Lately, I’ve read Yining Qiao’s question about a traditional Chinese candy “Big White Rabbit” in the discussion board and then I found her article about this in her blog. I personally really like this candy very much too and I just noticed that they are really never changed the package. Moreover, “Bit White Rabbit” is not only facing challenges from other traditional Chinese style candies but also foreign competitors like Mars. The sales of “Big White Rabbit” now is just half of the sales of Dove chocolate in China.
It is true that mothers and grandmothers are the main consumers of this candy (which remind me of what I learned from baby carrot). However, the children will grow up one day and become part of the mother segmentation. Therefore, while the profit margin of this candy is so low, instead of spending a lot on changing the whole package, they can focus on how to attract mothers of different generations.
Mothers nowadays are more educated than before, and the food safety problem in China is so serious, they would like to choose the best product for their children. Therefore, “Big White Rabbit” can simply have a information label on the package to emphasize the health benefit of this toffee (especially after the company had a milk quality scandal), while other candies like chocolates may contain too much sugar for children.
Or they can reduce the size of this candy (while not changing the price, like “what we learned” today 😛 ), so that children will never get enough and keep asking for more.
After all, this will become a loop that never end. Hopefully.
I just watched the MV of “On the Floor” the night before the Tuesday class and the product placement caught my attention.
The most obvious products, or in another words, the products that I really noticed are BMW and SWAROVSKI, which showed up in the beginning of the MV, when I was paying attention to what’s going on of the MV. The wine in 2:34 is relatively not obvious, or maybe it is because there is no close-up for it?
With over 47 millions views, I cannot deny that this is a efficient way to advertise. However, as a (not so good) marketing student, I cannot help to think “So, BMW is doing so as targeting on young, rich, party people? Then what will the original steady, older customers think about it?” Same as to SWAROVSKI.
With the close-up of the “water-drop” ear ring, I was looking forward to see it shake and shine with Jennifer dancing gorgeously, but I was disappointed, and this makes the product placement looks unnatural.
Another example is SONY in “Hold It Against Me” at around 2:40. I was totally emotionally interrupted by the close-up of the brand. My first reaction was “Ok, it’s SONY, so what can the brand help to express the meaning of the MV?” Then I realize that it is another abrupt product placement again. Apparently, no one wants to be like the wine in “On the Floor” hah!
There is a annual Spring Festival evening show in China, and in 2010, there were tons of product placements in it, and the audiences were strong discontent with that. As a result, the obviously product placements disappeared in 2011.
Therefore, without making the products blended into the atmosphere of the MV, I won’t call it a successful but just efficient way to do advertising.
(There is a comparison of MTV and VEVO visions. Are marketers indirectly generating profit from people who watch free video online?)
Recently, students are voting for keeping the U-Pass. When I looked at the voting website, I found that the monthly fee is actually increased by $7, which reminds me the rumor that BC TransLink is facing bankruptcy. And then, the “TV For Commuters” idea Victor Kong proposed in his blog comes into my mind.
As I’ve commented, this idea really works in China. Here is a successful sample, Vision China Media.
The first person who implemented this idea in China is Nanchun Jiang, the CEO of Focus Media. Started on 2003, this company “established [their] commercial location network by installing flat-panel LCD television displays in high-traffic areas, such as elevator bank of commercial office buildings to target business professionals with higher-than-average income.” Because this media provides a channel for ads to accurately target on the right segments, this mobile digital television industry bloomed out.
However, by simply broadcasting ads, people were not as interested in it as before, and as a result, Focus Media “provided” an opportunity for its competitors. Vision China Media, one of the competitors, who targets on the transportation– people in the “closed cage” as Victor Kong described, not only broadcasting ads but also some local news and TV shows which successfully grabbed the attentions back. As a matter of fact, I personally enjoy killing my time on bus or metro by watching it.
Investment banks are interested in investing these media companies. Some of the media company were merged by billion dollars and some of them are now publicly own company with shares traded on the U.S. Nasdaq Stock Market.
So I think there is a potential mobile digital television advertising market in Vancouver which BC TransLink will be glad to cooperate with.
If anyone has the ability to implement this business, I would like to sell my ideas and experience.;p
Books, magazines and newspaper, who were suffered due to the internet booming are now fighting back thanks to the portable big screen of iPad. However, iPad ADD Is More Acute Than Anticipated.
People said buying a magazines is actually buying advertisements, and therefore iPad provides a platform for readers to access to the product website and purchase right away. However, it also become a distraction. Without knowing what are in the remaining magazine, people probably would forget about going back to it.
