Entry Strategy

STP Model

Segmentation

Based on our research insights, we divide the segments to

Segment – A: Young children and students who love ice creams and have it as a means to beat the heat. They are usually price sensitive and are not particularly brand specific.
Segment – B: Young singles/couples and upscale families who would like to buy made-to-order ice creams by adding their own preferred condiments/confectionaries. These consumers do not mind paying extra for the experience and are usually those who would like to hang out with their friends and have a good time at the store while consuming it.
Segment – C: Big family and older consumers who would like to buy readily available ice creams over the counter and consume it at the store. These consumers are price sensitive and wouldn’t want to pay extra either for the experience or for the convenience of eating it.

Targeting

Myanmar is a young country (mean age 27 years) and lags behind most other countries in the region in terms of its socio economic state. After being under military rule for the past 50 years, it has now begun opening up and implementing reforms to boost investments and growth. Yangon, Myanmar’s economic capital, is more than two times richer than Myanmar’s national average and houses some of its richest citizens. We, therefore, intend to enter Myanmar by first setting up shop in Yangon.

Cold Stone Creamery differentiates itself from other ice cream brands by providing an interesting experience to its consumers while they order and consume their custom made ice cream. Cold Stone

Creamery prides in this entertaining experience that it offers its patrons. We, thus, aim to target Segment B which consists of these young families and couples that want to have a good time while having its custom made ice cream; and that which doesn’t mind paying a little extra for this unique experience that Cold Stone Creamery offers. Segment B can also be extended to tourists in Yangon.

Measurable – Based on a research paper from GlobalHABIT®, 40% of the population in Yangon fall in Class A and B that earns more than 500,000 MMK per month. Based on our primary research, 71% of respondents earning more than 500,000 MMK per month are willing to spend more than 3000 MMK per person for one scoop of ice cream and a similar 71% of people are willing to pay more for the experience and ambiance. Tourists and expats relatively have a higher WTP.

Accessible – The well to do in Yangon tend to visit shopping malls, and parks on weekends. For example, more than 4.5 Million[i] shoppers visit Junction Square, one of the largest malls in Myanmar, in Yangon every year. The central business district has the highest concentration of inhabitants living per sq km.

There are many buildings with historical value in this area[ii] that attracts tourists and are frequented by them.

Differentiable – Young people and upscale families respond differently to marketing mix elements and programs than those like young students and big family consumers who are more price-sensitive. Our target segment consists of young couples and friends who hang out with each other, young family with small children and expats/tourists.

Source:

[i] http://junctioncentregroup.com/junction-square.html

[ii] http://www.ijetae.com/files/Volume4Issue5/IJETAE_0514_04.pdf

Substantial – Myanmar has a sizeable population that is young. About 30% of population in Yangon is between 15 and 34 years old. Based on our survey, 94% of the respondents between the age group of 15 and 30 years have ice cream at least once a month.

Market Size = 7 Million (total population in Yangon) x 30% (belong to the young demographic) x 40% (with disposable income) = 840,000

Yangon is the most popular city in Myanmar and attracts the largest crowd of tourists. The number of arrivals is projected to increase at a CAGR of 16%. As the visa restrictions were relaxed inbound tourism is expected to soar even higher. In 2014, Myanmar received 3.05 Million[iii] tourists of which more than 60%[iv] arrived through the airports and almost everyone who visit Myanmar visit Yangon.

Market size = 3 Million (Tourists) x 60% (Remove cross border tourists) x 90% (who visit Yangon) = 1,620,000

Durable – The population in Myanmar is still young and with the economy opening up and growing this segment is bound to grow in size and have an increased disposable income. Yangon’s population is growing at 2.5% (Ngah, 2005) but with an increased rural to urban migration in the recent past, this growth rate is bound to increase several times over. Tourism industry is also growing in Myanmar. The projected number of arrivals is set to increase at a CAGR of 16%.

Positioning

Based on our consumer perceptual map analysis, we observe that there is an opportunity for Cold Stone Creamery to position itself at the premium segment and differentiate itself by highlighting its signature Cold Stone experience.

4Ps

Product

Based on our market survey, quality, variety and in-store experience are the most important factors that influence the buying decision of affluent Myanmar ice cream consumers. Based on our primary research, Chocolate is the most preferred flavor. We will therefore offer our signature flavors i.e. Cake Batter, Chocolate, Coffee, Mint, Strawberry, Cheese Cake, French Vanilla, Sweet Cream and Sinless Sans Fat. And also include local favorite flavors i.e. Coconut, Mango and other seasonal fruits on demand (feedback) basis.

