"WAGAS- Recognizing different level of the Chinese consumer, on the way to success The story of Wagas- Eat well, Live Well. "Wagas" is a chain that serves western food such as sandwiches, pasta, salad, cakes, fresh juice, and coffee, founded in Shanghai, in 1999, by John F. Christensen, who was a student in Shanghai, and had trouble finding a good sandwich, so he opened a cafe'-"Wagas", originally, an Australian Cafe Chain. Jackie Yun was born in Sydney, Australia, and had a Chinese heritage. In 2000 she came to Shanghai in order to learn Chinese, and worked in a bar-restaurant, in a part-time job. In 2001, Jackie met John F. Christensen, who asked her to join "Wagas", as a manager, and together, they registered a wholly foreign owned company-"Wagas Shanghai Ltd.". In 2010, **Wagas created Baker & Spice", a multi awarded winning caf' and retail bakery specializing in Modern European breads, pastries and cakes Currently, the company operate over 75 cafe/bakeries in 10 cities across China- Shanghai, Beijing, Shenzhen, Guangzhou, Wuxi, Suzhou, Qingdao, Chengdu, Nanjing and Hangzhou. Besides "Baker & Spice", "Wagas operates caf-/restaurants, within the same concept, such as: "Lokal" and "Funkkale". Besides the off-line shops, "Wagas" operates on-line shops, where you can order food at almost any given time, from all the chain's restaurants, and even from an on-line wine shop, and enjoy The "Wagas Reword Program", where you can earn points at participating "Wagas and "Baker and Spice" stores. Pointes can be redeemed for member-only e-coupon. Overview of the Chinese Bakery Industry- In order to understand why does "Wagas" managed to establish so well in China, it is important to overview the development of the Chinese bakery market, over the years. In the past decade, among the food and beverage in China, bakery product has shown growth years by years. With growing trend of consumption of cakes and pastries, popping of well stocked, well decorated and high-priced desserts shop is going on Chinese market. Chinese consumers are health oriented, so they want food product with quality like low sugar. high fiber, vitamin fortified so that the experts in China recognize the growth of bakery product in overall Chinese market. The demand of bakery is so high that goods are even imported. Pastries and cakes are consumed in all kind of celebrations due to which bakery product becomes the key drivers of growth rate of delicious desserts. Since foreign-funded bakeries in China in 1990s, Chinese people, used to "sweet bunds" with salty or sweet fillings, have been increasingly exposed to Western baked products, or rather, sweet and buttery baked products that look like those consumed in Westem countries. Baking industry in China has great potential, with gross probability of 20% cach year. Besides "Baker and Spice", we can find these following companies as leading the market: "Holiland" (a Chinese company). "85C" (from Taiwan). "Paris Baguette," and "Tous Les Jours". For practical and logistic reasons, bakery companies are geographically spread all over China. Unlike other food products that can be kept longer, bread and cakes have short preservation time and strict storage conditions. Bakeries must be able to offer fresh products in a country where food safety is a highly important factor, since Chinese endured many foods scandals. Bread and bakery products have daily indispensable for many people, particularly students and workers in urban areas. At the same time, the high level of foreign investments with its large number of new foreign companies in the bread and bakery industry has resulted in industrial improvements for manufactures. Bakery products include cake, pastries, biscuits, bread, breakfast cereals and other products. The growth potential of bakery product is shown by the grown per capita consumption trends of bakery products. From the influence of western culture, the demand of baked product is increasing creating huge market potential. The total market size of the bakery products is expected to reach USD 530 billion by 2023, at a 2.6% CAGR during the forecast period. Historic/Forecast retail volume of bakery products in China 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 8.000,00 12.000.00 400000 000 Tonnes Source: http:/wikitixpedia.comBakery market in China_will_rench_USS_81B_by_2025 Understanding the dynamic of the Chinese Consumers, and its features, on the way to success What did "Wagas" do in order to become such a significant part of the Chinese Bakery Industry, and positioning the company as a "brand"? Despite the fact that the Chinese market offers great opportunities, Western brands should be cautious when entering the market. The popular French company "Paul" penetrated the market in the 2000s by franchising private individuals- a strategy that did not work, as "Paul" closed down all its