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Analysis on Marketing Strategy of Hongkong International Terminal HIT in the HK terminal industry - PowerPoint PPT Presentation

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Title: Analysis on Marketing Strategy of Hongkong International Terminal HIT in the HK terminal industry

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... 4, 6, 7 and 8 East (joint-venture with COSCO) at the Kwai Chung Container Port ... And another 2 berth through its 50-50 joint venture with COSCO ... – PowerPoint PPT presentation

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Title: Analysis on Marketing Strategy of Hongkong International Terminal HIT in the HK terminal industry

1
Analysis on Marketing Strategy of Hongkong
International Terminal (HIT) in the HK terminal
industry
Master of Marketing Management The Hong Kong
Polytechnic University - Marketing Management
- Dr. Lorett Lau
Presenters Andy Leung (02413883G) Cary Cheung
(02720545G) Christie Cheung (02435421G) Rita
Chung (02435470G) Ryan Chan (02417833G)
8 Nov 2002
2
Overview on the Project Flow
Objective Rationale on our project
Introduction - History of HK Terminals

Situation Analysis
- Macro and Micro Environment
PEST
Porters 5 Forces

Opportunity
Competitive Advantage

Company Profile of HIT
Marketing Strategy Identification Selection
Recommendations

Analysis on Marketing Strategy
Market Segmentation
Target Market
Positioning Analysis 7P

3
Presentation Objectives

Analysis on marketing strategy of Hongkong
International Terminals (HIT)
Recommendations to HIT on the enhancement of
Outperforming rivals
Maintaining market share and leadership

Objective
4
History of HK Terminals

Containerization in 1966
Kwai Chung was purpose-built container terminal
With innovative IT application it led the world
in space usage and productivity.
With Chinas open-door economic policies it
expanded significantly
By 1987 Hong Kong was number one in the world
container league

Introduction
5
History of HK Terminals

Today with over 80 international shipping lines
providing 460 weekly container services to more
than 170 ports worldwide.
The integration of Kwai Chung into the network of
South China ports continue to make Hong Kong a
sea-trade logistics hub.

Introduction
6
Market Overview
Hong Kong Terminals handled gt60 of throughput
in sea platform and HIT with market share about
50

Sources
Government Census and Statistics 2001
Summary statistics of port traffic in HK-July
2002

Introduction
7
3 Types of Operation Mode in Sea Platform

Handling cargo at port
Containers handling with safe
Can handle overseas and local cargo

Handling container cargo at mid stream or tied up
at buoys in the harbour
Containers break easily

Handling cargo at river trade
Handle cargo of Pearl River Delta

Introduction
8
Sources Hong Kong Port and Maritime Board-Port
traffic trend 2001
Introduction
9
Situation Analysis
10
Situation Analysis
PEST
11
Economics
Political
PEST
Social / Demographic
Technology
PEST
12
Political Environment

HK is a free trade port
Customs procedures in Shenzhen area
Complicated and time consuming customs procedures
in China
C-TPAT issue in HK (Customs Trade Partnership
Against Terrorism)
To enhance port security in HK (after 911)
It adds some uncertainty to HKs customs
procedure because there is no CLEAR PICTURE up
to this moment

PEST
13
Economics

Regional Economy
Guangdong GDP 8 in 2000 and 8 in 2002
Regional throughput volume 16 in 2000 and 15
in 2002
Expected GDP continue 9 in next 5 years
HK Economy
Hong Kong GDP 2.3 in 2000 and 1.5 in 2002
Hong Kong Volume 13 in 2000 and 4 in 2002
Expected GDP continue 3 in next 5 years
US Economy
US GDP 4 in 2000 and 3 in 2002
Export to US Volume 8 in 2000 and 1 in 2002
Expected GDP continue 3 in next 5 years

Sources Guangdong Statistical Year Book
2001 Hong Kong Monthly Digest of Statistics
2002 Economist Intelligence Units report
(Oct 2002) Forecast figures Economist
Intelligence Unit s report (Oct 2002)
PEST
14
Social Demographic