Our product line will include –

Ice creams – The standard serving sizes of 5 Oz, 8 Oz, 12 Oz and 3 Oz (for kids)
Yogurt – The standard serving sizes of 5 Oz, 8 Oz, 12 Oz
Cake – To be launched in small, medium and large sizes.
Smoothies

Packaging – We will continue to have the cups in red color conforming to our international packaging standard. However, we will also include the brand name in the local language to comply with local regulations.

Price

Cold Stone Creamery follows a two part pricing strategy – one for the ice cream itself and the other for the toppings. The price of each serving would vary based on the variety of ice cream and mix-ins. On average, price range for the three sizes for ice creams and yogurt would be:

Source:

[iii] http://news.xinhuanet.com/english/business/2015-01/08/c_133905146.htm

[iv] http://www.tigermine.com/2013/01/20/myanmar-tourism-statistics/

The 3 Oz size for kids would be charged at MMK 2,999. Each ice cream order includes one topping, such as fruit or candy, and each additional topping or cone will be charged at MMK 499.

Prices for smoothies and shakes vary by size, and are respectively MMK 4,199 to MMK 4,899.

Cakes can be made in small, medium and large and are generally priced between MMK 7,999 to MMK 49,999 respectively.

Place

Chinatown City market, Hledan market, Junction 8 Shopping Centre and Yuzana Plaza are the potential locations to open Cold Stone Creamery store.

These are the popular/busy shopping and eating out destinations for locals and foreigners alike. However, to begin with Cold Stone Creamery should open its store at Junction Square which boasts of 4.5 Million shoppers annually.

The store will be located on the ground floor so that it can be easily recognized (spotted) by customers. The store will be designed for indoor seating with a capacity of 25-30 seats. The store will also be able to host kids’ birthday parties, family celebrations and private events.

Considering that ‘yellow’ in Myanmarese culture signifies happiness, we intend to have shades of yellow in the theme of the store while not changing brand logo or the colors involved in it. Yellow conforms to Cold Stone Creamery’s corporate color palette. Red in Myanmar stands for bravery. We however should be careful in using 'black' as that denotes inauspiciousness.

Promotion

Internet Marketing – In our secondary research we observed that most of the ice cream stores in Myanmar like Swensens, Haagen Dazs, and Gelato have a presence

in social media. Social networking provides an inexpensive -- and often free -- alternative to traditional advertising. We will need to start a Cold Stone Creamery Myanmar Facebook page for our store and post regular updates (in English and local Myanmarese language) on sales and store information to provide information about current promotions to our target customers. Cold Stone Creamery needs to engage with its customers and ask them about flavor suggestions, potential events and other ways to improve business. 10% discount will be offered on the total bill for a 'like' on Cold Stone Creamery’s Facebook® fan page.

Annual Budget: Students and young passionate people would like the page. We assume to reach a target likes of 200,000. Assuming a 25% reach, the total budget will be 200,000 x 25% x 10% x MMK 3,999 = MMK 19,995,000

Google Adwords – Google’s advertisement tool – needs to be setup to draw in customers who are searching for local ice cream parlors or visiting other sites such as www.tripadvisor.com for recommendations on ice creams in Yangon. Cold Stone Creamery needs to ensure that its address and location are submitted to search engines so that customers looking for it can easily find it. Having a blog that provides information about ice cream recipes, and serving tips is also an excellent opportunity.

Fairs and Events – Cold Stone Creamery should partner with cinema screening halls at malls like in Junction Square and distribute, along with their movie tickets, free coupons to movie goers offering a 50% discount if they buy a scoop of “like it (5 oz)” ice cream the very same day.

Annual Budget: We intend to print and distribute 100,000 coupons in a year. Cost of printing and distribution is MMK 275,000. Assuming a 10% reach, the cost of consumers redeeming the coupon will be MMK 3,999 x 100,000 x 10% = MMK 39,990,000. Therefore, total budget = MMK 39,990,000 + MMK 275,000 = MMK 40,265,000

Happy Hour Concept – Cold Stone Creamery should offer a 30% discount on its entire product offerings between 3 and 6 pm during weekdays & between 3 and 5 pm on weekends. Considering that we are targeting young couples and friends who would like to hang out and have a good time, the happy hour concept would help to have a network effect thus contributing to having more people coming to our store.

