Tiger Balm Case Analysis

1. Problem statement

Tiger Balm, which is known as an analgesic to effective relieve pains and aches, is a 100-year-old Singaporean brand that has gained a widely spread in nearly 100 countries all over the world. Along with the unique herbal ingredients which originated in China’s old dynasty, Tiger Balm has a very strong brand heritage, which could be impressed as its hexagonal glass jar and its leaping tiger logo. Since its success in the global, especially in the Asia, it has generated an international recognition with a high level of brand awareness. In addition, Tiger Balm has a variety of products which are segmented into different functions at various parts of the body. Based on Tiger Balm’s annual report, the company’s revenue heavily depended on its sales from the Asian market, which is the home ground for Tiger Balm, that more than 60 percent of sales were contributed by Asia in 2014 (Haw Par, 2016). In the context of changing demands of consumers, the company should really consider its global marketing strategy in both markets and products. The problems are given in detail in the following section.

Based on our current market situation, we summarized the main issues as follow. Firstly, in some of the Asian countries, the regulatory environments are still unpredictable and changeable. China and India, as Asian’s two biggest countries, are protecting their intellectual property by rising some barriers, such as establish the high level of requirements for Tiger Balm to register its product. In addition, the company was involved in a ling-lasting lawsuit with Indian imitators by using Tiger Balm’s trademark, which means the cost of time in these markets are high for the company to penetrate. Besides, many Asian markets are full of aggressive competitors who have established in these markets with deeper pockets. In order to its further international growth, these limitations for Tiger Balm have to be considered carefully. Secondly, some Asian countries go against the company’s future plan to harmonize its wholesale prices which are charged to its distributors all over the world. Due to the imbalanced development, the distributors in Asia’s developing countries could not create enough profits to cover their wholesale prices if they are charged as much as the distributors in developed countries; however, different fee standards may result in smuggling problems by importing Tiger Balm company to make a choice between the high profits and the maintenance of distributors. Finally, the markets in Europe had made little efforts to the company. Although the company encountered some resistances in the European countries, the purchasing behavior of using medicated plasters is not strong in Europe, which is difficult to overcome.

Based on our current products situation, we summarized the main issues as follow. Firstly, the traditional Tiger Balm ointment has an unpleasant smell and color with greasy feeling, which is difficult to use. As a result, customers may change their purchasing behaviors to using other brands, which would cause a loss of sales. Secondly, the company lacks marketing strategy and opportunities of attracting younger generations due to its backward brand image. Since the company didn’t make enough investments on product advertisement and line extension, the brand recognition was impacted negatively. As a consequence, the sales of Tiger Balm had dropped dramatically. In addition, the consumers consider Tiger Balm’s products as the pseudo panacea which have low credibility of the effect of their treatments.

1. Situation Analysis

Although the company is facing some issues, the external and internal factors of its success cannot be neglect and should be made full use of to solve current problems (Figure 1).  Within the company, our good brand image and product functions are constantly evolving so that we can maintain our existing customers and attract young generations. Additionally, we had established a good distribution network and marketing strategy, which are our competitive advantages for our success. Beyond these internal factors, we also benefit from the stringent regulatory environment and the rich resources including target customer sectors and raw materials.

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Figure 1 The external and internal factors of Tiger Balm’s success

According to the analysis above, it is obvious that the success of Tiger Balm is mainly relied on its own internal conditions. Although the company is heavily relying on the Asian markets, the users in Western countries were Caucasians instead of the Asian immigrants which indicate that the external factors are not essential for the success of Tiger Balm in the new markets.  Barbieri et al. (2010) mentioned that the main assessment of pharmaceuticals transferability is to identify the effectiveness and the demand for the medicine. Since the need to relief painful is not specific but general, the products of Tiger Balm can be adapted to different countries. Therefore, the transferability of Tiger Balm products is very high and the success of Tiger Balm could be replicated in other countries.

1. Options generation

In a major study (Ansoff, 1965), it was found that in order to gain growth, an organization could develop its market strategy by using a matrix shown in Figure 3 (Ansoff, 1965) which illustrate the different combinations of existing/new products and existing/new markets. Ansoff provided a general product-market strategy which was described as four different alternatives (Ansoff matrix, 2009):

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Figure 3 The Ansoff’s Product-Market Matrix

1. Market Penetration Strategy focuses on promoting the usage rate of existing products and services in existing markets, which tries to increase the organization’s market share. This strategy is more likely to achieve the firm’s objectives by using aggressive methods such as decreasing the prices.

1. Market Development Strategy focuses on expanding into new markets through the existing offerings, which tries to enter into new lucrative markets. This strategy is more applicable to the company who has the unique technology or could benefit from scale economy.

1. Product Development Strategy focuses on developing new products with new characteristics in existing markets, which tries to improve the depth and width of products. This strategy is suitable for the company that has already established a good basis of consumer groups and is capable of investing into new R&D process.

1. Diversification Strategy focuses on offering new products in new markets, which tries to gain growth by acquiring business outside the organization’s current products and markets. This strategy is the riskiest strategy for an organization due to the requirement of generating new products and entering into new markets simultaneously.

Based on the detailed analysis of Ansoff’s P-M Matrix, an option matrix was made for our company which is shown in Figure 4. In this matrix, Tiger Balm’s existing markets were described as the region instead of countries, which could be shown specifically in Exhibit 1; besides, four new markets were proposed for our company based on the Exhibit 2 which shows the global country rankings of pharmaceutical sales in 2007, 2012, and 2017.