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0 Introduction
1.1 Background
Malaysias food and beverage sector is increasingly refined and influenced by health and
convenience trends. High consumer awareness on nutrition value and healthcare has risen the
demand for functional, less processed, fresh, and natural food and beverages (Austrade,
2014). Studies also show that Malaysians spend a quarter of their income in the food and
non-alcoholic beverages, the largest expenditure of household consumption (Bank Negara
Malaysia, 2010) The increasing spending power of the Malaysians is expected to grow the
local food and beverage retail markets by 10% per annum (New Zealand Trade and
Enterprise, 2014).
1.2 Company and its competitors
In Year 2012, cafs accounted 59% of foodservice value share amongst other foodservice
provider in Malaysia. These cafs have strong focus on coffee than on tea as they are
influenced by the dominating coffee-drinking culture found within Malaysia (Euromonitor,
2013). However, a tea-drinking trend emerges when Mr. Bryan Loo, the master franchisor of
Chatime Malaysia brought the tea drinking culture of Taiwan to Malaysia. Chatime
revolutionised the tea-drinking culture of Malaysians, offering over 120 beverage variations
across its many outlets when it first started (VisionKL, 2012). Since Chatimes effort in
pioneering the Taiwanese-style bubble tea became a success in Malaysia, other bubble-tea
outlets started mushrooming all over the country. For example, there is stiff competition for
Chatime when other bubble tea outlets like Gongcha, ShareTea, Orchado and DingTea
joined in the market, saturating the tea beverage market. Being the only public-listed bubble
tea company in the world, Chatime has a huge market share and strong foundation to compete
with other bubble tea companies around the globe and in Malaysia (Chatime, 2014).
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Bases
Geographic
Variables
Location
School Kids
Urban
Demographic
Age
Income level
Needs
14-18
RM0-800
Security
Social
Neurotic
Fickle
Low
Low
None
Psychological
Personality
User-related
Involvement
Usage rate
Brand loyalty
University Guy
Young adults
Urban
Urban
18-26
RM800-2000
Social
Esteem
Extrovert
Agreeable
Moderate
Heavy
Some
26-34
RM3000-6000
Security
Esteem
Conscientious
Committed
High
Heavy
Strong
appendix). Besides, the usage of purple as the colour of Chatime interior, suits the agreeable
and fun personality of these University Guy. According to the survey done (see Figure 6 in
appendix), more than 50% of the people agree that purple means fun and uniqueness to them.
Level of involvement and propensity to switch brands is between the group of School Kids
and Young adults. Hence, ThirsTea, a loyalty programme designed to support of young
talented Malaysians is launched (Chatime, 2012). Chatime ThirsTea cards are designed by
local artists and therefore it could indirectly strengthen brand loyalty among the community,
especially among the University Guy. This segment consists of heavy users of foodservice
providers as these university students always dine out (Euromonitor, 2013).
2.3 Current Retail Strategy and Positioning
franchisees would not value his vision as much as the franchisor. With a greater reach,
Chatime Malaysia is committed to ensure every household have easy access to a Chatime
outlet. Besides, Chatime Malaysia is aware of the importance of market positioning. In fact,
Chatime have designed an offering so that it occupies a distinct position in the minds of
consumers. The objective of positioning is to create a market focused value proposition
(Hassan & Craft, 2012).
Most bubble-tea providers have found to be setting level pricing against most of the
competitors. However there is less emphasis on dining experience of these beverage
providers. There are not much bubble-tea providers which focus on improving accessibility
of brand product to the community. In this case, Chatime differentiates its image from
competing tea providers through fun and unique interior design and an enhanced dining
atmosphere. Chatimes vision to expand the business while preserving the quality of these tea
providers have further increased the accessibility of quality beverages to the community. The
ability of Chatime to fill up the market gap by providing fulfilling experience and great
accessibility has built a distinct position of Chatime in the bubble-tea market in Malaysia.
2013). Hence, consumers are willing to spend slightly more money on products that they trust
are healthier.
Chatime offers a wide range of healthy bubble tea, supported by strong advertising
activity. Marketing events helped to sustain awareness among consumers of Chatime healthy
drinks. In order to maintain their image of serving healthy bubble tea, Chatime should invest
in good quality products, such as their best seller, the white pearls, which are made from
seaweed extract and are low in sugar and calories, and high in fibre, in order to target health
conscious consumers (Wong, 2012).
Chatime has the advantage of the market share and has a strong momentum in terms
of expansion. Chatime should also take care the quality of their drinks. Since bubble tea is an
easy substitute, consumers maybe try other brands of bubble tea such as Gongcha if
consumers are not satisfied with Chatime. Since Chatime has opened many outlets,
accessibility will ultimately drive the demand for tea in the Malaysian market.