In Pearl River Delta Main focus is
Manufacturing industries
Foreign investment grow very fast
e.g. Japanese investment in Guangdong increased
by 94 in 2001
Taiwan investment in Guangdong also
increased by 30 in 2001
All this will boost up the size of workforce and
cargo flow in
the region.
Technological
Fast moving technology in the industry force the
players to build up new IT systems to meet market
and customer needs
e.g. Introduce EDI service to Customers
Improve their system to increase their
operation efficiency
Online services to meet market needs

PEST
15
Summary on PEST

Economic opportunity for the industry which is
subject to some uncertainties of C-TPAT

PEST
16
Porters 5 Forces
Porters 5
17

Threat of New Entry VERY LOW
Very high barrier of entry
Huge amount of money have to be invested
High Land cost in Hong Kong
High human cost for skill people
High exit barrier !
e.g. Modern Terminals needed to raise a
HK2.6 billions from banks to develop 2 berths
in Container Terminals 9 (Source MTLs
web-site)
Bargaining Power of Supplier LOW
Including both Hardware and Softwares supplier
Low concentration gt 5 Suppliers
Low switching cost

Porters 5
18
Threat of Substitutes Medium - Shipping lines
may shift to some other operation modes
like Mid-stream operation due to lower price
- HOWEVER brand name and service level will be
affected Bargaining Power of
Customers Very HIGH - High concentration
(Top 10 customers contribute volume gt80) -
Major customers have high bargaining power - Low
switching cost for customers
Porters 5
19

Competitive Intensity among Current Competitors
Industry growth is slow
High fixed cost
Competitors provides standardized service
Low switching costs for customers
Customers are very sensitive to price
Need to pay more attention to maintain their
business and market share

Porters 5
20
VERY LOW
LOW
VERY HIGH
MEDIUM
Porters 5
21
Company Profile of HIT
22
HIT - Company Profile

Flagship operation of the Hutchison Port Holdings
(HPH) Group
Established in 1969
Service-focused organization
state-of-the-art computer systems (management)
application of leading-edge technologies (IT
application)

Introduction
23
HIT - Company Profile

Situated in the Kwai Chung container port area
Existing 6 berths
By 2004 2 more berths at Terminals 9
In 2001
Throughput of 5.4 million TEUs
About half of Kwai Chungs container port traffic

Introduction
24
Corporate Mission

To be the worlds leading container terminal
operator through excellence in service teamwork
and innovation.
With goals value competitive scope!

HIT
25
Corporate Vision

We will forge even closer relationships and
successfully meet the challenges and
opportunities which lie ahead
Eric IpManaging Director - HIT

HIT
HIT
26
Business Strategy

Generic Competitive Strategy
Cost-Leadership Strategy
a) Low Level of product differentiation
b) Concentrated marketing to major customers
c) Focus on increasing his efficiency and
lower production cost
per unit

HIT
27
Container Port Performance Benchmarks

HIT 58
MTL 44

Source Quarterly report of Drewry Shipping
Consultants Ltd Individual terminals in HK 2002
HIT
28
Analysis on Marketing Strategy
29
Market Segmentation

Segmentation Base Variable
Geographic
Trade Destination

Source HIT Sale Department 2001
Segmentation
30

Usage Rate
Different groups of customer determining by
contract sales scale
Top 10 customers contributed 83 of total business

Source Sales people of shipping companies 2001
Segmentation
31
Target Market Strategy

Target Market
US and Europe Market
86 of trade comes from these markets
Key contractual customer

Target Market
32

Multi-segment Target Strategy
HIT offers the standard service to wide variety
of customers with different price to different
segments (like geographic and usage-rate)
a) Terminal Handling Charge in different areas
are different
Asian trade 1800 per 20-container
Europe trade 2075 per 20-container
US trade 2153 per 20-container
b) Price is also related to the customers
size.