Not as flexible as print media is one of disadvantage of not only iPad but also any other ebook devices. Traditionally, people can open or skip whatever page they want in a second and fold a page as a bookmark which let people recognize a page intuitively. However, finding a page in iPad may spend a lot of time due to the network or hardware delay.
To gain the market share back, maybe one day the ebook device would provide a similar experience as reading a real book.
There is a surprising but interesting news comes out this week: BestBuy announced that they close all the stores in China.
Here is the article: Best Buy Shuts China Stores to Focus on More Profitable Brand from bloomberg.com
I’ve been to Futureshop on the first day I arrived in Canada. At that time, I was surprised by the number of staff there. Sometimes I even couldn’t find anyone to help me check out. In China, staffs are everywhere, some may follow you to anywhere, it’s annoying sometimes, but you cannot deny that it’s convenient to reach the product you want. Later on, I thought maybe it’s because the labour cost in Canada is too expensive or, like what BestBuy said in China, they want to provide a comfortable, upscaled environment for people to choose whatever they want. People like the environment but also want more information of products and it’s hard for people to get used to the American style customer service quickly. Also, people like the quality of BestBuy but they prefer a good deal.
(A picture about how German (western) different from Chinese (eastern) in opinion and the way people think)
While Bestbuy is still doing business in their American way, Gome and Sunning are not leaving many market for it . First of all, to be able to sell products in the store, manufacturers have to pay Gome and Sunning million RMB for admission. Also, Gome and Sunning import and sell the products before they actually pay the manufacturers. This is their key to success. In this way, they can import a large amount of inventory with a high discount and therefore offer low price for customers. However, this is also a cruel way, and many small manufacturers bankrupted because the capital chain broke. Lastly, Gome and Sunning keep opening new stores, so the loss of one store can be covered by the gain from the other store. Some articles also mentioned that Gome and Sunning close stores for a nice book profit. All in all, Gome and Sunning are not simply making profit from prices spread.
A giant business can fail in an unfamiliar market when a small one survived
More interesting differences between German and Chinese, drawn by a Chinese who grew up in Germany:
Like what I’ve mentioned that I plan to buy a netbook, I did buy a pretty good one thanks to all my researches. After that, I believe I should do what other people do that upgrade the ram to 2GB so I started my research again. After realizing Best Buy or Futureshop don’t have much memories for me to choose (actually they only have a 1 sq.m. place for all the memories in store), I choose to search those websites that I turned off. Then I realized how shortsighted I am.
After researching, I ordered a memory on NCIX’s website and I chose to pick it up in the store in Richmond. When I were there, I realized that the store is more like a place to pick up. It’s only around 700 sq.ft., and not all the item are displayed in the store.
(Minh Ngo, co-founder of Memory Express)
Apparently, compared to Best Buy and Futureshop, NCIX and Memory Express are smaller businesses focus on computers and computer components instead of big ticket items. I think they target on the customers who would like to assemble and optimize their own machines.Normally, this group of people are familiar with internet, so these retails put a lot of effort on their websites. However, even though they have all their merchandises on their websites, the websites are not so appealing. Therefore, since I were not in their target market and I didn’t know them at all, I closed the unappealing websites right away.
As a result, I think they should do some advertisements, like bus stop poster advertisement, to make their brand name know to everyone, even those people who don’t know about computer at all. I think it’s always good to let people remind of the company’s function right after they come to the brand.
It’s time to move on to the macroenvironment!
I would like to share some opinion about the current market situation in China.
Let’s start with an interesting video.
I have to say I don’t know most of the things until I watch this video. However, I think it’s way too exaggerated (or maybe I’m brainwashed?). To me, it is just about Facebook, Twitter, Youtube are not accessible and I cannot search some political stuffs that I don’t care.
What really happened is Chinese people copy Facebook, Twitter, and YouTube and develop them, so Chinese people actually have everything in Chinese style which, to me, is even more functional than the original ones.
(www.renren.com Interestingly, it was called “In School Networking” at first and only people in school register for it. This website decide to expand their market and so they change the name to “Everyone Networking”, but due to its brand name and the original customer base, it’s customers are still mainly students.)
Beside these successful IT examples, we also have cheap copies of “everything”. The most popular one is smartphone, since IPhone was not sold in China at first and most people cannot afford it.
(Meizu M8)
As a sad result, serious polarization and distorted world view exist.
Some people, especially those who are richer, are so eager to differentiate themselves from poor people. It’s being said that people buy the benefit of a product, not the feature, but what happens in China is people are actually buying the feature. They “love” the LV logo so much that they buy a lot just for showing off. People, especially “after 80 and 90” (referred in post (1) ), love and buy everything that can show their dignity and go to any place can show their taste. In short, the more expensive a product is, the more popular it is. The real “Made in China” become the symbol of cheap, low quality stuffs, even though the products are getting better.
