Marketing Strategy for Yurun Group to enter USA


Executive Summary 

The paper analyzes the marketing forces to develop a strategy for Yurun, a Chinese meat processing firm, to enter the US market with Chicken products. Tools such as SWOT and Pestle are used to understand the micro and macro forces and the Porters Five Force analysis was used to analyze the strength of entry barriers. Findings from the analysis indicate that the US market has a large number of meat suppliers and that strong regulations are enforced to ensure quality of meat products. While there is a substantial market for Chicken products, Chinese firms are viewed with suspicion due to scandals involving tainted food and meat products. The market was studied with segmentation, targeting, and positioning strategic analysis. Different segments were developed based on ethnicity, location, and prices. In the first phase, Chinese Americans living in localities with significant Chinese population in major cities would be targeted. In the second and third phases, Hispanics and African Americans with limited shopping budget would be the focus. Another possibility is to target fast food outlets such as McDonalds, KFC with high quality and lower priced products. Positioning strategy is to promote Yurun as a product with high quality that is safe and affordable. A primary research was administered to 10 managers of retail stores who managed the poultry department of retail stores. Several suggestions were made to implement the products and one of the suggestions is to provide seasoning packets with the packages. The recommendation is to initiate the plan with a market research.    

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This paper presents a marketing strategy for Yurun Group (Yurun), a China based processed meat supplier to enter the US market with Chicken products. Exporting food products to US markets is a challenging process since exporters must satisfy stringent requirement of the Food and Drug Administration authorities. In addition, US exports large quantities of meat products and entering the US market would require a refined value proposition. Several important tools are used to analyze the market and to develop a segmentation, targeting, and positioning strategy. A primary research also helped to understand important requirements of the US market. Based on the findings, several important suggestions are proposed.


Objectives for the research are:

  • To understand the structure and potential of the US meat market.
  • To analyze the macro and micro force that act on the industry and the strength of entry barriers
  • To use segmentation, targeting, positioning strategy to identify and target the markets
  • To administer a primary research and obtain views of industry experts
  • To recommend solutions for the marketing strategy.

Brief Background

Head Quartered in Nanjing, China, the Yurun Group operates in China in multiple markets such as meat processing and food, tourism, real estate, and logistics. Founded in 1963, the Food division had a turnover of $21, 395, and 26,032 in 2015 with net loss of -$2, 999, 91,033. Yurun sells two main categories of meat, Chilled and frozen meat and processed meat products. Product types include low-temperature meat products of hogs, beef, mutton, poultry such as chicken, ducks, geese, and rabbits, and the firm exports to Australia, New Zealand, Korea, Singapore, Russia, and Hong Kong. Following chart shows stock prices movement from 2005 to 2017. Financial health of the group is weak, implying that funding for overseas expansion may present problems. However, overseas markets such as Europe and US provide sufficiently high margins and the group can expect profits by expanding in international markets.

Environmental Analysis

Before designing the marketing strategy, it is important to evaluate the micro and macro forces, and the strength of barriers to entry. The analysis helps to position a firm and its products appropriately. This section analyses these forces using different tools (Baker, 2014).

US Meat market

US market is highly competitive with a large number of regional and multinational firms. The market size is worth $150 billion. Beef dominates with followed by hogs and poultry. Poultry and this includes chicken and Turkey account for $33 billion (IBISWorld, 2017)). Main firms are BRF, Cargill, Hormel Foods, JBS, NH Foods, Smithfield Foods, and Tyson Foods. These firms have their own farms and contractors (Zion, 2017). Consumers give importance to hygiene, nutrition, grass fed and free range animals, animal health, ethical methods of slaughter and processing (USDA, 2016). In 2016, US exported $7.1 billion worth of meat to Japan, Korea, Mexico, Canada, and the Middle East. Average retail price of beef is $6.29/ lb and main outlets for purchase are Convenience stores, Supermarkets and hypermarkets, and Specialist and independent retailers (Packaged Facts, 2017). In a related move, US allowed imports of cooked chicken from China. Meat and food imports from China were banned due to concerns of dangerous food processing characteristics (Godoy, 2017). Yurun needs to consider this information when it plans to expand to US.

SWOT Analysis

The SWOT analysis helps to analyze the micro or internal forces of a company. It provides an analysis of strengths, weakness, opportunity, threats (Boone and Kurtz, 2013).  The analysis for the Chicken segment of Yurun is given as below.

Strengths: Yurun has access to extensive supplier base of chicken and poultry farmers, it has a number of slaughtering and meat processing plants, and a logistics firm. With pro import US policies, Yurun can scale up production since it covers upstream and downstream operations.

Weakness: Maximum business is from hog meat and chicken sales are less. Yurun has seen scandals in the form of unsafe meat, illegal additives, unethical treatment of animals, selling products beyond their expiry dates, selling rat meat, the Chairman was placed under house arrest and the firm faces financial troubles (Chiang, 2015; SCMP, 2012).

