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Posts Tagged ‘China’

3 rules to succeed in China retail

Here’s a great post by someone who knows how to win in Retail.

Renee Hartman, is the founder of  eno named by Fast Company as one of the 10 most innovative companies in China for 2010.

Renee says that one of the keys in winning in China is ditribution. Given lack of an existing strong distribution network brands often have to create their own. This results in many own/single brand stores. Apparently brands like Nike and Li Ning have over 6000 own brand stores across China.

She points out 3 maxims for brands operating in China.

1.) Act like a retailer – whether you want to or not : Given low expertise it is important to get down and dirty and contribute and participate in every aspect of retailing. From store design to fixture units to merchandising layouts. Great for brands that are particular about managing the customer experience down to the last mile. A unique feature here seems to be the need for marketers to provide on going support on maintaining the store design and look and feel.

2.) Retailers are not long term investors – make money for them now :  This seems to make complete sense. They are running a business so they need to maximise returns. However, I imagine unlike more developed markets their goals are more short term, and like many big brands are focused on today’s sale to tomorrow’s margin. They know more about their environment and so are far more willing to participate in brand business conversations. Rich resource to tap into.

3.) Look pretty in Tier 1 cities, make money in Tier 2 and 3: Finally, it is about segmentation. Use Tier 1 markets where there is affluence and competition to raise the brand profile, through ‘fashion street’ retail. It’s going to cost more for not adequate immediate returns.  But use the size of the country to generate the volumes and thereby the revenues.

Renee goes on to say that while these maxims are meant for single brand operators , the essence is still relevant for categories that operate in multi brand outlets like electronics and health and beauty. In these categories the challenge is more around getting noticed amongst clutter .

So to win in China it is important to assume nothing and start with the basics of building your retail infrastructure ground up, recognise that retailers are great business men, not brand ambassadors and tier the approach to the type of city.

All good advice and in detail here.

Wonder how different this is in the other developing economies.

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Pampers case study from China

This is a great story of how P&G learned from failure and invested in getting customer insights to create a success in China for their diapers.

Pampers is a global brand, but obviously believes that global brands need to be built on local foundations. As long as the essence of the brand is maintained local communication generates significantly greater returns than the savings in running global, read English, ads everywhere.

All the more important that the brand story is clearly defined so that the integrity is maintained universally.

Another example of P&G’s dedication to brands and their consumers.

Wear Pampers. Sleep better. So simple. So true.

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Great coup : Empire State Building lit up in PRC colours

Empire State Building ChinaEmpire State Building China

And the US goes red in ire!!

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Branding in China

Here’s a rather educative article about China’s branding challenge. But reaches some odd conclusions.

Firstly let’s look at what it says.

Using Huawei’s example it talks about China has companies that have significant market share in the category in which they operate. But they are not well known to the consumer.

A couple of reasons it mentions include

1. Intense competition at home and weak IP protection means that there are low/no margins to invest in brand building

2. The Chinese companies are focused on b2b ie they sell to other businesses

The article references marketing razzle dazzle like those of Nike and Google.

And that is kind of where I believe the article loses its plot and is stuck in archaic thinking.

Firstly if a company like Huawei sells to other businesses and all those companies know of and regard it well then it is achieving its purpose. It doesn’t need Nike style campaigns talking to me. They may be smart in focusing their attention on the people who really need to know and think highly of them.

Secondly Google’s razzle dazzle is quite different from Nike’s. Nike’s was ‘top-down’. Make a product that is not uniquely differentiated and imbue it with great brand values and back it with a superlative campaign consistently.

Google started with a great product. And they built their brand bottom up. I don’t recall any great ads from Google, save some clever recruitment ads. Their brand was built through Word of Mouth and PR.

Which leads me across the Himalayas to India. Another great factory. But of services. It is an identical situation as China. Large companies facing intense competition at home engaged in services to other large companies.

Yet we know Infosys, Tata and Wipro as big brands. No marketing razzle dazzle.

High quality service with outstanding use of PR and Word of Mouth.

Many years ago I was having a chat with Nandan Nilekani (yes name dropping!!) when he was at Infosys and I at Ogilvy. He sneered, and he can sneer well, at the old fashioned way of building brands through ads. He told me then, that Infosys didn’t believe in advertising as the route to build brands. Fast forward and anyone in the IT services business knows that Infosys is one of the most powerful brands in that market place.

Jump across to Acer. After years of being a supplier to other PC manufacturers, Acer decided to go out on its own. Today it is the No 2 PC manufacturer in the world. Again no marketing razzle dazzle. Good product. great distribution. Low prices and huge dollops of PR.

The point of this post, and yes there is one, is my angst that there is such a wide spread belief that the way to build a strong brand is through some fantastic advertising campaign. That is so passe.

Brands like Acer, Infosys, Google and I would say Huawei are striking examples of bringing new thinking to this space.

And China is getting there. Slowly. But they are.

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