Marketing for Chinese

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Marketing is not well developed in China, but it is rapidly changing. Le us analyze the main problems Chinese companies face in Marketing.

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The definition of Marketing is: the goal of marketing is to make (or maximize) profits for the company by selling products at special value to customers for a price target profitable and sustainable.

 

Marketing includes the development of successful products and sales through research, targeting and positioning.

 

 

Chinese companies are trying to improve their marketing, but there are still major problems.

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1. Management data marketing

 

Marketing has to generate a need among customers and from that create a distinctive value for the product.

 

Basis of marketing is to collect data on customer needs, their desires and their purchasing behavior. It is important to analyze all existing offers of competitive products and study the existing offer on the market.

 

As a reminder, many large foreign groups have entered the market and had not worked on their product lines, pricing strategy, distribution and promotion. Their product lines were inadequate and they have been slow to enter the market. For example: IKEA, Danone or even L’Oreal. Subsequently, these large groups were able to understand the market, rectify the situation and are taxed in the middle kingdom.

 

2. Segmentation

 

.Practices in Modern Marketing is to segment the market, in other words, marketers have to define the different markets are segmented by customers, by offering and purchasing behavior.

 

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Companies must target their potential customers and should be positioned on distinct segments with a suitable offer.

 

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Chinese companies have superficial data, because they do not invest enough energy on data collection. Their analyzes are often biased and do not allow them to position themselves strategically on a segment.

 

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For example, Chinese the mobile phone brands are difficult to enforce because they can not be positioned on a segment and do not reach to differentiate themselves in this highly competitive market.

 

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Nokia, the leader in the cell phone industry has maintained its mastery of the custom segmentation with an offer for families and children, teenagers and professional segments with more features (eg PDA).

 

Comparison with Chinese brands: those above have focused on the volume of the mass market.

 

.They lack focus on their offer. TCL had made a good start with the phone “jewelry” for women, but were unable to capture the attention of this particular segment to women in China.

The strategic challenge of competition is not to go against other competitors, but to position themselves in targeted segments and niches.

 “To sell more and more, it is necessary to reach a lot of people”

 

It is difficult for a Chinese entrepreneur to understand that focusing on the segment of: we sell better.

 

3. Issues of distribution

 

There are two major problems of distribution: one for the manufacturer and the other for the retailer.

 

The objective of the distributor is to buy the same goods cheaper than its competitor. Distributors seek to establish strategic partnerships with various retailers that will reduce the cost of goods and having a competitive advantage.

 

This price drop for the distributor is always a loss of revenue unit and a threat to the supplier.

It is more interesting for this partnership to work on customer service, replacement of components, changes in operations, logistics, store brands special shorten the payment cycle …

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A strong brand can defend the price and the brand capture consumers. In China, requests for discounts on purchase volume (to reduce prices) occurs very often.

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There are so many problems with distribution homogeneity.

 

Small retailers find themselves poorly positioned compared to large chain stores. In High Tech products, major brands such as Gomes arrive to obtain the most competitive prices on most of the references.

China rule by large retailers but also an extensive network of small retailers with whom it is important to establish a partnership with a personalized trust. Their means of survival is dependent on personalized and privileged relationship with their clients.

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Chinese consumers are in a store where they get personal attention, and this is an advantage for prestigious brands. Using the example of Nokia has made the choice not to sell its prices in major supermarkets could win the confidence of small shop owners who may have a more powerful distribution network more China. You will notice in every little shop, they sell Nokia phones.

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So the Chinese supplier’s strategy of “Low Prices” is not the best solution in the long term.

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4. Marketing is important for long-term

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Chinese people, contrary to their image, are impatient businessmen. They want to succeed faster, and often have a short-term vision.

 

Succeeding quickly and short-term vision does not stick very well with the concept of marketing, where it is more of a medium to long term investment.

It is very difficult for a Chinese entrepreneur to consider a long-term vision of marketing, and it is therefore necessary to explain to the Chinese industrial communication, branding (building a brand), R & D are only effective over the long term.

Another problem is the shifting staff. Chinese employees rarely wants to stay in the same company.

 

It is same for their customers, who are generally very faithful without solid Guanxis.

 

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5. The After Sales Service

 

All elements of the value of the brand in the eyes of consumers, the After Sales Service is the most durable.

 

 

Technology is good, but it evolves rapidly and it is difficult for a company to maintain it, while service and loyalty can keep new customers with limited resources.

 

 

This is the weakness of Sony, which in each new product has a technological advantage above other brands but found itself in trouble with rapid changes in tastes of users. It is therefore difficult for companies to maintain consistency of brand and catch new trends in design.

 

Chinese brands Haier, Lenovo, Tsinghua Tongfang and are outstanding examples. In China, their after-sales service are highly efficient.

 

These three brands are, however, exceptions in China, Chinese manufacturers do not see value in the after sales service, as a source of expense and will profit loss.

 

“Why spend money on an item the customer has already purchased?”

 

6. Technical Promotion

 

 Advertising market in China is increasing while TV advertising budgets are declining in the United States and Europe. In China advertising has increased, television is a big influence of this.

 

Multinational companies are more experienced in marketing, while Chinese companies uses less modern processes marketing and more instinctive marketing.

 

I was surprised to see a TV ad during the World Cup from a  cast aluminum tubes company. It is normal to see companies like Coca Cola promoting their brands on television to increase popularity amongst the public but an industrial supplier? I think not.

 

Few Chinese companies are able to measure the effectiveness of direct marketing, but it will eventually catch up.

 

7. The Use of Internet

 

Internet is the media of the future in Europe, the USA and even in China! Impact of Internet marketing has been striking. This media has many advantages: low cost, easily measure the effectiveness of campaigns, and then growing media especially amongst the youth segment. China is now the world’s largest market of Internet users.

 

“Internet is not our priority!”

 

Personally, I find that Web marketing in modern China is largely under-utilized:

 

  • How Buzzs campaigns are recorded per day in China? Too little … the Chinese are not yet big consumers of video sensations.
  • Chinese websites, I will not dwell on this but is not the top priority for Chinese companies
  • The SEO China SEO, you’ll be lucky if a Chinese person in the marketing industry even knows SEO
  • The originality of the banjo or windows Pop Up …
  • Brand communication on social networks
  • Etc …

 

With the expansion of credit cards in China and payment systems, e-commerce in China will reach new heights (other than Taobao).

We will also see a new generation of private sales sites of diggs likes, of price comparison …

 

8. Reserves culture

A Chinese company ‘core’ saves Cheap to produce, at low cost …

 

Marketing is a new discipline business in China. Therefore, the Chinese remain sceptic about spending in marketing. We are talking about spending, not investments which shows in China (as elsewhere) reflects a mentality.

 

“If we do so well, why spend more?”

 

Be careful because the short-term financial results can be misleading and do not necessarily reflect the long-term results. If the R & D declined as a percentage of sales.

 

If you can measure marketing performance with financial results on takeoff sales or margin increase, you can convince a Chinese entrepreneur.

 

A Chinese entrepreneur can also become excessive if it is convinced of the effectiveness of Marketing.

 

 

Have you noticed other weaknesses of Chinese enterprises in marketing?

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Olivier VEROT

Marketing chinois (in French)