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The
faces of China
Study: marketers focus on only one type of consumer
China, the most populated country in the world,
presents vast opportunities for multinationals, even if making a profit on the
mainland remains a distant prospect for many western companies.
Distribution, advertising, recruitment and piracy are
just some of the difficult issues faced by western brands which are already
active there. Another challenge is the realization that Chinese consumers are an
enigma, constrained by relatively low incomes and an unfamiliarity with the
concept of branding.
For marketers, the situation becomes even more complex
when the size of China is taken into account. It's not one market, experts say,
but 30, and that's only counting the major urban areas, not the hinterlands
populated by poor farmers.
To help marketers make sense of Chinese consumers,
ACNielsen questioned more than 1,500 consumers in the three main urban centers
of Beijing, Shanghai and Guangzhou about preferred brands and prices for
products in popular categories such as shampoo, instant noodles, bottled water,
toothbrushes, mobile phones and electronics.
"The results were very revealing," says
Alistair Watts, managing director of ACNielsen China. "For the first time,
we have identified that different groups of Chinese consumers have specific
preferences toward certain brands and that they display different spending
habits based on their price expectations."
However, by concentrating too much on price
competition and advertising, manufacturers in China are often ignoring their
customers' needs and not marketing their product to the full potential.
The five "faces" of the Chinese consumer, as
determined by ACNielsen, are the Adventurers, the Worker Bees, the
Value-hunters, the Herds and the Laggards.
As the names indicate, each of these five groups
demonstrates different shopping attitudes and has different price expectations
for new purchases.
Eager to try new things, Adventurers will want to
spend money on new technologies or new gadgets, while Worker Bees strongly
believe in quality and will be willing to pay for high quality brands.
Value-hunters, on the other hand, seek best bargains
and are willing to wait to achieve the best value for money. Herds are people
who are vulnerable to influence of advertisement, while Laggards are
brand-conscious but do not discriminate between international or local brands.
The survey found that in the three cities surveyed,
Shanghai was dominated by Value-hunters with almost 31% of the respondents
falling into this group, while in Guangzhou, Herds accounted for one third of
the respondents. Beijing was the only city with a relatively balanced mix of all
consumer 'faces'.
"Smart manufacturers and markets will target
different consumer segments in different cities and at different stages of the
product's life cycle," says Mr. Watts.
While people may have different preferences toward
brands, some brands clearly emerge as the top brands preferred by consumers.
Rejoice is the No. 1 brand in shampoo, enjoying an
overwhelming preference among consumers in all three cities. President lagged
behind Kang Shi Fu in preference ranking in the instant noodle category.
The most preferred brand in bottled water market is
Nongfu Spring, with Robust and Wahaha as the leading international brands in
preference, whereas in toothbrush category, a market flooded by local brands,
Colgate ranked by far the first.
In the two non-FMCG categories covered in the survey,
international brands were still the mainstream. Nokia and Motorola still
dominate the mobile phone market, while Samsung has surpassed Ericsson to take
the third seat in preferred brands. Sony, Aiwa and Panasonic remain the
dominating brands when it comes to portable compact disc players.
Why were these brands so popular and the others were
not? The answer lies in their efforts to market segmentation.
"If you look across these brands," Mr. Watts
explains, "you'll find one thing in common: they had a clear target at
different segments of the market, and in the targeted segments they established
a strong image, which protected them from severe price competition."
Take Rejoice. The leading brand in shampoo, Rejoice
captured consumers' interest because of its balanced segment mix. Another
successful shampoo brand, Head&Shoulders targeted Worker Bees and might
increase profit as these people are generally speaking better-off and they are
willing to pay a higher price for quality and brand.
Compared to these leading brands, the other brands
were not so successful in this regard. In fact ACNielsen's study led to the
conclusion that most brands were cluttering in certain segments and fighting to
influence consumers' initial preference, particularly in the low-end of the
market in most categories.
Manufacturers may suddenly realize that by cluttering
in the low end of the market, they are simply undercutting each other. And even
worse, they are getting further and further away from average consumers' needs.
This is especially true in the bottled water industry.
ACNielsen found that most brands were in a fierce battle seeking for the lowest
prices, while mid-price or luxury package water products were scarce
particularly in Beijing and Guangzhou.
This was also the case with instant noodles. Prices
concentrated in low end with key brands competing fiercely, while high price
markets in Shanghai and Beijing remained untapped.
Compared to these FMCG categories, mobile phone and
portable compact disc players did much better with catering for different needs
of Chinese consumers.
The lucrative mobile phone market seems to be well
served at different price points, with Nokia and Motorola, the leading brands,
appealing to all market segments, Samsung was particularly appealing to most
Adventurers and Ericsson proved to be the popular choice among Value-hunters and
Worker Bees.
