שיווק בסין הזדמנויות ואתגרים - אבי מזור

Marketing in China

Emma (Lijin) QIUApril 2011April, 2011

0Copyright © 2011, QIU

Emma QIU• Marketing Professor, School of Management, Fudan

University• Ph.D of Business Administration, Fudan University (PRC)• Global Faculty of Center of Service Leadership, Arizona y p,

State University (US) • Honorary Associate Professor, the University of Hong Kongy y g g• Courtesy Professor, Warsaw Sports Marketing Center,

University of Oregon (US)• Visiting Scholar @ Harvard Business school (US) &

MAFED, SDA, Bocconi University (It)• Research interest: Service Marketing, Consumer Behavior,

Sports Marketing, Luxury Brand Management


• [email protected]

AgendaAgenda

• Some Marketing Stories in China

• The Nature of China’s Market as ImmatureThe Nature of China s Market as Immature Market

S h fi di• Some research findings– The nature of Chinese Market– The nature of Chinese Consumer Behavior

• Summaryy


China, What kind of Market?Unique Feature– Unique Feature

– Difference to your/other Market(s)


Part I

Marketing Stories Happened in China

Challenges of Localization vs. Globalizationg


MNCs: Efforts to Deepen The Localization

• The communication localization of Coca ColaTh Chi N Y i l f t d W i A F – The Chinese New Year commercials featured: Wuxi A Fu (well-known Chinese mythical figure), couplets, paper cuts and other Chinese elements, showing deeper understanding of , g p gChinese culture

– Using local celebrities: A-Mei, Nicholas Tse, Cecilia Cheung, F Mi i H Ji Fu Mingxia, He Jie, etc.

– Sponsoring the Beijing Olympics: Making commercials that show gratitude towards Chinashow gratitude towards China


• KFC’s development of local products– +3,000 stores in China

– Successfully introduced “preserved egg and minced pork congee”, “rice with meat and vegetables on top”, and

th Chi t l d tmany other Chinese style products

– But the “East Dawning” Chinese restaurant chains started by KFC are struggling to survivestarted by KFC are struggling to survive


• SAP China: From the “Lighthouse Project” to the “Blue Ruby Project”to the Blue Ruby Project– The “Lighthouse Project” acquired a market share

f h % f h i d ’ l di of more than 30% from the industry’s leading enterprises;

h “ l b j ” f d h– The “Blue Ruby Project” focused on the SME market, but its current penetration rate among SME i l 3 8% hil th l b l t i 68%SMEs is only 3.8%, while the global rate is 68%;

– How to make a breakthrough in the SME segment?


• L’OREAL’s acquisitions of local brandsL’OREAL’s acquisition of Mini nurse: instilled the – L OREAL s acquisition of Mini-nurse: instilled the “Garnier” technology concept

– L’OREAL’s acquisition of Yue-Sai: L OREAL s acquisition of Yue Sai:

• “Eastern, Asian, and Chinese”

• “international and fashionable”• international and fashionable


– Dell’s Business Model Adjustment • Dell did well in China’s B2B market, but it struggles

in the B2C market

• It started to enter the distribution market in 2007, i S i G d h l i li d using Suning, Gome, and other large specialized

stores as channels, with limited results

Then it adopted the agent s stem to enter the retail • Then it adopted the agent system to enter the retail stores market, trying to approach China’s 4-6 tier marketsmarkets


Domestic Enterprises: Exploration of Globalization

• UFIDA: Competing with SAP– Started off with 1:1 marketing, but soon reached a

growth bottleneck

– Opened up the SME market, provided standardized

ERP software, and achieved rapid growth in b ibusiness

– Comprehensively differentiated the market, and

d h lsurpassed SAP China in sales revenue


• Lenovo: Desires “internationalized”, yet remains “domestic”– Acquiring IBM’s PC department, Lenovo continued searching for

a breakthrough to global market, but met with repeated setbacks;

