiaries whose business tip-up make each company#s development. 8or e9ample! the food industry of 67E' supports 7-Eleven#s variety of food products! and increases their outlets than other convenience stores. Especially! for the working class people whose purpose to visit convenience store is for the food! it can say the food industry of 67E'#s support relate to the success of 7-Eleven. &lso! the detailed internal business management of 7-Eleven makes worker can understand clearly how they work and behave! and following its regulations "hich increase the efficiency of each stores. mploying people in the promoting "ay also give them more faith for their "ork. If the management does not give the sta$le "ork condition for employee, they also cannot give a good response to the upper levels. ?oreover, 7- leven!s geographical marketing or large num$er of advertisements "hich also raising up their pu$licity and $ecome the one of strategy for the success. If "e do not kno" "hat is hiding $ehind 7-++, "e "ill never understand "hy they are so popular in #ai"an and ho" they succeed. #o the success of one company, the managements should consider a lot of possi$ilities to make their $usiness more efficient and al"ays o$serve people!s mind. >or instance, :7- leven!s training materials are rene"ed in every six months; <(hen, 3..4=, from there "e can see they al"ays change their materials depending on the passage of the time, it also makes 7- leven!s continual improvement. In +01-, 7- leven closed up ,, stores $ecause of the crisis of management, and their $rand of (ity (afD in 3..- recorded lo" prize8 nevertheless, the history of 7- leven is not al"ays successful $ut they come up "ith ne" ideas to solve the issues. 7hat can "e learn from 7- leven is that even though the result is a failure, you forge ahead and try next "ithout giving up.