Bridging the Supply and Demand Gap: Growing the Demand of a Cartonboard Product in the Chinese Market

Abstract

A company, in this report, referred to as Global Forest is a leading supplier of cartonboard that recently initiated operations of a new cartonboard mill in China. The new machine will produce a mix of five products and will drastically increase the company’s supply of board products in the Chinese market. One of the five products is called Eucalyptus, this product is the focus of the master’s thesis. The Chinese market for the product group of Eucalyptus is small and inexperienced compared to other markets globally. The main reason for the lack of market adoption of Eucalyptus is believed to be caused by a unique feature of the product’s appearance. The recently increased supply of Eucalyptus and the low market adoption has resulted in a supply and demand gap. The total cartonboard market is characterized by a general oversupply which further increases the supply and demand gap of Eucalyptus. Due to operational constraints of the mill the supply of the product is assumed to be constant for the coming years. Efforts to bridge the supply and demand gap can thus mainly be performed on the demand side, why the market strategy for demand creation needs to be assessed. In order to increase the demand for the product the current market situation needs to be understood. This was performed in the study by conducting a market opportunity analysis. Based on the outcome of the analysis a business model was designed where target segments, value propositions, channels and customer relationships were outlined. It is believed that large growth can be generated by entering new application areas in the market. A driver for value creation lies in a natural trend observed in their market. The share of direct business needs to be increased in order to reduce dependency on merchants and to ensure visibility and control in the value chain of Eucalyptus. Furthermore the company should focus on establishing relationships with brand owners as this offers Global Forest insights in consumer preferences and market feedback. The process of growing demand is challenging for many companies and the structured approach presented in the case of Global Forest can be used as a reference case for other companies facing similar challenges.