Wh tit i d id th i 8 – When competitors experienced rapid growths in 2008,

Lenovo was in red;

– Lenovo changed its strategy in 2009 and placed its focus on Lenovo changed its strategy in 2009 and placed its focus on China, and particularly along with the implementation of the “Computers Going to the Countryside” Plan, Lenovo achieved a better performancebetter performance


Part IIPart II

Th N t f Chi ’ M k tThe Nature of China’s Market as Immature Market


S d t d i d t f Chi M k tSome updated economic data of Chinese Market

• Reform since 1978: from central-planned economy to marketReform since 1978: from central planned economy to market economy

• Annual growth rate of GDP: about 9% over last 30 yearsAnnual growth rate of GDP: about 9% over last 30 years

• Whole economy as of GDP: USD 2.68 Trillion in 2006 (1.26 Trillion in 2004) the first time the per capita GDP exceededTrillion in 2004), the first time the per capita GDP exceeded USD 2,000

• GDP per capita: expected to reach $3 400 by the end of• GDP per capita: expected to reach $3,400 by the end of 2010

A l di bl i it• Annual disposable income per capita– USD 660 (RMB 4,500) in rural area in 2008– USD 2,350 (RMB 16,000) in urban area in 2008


USD 2,350 (RMB 16,000) in urban area in 2008

Major developed countries witnessed fourMajor developed countries witnessed four continuous stages (i.e. breeding, growing, maturing and refining) during the whole course of market

l ievolutionMarket Evolution

Immature MarketMature MarketMaturity

of Market

Stage of market evolution


Breeding Growing Maturing Refining:Post-mature market

Features of a Mature MarketGenerally, a mature market has the following features:

1) It belongs to a middle-level developed economy and has established an advanced andeffective industrial structure with the tertiary industry and newly-emerging industrieseffective industrial structure with the tertiary industry and newly emerging industriespredominating;

2) It is both externally open and internally unified with market institution founded as the basicmechanism in national economic activities;mechanism in national economic activities;

3) The government is skillful at and capable of properly intervening and monitoring the market;

4) Market orientation is pervasively accepted and most enterprises are able to design andimplement marketing strategies with relatively competent resources;

5) A well-woven network of distribution is taking shape with multi-pattern channelscomplementary to each other;p y ;

6) Consumers fall into stable societal-economic subgroups and consumer sovereignty is greatlyrespected;

7) St d i d l t f t th h l k t i id b id ith i t7) Steady-going development features the whole market, going side by side with incessantinnovation. This tendency is manifested by the fact that the market sees less fluctuation andis equipped with mechanisms to effectively deal with the unpredictable incidents as well asadapt itself to the change


adapt itself to the change.

Next

Features of a Immature Market (Simplified)

• Economy: Developing Economy, manufacture-dominant

Features of a Immature Market (Simplified)

y p g y,

• Market Unification: diversified and un-unified

• Government: Intervention of market

• Product/production orientation

• Distribution network

C hi ti ti• Consumer sophistication


Competitiveness of Countries

Source: CIA World Factbook 2010


Service industry in Shanghai

• Shanghai GDP (2009): USD 218 billion (RMB1.49Shanghai GDP (2009): USD 218 billion (RMB1.49 trillion)

• The ratio of the service industry (the tertiary• The ratio of the service industry (the tertiary industry) to the whole GDP is 50.6% in 2000, comparing with 31 9% in 1990comparing with 31.9% in 1990.

• Service in GDP (2009): 59.4%, up 3.4% from 2008

• Finance, logistics, trade, real estate, travel and information service are the biggest six sectors in Shanghai’s service industry.

Back


Back

Features of an immature marketFeatures of an immature market

The immature market, featuring vulnerability,instability, more fluctuation and unpredictability,reciprocally, has not been fully developed in most ofabove-mentioned aspects. There exist obviousdeficiencies in the market institution, which need tobe corrected.


