Brand Loyalty, China? [Part 1]

Introduction

This topic is of interest to me because, like most of my friends in the industry (we are usually most perplexed, if sales & marketing plans are not going well, and exhilarated when sales & marketing plans go well), I expect brand loyalty to help me sustain and grow my business.

This is a huge topic by itself and you can easily find many articles and discussions on the internet. I don’t intend to write a thesis on it. My writing will primarily reveal some observations I have made regarding the subject, how important it is for me as an entrepreneur and what I can do to achieve it.

Snapshot of Chinese consumers general characteristics

To begin, I have listed some general characteristics I have concluded from past projects and reviewing present literature.

· Diverse market segments across different regions and cities
· Choices are aplenty for Chinese consumers
· Chinese consumers are primarily influenced by media advertising, internet, family and friends
· Brand conscious
· Price-for-value conscious
· Quality and function conscious
· Chinese consumers generally perceive foreign brands to have better quality and status
· Like to associate with products and services that are associated with high or privileged status

#1 First Observation: Check Your Assumptions – the missing equation

I discover that if you peel the onion enough (as a figure of speech), you will discover assumptions and insights on any issue or subject. This is important to me as a business owner because I am daily faced with limited resources and time, and I simply want to make the best use of it. I need insights and clarity to help me achieve economical usage of my resources.

So, what do we understand by brand loyalty? What are our expectations and assumptions?

Brand loyalty is having my customers returning and preferring to purchase my products or services over my competitors. The expectation and assumption is that if I can address the key buying behaviours in my target segment and the 4Ps (place, promotion, price and product), I can usually expect brand loyalty from my customers.

I suggest we check our assumptions because I have observed many successes as there are failures despite companies adequately address key buying behaviours and the 4Ps.

The missing equation, in my observations, is the presence and activities of competitors. The 4Ps and addressing key buying behaviours certainly contribute to the success or failure in my attempt to build brand loyalty. But notice the culprit behind these activities besides me? That’s right, my competitors.

My point is simple; do not assume customers to consistently purchase your products and services even when you have addressed key buying behaviors and the 4Ps, if you have not consider your competition. This is true in China.

Case in point: Cosmetics in China. Chinese women are willing to pay for premium products. However, they are also willing to switch to another premium cosmetic provider if they are giving away generous gifts. Why? Because Chinese women perceived both premium brands to be equally good in addressing their needs since they are in the same category – high-end brands.

Thus, I can be sufficiently and accurately addressing my target segment’s key buying behaviours and the 4Ps but my efforts can be thwarted when one of my competitors pull a stunt like the cosmetic example mentioned.



End of Part 1

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Brand loyalty, China? [Part 2]

#2 Second Observation: Learn from your top competitors – they are probably doing something right

From the many competitors that are competing in the same market space, there are usually a few that manage to achieve brand loyalty. I study them, observe them and try to determine their key success factors in achieving brand loyalty.

From this, I typically uncover certain buying behaviours or demand drivers that I may have overlooked. This discovery helps me in two ways; first, I realize fresh insights into my target segment’s buying behaviours and demand drivers, and second I further determine my value innovation.

Case in point: Using the same cosmetic case we gain two insights namely the importance of product differentiation and Chinese women sensitivity to price (or perceived value). The cosmetic company can then find or create new demand and value that really matter to Chinese women. Professor Chan Kim and Renee Mauborgne of INSEAD explains this very well in the ‘Blue Ocean Strategy’.

By learning from top competitors and acting on the insights gained, you are giving consumers good reasons not to follow your competitor.

#3 Third Observation: The Punch of Promotion & Publicity

The Chinese consumers are swarmed with many choices all vying for their attention. Added to this, the vast majority of Chinese consumers are still not familiar with foreign brands, lifestyles and influences. To make matters more complex, China has diverse consumer market segments. And finally, Chinese consumers rely very much on recommendations made by family and friends, and emotional appeals.

The above phenomenon has three implications:

• Chinese consumers’ decision making can be influenced
• Chinese consumers are being presented incessantly with large amounts of product and service information

Therefore, buying behaviours and demand drivers change over time as current industry players and consumers are constantly interacting and shaping the market landscape.

For an entrepreneur such as me, these implications mean that my brand message has to be consistent and strong working hand in hand with an appropriate promotion plan. The point is to have my brand message lodged deep into my target segment’s minds such that my brand name will outshine my competitors’.

Since I have limited resources, this means maximizing the returns on promotion activities.

#4 Fourth Observation: Consumer demand is changing…..

I don’t have to tell you this as you must already know that China’s consumer demand landscape is changing. The factors that are driving this change are urbanization, increasing affluence, influx of information to consumers and the many alternatives for consumers in the market.

A very important example of this observation is the rapid widening of attention by many organizations on first tier cities to China’s second tier cities. Consumer demand is expected to be huge in China’s second tier cities and already many organizations are vying for market shares.

For a business owner, it is not enough to keep close tabs on his or her market; you have to identify trends and growth opportunities, constantly. I started focusing my attention on China’s first tier cities initially but found many clients have already started to be curious about second and even third tier cities, curious enough to approach my competitors.

Conclusion

Brand loyalty is possible in China but remains elusive for many businesses. There are many key success factors leading to brand loyalty, depending on your industry, and the consumer market landscape is not consistent.

My experiences and observations led me to focus on building a strong and consistent brand, and deliver enough value to my customers giving them enough reasons to prefer my services over my competitors.

This basically means (and I mean it) exceeding clients’ expectations and producing top quality work. I cannot expect 100% brand loyalty because I cannot adequately address all key buying behaviours and the 4Ps; there are simply too many variables.

My strategy has not failed me thus far.



End

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