Opportunities: US has about 3.8 million Chinese, with people from other ethnicities such as Filipinos, Indonesians, Vietnamese, etc., totaling to 11.9 million. LA, San Francisco, Boston, Chicago, Washington, Houston, and others have an average of 5% of the population made of Chinese Americans. Processed and cooked chicken can be sold along with packets of Chinese spices to these people. Large food chains such as McDonalds, KFC, and others will be interested in low priced chicken (Lee, 2015).

Threats: Yurun faces threats from local poultry producers and from local stores and consumers that would ban Chinese food. Food safety is a major concern and Yurun has a bad record in this area (Subler and Vlastelica, 2011).

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Pestle Analysis

The PESTLE analysis provides an analysis of macro or external forces that impact an industry and firm. The six forces are analyzed for Chicken market in US (Fahy and Jobber, 2012).

Political: While US government banned imports of Chinese meat following the scandals and dangers from such products, imports were recently allowed (Lee, 2015).

Economy: With the downturn in the economy and change in taste, meat purchase has reduced by 2.3%. Consumers are willing to try cheaper but safe products. Chicken breast retail price is $4- $6/ lb in NY and the market is very price sensitive (Statista, 2017).

Social: While more people are turning vegetarians, other consumer’s value chicken for health, nutrition, and they expect ethical treatment. Quality and safety concerns are very high (Packaged Facts, 2017).

Technology: Chicken farming and processing sees high technology applications in the form of breeding, feeding, processing, and accessing markets (Farm Flavor, 2016).

Legal: FDA has requires strict compliance to rules governing, safety, quality, labeling, production, storage, and sale of meat products. Strict action is taken against violators of the U.S. Federal Food, Drug and Cosmetic Act (FDA Meat, 2017).

Environment: Chicken farming and processing is subject to strict environmental rules and ethical treatment requirements. Customers do not accept products from firms that violate laws (Maheshwari, 2013).

Porters Five Forces

The Porters Five Force analysis measures the threats and barriers to entry. The analysis helps to understand the external forces so that a strategy can be developed (Porter, 2004). Analysis of the five forces is given as follows.

Threat of new Entrants: New entrants in the form of small suppliers and farmers with a few thousand birds can cover local markets. They can offer lower prices since overheads are lower. Foreign players have to meet FDA requirements, find a unique differentiator, and appeal to customers. Threat is medium (IBISWorld, 2017).

Threat of substitutes: Substitutes products are other meat or non-chicken meat products. These include beef, pork, duck, veal, and other products. These products are already in the market and have their own customers. Duck, geese, Turkey and other birds are more expensive and eaten occasionally. Threat is medium (IBISWorld, 2017).

Bargaining power of suppliers: Suppliers are providers of feed, plant and equipment for storage houses, and farms. They are not organized and a surplus in the market combined with changing consumer taste, suppliers cannot bargain. Bargaining power is weak (Packaged Facts, 2017).

Bargaining power of Buyers: There are two types of buyers, retail outlets and chains who sell the products and individual consumers. Retailers can bargain for lower wholesale purchase prices and they can decide not to stock a brand. Customers look at price, safety and quality, and they can decide about not buying a brand. Bargaining power is strong (Zion, 2017).

Industry rivalry: With a large number of organizations offering chicken, brands fight for shelf space in retail stores. Lower prices, discounts, special offers, quality, safety, and other factors make the business very competitive. It is difficult for a new brand to get an entry. Industry rivalry is severe (Zion, 2017).

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Targeting, Segmentation, Positioning

Market segmentation, targeting, and positioning helps to divide potential customers as per different characteristics, target the segments that are most likely to buy, and offer them a value proposition (Kotler, 2012). This section carries out the STP exercise of the chicken market in US for Yurun.


Almost all meat eaters consume chicken, though higher cost of chicken when compared with beef reduces regular consumption (Kotler and Armstrong, 2013). As indicated in section 3.2, Chinese and South West Asians can become the prime targets, based on ethnicity. Cities with larger population so these groups can be considered. Age is not a factor since people of all ages consume chicken. Pricing is another factor since consumers want lower prices (Lee, 2015). Targets in the first phase are as follows.

By Ethnicity: Chinese and South West Asians. These people can be targeted since Yurun is a Chinese product. In addition, offering sachets of spices that appeals to their taste will make the product sell better.

By Location: South Asians and Chinese in cities with large population of these people can be targeted. Focus on stores in localities with higher population of these groups.

By price: Yurun can consider lower prices of less than $4/ lb to target people with lower shopping budget. Large food chains such as McDonalds can be also be targeted since lower whole sale rates will be attractive.


The next step is to target selected segments. The same parameters can be applied to all the three segments. The process of targeting is as given below (Kotler et al., 2015).

First Phase: Target Chinese and South West Asians where their population is significant. Focus on small and large stores, local stores in these areas. Sell processes and packaged chicken along with packets of seasoning.