Part IIIPart III

Some Research Findings


Case Share I: Nature of Chinese MarketCase Share I: Nature of Chinese Market

Chi b k t b di id d i t th it• Chinese urban market can be divided into three city levels according to the market evolution.– First Level

smaller population, lower GDP/capitasuch as Yancheng, Deyang；

Second Level– Second Levelmedium-smaller population, medium-higher GDP/capita or medium and larger population, medium and lower GDP/capitamedium and lower GDP/capitasuch as Wuxi, Xiamen, Shenyang, Changsha；

– Third Levellarger population, higher GDP/capitasuch as Shanghai, Beijing.


Relationship between the Influence ofRelationship between the Influence of Ads and the Level of Urban Market

InfluenceInfluence of AdsStrong

Level I Level II Level III

Weak

Low High


Level I Level II Level IIILow High

• The consumer’s demand for daily goods has a positive correlation with the city level.

• The consumer’s demand for durable goods has a positive correlation with the city level.

• The consumer’s demand for service consumption has a positive correlation with the city level.

• The consumer’s demand for innovative consumption has a positive correlation with the city level.

• The consumer’s concern about product quality has a positive correlation with the city level.


• The consumer’s concern about brand has a positive• The consumer s concern about brand has a positive correlation with the city level.

• The consumer’s concern about brand of daily goods y ghas a positive correlation with the city level.

• The consumer’s concern about quality of daily goods has a negative correlation with the city levelhas a negative correlation with the city level.

• The consumer’s concerns about brand, quality and price in terms of durable products are all positivelyprice in terms of durable products are all positively correlated with the city level.

• With the upgrading of city level, consumers are more illi t ifi f i tiwilling to sacrifice more money for saving time.

• Consumers in third level cities are significantly more time sensitive than their counterparts in first andtime sensitive than their counterparts in first and second level cities.


Case share II: Unique consumer behavior diff t tamong different segments

• Affluent Class

• Middle ClassMiddle Class

• Young Single

• Modern Women

• DINKs• DINKs


Research Contents

• The Comparison across the Groups– Definition – Demography– Consumption Behavior– Fashion and luxury consumption

Lif i ti

g p y– Opportunities with Family– Life attitude

Self identification– Life aspiration– Plan for future

• The In-depth Analysis of the Three Groups across

– Self identification

• The In-depth Analysis of the Three Groups across Different Dimensions– Middle Class

• City, Gender, Age, Marriage, Overseas experience– Modern Women

Cit P l i M i Off i O i• City, Personal income, Marriage, Offspring, Overseas experience– DINKs

• City, Family income, Gender, Age, Overseas experience,


y, y , , g , p ,Marriage years, Child-bearing plan

Research Structure

Belief Attitude BehaviorBelief Attitude Behavior

Information Search

Luxury Goods Consumption

Values and

Shopping and Consumption Attitude

T diti d R ibilitProperty and Car Purchase

Values and Lifestyles

Tradition and Responsibility

Societal Consciousness

Leisure Activities

Financial ServicesLife Aspirations

Societal Consciousness

Marriage and love

Media Approach and UsageMoney Ethics Attitude


Part IVWrap Up

How to do marketing in China: O t it d Ch llOpportunity and Challenge


Why both MNCs and Domestic Companies failed in Chinese Market?

• Misinterpreting the population size of China• A big gap existing between the current and potential g g p g p

demand • Relying on price war onlyy g p y• Competing to consumers’ knowledge and experience• Extreme and disparity in terms of the development p y p

across the nation


Why Similar Mistakes but Different Results?Results?

• Resources and System– Marketing research and professional support

Marketing expertise– Marketing expertise– Effective implementation and control– Cash for trial-error

• Strategy– Not Speculating on only-one or biased competition tool– Not triggering the price-sensitiveness– Not intending to drive out all rivals through one overwhelming war

• Marketing Concept– Sales-oriented or market-driven


Education

שיווק בסין הזדמנויות ואתגרים - אבי מזור