Chinese stores in 2010, in China, it is important to understand the market and its consumers and it is essential to expand into franchises with a local partner, who can help to manage the relationship with the administration, in other words, you need a Chinese oriented management, in order to get a better understanding of the Chinese market, and the Chinese consumers. Jackie Yun, the women behind "Wagas", considers "Wagas expand to success, as right timing, hard work, and entering the market, when completion was minimal, and the cost of running a business was considerably lower. However, it seems like that prices gone up over the years. In 2002, a regular coffee was 13RMB, today it's 32RMB. A sandwich is 56RMB, and an average salad is 78RMB, so, how come it is so popular? The Chinese consumer has become much more health conscious and more focus on value, although that does not mean they want cheap products. On the contrary, a survey by Mckinsey principals Fang Gong and Daniel Zipset, finds that Chinese consumers are spending on luxury items as well as services, and often do so when traveling abroad.' The Chinese consumer is still confident and still spends both in China as well as outside China when travelling At the same time, what is driving the overall growth for food and beverage clients is a large increase in the price the consumer's willing to pay. It seems like the Chinese consumer is looking for the best and the most expensive products. According to the reports, we can notice, that the loyalty level of Chinese consumers has been improving. There are two reasons behind that: one reason, because the Chinese consumers are more sophisticated now compared with before. They have experienced a lot of different brands, and they can tell which one is better than the other one. On the other hand, Chinese consumers, thanks to social media, have been influenced by what other people have experienced with certain brands, especially among the young generation, who wishes to try and experience new products and services. Furthermore, healthy living is another interesting trend that is on the rise. People are not just working all the time, they actually starting to enjoy themselves and also care more about what they eat and how they take care of themselves. It is not just about pricing, we can recognize values 1 "What's driving the Chinese consumer", Mckinsey & company (April 2016 "What's driving the Chinese consumer", McKinsey & Company (April 2016) :: :: If we could have implemented theories, into the assumptions, above, we could have recognized different level on needs. Psychological elements can be recognized, according to the Maslow's Needs Hierarchy Theory: needs lower down in the hierarchy, must be satisfied, before individuals can attend the needs higher up. It is important that people will feel safe, cat and drink well, however, people would like to feel like they belong to something, they are part of community, they are looking for better products, better quality, not just to satisfy their physical needs, but to satisfy self-actualization needs. To find better solutions not just for themselves, but for the benefit of the entire society. Implementing theories into success- Before concluding this assignment, I went to "baker & Spice", with my kids, who likes their breakfast. Most of the people, in the cafe where Chinese and I could not stop thinking, about Wagas's success of attracting so many people into their stores, It is obvious, that this is not just satisfying the physiological needs of the consumers, it is much higher hierarchy- it's values, it's about implementing self-actualization. In my opinion, Chinese consumers want to be appreciated, they are progressive and sophisticated, who wish to explore more. They want to feel good about themselves, and about the society, They want to eat well in order to feel well, and it's not just about good quality of food and ingredients, it's about the atmosphere as well, and about concerning the environment and sustainability- the food is being served in recyclable tools, even when ordering on-line. It is tasty, high quality food, coming ASAP, you can find it off-line and on-line, you can use digital payment, and even receive discount or coupons if you join the "Wagas" Reword Program. "Wagas" it's innovation! the market in the 2000s by franchising private individuals- a strategy that did not work, as "Paul" closed down all its Chinese stores in 2010, in China, it is important to understand the market and its consumers and it is essential to expand into franchises with a local partner, who can help to manage the relationship with the administration, in other words, you need a Chinese oriented management, in order to get a better understanding of the Chinese market, and the Chinese consumers. Jackie Yun, the women behind "Wagas", considers "Wagas expand to success, as