Annual Budget: We expect to receive about 40 customers per week. Total budget = MMK 3,999 x 30% (discount) x 40 (customers) x 50 (weeks a year) = MMK 2,399,400

Saturday Free Kids Giveaway – During the summer season (when kids are out of school) kids aged ten and under can receive a free kid’s size ice cream on Saturday from 5:00 PM to closing when their parents buy at least one regular size ice cream treat for themselves. Giving treats away to children ten and under will create a sense of value to adults and will as a result drive customers to come in when they otherwise would have passed on super premium ice cream. The purpose would be to get parents to bring their kids into Cold Stone and hopefully indulge in a treat for themselves. We target to limit the number of free Kids giveaway at 100 per day. The promotion aims to target parents with children aged 10 or under.

Annual Budget: (Kid’s 3 Oz. @ MMK 2,999) x (100 kids per day) = MMK 299,900 x (4 days per month) = MMK 1,199,600 x (12 months per year) = MMK 14,395,200.

Loyalty card programme – Customers that visit their local Cold Stone Creamery store can pick up a “punch card” at the counter when they are paying for their treat. Customers will receive one punch for every ice cream treat or smoothie they buy excluding kid size ice cream treats. Once the customer fills their card with ten “punches,” they can redeem it for one free “love it” size treat or smoothie. The promotion will run indefinitely as it intends to turn one-time or infrequent customers into regular customers. The success will be based on the percentage increase in sales and how many “fully punched” cards are collected.

Budget: It is estimated that the store will give out at least 5 free “love it” size treats per month. MMK 4,999 x (5) = MMK 24,995 a month. = MMK 299,940 a year.

Brand Building

Ensure identification of the brand with customers and an association of the brand in customers’ minds

Create Brand Awareness – Per a research paper from GlobalHABIT®, TV gets the highest score for access/watch/read/listen and for being the most reliable source of information in Yangon.

According to secondary research, TV still remains the most popular medium to reach customers in Myanmar. In particular, Korean dramas are used to reach the female audience, and reality shows are very popular amongst young crowd. We will, therefore, advertise on TV (on entertainment, soap opera and children’s channels), billboards in busy shopping/commercial areas, and distribute flyers in newspapers to reach out to the customers and create awareness of the brand. Considering that the young population of Yangon is increasingly on internet, we also intend to use social media tools such as Facebook®, Twitter and YouTube to promote the products and the brand. However,internet penetration is still in its infancy. Only about 7% (including mobile access) of its population have access to internet though the government hopes to have this increased to about 50% in three years[v]. Nonetheless, we believe that the concentration of users having access to internet will be relatively higher in our target segment.

Budget: A 10 second slot on MRTV-4 costs MMK 75,000 during prime time and other popular shows. Since we intend to establish Brand Awareness by the Familiarity of repeated exposure, we hope to run a 30 second advert at least 4 times per day every alternate weekday and over 5 times a day over the weekends.

Annual budget (TV Ads) = MMK 75,000 x 3 (10 second slot) x (4 (time per weekday) x 3 (alternate weekdays) + 5 (times per weekend) x 2 (weekends)) x 50 (weeks) = MMK 247,500,000

Annual budget (Print Ads) = MMK 175,000 (size – 1/4th of a Yangon Times page) x 2 (Weekends) x 50 (weeks) = MMK 17,500,000

We intend to use celebrity endorsement to build brand associations. In Myanmar, the best way to make brand association is by putting celebrities into TV commercials[vi]. Local consumers remember the product and the celebrity. It is common in Myanmar for buyers to ask for the product with the celebrity’s name; for example; “Multivitamins brand with Sai Sai in its TVC”. Local celebrities have become a mainstay in the ad industry, giving individual campaigns both a degree of credibility and personality. Most advertising promotions and story narratives, for instance, use movie stars, footballers, singers and other famous people, who become associated with local products and places advertised on TV.

Annual Budget (Celebrity Endorsement): MMK 100,000,000

Cold Stone Creamery should define its competitive frame of reference by defining its category membership as a – “Super premium Ice cream store” in Myanmar. The category membership indicates the set of products and other brands with which Cold Stone Creamery competes.

We also intend to leverage Ingredient branding to highlight the high quality condiments used in the signature creations of Cold Stone Creamery ice cream. This will help signal a sign of quality to the consumers and also reinforce the ice cream’s quality.

2. Establish the totality of brand meaning in the minds of consumers

We identify the following points of parity and difference for Cold Stone Creamery.

