7-Eleven in Taïwan - Marketing Analysis

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II- A changing business model

a- Imitation of the US strategy and what it implies.

At first , 7-eleven did a complete imitation of its United States 7-Eleven stores.

Because of the Taiwan land scarcity, it is difficult to achieve the same standard area compared to the United States stores, what’s more Taiwan 7-Eleven represents only 1/4 of the United States. They had to change some of their procedures. Unfortunately, 7-Eleven made some mistakes in the first 10 years :

There were many 7-Eleven in residential areas, targeting mainly housewives, for whom the price is very sensitive, and the stores where to the high-end convenience stores, so positioning wasn’t effective.

They chose to purchase open spaces rather than lease shops so it greatly increased the cost of pre-investment.

[pic 5][pic 6]Also, the direction should not presume that what was good for 7-eleven’s American consumers would automatically be good for Taiwanese consumers. Beware of culture differences, cultures vary because of profound differences in social structure, religion, language, education, economic philosophy, and political philosophy. Westerner’s and Chinese people are really different in their state of mind, actions and purchasing behavior, which is crucial to know for convenience stores.

Companies that doesn’t know about the practices of another culture are unlikely to succeed in that culture because there is a connection between culture and national competitive advantage. Managers must also beware of ethnocentric behavior, or a belief in the superiority of one's own culture

7-Eleven has to take into account the importance of cross-cultural literacy, which is critical to the success of international business

b- Localization and culture specification

7-eleven has adapted its procedures to the food industry in Asia, taking into account the culture differences.

Different places: 7-eleven chose not to buy the shops but rather using leasing to reduce capital outflow, saving management time, thereby improving efficiency. New stores no longer choose residential areas, but the city center or subway station where the density of population is higher. USA and Taiwan has differences in traditional practices and infrastructure, so 7-eleven handled well pressures for local responsiveness who could have emerged when there are such differences.

Different target : New target population, young urban white-collar class. Because the target is a moving one, wanting to save time, and have a different purchasing behavior, they also change what is proposed in the shop as written below.

[pic 7][pic 8]

Different goods: Sales of fast food, frozen food, beverages, newspapers and magazines and cigarettes. And also adapt to what Taiwanese normally eat like tea-eggs, buns or rice balls for instance. They really emphasize on selling fresh and local food instead of just packaged food. It helps increasing consumption of food and reduce inventory.

By adjusting their strategy to the country, 7-eleven could make location economies. It is the economies that arise from performing a value creation activity in the optimal location for that activity, wherever in the world that might be. By achieving location economies, 7-eleven achieved to lower the costs of value creation and achieve a low cost position and differentiate their product offering has shown above in the picture.

c- Becoming an innovative whole-in-one service provider

7-Eleven understands the need of the population, it has transform to a retail shop to a global service provider: it’s a complete world where you can enjoy life, coffee, or different services as shown below.

Payment Cash-EasyCard: any electronic payment is accepted.

Coffee counter: "city coffee", best-selling Taiwan, 53 million cups a day with 400,000 from the 7-Eleven.

Seating area: 7-Eleven is also a place where you can just sit, enjoy time with friends or family.

Taxi Services :7-Eleven takes care of their consumers as they offer Disabled car calling service and drunken driving services.

Pre-order: The consumer can pre-order at any time to any convenience store to take away.

Distribution and delivery: You can ask the goods you order to be delivered at your home or at any address you chose.

Telecommunication Services: 7-Eleven offers mobile communication at affordable prices

Ticketing: Into any 7-Eleven, customers can scheduled domestic travel tickets, high-speed rail tickets, movie tickets and theater tickets, E-mail download, print.

Civic services: pay personal income tax, vehicle costs or even driving expenses.

Ibon:7-Eleven also understands the expansion of e-commerce and new technology in our everyday life, by creating Ibon, a platform that links e-commerce data with cloud services.

d- Future perspectives to maintain their competitive advantages and SWOT Analysis

STRENGHTS

- established brand image

- excellent in-house infrastructure

- localization of food to suit to Taiwanese taste buds

- Technology and Service innovations

- Foresight in future developments

WEAKNESSES

-Previous conformity with U.S model

- Saturation of convenience store market

- Complex operations

- High employee turnover rate

OPPORTUNITIES

- Implementation of drive

- More innovations as I-Bon service

- Foreign currency exchange services other than RMB

- Fedex/DHL