| While the Chinese products flooded the ASEAN countries with low-cost advantages, this study proposes an alternative approach for marketing velvet antler product in People's Republic of China (PRC) - differentiation strategy. PRC is home for traditional Chinese medicine (TCM) and also the major market of velvet antler product in the world. Velvet antler is a new product with innovative advantage as RUSA 100% Natural Essence of Deer discovered and produced in Thailand.To understand the industry status, the 5 forces model of Michael E. Porter is applied. It offered us the following insight:1. The customers'bargaining power is the second most powerful among the five competitive forces. Prompted by the increasing number of substitutes, we notice a substantial change in consumer preferences.2. The suppliers'bargaining power continues to decline due to intensifying competition both local and global. Those companies that are short of innovation in products and marketing strategy are experiencing relentless rejection by consumers.3. The substitute product force is the most powerful competitive force in the industry. It gains extremely high momentum both in volume and categories that flooded the PRC market.4. The new entrant force is at average. New comers must be strong with economy of scale to combat rivalries. However, those with proper strategy such as differentiation still stand a chance, because the product category is not yet saturated with sufficient varieties.5. Lastly, the rivalry force has fallen from its peak. That is because large number of global and local suppliers are retreating or exiting the market, which helps to restore a temporal balance between supply and demand. Differentiation becomes a favored survival kit for those firms that are expected to remain viable in the market.To understand the new product potential among the rivals, SWOT analysis offered us the following insights: 1. Opportunity factors are multi-facets in China market: thriving economy, growth of purchasing power, growth of high-end market, growth of population and aged people. The number of global and local suppliers is shrinking. As Chinese lifestyle changes, more concern is attached to healthy products and thus caused a boom in particular product categories. However, the traditional consumer belief in certain products persists. The velvet antler product is still accepted in broad array in Chinese society as a high value multi-purpose health therapy. As lifestyle changes, the traditional way of consumption for such a high value product begins to lose consumer's favor. Then the instant consumption product is more suitable, because the traditional preparation takes time. High technology is the factor to help the consumption changed to various alternatives. The substitute products are flooded the market, then the product differentiation must be the appropriate solution in competitive advantage among this intense competition.2. The threat of industry shows very interesting conditions for the market. One is the product differentiation characteristics because of various substitute product types are so many. It needs the new development and new technology to discover something new with potential for creating new market. And two is the unchangeable of our foreign company status which facing the unaware and unknown stability of PRC entry barrier policy as such tax laws on foreign products or the consequences of exchange rate.3. For the product, it stands in the advantage position. The strength factors of our product is the differentiation advantage such as the instant consumption, broad in consumer range, hygiene and hi-tech production, the copyright holder and the approval license granted by the Thai and PRC State Food & Drug Administration. And there are marketing advantages such as zero inventory management, being the first mover in the market and having the strong suppliers'commitment.4. Meanwhile, the weaknesses such as those additional costs in operation, especially the international transportation, the branding, consumer education must be brought to attention. Moreover, the narrow distribution channel, which is now applying, caused the small number of local distributors joined and limitation of the expansion capability.Under the current market pressure mentioned above, either of two business level strategic alternatives must be selected. In competitive market, Differentiation Strategy is more suitable than Low-Cost Alternative with the following major reasons:1. Price war2. Large number of suppliers3. Widely use of Low-Cost Strategy in the market4. Businesses abandoned5. Lots of substitute products6. Small number of new product7. Consumer behavior changed8. Unmatched current products with the needs9. Lifestyle and consumption method changed10. The rivalry survivals are all large firms with low-cost advantage11. The changing strategy of rivals12. Economy of scale advantage...
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