Treat China like China. In fact, treat all local markets as unique
The World Bank recently indicated that China has the potential to follow its current strong economic performance and achieve another 20 years of 8% annual growth. Combine this with a population of 1.3 billion and it’s understandable why many international Western organizations, operating primarily in haltingly languid markets, are looking at China with great hopes of salvation.
While it might seem like a self-evident fact, the foundation of any successful marketing strategy is dependent on understanding and serving the distinctive needs and idiosyncrasies of the local people and markets. China (probably more accurately described as a collection of unique markets, not a unique market in itself) is probably one of the most challenging. However, when it comes to understanding channel preference and the growing importance of digital, many companies’ marketing budgets aren’t keeping pace with consumer behavior.
Back in 2010, Shaun Rein stated in a Forbes article that in China multinationals are currently spending 2-3% of their marketing budgets on digital initiatives, compared to 8-12% in the US. However, Chinese consumers spend more time online daily than their US counterparts (2.7 versus 2.3 hours, according to the BCG) and spend proportionally more time using online rather than offline media.
Online sources also seem to have greater influence on the Chinese. Recent research found that user-generated content, including consumer reviews, forum discussions and blog entries, influences 58% of purchase decisions in China, compared to only 19% in the US. China is also the world leader in the most number of people who join social networks to find information about brands, according to the 2010 TNS Digital Life report.
Obvious discrepancy? Companies are spending disproportionally less on a channel that matters more to their customers. Why? Maybe many are still operating under the preconception that since China is a developing nation, its consumers are not yet ‘eReady’, that China is similar to many of the mature markets ten years ago, that the correct marketing strategy is to emulate what worked in the past. But the world, and Chinese consumers, has moved on.
I recently saw a great presentation on the pace of change in China and how it’s operating in marketing ‘dog years’. The notion that in one year in China the marketing landscape will actually have moved on and matured by seven. The key here is to treat China like China; in fact, treat all local markets in a global organization as different and unique. Take the time, care and attention to answer some basic questions.
So what should you do differently? How do you iron out the discrepancies in your marketing plan?
· Understand where your customers go, and why (online and offline sources). Don’t hold any preconceptions. Be open-minded and listen to what your customers are telling you.
· Get an understanding of the importance of each channel. Prioritize them based on their likely impact on your marketing objectives, at each stage of your customers’ journey. Remember no pre-conceptions.
· Align your channel mix and marketing strategy based on the local market’s needs. Be aware that regional differences can be vast between cities in China.
To give you a flavor of what to look out for when thinking about your digital channel mix for China, here’s what’s caught our interest recently:
Microblogs are going from ‘new media’ to ‘hot media’ in China. Sina’s weibo is the biggest, launched just three years after Twitter in 2009, and already has over 10 times as many users as Twitter (1,300 mil vs 106 mil). It has 38% more users than the top mainstream media, Xinhuanet News (940 mil users). A handful of Chinese and foreign companies such as Estee Lauder, Nike and Starbucks have already started to use social media to promote their offerings, such as tweeting alongside offline events, and providing GPS-specific offers.
The upsurge of Internet access via mobile. About 46% of Chinese Internet users access the Internet via cell phones, according to a China Internet Network Information Centre report in 2010, and nearly half of Sina Weibo’s updates are sent via mobile phones, compared to less than 20% for Twitter.
Grace Zhao is a consultant withdigital business and marketing consultancy Blue Latitude.
For all of eyeforpharma’s coverage of emerging markets, check out our Emerging Markets special report.
Danielle Barron talks to author Ron Adner whose book “The Wide Lens” explains why the failure to...
With a staggering cost of drug development estimated at US$2.6 billion and a high failure rate of...
Working at a business intelligence company, I spend a lot of time at conferences and obviously I...