Points of parity –

Super Premium
High Quality/Creamy
Flavored ice cream

Points of Difference –

Experience
Uniqueness
Custom made

Cold Stone Creamery’s mission is to share happiness. It must highlight the great experience that consumers can have at its store and share the possibility of creating your special moment with friends. The rich taste and creamy ice cream from Cold Stone Creamery should appeal to the mind while the happy, joyous feeling should appeal to the heart of the consumers. Per Myanmarese culture, Yellow signifies happiness and prosperity. We, therefore, intend to have all of our stores and adverts sprayed with this color. We need to create a favorable image by consistently presenting a unified message of happiness and the possibility of a consumer creating/finding happiness amongst his/her friends and loved ones at a Cold Stone store.

3. Elicit the proper customer responses to the brand identification and brand meaning

In Myanmar, imported products are perceived as having much higher quality than locally-made products, a sentiment which largely stems from consumer experience with inferior quality products produced by government-run enterprises during the military regime. Moreover, small and local businesses generally have low standards of customer service, supply chain management, and professionalism when compared to international or even regional practices. Products of U.S. origin are considered high quality. We, therefore, need to highlight the US origin of our brand to elicit the superior quality response.

In addition, Cold Stone Creamery should also highlight how everyone is unique and they don’t have to necessarily settle to choose from pre-made ice cream. Through its branding program, Cold Stone should celebrate the differences within us and highlight how we could find happiness by recognizing and appreciating the special quality that makes us unique. Special moments are makeable when we are having a great time with our friends and loved ones and that’s something that Cold Stone Creamery should highlight through its branding program.

4. Convert brand response to create an intense, active loyalty relationship between customers and the brand

Cold Stone Creamery should create a Facebook Fan page (both in English and Myanmarese) to connect with its consumers and start a conversation amongst its core group about the causes it believes in.

The ambiance that Cold Stone Creamery builds at its store should elicit the positive, happy vibe that makes consumers to want to come back for more. The happy faces of its store staff and their well behaved, happy mannerisms should reinforce the belief a consumer has on the brand. The brand should create enough passion amongst its consumers that they want to come back to relive and create their happy moments with us.

Brand Frenzy

Cold Stone Creamery is thus for "People who are young and creative who hang out with friends and family & try out new things (experimental)" and against "people who are looking for a quick snack & are price sensitive" because "everybody is different and special moments are makeable"

Financials

Based on our conservative assumption of 5% Target Market size penetration, average pruchase frequency of once per month, and an average purchase of MKK 3,999 per visit, the financials work out as follows -

Direct Ownership Model

Source:

[i] http://consult-myanmar.com/2013/06/13/myanmars-advertising-industry-running-catch-up/

[ii] https://yanjamesaung.wordpress.com/category/brands/

Assumptions

COGS is 30% of Gross Sales

Labor cost is 10% of Gross Sales

Property and Sales tax is 6% of Gross Sales

Rent/Lease rate is MMK 90000 per Sq ft. Store size is 1057 Sq ft. Number of Stores is 4.

Repairs and Maintenance cost is 2% of Gross Sales

Telephone and Electricity utilities is 3% of Gross Sales

Miscellaneous charges is 2% of Gross Sales

Loan from Bank for MMK 294,250,000 @ 10% interest rate for 20 years towards initial training of talent, and designing of the store

IRR = 16% over a period of 5 years. (Assuming a CAGR of 12% and Cost of Capital of 10%)

Franchise Model

Per Cold Stone Creamery's webpage

Franchise Fee $27,000

Net Worth (Req) $250,000

Liquid Funds (Req) $100,000

Total Initial Investment $277,375 – $464,325

Royalty Fees 6% of gross sales

Advertising Fees 3% of gross sales

IRR = 13%, over a period of 5 years. (Assuming a CAGR of 12% and Cost of Capital is 10%)

There is a greater risk involved in the direct ownership model as the political and economic reforms are still ongoing. A diverse political climate may cause Cold Stone Creamery’s funds to get seized and make the working environment untenable. Moreover, Kahala brands, Cold Stone Creamery’s parent company usually goes in with the franchise model (as it has in all other countries).

For a franchise model though, Cold Stone Creamery should first check the willingness of any partner in the local market. In light of the flow of so many foreign players in the market, we believe that there should be considerable amount of interest from the local players to partner with a foreign brand to cater to the premium segment. Based on our research, our recommendation is to begin conversations with the following partners – Htoo, City Mart and Moon bakery.