However, the blindness does generate a lucrative market, doesn’t it?
I should go on with corporation today, but this part can be concluded in just one sentences.
FJ has a maintenance department while the Gome branch store hasn’t, so they corporate. Maybe there are some other “top secrets” that I don’t know. Overall, this part is not interesting at all.
What I really want to talk about today is my recently experience.
I’m currently looking for a new netbook and I realized that I never put local small dealers in my consideration. Ironic, huh?
Before saying “no”, some thoughts flash across my mind. The first one is “I don’t know whether they are creditable”, and then comes with “If there is something wrong with the product, I doubt if they can deal with that properly” and “Overall, I trust Futureshop.” Seriously, I prefer Futureshop over Bestbuy. The reason is simply, I’ve never bought a thing from Bestbuy yet.
Same story happened. There are two major 3C retail chains in Hongkong that I know, Broadway and Fortress. I have had great shopping experience in Broadway before that they gave me almost all the camera accessories for free with my purchase of a single camera (This is why I loooove Hongkong!LOL). Even Fortress offers the same prices and same gifts, I make habitual decisions ever after. (What a loyal customer!)
To be responsible for the side I am standing for, I searched for the small retails right after I realized they actually exist. However, I was disappointed by the unprofessional styles of the websites and the no surprising prices. Finally…I gave up.
Therefore, a ultra thought comes to my mind–If you are not prepared to show the most professional or competitive aspect of yourself, you’d better not even let people know you, because they won’t initiative learn you anymore.
How strong are FJ’s competitors?
As I’ve mentioned before, Gome and Sunning is like the Bestbuy and Futureshop in Canada. Take Gome for example, (since there is a Gome store just a mile away from FJ), it was opened in Beijing on January 1st, 1987 and now it becomes the largest 3C (computing, communication, and consumer electronic) retail chain in China with around 1200 stores. It’s main mission is “Competitive price from high volume, customer service comes first”.
(Gome’s mission & store locations. Snip from http://www.gome.com.hk)
It is true that Gome provide low price. Due to the immature market regulation in China, retailers have price war with each other which lead the gross margin to a really low level. Manufacturers offer discount to retailers base on the size of retailers’s order, which means if a retailer don’t have the ability to order huge among of goods then it cannot provide low price to customers and finally it has no choice but leave the market. This is also the main reason why small business are suffering through the battle of big retailers.
However, when we move to customer service, I’m going to slightly lean my head, knit my brow, shrug my shoulders and show my palms. (Ya, just like what you are doing!…If I’m right 😉 ). First of all, all the sales clerks in any retail stores are pretty much the same. Secondly, if you type “Gome delivery” in a Chinese search engine, beside the advertisements, all you can find are negative information. Last but not least, Gome do not have its own maintenance department and I will elaborate this in next post.
Beside these retail chains, I’m actually happy to see that some other small retailers are also earning their living in that area, which means there still are market available for FJ to capture (remember FJ was the best). However, do I dare to imagine that FJ not only survives but also grows up? I hope so.
I think this is a good opportunity for me to analyze a small company where I worked as an intern before by using the marketing concepts that I learned and I am really excited about it!!
Let me start with some basic background of this company. It is a small, local appliance store call FJ (for short) in a small place beside Shenzhen, one of the big city in south China. The store mostly sells big appliances like television, air-conditioner, refrigerator and some small appliances as well. It was the biggest appliance store in that place before Gome and Sunning (the Bestbuy and Futureshop in China) captured the market. Now, FJ is suffering through a hard time.
(part of the store)
I’m really interested about how a small business like this can survive through the pressure and challenge from the big companies. Will these small businesses survive by finding a new way to capture the market or will they leave the market finally?
So now I am going to analyze this company and try to figure my questions out probably throughout the term.
Where do the customers come from and what are they looking for?
Since both the big and small companies seldom distribute flyers and most people in that area won’t go online and check the deals, I think the major customer group come from the people who live around the store and people who regard FJ as a local “old-brand” and this kind of people are mostly “after 60, 70”. For those who are “after 80”, most of them believe in “famous brand” has higher quality, not only products, but also stores.
(Vikapedia: In China, people have different name for generations. For example, for those who were born after 1960s, before 1970s, people name them “after 60” and so on and so forth. Uncreative, ya, I know 🙂 )
Because of the average per capita income in China is around $3700 per year, people don’t make quick decisions while buying big applications. They always look for the best deal, which means low price with as high quality as possible. However, due to the underdevelopment of IT in China, customer mostly receive product information from sales people. Therefore, they probably will go to different stores and inquire about a product for many times before making the decision.
I will continue the analysis next post.