In addition, in order to overcome emerging trends such as the caf culture amongst
consumers such as Starbucks and Coffee Bean, Chatime is choosing to emphasise a lifestyle
concept. The drinks are 100% healthy. Whatever is not healthy wont last in this day and
age. (Bryan Loo, 2012)
Bryan Loo, the CEO of Chatime Malaysia aims for Chatime is to create a need for
Malaysians to drink tea and then choosing Chatime to satisfy that need. Bryan Loo included
that his efforts might not result in replacing coffee culture with a tea culture, but he at least
aims to make tea the second choice amongst consumers (Bryan Loo, 2012).
beverages are creating cycles of poverty and disease (Melissa Musiker, 2013). While this is
an area of emerging science, companies like Chatime should pay keen attention.
Furthermore, some Chatime stores offer a variety of snack food (see Image 4 in
Appendix), with Chatime Galleria goes to further extend to provide consumers with
Taiwanese style desserts (see Image 5 in Appendix). These stores encourage consumers to
have social gatherings or casual business meetings where turnover is low for the shop.
Chatime constantly comes out with new variation of drinks to create a one stop place
for customers seeking for beverages. The assortment of drinks ranges from coffee made by a
Teapresso machine, chocolate drinks (collaboration with Cadbury), FruiTea summer crush
and even Durian SmooTea. Notice that Chatime has cleverly played with the word Tea. This
helps to strengthen their brand image as a tea provider to society. The addition of Durian
SmooTea utilises the concept of micromarketing, where the king of fruits in Malaysia is
developed into a tea flavour to suit local taste.
4.3 Customisation
Chatime beverages are infinitely customisable. After choosing a temperature, base beverage,
flavourings, toppings and mix-ins, customers then dictate their sugar and ice levels, both
available from 0% to 110% (see Image 6 in Appendix). The concept of flexibility is
particularly appealing to young, chain-savvy customers. Judging from the survey conducted
where 88% of the respondent likes the idea of customisation (see Figure 4 in Appendix),
Chatime is successful in projecting this image to consumers.
4.4 Brand name and purple colour
The Brand name Chatime has a beautiful yet deep meaning. In Chinese it means Sunrise,
referring to Henry Wangs (founder of Chatime in Taiwan) goal of having Chatime in every
place that has sunrise. Also, it plays on words with a double meaning of Tea Time (Cha Time) or as a place to socialise with friends (Chat - Time) (Diaz, 2012).
Moreover, using the colour purple for Chatime implies luxury, extravagance, premium quality
and even uniqueness. While projecting individuality and originality to its customers, purple
also appear to be Henry Wangs favourite colour (Diaz, 2012). Conversely, in the survey
conducted shows that most customers perceive purple as being fun and unique which
nonetheless, projected a positive image of Chatime (see Figure 6 in Appendix).
4.5 Store locations and types
As location is the major factor leading to retail stores success, Chatime Malaysia is
successful in being easily accessible with over 100 stores nationwide (Berman & Evans,
2013, Chatime Malaysia, 2013). They have recently been awarded Malaysian Book of
Records 2014 for being the largest Pearl Milk Tea Beverage Chain (Loo, 2014).
There are four types of stores in Malaysia which represents different images to
consumers. Firstly is the Chatime Lite, This is the smallest footprint of Chatime with only a
service counter available to provide takeaway orders. Chatime beverages are specially made
for takeaway orders with laminated top and a thick straw to pierce on top only when
customers are ready to drink. All Chatime Lite stores are strategically situated within busy
locations with huge pedestrian traffic. Not only is there limited space for store build-up, most
of the customers are always on-the-go, thus takeaway is the best option.
Next is the Chatime Kiosk, which has small footprints with limited seating. It is
mainly situated across popular shopping malls. Their primary target is on-the-go customers as
well, largely catering for takeaway orders but also provide limited tables and chairs for
customers who are tired from walking and need a break for refreshments.
Chatime Outlets are single retail outlets, available in standalone stores (isolated),
unplanned business districts or planned shopping centres. These outlets provide a soothing
and cosy environment for friends get together and family bonding time.
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The exterior appearance of a store is a major determinant for a customer that should not be
underestimated (Bastow-Shoop, Zetocha & Passewitz, 1991). Chatime works more towards
their marquee and surrounding areas.
5.2.1 Marquee
Marquee is a special type of sign used to display the name of a store (Bastow-Shoop et al.,
1991). The vibrant purple background of Chatime signboards serves as a reminder for
customers that purple colour is associated with the brand, hence gaining customer top-ofmind-awareness (Johnson, 2013). Meanwhile, the white Chatime font communicates the
brand name and the tea leaf symbolises the industry of Chatime (see Image 9 in appendix).