Second phase: This can begin along with the first phase. Approach large fast food retailers such as McDonalds, KFC, Burger King and smaller restaurants and fast food chains. Offer them Chicken at lower wholesale prices.

Third Phase: This phase can begin later. Target whites, African Americans, Hispanic, and other ethnic groups with a national level promotion.


Position the product using quality, safety, and affordability as the differentiators. Develop a good brand name that is generic and would appeal to all ethnic groups. Consumers and business should consider the products for high quality, taste, and affordability (Kotler, 2012).

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Primary Research

As a part of the research, a semi structured interview instrument was designed and administered to retail store managers and owners of poultry department of large and small stores. Twenty managers were approached and the instrument was emailed to them along with a request to complete the instrument. Ten people responded. The questions and key themes from the responses are given as follows (Saunders, Thornhill and Lewis, 2015; Fowler, 2013).

Q1. What are the requirements for Chinese firm to supply processed chicken to US markets?

Key words from responses:

Chicken should have accepted taste and this means the taste of US raised chickens. Products must be certified safe without dangerous bacteria or having crossed expiry dates. Prices must be 15-30% less at the retail level.

Q2. What are the barriers for successful entry?

Key words from responses:

Chinese products, especially food items are regarded with suspicion. Adverse media reports in the past have severely harmed the credibility. Current political environment is against the Chinese. 

Q3. What marketing strategy should the firm adopt to gain success?

Key words from responses:

Try to obfuscate and hide the Chinese ownership. Use a US city to set up the headquarters. Hire Americans for staffing and for promotion. Focus on quality, safety, and affordability. Giving away seasoning packets will encourage sales. Use a good promotion agency to build a campaign that appeal to people. Right sized packaging and portions, labeling, attractive images will encourage sales. False claims will drive away customers.

Q4. What can be the customer response to Chinese chicken?

Key words from responses:

Customers will initially be hesitant to try Chinese food items. However, continuous promotion, good media reports, affordable prices will encourage customers to try the products. 

Q5. What customers should be targeted?

Key words from responses:

Initial customers can be Chinese students, Chinese American citizens in cities and localities with more of such people. Also target Hispanics and African Americans, and Whites in poorer neighborhoods since they would be willing to try affordable products.

Proposed Solutions

Solutions for the strategic marketing plan must be based on background and primary research. Once the research is completed and problems are identified, solutions can be proposed (Porter, 2004). Based on the findings and analysis from the previous sections, the following set of solutions are proposed.

  • Considering that US government has allowed import of Chinese chicken products, Yurun can consider the entry strategy after a careful market research that evaluates the market potential.
  • Develop Chicken products that suit the tastes of a wider population. Evaluate the type of seasoning preferred and offer packets of seasoning free with the purchase.
  • Pricing is an important criterion and while lower prices are important, very low prices will create misgivings.
  • Set up the headquarters in a US city near the target locations. Give a generic name to the firm and employ locals or Chinese Americans with American accent.
  • In the first phase, target Chinese students and Chinese Americans living in selected localities with significant Chinese population. Cities such as New York, Houston, Chicago, and other places within easy reach of shipments can be targeted. In the second phase, target Hispanics and African Americans.
  • Use focused promotion to target these groups. Hire a promotion and advertising agency for the promotion.
  • Message of the promotion is to highlight good quality, safety, and affordability.
  • Point of sales can be small retailers, specialist retailers, and larger retail chains.
  • For the fast food sector, study supply patterns, requirements, and prices of exiting chicken suppliers. Offer these chains a value proposition based on quality and prices.
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The previous sections analyzed the US chicken market and proposed solutions for Yurun to market Chicken products in US. It is essential that Yurun should overcome the negative image of Chinese food products that are considered as contaminated with lethal bacteria. While these feelings may be exaggerated, the fact remains that Chinese products are viewed with suspicion. America has a large number of Chicken suppliers and these entities would resist entry of a Chinese firm through lower prices and other measures. Larger retail chains may not be willing to stock Yurun products. The proposed solutions have considered these factors. The biggest challenge is to overcome the negative image. Lower prices and good promotion can help to reduce these barriers. By targeting Chinese Americans and Chinese students, the firm can appeal at an emotional level. This factor becomes important and initial Ads must focus on these elements. Supply chain and logistics become very important since processed Chicken would be shipped from China to USA, and the products will have a shorter shelf life when they arrive in US.


The paper presented a detailed analysis of the macro and micro forces and the strength of barriers to entry for Yurun. It is clear that US is a highly competitive market with a number of large and small firms. The analysis with STP indicates that the first targets should be Chinese Americans living in cities and localities with significant Chinese American population. The primary research and other findings indicate that good quality, safety, and affordability will help to sell the product. Several important suggestions were proposed for the marketing strategy. The recommendation is that Yurun should initiate an active market research to develop products, identify locations and cities for product launch, and develop a promotion strategy.

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