33
Positioning of HIT

HIT positions itself as a customer-oriented
terminal operator

Positioning
34
Determining Successful Factor

2 major determining factors
Customer Service
Efficiency

Successful
35

Perceptual Map
Positioning
Remarks CCT Chi Wan Container Terminals
36
Pricing

Price Elastic
Price is set near competitive levels
Price Comparison on Competitors

Source Market Information from Shipping lines
2001
Pricing
37
Place

Container Terminal 4 6 7 and 8 East
(joint-venture with COSCO) at the Kwai Chung
Container Port
Comprehensive upgrades have increased stacking
capacity to over 104000 TEUs within an area of
122 hectares

Place
38
Place

Geographical Edge of HIT
With dominant no. of berth 6 berths
Proportion of HIT to the total

Place
Data source Hong Kong Port and Maritime Board
2001
Place
39
Product-BCG Matrix
High
Market Growth
Low
High
Market Share
Low
BCG
CFS Cargo Freight Service
40
Product
Source HIT Sale Department - Sep 2002
Product
41
Promotion

Brand Building
To build up a positive corporate image
To build up professional image
(a) Active in various community service
Youth Education
Helping the Community
Road Safety Event
Government Industry Event
(b) Active participation in the industry
competition E.G.
Best Container Terminal Operator in the Lloyds
ListMaritime Asia Awards 2002
Hong Kong Occupational Safety and Health
Enhancement Forum - Gold Award 2001

Promotion
42
Promotion

Below-the-line promotion program
HKCTOA and HK Government go to other countries to
promote HK as a transshipment ports
Go to visit different shipping lines both
existing and non-existing to sell their services
in order to enhance brand-name

Promotion
43
Process

50 of total throughput in Kwai Chung Container
Port
Operates 6 berths on at its wholly owned
terminals 4 6 and 7
And another 2 berth through its 50-50 joint
venture with COSCO
Invested HK1.5billion on its Productivity Plus
Programme in 1994 in order to raise the
productivity

44
Physical Evidence

HIT strong historical background and sound
corporate identity and image
Excellent reputation in the industry
Professional experience in handling difficulties
All facilities achieve at international standard
and requirement as well as complied with the
safety standard
Innovative premier in the industry
HIT use internet to share an increasing amount of
information. Our many interfaces with customers
vendors and other partners reflect our
customer-services focus.

Physical
45
People

HIT is a dynamic customer-driven business
dedicated to enhancing the competitiveness of the
many shipping lines we serve
One stop-shop for customer service. The Customer
Service Team comprises dedicated staff to answer
customer calls and enquiries
Staffed by people with a deep knowledge of our
operations
Provide sufficient training to their staff
included
enhancing some selected staff knowledge by
sending them to other HPU ports in different
areas

People
46
Successful Marketing Strategy

Based on
Business Performance
Market Share
Market Share Comparison
HIT vs Key Competitor MTL
Sales volume growth

Market Share in 2002

Source MTL Sale Department - Nov 2002
48
Market Share ComparisonHIT vs Key Competitor MTL
Source MTL Sale Department Nov 2002
49
Trend of Sales Volume of HIT
Source HIT Sale Department 2002
50
Competitive Advantage Summary

Geographic edge
Reputable brand image
Innovative
High efficiency
Dominant Market Share
Ways to continue for success

Advantage
51
Recommendations
52
Recommendations

Strategies to overcome competitors
Encourage international shipping lines to
increase the frequency of services through Hong
Kong
Hong Kong gt 160 ocean-going sailings per week
Shenzhen about 60 ocean-going sailings per week
(Source HK and Shenzhen Shipping Gazette
2002)
Increase IT spending
Build up the two IT business models (InfoXpress
and Customer Plus) from Problem Child to
Stars
Enhancing the functionality of the systems
Promotion Events such as staff application
training or seminars for shipping lines

Recommendation
53
Recommendations

Relationship Marketing
Select strategic partners e.g. major shipping
lines as investors of the port so that they will
increase the usage of their services
e.g MAERSK PON MSC APL COSCO TOP 5
shipping
lines in the world
Strategic alliances with other HPU ports. Strong
network and relationship offers competitive
advantage over others on improved efficiency
operating cost and customer services

Source Salomon Smith Barney Containerized
Transport (Nov 2001)
Recommendation
54
Recommendations