right timing, hard work, and entering the market, when completion was minimal, and the cost of running a business was considerably lower. However, it seems like that prices gone up over the years. In 2002, a regular coffee was 13RMB, today it's 32RMB. A sandwich is 56RMB, and an average salad is 78RMB, so, how come it is so popular? The Chinese consumer has become much more health conscious and more focus on value, although that does not mean they want cheap products. On the contrary, a survey by Mckinsey principals Fang Gong and Daniel Zipset, finds that Chinese consumers are spending on luxury items as well as services, and often do so when traveling abroad.' The Chinese consumer is still confident and still spends both in China as well as outside China when travelling At the same time, what is driving the overall growth for food and beverage clients is a large increase in the price the consumer's willing to pay. It seems like the Chinese consumer is looking for the best and the most expensive products. According to the reports, we can notice, that the loyalty level of Chinese consumers has been improving. There are two reasons behind that: one reason, because the Chinese consumers are more sophisticated now compared with before. They have experienced a lot of different brands, and they can tell which one is better than the other one. On the other hand, Chinese consumers, thanks to social media, have been influenced by what other people have experienced with certain brands, especially among the young generation, who wishes to try and experience new products and services. Furthermore, healthy living is another interesting trend that is on the rise. People are not just working all the time, they actually starting to enjoy themselves and also care more about what they eat and how they take care of themselves. It is not just about pricing, we can recognize values 1 "What's driving the Chinese consumer", Mckinsey & company (April 2016 "What's driving the Chinese consumer", McKinsey & Company (April 2016) 2:11 :: If we could have implemented theories, into the assumptions, above, we could have recognized different level on needs. Psychological elements can be recognized, according to the Maslow's Needs Hierarchy Theory: needs lower down in the hierarchy, must be satisfied, before individuals can attend the needs higher up. It is important that people will feel safe, cat and drink well, however, people would like to feel like they belong to something, they are part of community, they are looking for better products, better quality, not just to satisfy their physical needs, but to satisfy self-actualization needs. To find better solutions not just for themselves, but for the benefit of the entire society. Implementing theories into success- Before concluding this assignment, I went to "baker & Spice", with my kids, who likes their breakfast. Most of the people, in the cafe where Chinese and I could not stop thinking, about Wagas's success of attracting so many people into their stores, It is obvious, that this is not just satisfying the physiological needs of the consumers, it is much higher hierarchy- it's values, it's about implementing self-actualization. In my opinion, Chinese consumers want to be appreciated, they are progressive and sophisticated, who wish to explore more. They want to feel good about themselves, and about the society, They want to eat well in order to feel well, and it's not just about good quality of food and ingredients, it's about the atmosphere as well, and about concerning the environment and sustainability- the food is being served in recyclable tools, even when ordering on-line. It is tasty, high quality food, coming ASAP, you can find it off-line and on-line, you can use digital payment, and even receive discount or coupons if you join the "Wagas" Reword Program. "Wagas" it's innovation! The future of "Wagas" seems to be bright, especially while following the profile of the modern Chinese consumer, understanding their different level of needs and continuing to position the chain, as the one who has the ability of fulfilling these needs, as their main target. I finally made into a conclusion, why do I often come to "baker and Spice", or to one of "Wagas restaurants- I feel like I can enjoy tasty food with high quality, in China, and not feeling like a foreigner. It is way beyond... ---Written by Zadka Hila Please try to answer these following questions according to the case material. You also can find more information and evidence from other sources to strengthen your argument. 4. If you are the manager, please design a promotion campaign. Which type(s) of promotion would you like to choose, and why? Please give details as many as possible (10 points). 