5.2.2 Surrounding stores and area
Most of the Chatime stores are located within planned shopping centres (e.g. Sunway
Pyramid) and unplanned business districts (e.g. shoplots). This is because an overall area
image affect individual retailers as consumer tend to have a general perception of shopping
centres and business districts (Berman & Evans, 2013). It presents image cues in terms of
price level, types of services etc. Chatime is not only able to seize the image of its location,
but also serves a parasite store which utilises the high traffic trading area generated by
shopping centres and business districts.
5.3 General interior
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General interior are the interior elements of a store and it helps to create positive feelings
towards the brand (Ballantine, Jack & Parsons, 2010). In the context of Chatime, it includes
flooring, lighting, fixtures, personnel and so on.
5.3.1 Flooring, wall textures and lighting
The color combinations of the ceiling, walls and flooring and can affect the atmosphere of a
store (Bastow-Shoop et al., 1991). Most Chatime stores manage a clean cut image of white
ceiling, white walls and tile flooring. It enhances the natural and in-store lighting to create a
conducive environment for friends and families (see Image 10 in appendix). On the other
hand, Chatime Galleria carries a more wooden feel that exudes a certain comfort, warmth and
cheer. It provides warm lighting from wall scances and hanging light bulbs and wood planks
to enhance the overall mood (Chatime Malaysia, 2013) (see Image 11 in appendix).
5.3.2 Store fixtures
White metal chairs with custom made round tables are a signature of Chatime when comes to
store fixtures. The white colour complements Chatime purple colour which is easy to
consumers eyes. Chatime Galleria offers a variety of table settings from face-to-face dining
to tall bar stools with a wooden counter (see Image 12 in appendix). The accompaniment of
red-coloured bicycle, vintage typewriters, olden decorative items and fascinating wall
portraits exhibit a nostalgic ambience which enforce the retro interior design style Chatime
Galleria is implementing (Chatime Malaysia, 2013).
5.3.3 Personnel
Well-groomed, polite and knowledgeable employees are found to work under greater feelings
of positive arousal in high atmospherics stores (Baker, Levy, & Grewal, 1992). According to
Chatime Malaysia (2013), there must be a minimum of 4-8 staff or Tearista (wordplay on
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Barista) in each store who must have undergone professional training programme before
carefully evaluated and become an official staff. This is why 32% of respondents perceive
that Chatime staff provides good service (see Figure 7 in appendix). It was also observed that
the fast service in Chatime IOI Boulevard is second to none. The drink was already there
when customers walk from the point-of-sale to the pick-up point. In the survey conducted
(see Figure 8 in appendix) shows that 78% of the 50 respondents confirms the previous
statement that they did not wait long to collect their drink. It reflects the competence of
Chatime personnel in delivering the best service which complements the high quality drinks
they provide.
5.3.4 Price displays
They way prices are displayed is part of store atmosphere and it fosters perception of retail
image in consumers minds (Berman & Evans, 2013). Chatime outperforms its competitors
by clearly displaying their large menus in front and sometimes above the ordering counter.
The menu itself is comprehensive with easy classification on the types of drinks with clear
price labels for Regular and Large drinks (see Evidence 1 in Appendix). The presence of
actual-sized demo cups was available at the counter to enable customers to estimate how big
of portion they can drink (see Image 13 in appendix). All of these elements form an
atmosphere to ease the customers process of selecting their drinks which is vital on Chatime
retail image.
5.3.5 Numbering system
Instead of yelling out names like in Starbucks, Chatime implemented a clever digital
numbering system across all stores. It displays the receipt number of customers when the
drinks are ready at the claiming area (Chatime Malaysia, 2013). In the online survey (see
Figure 9 in appendix) proves that 92% of respondents favour Chatimes numbering system as
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it minimises queues and avoid confusion. It speeds up the operations of the store which
complements the image of fast service provided by personnel discussed above. In addition,
during Chatime IOI Boulevard site visit, it is observed that there is a small counter where
customers who are waiting for takeaways can sit to prevent the hogging of tables (see Image
14 in appendix). It smoothens the takeaways process and the entire operation of the stores.
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in overall Chatime provides a calm atmosphere for their customers as well as good quality
bubble tea for their customers to enjoy. On the other hand, kiosk Chatime should provide
more seats for their customers if they would like to enjoy a drink while waiting for someone.
