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Brand in New China: Advertising, Media and Commertial Culture

Degree programme: Business Administration Author: Jos Miguel Tejedor Fernndez Deadline: 24 November 2011 Lecturer: Jukka Lahtinen

Table of contents
Table of contents.....................................................................................................................2 Introducing some macroeconomic figure................................................................................2 Back to basics..........................................................................................................................5 Segmentation...........................................................................................................................5 Cultural Factors.......................................................................................................................6 Conclusion...............................................................................................................................8 References...............................................................................................................................9 Bibliography............................................................................................................................9

Introducing some macroeconomic figure


Chinese purchasing power is rapidly growing, which implies some risk to Western economies but also many opportunities to companies. Moreover, Chinese economy is rocketing at an annual rate of more than 9 points, so some companies are seeing a great opportunity for their products and services. The

objective of this writing is to outline some interesting ideas focused on the activity of marketing and communication of business towards the Asian giant. Table 1
Evolution of Gross Domestic Product Real growth rate for 20042009*

. *This variable comprise the annual Gross Domestic Product (GDP) adjusted for inflation, expressed as
percentage. Source: The World Fact Book (2010)

Lately, finding press articles about Chinas economic miracle is common and both, general-interest and economic press equally detail the trade relations between the West and China and how the power is changing is focus towards the Asian giant. Indeed, China and its economy deserve the attention in its own right, raising its gross domestic product (GDP) from $ 1,931 billion in 2004 to over $ 5,800 billion (1) dollars in 2010, representing a compound annual average growth of around 9 percentage points. Undoubtedly, the trade imbalance with the Asian giant is so significant that represents the main economic factor for Western's trade deficit. Given this situation, some companies recognized the opportunity to access a new market for their products and services. The first impression is that Western nations cannot compete with its manufacturing capacity, falling into the temptation that it is time to move on. But nothing further from the truth. If you go, for instance, to Xiang Yang market in Shanghai which is located on Central Street Hualhai of the former French concession, and in it is possible to find plenty of posts with imitations of all kinds of watches, luggage, clothing, etc.. In this shopping route, it is possible visit several of the most elegant and exclusive shopping malls, where the new wealthy local people buy luxury clothing manufactured in Europe, and all types of furniture and household items, always with one common denominator: top quality and high added value.

This image can be paradoxical if we take a look at the stereotype of developing countries with cheap labour. Figures are more descriptive. According to the World Economic Outlook Database (September, 2011) the income per capita in China is estimated at about $ 4,382 a year, away from just over $ 44,400 in Finland, but the numbers and mostly means can be deceptive. In fact, the Chinese population is very heterogeneous both in terms of income and living standards. In a country of contrasts as China with a population of over 1,300 million people, the first lesson to learn marketing managers is to return to basic marketing: managing and segmenting the market. For more abuse of statistics in China, not only are there more than two million millionaires - which definitely is attractive - but also, it is estimated that 30 per cent of disposable income is up 10 per 100 of the population. This last fact makes a market with a purchasing power of the OCDE countries had a couple of decades ago, meaning that a good opportunity for Western companies.

Table 2
Economic indicators of Chinese municipalities*

Population 2003 (millions)

Growth of Gross Domestic Product (% 2003/2002)

Per capita income 2004 (RMB(3))

Shanghai Beijing Guangahou Censen Suzhou Hangzhou Tianjin Chendu Wuhan Chongqing

17,1 14,5 9,9 5,5 5,9 6,4 10,1 10,4 7,8 31,3

11,8 10,5 15,0 17,3 18,0 15,0 14,5 13,0 12,1 11,4

16.683 15.638 16.884 27.596 14.451 14.565 11.467 10.394 9.564 9.221

. * Source: Morcillo, Eduardo. El marco de los negocios en China (2005).

Back to basics
Therefore, it is convenient to begin from the most basic and abstract to the reality of our practices and competitive situation: What is marketing? According to Robert Bartels, "Marketing is the process whereby society, to supply its consumption needs, evolves distributed systems composed of participants, who, interacting under constraints technical (economic) and ethical (social) create the transactions or flows which resolve market separations and result in exchange and consumption."

Segmentation
Segmentation criteria may vary depending on our needs, supply and resources: Ease of access: Focusing on the large municipalities see Table above - and looking at where the money is. It often happens that many workers on vacation of their "new year (3) " used to buy large quantities of goods to resell in the interior of their home towns, where not available. Sales Channel: Again, it should not be assumed in advance criteria. Lets suppose that a product is having significant success in Carrefour or Wal-Mart. We would be tempted to focus on this channel and organize the final consumer promotions, only to discover that, in fact, the buyers are small traders who go to these shopping centres and then resell them in small convenience stores. So, shall we consider the commercial area as a retailer or a wholesaler? Purchasing Power: If we target to the high purchasing power customer we find a very heterogeneous mix. From "old" Communist leaders in rural areas or small traders and

artisans, to entrepreneurs, speculators and employees of international companies. To further complicate the mix, the question arises: in what context should we frame the purchasing power: individual, "family" or danwei (a concept referred to the extensive "social benefits" that some companies offer their employees). In China there is no regular bills and schools are free. Also insurance, credit cards and taxes are not very popular as we conceive in Europe. The car penetration is not so high like in developed countries. This enables a high percentage of consumer's income disposable to spend. The concept of "family" in China is very broad, ranging from college friends, even neighbours that make up an extensive network of support and financing difficult to understand in our model led to the final consumer.