5. If you want to increase the brand awareness of WAGAS, what will you do? Try to give details as many as possible (10 points) "WAGAS- Recognizing different level of the Chinese consumer, on the way to success The story of Wagas- Eat well, Live Well. "Wagas" is a chain that serves western food such as sandwiches, pasta, salad, cakes, fresh juice, and coffee, founded in Shanghai, in 1999, by John F. Christensen, who was a student in Shanghai, and had trouble finding a good sandwich, so he opened a cafe'-"Wagas", originally, an Australian Cafe Chain. Jackie Yun was born in Sydney, Australia, and had a Chinese heritage. In 2000 she came to Shanghai in order to learn Chinese, and worked in a bar-restaurant, in a part-time job. In 2001, Jackie met John F. Christensen, who asked her to join "Wagas", as a manager, and together, they registered a wholly foreign owned company-"Wagas Shanghai Ltd.". In 2010, **Wagas created Baker & Spice", a multi awarded winning caf' and retail bakery specializing in Modern European breads, pastries and cakes Currently, the company operate over 75 cafe/bakeries in 10 cities across China- Shanghai, Beijing, Shenzhen, Guangzhou, Wuxi, Suzhou, Qingdao, Chengdu, Nanjing and Hangzhou. Besides "Baker & Spice", "Wagas operates caf-/restaurants, within the same concept, such as: "Lokal" and "Funkkale". Besides the off-line shops, "Wagas" operates on-line shops, where you can order food at almost any given time, from all the chain's restaurants, and even from an on-line wine shop, and enjoy The "Wagas Reword Program", where you can earn points at participating "Wagas and "Baker and Spice" stores. Pointes can be redeemed for member-only e-coupon. Overview of the Chinese Bakery Industry- In order to understand why does "Wagas" managed to establish so well in China, it is important to overview the development of the Chinese bakery market, over the years. In the past decade, among the food and beverage in China, bakery product has shown growth years by years. With growing trend of consumption of cakes and pastries, popping of well stocked, well decorated and high-priced desserts shop is going on Chinese market. Chinese consumers are health oriented, so they want food product with quality like low sugar. high fiber, vitamin fortified so that the experts in China recognize the growth of bakery product in overall Chinese market. The demand of bakery is so high that goods are even imported. Pastries and cakes are consumed in all kind of celebrations due to which bakery product becomes the key drivers of growth rate of delicious desserts. Since foreign-funded bakeries in China in 1990s, Chinese people, used to "sweet bunds" with salty or sweet fillings, have been increasingly exposed to Western baked products, or rather, sweet and buttery baked products that look like those consumed in Westem countries. Baking industry in China has great potential, with gross probability of 20% cach year. Besides "Baker and Spice", we can find these following companies as leading the market: "Holiland" (a Chinese company). "85C" (from Taiwan). "Paris Baguette," and "Tous Les Jours". For practical and logistic reasons, bakery companies are geographically spread all over China. Unlike other food products that can be kept longer, bread and cakes have short preservation time and strict storage conditions. Bakeries must be able to offer fresh products in a country where food safety is a highly important factor, since Chinese endured many foods scandals. Bread and bakery products have daily indispensable for many people, particularly students and workers in urban areas. At the same time, the high level of foreign investments with its large number of new foreign companies in the bread and bakery industry has resulted in industrial improvements for manufactures. Bakery products include cake, pastries, biscuits, bread, breakfast cereals and other products. The growth potential of bakery product is shown by the grown per capita consumption trends of bakery products. From the influence of western culture, the demand of baked product is increasing creating huge market potential. The total market size of the bakery products is expected to reach USD 530 billion by 2023, at a 2.6% CAGR during the forecast period. Historic/Forecast retail volume of bakery products in China 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 8.000,00 12.000.00 400000 000 Tonnes Source: http:/wikitixpedia.comBakery market in China_will_rench_USS_81B_by_2025 Understanding the dynamic of the Chinese Consumers, and its features, on the way to success What did "Wagas" do in order to become such a significant part of the Chinese Bakery Industry, and positioning the company as a "brand"? Despite the fact that the Chinese market offers great opportunities, Western brands should be cautious when entering the market. The popular French company "Paul" penetrated the market in the 2000s by franchising private individuals- a strategy that did not work, as "Paul" closed down all its