Four elements of Chinese brand building

Wharton marketing professor David Reibstein shoulders a mission. As Chairman of the Board of Directors of the American Marketing Association (AMA), he recently signed an agreement with the Chinese government to provide training and certification for all state-owned enterprises. State-owned enterprises account for about 65% of China's total economy.

"The Chinese government wants to improve the level and quality of Chinese company marketing," Rubinstein said. "American Marketing Association will provide support for it."

This is a difficult task, not just because of China's size and population (over 1.3 billion). "China is very good at marketing '4P' (referring to Price, Product, Place and Promotion) - price, and in the other three - products, channels and Promotions - poor performance," Rubinstein said. The country’s success in maintaining low costs—and thus maintaining low prices—means “other developments have been hindered.” As a result, Chinese companies have yet to feel the pressure to improve product quality, channels and promotions, and urgently. Sex.

Taking the history of the United States as an example, Rubinstein talked about the success of the car manufacturer Henry Ford initially through the mass production of a large number of cheap black cars. It was only when General Motors began to make models more stylish and provide people with more choices in design and performance. Ford only felt more customer-centric pressure.

Now that China has begun to feel the same pressure from competition, its form is a price war, and the price war has further increased the pressure to produce better products. "But, to create a better product," Rubinstein said, "You must be very clear about the competitive landscape and the customer segmentation." The American Marketing Association's website defines customer segments. "The process of subdividing a market into a small group of unique customers who behave in the same way or have similar needs...Each small group can be selected as the market target for implementing a unique marketing strategy." Rubinstein talks about Historically, "Chinese companies have not done any work on customer segmentation, which means that they do not have much of the customer's different needs." However, Rubinstein also talked about his recent Years also saw the growth of new brands in the Chinese market and more diversified choices. Just as a marketing executive from a multinational company recently told him: "China is not a single country. It is more diverse than people think."

The big brands mean that high-profit Rubinstein recently presented a list of the top 100 global brands in terms of value when speaking with alumni, teachers and students of the China Europe International Business School (CEIBS) in Beijing. Coca-Cola ranks first, followed by IBM, Microsoft, Google, GE, McDonald's, Intel, Apple, Disney and Hewlett-Packard (HP). Although computer and electronics maker Lenovo is a strong competitor, there is no Chinese brand list yet. "Interestingly, they have won this position by buying the brand." Rubinstein said when Lenovo paid $1.75 billion to buy IBM's ThinkPad unit in 2005. “Lastly, Lenovo had already been manufacturing this kind of product.” Rubinstein also talked about the efforts made by Haier Group, the Chinese consumer electronics and home appliance company, in order to obtain its brand value and intends to acquire a famous competitor Mitel. The company (Maytag) - this transaction "(making home appliance manufacturers and competitors) Whirlpool company (Franklin) was so scared that he did not need to be included in the United States and Techtek. Whirlpool did so, just to stop Haier from entering ."

Rubinstein told the audience in Beijing that the best-selling differentiated brand can bring high profits. Coca-Cola's gross profit was 61%, and Procter & Gamble (P&G) and Apple's gross profit were 49% and 44%, respectively. However, the gross profit of Hon Hai, the parent company of iPhone maker Foxconn Technology Group, is only 8%. To some extent, companies such as Hon Hai and Foxconn are "worried about whether they can make money on non-branded products." Although they have the advantage of low-cost manufacturing, Rubinstein said.

He also talked about the interaction between price, brand, and brand image. For example, with low-cost goods, often the view of lower product quality: "We look at German cars, they are really good cars, but we think they are good cars because (Germany's cars Manufacturers) set high prices," he said. "If my product is priced higher, then I will leave the impression that I am a premium brand. It is difficult for a low-priced product to make consumers think it is a high-quality brand."