Cultural Factors
The first thing we notice is that Chinese characters are not up, but pictographs and each of these represents a word or concept, so there is no possibility of translating our brand. There are various approaches, for example, one of the most obvious has taken by Nestl, which had chosen to describe its logo. The pictograms sounding something like "qiao chao". corresponding to the nest and bird,

Nestl Logo

We also note the familiar forms of Coca Cola. In this case, pictograms chosen not only have a familiar sound, something like "ke kou ke le", if not that, in addition, describe product attributes: taste good and happiness. We

need only look at Pepsi Cola happiness ( the two seconds: "ke le".

, to recognize again the pictogram of

). The first two pictograms sound like "bai shi", and we know

Coca-cola logo

Pepsi logo

Returning to the Carrefour supermarket in the logo are three attributes: All Happy Family . This time, use the traditional glyph ( ) and not the

simplified (

) to show happiness. The same choice was made by a brand as sound like gao gao and attribute it

ours as Cola Cao. The pictograms

to "happiness" will complement the "height", as the target product are tall children (so healthy) and happy. Wal-Mart, , does not hesitate to , the fortune

incorporate the fertility attribute / wealth, or Panrico or improvement.

Another collateral factor to consider is the cultural record. The Chinese people are the dregs of their own culture with 5,000 years old, qualified by the Communist disconnection. This lack of common registration can lead to confusing situations such as popular election of the Rolling Stone, "Satisfaction" by a known manufacturer of mobile phones. Consumers did not understand why they should buy a product that it did not produce any satisfaction. "I can t get no satisfaction / I can t get no satisfaction. / 'Cause I try and I try and I try and I try. / I can t get no, I can t get no " Our message, as well to build brand, it must educate the client and avoid Western practices that had very successful result in another countries. Both before, during, and after the purchase we must strengthen our brand while we build the market and be sensitive to their reactions. In this process, we observe the current regulations (Table below summarizes the most

significant). The most important thing is that advertising must be credible, legal and "comply with all the requirements for the spirit of socialist civilization." These regulations should not be taken as barriers, but as a stimulus to creativity. Failing to use the national flag, and since the great patriotic sentiment, the image of Yao Ming, NBA star, or Chinese astronauts have become important marketing assets. Table 3 Chinese prohibitions in advertising

CHINA BANS Use the flag or national anthem Use the name of government agencies Use superlative propositions Discriminate racial, sexual or religious Perform comparative advertisement Using the honour, obscenity, violence or superstitions Describe the benefits of eating the food announced

As for the price, the Professor William Burgers, of the China Europe International Business School (CEIBS), evaluated the acceptance of a price for a particular good in a continuous spectrum from 31 to 70 renminbi (RMB)
(2)

. Logically, the higher price, the lower demand. However, consumers prefer

to pay 37, 38 or 39 RMB before 34 or 31; also choose 47 or 48 versus 44 or 41. The reason is that the digit 4 symbolizes the death, 44 death twice, and 8, good luck. Hence, setting prices in China implies carefully consideration.

Conclusion

Create and introduce a brand in a society like China, with a cultural and historical background disconnected from Western nations, is a challenge for marketers. Marketing in China is a return to origins (do not forget the definition of marketing and market management). This requires a different attitude as not only obeys a different reality to the West, but encourages innovative approaches concerning competitors founded not to export. It exists great margin to define the market, without many of the existing conditions in our environment, and it requires a very aggressive approach and tenacious in his footsteps. The definite conclusion is reached that it is essential to understand firsthand the reactions of our target market to manage them according to our goals and expectations.

References
1 .- Source: International Monetary Fund, World Economic Outlook database, September 2011.

<http://www.imf.org>
2 .- 8.49 RMB equals approximately 1 .The renminbi (RMB) or yuan () is the name of China's currency. 3. - The Chinese New Year is the most important holiday. It starts with the new moon and ends with full moon 15 days later. Remember that the Chinese calendar is based on lunar and solar cycles, giving months of 29.5 days and, therefore, the Chinese New Year is celebrated on different dates each year.

Bibliography
Wang, Jing. Brand New China: Advertising, Media, and Commercial Culture. Cambridge, MA: Harvard UP, 2010. Print. Morcillo, Eduardo. El Marco De Los Negocios En China: Aspectos Prcticos. Barcelona: Ediciones Gestin 2000, 2005. Print.

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