Chinese stores in 2010, in China, it is important to understand the market and its consumers and it is essential to expand into franchises with a local partner, who can help to manage the relationship with the administration, in other words, you need a Chinese oriented management, in order to get a better understanding of the Chinese market, and the Chinese consumers. Jackie Yun, the women behind "Wagas", considers "Wagas expand to success, as right timing, hard work, and entering the market, when completion was minimal, and the cost of running a business was considerably lower. However, it seems like that prices gone up over the years. In 2002, a regular coffee was 13RMB, today it's 32RMB. A sandwich is 56RMB, and an average salad is 78RMB, so, how come it is so popular? The Chinese consumer has become much more health conscious and more focus on value, although that does not mean they want cheap products. On the contrary, a survey by Mckinsey principals Fang Gong and Daniel Zipset, finds that Chinese consumers are spending on luxury items as well as services, and often do so when traveling abroad.' The Chinese consumer is still confident and still spends both in China as well as outside China when travelling At the same time, what is driving the overall growth for food and beverage clients is a large increase in the price the consumer's willing to pay. It seems like the Chinese consumer is looking for the best and the most expensive products. According to the reports, we can notice, that the loyalty level of Chinese consumers has been improving. There are two reasons behind that: one reason, because the Chinese consumers are more sophisticated now compared with before. They have experienced a lot of different brands, and they can tell which one is better than the other one. On the other hand, Chinese consumers, thanks to social media, have been influenced by what other people have experienced with certain brands, especially among the young generation, who wishes to try and experience new products and services. Furthermore, healthy living is another interesting trend that is on the rise. People are not just working all the time, they actually starting to enjoy themselves and also care more about what they eat and how they take care of themselves. It is not just about pricing, we can recognize values 1 "What's driving the Chinese consumer", Mckinsey & company (April 2016 "What's driving the Chinese consumer", McKinsey & Company (April 2016) :: :: If we could have implemented theories, into the assumptions, above, we could have recognized different level on needs. Psychological elements can be recognized, according to the Maslow's Needs Hierarchy Theory: needs lower down in the hierarchy, must be satisfied, before individuals can attend the needs higher up. It is important that people will feel safe, cat and drink well, however, people would like to feel like they belong to something, they are part of community, they are looking for better products, better quality, not just to satisfy their physical needs, but to satisfy self-actualization needs. To find better solutions not just for themselves, but for the benefit of the entire society. Implementing theories into success- Before concluding this assignment, I went to "baker & Spice", with my kids, who likes their breakfast. Most of the people, in the cafe where Chinese and I could not stop thinking, about Wagas's success of attracting so many people into their stores, It is obvious, that this is not just satisfying the physiological needs of the consumers, it is much higher hierarchy- it's values, it's about implementing self-actualization. In my opinion, Chinese consumers want to be appreciated, they are progressive and sophisticated, who wish to explore more. They want to feel good about themselves, and about the society, They want to eat well in order to feel well, and it's not just about good quality of food and ingredients, it's about the atmosphere as well, and about concerning the environment and sustainability- the food is being served in recyclable tools, even when ordering on-line. It is tasty, high quality food, coming ASAP, you can find it off-line and on-line, you can use digital payment, and even receive discount or coupons if you join the "Wagas" Reword Program. "Wagas" it's innovation! the market in the 2000s by franchising private individuals- a strategy that did not work, as "Paul" closed down all its Chinese stores in 2010, in China, it is important to understand the market and its consumers and it is essential to expand into franchises with a local partner, who can help to manage the relationship with the administration, in other words, you need a Chinese oriented management, in order to get a better understanding of the Chinese market, and the Chinese consumers. Jackie Yun, the women behind "Wagas", considers "Wagas expand to success, as