Customers definitely got more than what they bargained for, as whenever someone
mentions a bubble tea shop, one expects a regular tasting bubble tea and maybe an area to
have that drink but with Chatime Malaysia, customers are in for a pleasant surprise when
together with a high quality bubble tea, they are also in for an experience that is like no other,
with comfortable seats and tables, with randomly hung light bulbs with dim lighting,
enhancing the peaceful ambience around customers, making them feel comfortable and thus,
as the saying goes, the longer you stay, the more you will buy. Chatime management is
definitely gaining more profit, as the longer their customers stay in the store; the more likely
they are to purchase other bubble tea drink.
Furthermore, based on a talk held in Sunway University by CEO of Chatime
Malaysia, Chatimes future plans include having a Chatime drive thru, the availability of
Chatime in cans and the ability of consumers to pay for their drinks with preloaded cards.
These changes will hence enhance the total shopping experience of the consumers when
buying a drink at any Chatime outlets. If Chatime keeps up their innovation and marketing
measure, Chatime will definitely be able to reach another milestone in the Malaysian tea
business market.
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7.0 Recommendations
In order for Chatime to maintain an image of providing high quality beverages along
with the full shopping experience, each individual staff has to have thorough understanding
of the tea making procedure as well as friendly interaction with customers. Recently, Chatime
have received many unappealing feedbacks on the staff in various outlets: let it be unethical,
unskilled or poor and slow service. Based on the survey conducted, 3 out of 50 respondents
think that Chatime staff provided bad service (see Figure 7 in Appendix). Even though it is
not a huge number, it should not be ignored as negative word-of-mouth can erode a brands
reputation (Quester, Pettigrew, Kopanidis, Hill, & Hawkins, 2014). Chatime can overcome
this by providing adequate staff training to all levels of employees. Untrained employees
cost significantly more to support than well-trained employees (Ekot, 2010). This cost
includes decline of sales and damage to the image which is difficult to recreate once
destroyed. Staff training affects employee retention which can be viewed as a valuable
commodity (Ekot, 2010). According to Asia Pacific Business (2013), each Chatime employee
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has to undergo a four weeks training program with subsequent two months of work to
practice their skills. With the amount of complains received, Chatime should consider
revising their training program. Training manuals should be constantly updated as an
effective retail strategy today may not be as effective in the future. Nonetheless, it only makes
sense that employee training programs are follow suit (Elder, 2013). Thus at the very least the
basics of serving customers have to be regularly emphasised by store managers.
Retailers want to present an appealing image of never losing a sale by being
understocked or be stuck with excess merchandise (Berman & Evans, 2013). Hence,
inventory management is mandatory in order to sustain operations. Chatime has received
multiple complains on the unavailability and insufficiency of certain drinks and toppings
throughout the years of their operations. The problem can be easily overcome by effective
inventory management techniques. One of the prevalent methods is forecasting.
Forecasting take into consideration the uniformity of the series and changes which occur and
their direction (Kot, Grondys & Szopa, 2011). Since Chatime operates across different states,
the forecasted demand must be projected on a store-by-store basis. For example, the monthly
sales of Pearl Milk Tea in Chatime Pyramid are different than in Chatime Galleria. Hence, the
store managers of both branches can estimate and procure a certain amount of tea leaves and
black pearls according to the projected sales forecast of that store. It ensures availability of
stock and reduces customers complains to reflect a positive image of that particular store and
overall Chatime.
Cultural background and translation problem could lead to miscommunication in
advertising and promotion (Kaser, 2013). It usually causes dissonance which is the
uncomfortable feeling of remorse over a product purchase (Lister, 2013). The promotion
Chatime holds for ThirsTea members and the overall public is a continuity promotion which
runs year long. The online survey (see Figure 10 in Appendix) indicates that 10 out of 50
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Appendices
Appendix 1: Online Questionnaire of Overall Chatime Image
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23
Figure 3: Percentage of respondents who think Chatime drinks are high quality
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Figure 4: Percentage of respondents who like the idea of customizing the sugar and ice level
of drinks at Chatime
Figure 5: Percentage of respondents who thinks Chatime drinks are worth their money
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26
Figure 9: Percentage of respondents who like the idea of Chatime digital numbering system
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Figure 10: Percentage of respondents who encountered promotional problems with Chatime
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29
Image 5: Taiwanese style desserts in Chatime Galleria and certain Chatime stores
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Image 6: Customisation of ice level, sugar level, toppings and amount of tea and coffee
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Image 10: Clean cut image of Chatime with white and purple colour as its theme
Image 11: The warmth, comfort and luxury of Chatime Galleria, Bandar Puteri Puchong
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Image 13: Display of actual sized demo cups in front of the order counter
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Image 14: A small counter with stools designed for customers who are waiting for takeaways
Evidence 1: The comprehensive menu of Chatime with easy classification on the types of
drinks with clear price labels for Regular and Large drinks
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36