Branding through advertising is the trend of the
moment, with manufacturers investing heavily in advertising and feverishly
fighting for spots in prime time, such "markcom" money may not
necessarily lead to increased preference.
La Fang, a local shampoo brand, was one of the top
advertisement spenders last year, but still it lagged far behind in preference.
And Motorola's heavy investment in advertisement failed to get it the top
preference too.
"The issue here is not how much money you should
spend on advertising," Mr. Watts emphasizes, "but how you spent your
money effectively. And the answer to that is, again, targeting the right
segments."
Unfortunately, he adds, there is no
'one-size-fits-all' solution in marketing, as marketers in different categories
pursue different strategies.
"The idea is for manufacturers to stop being
blindfolded and fighting for lower price. That can only make them overlook the
fact that the pie is actually bigger than they might have realized. To increase
their profits they can consider tapping in the new market potential and building
a powerful brand image. And in order to become a powerful brand, they should not
bet on advertisements alone." - By Normandy
Madden AdAge
18 May 2002
Scientists scanning the brains of
Chinese children as they read have found that the Chinese writing system puts
demands on some different parts of the brain than Western alphabetical writing
systems.
The study by Chinese and U.S.
scientists, published as a letter to the journal Nature, was said by the
researchers to be the first to scan the brains of dyslexic Chinese readers. It
suggests that helping dyslexics in China will require different methods than
those used in the West.
The study also lends tentative support
to the possibility that specific brain miswiring leading to dyslexia for an
English reader might not lead to dyslexia for a Chinese reader.
Dyslexia is a severe reading disability
in people of normal schooling and intelligence. Li-Hai Tan, senior author of the
study and an associate professor of Linguistics at the University of Hong Kong,
said that an estimated 2% to 7% of the Chinese population is dyslexic. Estimates
of dyslexia in the U.S. usually run from 5% to 12%. The lead author on the study
was Wai Ting Siok, also at the University of Hong Kong.
In the study, MRI scans were done of 16
Chinese children from 10 to 12 years old, including eight normal readers of
Chinese and eight with reading difficulties. The researchers found differences
in the functioning of brains of the normal and dyslexic readers, just as
differences have been found in brain scans of English-speaking readers. However,
the regions used by the normal and dyslexic Chinese readers were in some
instances distinct from the brain areas used by readers of Western, alphabetic
languages.
Brain-imaging studies of dyslexic
Western readers have found deficits in the left temporoparietal region of the
brain -- located toward the middle and upper part of the brain on the left.
That's where the brain maps alphabetical symbols to "phonemes," or the
small bits of sound that letters represent. The dyslexic Chinese readers ran
into trouble in a different part of the brain known as the left middle-frontal
gyrus, located toward the front of the brain on the left. That area of the brain
is known to map written symbols to meaning, and written symbols to syllables.
The researchers said that differences in
Chinese writing from Western writing account for the different work done by the
reading brains. Chinese characters contain elements indicating both symbolic
meaning and pronunciation of syllables, which are larger and more complex sounds
than the sounds indicated by letters in the alphabet.
Dr. Guinevere Eden director of the
Center for the Study of Learning at Georgetown University, in Washington, called
the study "important and innovative," adding, "reading is not a
skill that is innate and hence the mechanisms that the brain will draw upon to
accomplish this task are likely to differ depending on the demands of a
particular writing system."
In Hong Kong, Dr. Tan said, intervention
programs for dyslexic children "all follow western traditions, emphasizing
phonological awareness of spoken words." The new study suggests shifting
the emphasis to teaching "effective links among visual shape, sound and
meaning of characters." He also said some dyslexics in English and other
alphabetic languages might fare better through a "whole word" approach
to reading -- a technique that has declined in favor in recent years compared to
phonetic teaching methods.
Dr. Tan said one prior study had found
that some dyslexic English reading children were able to quickly master
"the English equivalents of Chinese characters." He said the
differences in demands on the brain found in the current study could account for
that intriguing ability. - by Robert
McGough THE
WALL STREET JOURNAL 2
Sept 2004
Firms that aspire to greatness must know how
to reconcile company and Asian values to those of their customers
I have deliberately reserved the last two instalments
of this branding series for two very important subjects: one that Asian CEOs
never get tired of asking about, to the point of being single-minded; and
another that they should ask about, but don't.
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| Made in Asia: Bruce Lee is one
of the first and greatest of Asian brands to succeed in the West. Even
in death, he continues to symbolise a combination of universal values:
heroic action and self-sacrifice |
The first is - predictably - all about cost: 'How much
is it going to cost me?'. I will address this subject next week. The other and
far more interesting area is the subject of 'Asian values' and how they relate
to brands and branding.