right timing, hard work, and entering the market, when completion was minimal, and the cost of running a business was considerably lower. However, it seems like that prices gone up over the years. In 2002, a regular coffee was 13RMB, today it's 32RMB. A sandwich is 56RMB, and an average salad is 78RMB, so, how come it is so popular? The Chinese consumer has become much more health conscious and more focus on value, although that does not mean they want cheap products. On the contrary, a survey by Mckinsey principals Fang Gong and Daniel Zipset, finds that Chinese consumers are spending on luxury items as well as services, and often do so when traveling abroad.' The Chinese consumer is still confident and still spends both in China as well as outside China when travelling At the same time, what is driving the overall growth for food and beverage clients is a large increase in the price the consumer's willing to pay. It seems like the Chinese consumer is looking for the best and the most expensive products. According to the reports, we can notice, that the loyalty level of Chinese consumers has been improving. There are two reasons behind that: one reason, because the Chinese consumers are more sophisticated now compared with before. They have experienced a lot of different brands, and they can tell which one is better than the other one. On the other hand, Chinese consumers, thanks to social media, have been influenced by what other people have experienced with certain brands, especially among the young generation, who wishes to try and experience new products and services. Furthermore, healthy living is another interesting trend that is on the rise. People are not just working all the time, they actually starting to enjoy themselves and also care more about what they eat and how they take care of themselves. It is not just about pricing, we can recognize values 1 "What's driving the Chinese consumer", Mckinsey & company (April 2016 "What's driving the Chinese consumer", McKinsey & Company (April 2016) 2:11 :: If we could have implemented theories, into the assumptions, above, we could have recognized different level on needs. Psychological elements can be recognized, according to the Maslow's Needs Hierarchy Theory: needs lower down in the hierarchy, must be satisfied, before individuals can attend the needs higher up. It is important that people will feel safe, cat and drink well, however, people would like to feel like they belong to something, they are part of community, they are looking for better products, better quality, not just to satisfy their physical needs, but to satisfy self-actualization needs. To find better solutions not just for themselves, but for the benefit of the entire society. Implementing theories into success- Before concluding this assignment, I went to "baker & Spice", with my kids, who likes their breakfast. Most of the people, in the cafe where Chinese and I could not stop thinking, about Wagas's success of attracting so many people into their stores, It is obvious, that this is not just satisfying the physiological needs of the consumers, it is much higher hierarchy- it's values, it's about implementing self-actualization. In my opinion, Chinese consumers want to be appreciated, they are progressive and sophisticated, who wish to explore more. They want to feel good about themselves, and about the society, They want to eat well in order to feel well, and it's not just about good quality of food and ingredients, it's about the atmosphere as well, and about concerning the environment and sustainability- the food is being served in recyclable tools, even when ordering on-line. It is tasty, high quality food, coming ASAP, you can find it off-line and on-line, you can use digital payment, and even receive discount or coupons if you join the "Wagas" Reword Program. "Wagas" it's innovation! The future of "Wagas" seems to be bright, especially while following the profile of the modern Chinese consumer, understanding their different level of needs and continuing to position the chain, as the one who has the ability of fulfilling these needs, as their main target. I finally made into a conclusion, why do I often come to "baker and Spice", or to one of "Wagas restaurants- I feel like I can enjoy tasty food with high quality, in China, and not feeling like a foreigner. It is way beyond... ---Written by Zadka Hila Please try to answer these following questions according to the case material. You also can find more information and evidence from other sources to strengthen your argument. 4. If you are the manager, please design a promotion campaign. Which type(s) of promotion would you like to choose, and why? Please give details as many as possible (10 points). 5. If you want to increase the brand awareness of WAGAS, what will you do? Try to give details as many as possible (10 points)