At my former company Carlyle, we often liked to
compare brands to people. For a multitude of reasons, the analogy is very
appropriate. Central to the comparison is the subject of values: before an
individual can expect others to like him, even to embrace him, he needs (whether
he realises it or not) to 'know' and like himself first. The same principle
applies to brands. Asian brands will never achieve 'greatness' (that is, go
beyond being merely acceptable consumer brands to being brands that are
compellingly, emotionally, even addictively, appealing to Asians as well as
Westerners alike) unless they understand that central to their DNA are
undeniable, unique indigenous values that need to be recognised.
Competitive advantage
Having established that in today's highly competitive
environment, products and services need to go beyond providing features and
functional benefits, company values and by extension brand values, emerge as an
important source of powerful competitive advantage.
Social, political and economic events over the last
decade, and in particular over the past five years or so, are clearly driving
home the point that people the world over are not the same. In the context of
business, the discussion has revolved around the relative similarities and
differences between East Asia and the Western world.
Though Asia is by no means homogeneous, some
meaningful generalisation is possible even after separating North-east Asia
(China, Hong Kong, Taiwan, Japan and Korea) from South-east Asia (Indonesia,
Thailand, the Philippines, Malaysia, Singapore, Vietnam). Independent of
linguistic diversity and other cultural differences, all North-east Asian
societies are culturally indebted to Confucianism.
Though more diverse, South-east Asia is strongly
characterised by a broad Malay ethnic identity with substantial non-Malay
minorities.
Greg Sheridan in his book Asian Values, Western Dreams
refers to a survey that identified and separated East Asian societal values from
those of the West. The survey found that East Asians cited the following values
as most desirable: orderly society, social harmony and respect for authority,
among others. Westerners tended to prefer: freedom of expression, the rights of
the individual, personal freedom and open debate among other values.
So if surveys show that Asians continue to think and
feel differently to Westerners, how then, do we account for the overwhelming
preference Asian consumers have to western brands? What lessons can Asian
companies learn? Two things need to be explored: The first has already been
discussed briefly in an earlier instalment: the importance of creating and
sustaining relationships with customers that are 'emotion' based. The other
reason which shares an overlap with the first, lies with some specific Western
values that do not necessarily compromise typical Asian values embraced by most
Asians. Rather, they add an additional layer that, by and large, is often absent
from Asian brands: some elements of personalisation or some recognition of
'self' and with that, the notion that a little 'fun' or even self-indulgence is
OK.
Consequently we can understand the strong sense of
belonging some Asians have with Apple products, or the comfort of
self-expression Nokia delivers to others. It is important for Asian companies to
understand that while 'Asianess' is getting stronger amongst Asians, there is
continued preference by Asians for Western brands. The reasons for this have
little to do with any notions of the superiority of Western values, but rather
to the incremental contribution of things like personal expression or
lightheartedness Western brands offer Asians.
These contributions help cement emotional
relationships between brands and consumers. The lesson for Asian brands does not
lie in replicating Western values per se, but somewhere else. They lie in
recognising the importance and power of Asian values. Asian brands can't escape
where they come from and 'who' they are - as much as some might try. The irony
is that not only is there no need to escape, there is, in fact a compelling
argument to celebrate provenance and indigenous values.
The world is ready and receptive to Asian values and,
by extension, brands that strongly and genuinely reflect some of these. Where in
the West there is an ample presence of brands that reflect personal expression
and individual rights, there is an increasing demand for icons that symbolise
things that are visibly absent in the West.
Those that are is decidedly Asian like stronger social
order and harmony, for example. Asian brands from Banyan Tree to Zen Buddhism
resonate in the West not because they mimic western brands but because they
communicate - in one way or another - Asian values.
One of the first and greatest of Asian brands to
succeed in the West was Bruce Lee. Even in death, he continues to symbolise a
combination of universal values: heroic action and self-sacrifice. But it is the
perception of stoic Asian dignity (at the risk of stereotyping) that this icon
is revered as much as he is in the West.
Monumental strength
There is monumental strength buried in Asian brands.
Much of it lies locked in Asian values. For many companies, these will come to
represent the best chance their brands will have to establish real and
sustainable relationships with Western consumers. Further - and this is
extremely important - in establishing emotional reasons for Western consumers to
bond with Asian brands, Asian values will also emerge as one of the few
effective tools that will, in time, help overcome present consumer concerns with
point of origin: 'made in Asia' or 'made in China'.
As the world gets smaller and people increasingly
reach out to others looking for more holistic human experiences, values will
only increase in importance. In Asia, companies will have a choice: to be good
or to be great. Those that opt for greatness will know how to reconcile genuine
company values and Asian values to those of their customers. -
16 Nov 2005 SINGAPORE
BUSINESS TIMES Joe Baladi
Based in Singapore, the author is a
branding consultant. He is the former CEO of Carlyle Brand Consultants.
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