MKT221 Marketing in the Chinese Mainland
Outline for Review
1:
Introduction
1) What are the some of the key socio-economic indicators of China that suggest the time has come
for Chinese consumers provide a realistic market for branded products?
2) Based on the current stage of economic and policy development, what are some of the risks and
challenges for foreign firms?
3) What is the China syndrome or the popular misconceptions about the consumer market in China that
has led to the downfalls of some multinationals?
2:
China: A Society and Market in Transition
1) Transition from central planning (command economy) to a market economy
2) Key characteristics of a command economy in terms of product and distribution, and its impact on
consumption and firm behavior (examples)
3) An overview of economic reforms and policy changes since 1978 (examples), e.g., starting in rural
areas, ownership structures, foreign direct investment (FDI), state-owned enterprises (SOEs) and
its impact on various aspect of marketing operations,
4) What is a dual economy or dualism? How is that exhibited in modern China with examples in
marketing?
5) What are some of the typical problems with marketing in such an economy?
3:
The mainland-Hong Kong Link: Opportunities and risks for Hong Kong
1) Hong Kong’s history of economic development and key characteristics.
2) Brief discussion of the characteristics of Hong Kong firms, i.e., their strengths and weaknesses and
their investment in mainland: the biggest investor in mainland, focusing on export-oriented and
labor intensive operations, such as toys, watches, and apparel; more recently in real estate and
hotels;
3) Hong Kong’s economic woes since 1997 and the challenges for Hong Kong firms, such as the need
to upgrade technology and product quality, and expand market opportunities in the mainland.
4) Major policy initiatives and projects by the SAR government to promote economic development
and HK firms
5) What are the major thrusts of the CEPA and how can HK and foreign firms take advantage of the
benefits of CEPA?
4:
Marketing Environment and Development
1) What are the legacies of the central planning in terms of product availability and customer services?
2) Evolution of China’s marketing environment in terms of advertising, product quality, packaging,
and then brand management, customer relationship management,
3) What are major steps taken by Chinese firms to improve product quality and marketing over time?
4) Changes in market characteristics such as product variety, increasing competition, a buyer’s market,
and the role of technology and services.
5) What are the ethical challenges in marketing and distribution such as guanxi and corrupt practices
and how would you deal with such dilemma?
5:
China’s Consumer Markets
1) Consumption upgrades from time to time, focusing on different big-ticket items over time, reflecting
changes in consumption power (Engel’s coefficient), motivation and need.
2) From a homogenous population, Chinese gradually emerged into very heterogeneous segments,
based on demographics, psychographics, values and lifestyles.
3) Market structure remains a pyramid with a small superrich and a large working poor group, with
increasing disparity as reflected by Gini index.
4) What are the major consumer market segments in urban China and what are their key characteristics?
5) Why is the emerging middle class in China important for marketing? Key characteristics,
consumption patterns, and marketing responses
6) Why do Chinese consumers have high level of brand awareness yet low level of brand loyalty?
Articles: 1) China Consumer Pyramid (Cui and Liu 2001)
6:
Regional Markets of China and Different Faces of Chinese Consumers
1) Regional disparities and segments in China due to differences in location, culture, economic
development, consumer preferences, lifestyles, and innovativeness,
2) Marketing implications for expanding in the urban markets from first tier to second and their tier
cities
3) Rural markets and the opportunities there.
4) Given the diversity and heterogeneity of the Chinese market, what kind of missteps have some
multinationals made, and what should be done to avoid such mistakes in expanding in the China
market?
Article: 1) The geographic market segments of China (Cui and Liu 2000)
7:
Entry and Growth Strategies for China
1) Entry strategies based on government policies, industry sectors, and firm background.
2) What factors should be considered in marking entry decisions?
3) Three major decision areas: location (where – coastal vs. inland), when (early mover vs. late mover),
and how (different modes of entry), and strategy and performance implications.
4) Compare their advantages and disadvantages of different modes of entry from exporting, licensing,
EJV to WOS, and M&A.
5) Evolution of strategies over time depends on priorities and challenges facing firms.
Article: Marketing Planning in China, Cui&Lui (2005) entry order article
8:
Marketing Strategies I. Product and Brand in China
1) Production line extension is a key strategy for expansion – using a product development strategy.
2) Market development is another popular expansion strategy. However,
diversification – new product and new market – was very popular among Chinese companies for some
time, but with mixed results.
3) For several reasons, focused (penetration) strategies help achieve firms better
operating results than diversification strategies.
4) Despite number brands in China, top brands are not dominant and sometimes short-lived, due to
poor brand image and short-term orientation, ambiguous brand value and positioning.
5) Comparing with the product brand strategy, which is popular in the U.S., corporate brand is more
popular among Chinese firms.
6) Entrepreneurs and other factors have a big influence on brands in China.
7) Meanwhile, many multinationals have adopted a localization strategy – by building local brands
(standardization/global marketing vs. adaptation/localization), to compete with local companies.
9:
Evolving Marketing Strategies II: Channel Management
1) Evolution from vertical hierarchies under central planning to flat structures with many options, new
forms of retailing, with many new formats of retailing and distribution
2) Unbalanced development of structures and functions, low development in management and
technology, increasing competition, thinner profit margins.
3) Unique characteristics: heavy use of the agents to cover large areas, other reasons include local
protectionism and diversity in cultures and business practices
3) Channels relationship and power struggle between manufacturers and retailers.
3) Differences between first tier cities, second tier cities and the rural market
10:
Marketing Strategies III: Promotion and Integrated Marketing
1) Emphasis of different products in advertising over time, reflecting the progress of economic
development and consumer demand (from food, pharmaceuticals to cars and real estate).
2) Another important transition is the shift of focus on product functions and features to emotional
appeals (such as nationalism and sex appeals), more accurate positioning, integrated marketing
communications to enhance brand and corporate image.
3) Other methods of promotion such as sweepstakes, celebrity endorsement, sports and event
sponsorship, sales discount, incentives, VIP programs are gaining popularity and effective in China.
4) How to handle ethical issues in sales promotions
11. Marketing Strategies IV: Pricing
1) Price war and price competition are common among Chinese industries and firms, due to
consumers’ price sensitivity, lack of brand power, short-term orientation, increasing product
similarity (or lack of differentiation), lack of management expertise in pricing management and
strategies, reflecting the hypercompetition among firms, and the lack of non-price competition
strategies, heavy reliance on low cost and low price strategies.
2) Thus, to avoid price competition, firms need to reduce price sensitivity, increase brand value, adopt
innovation and differentiation, etc.. as price is not the only tool.
3) The involvement of both foreign and local brands in price wars are creating a trend of convergence
between foreign and local brands in terms of market share and pricing.
4) The winning formula – marketing mix strategies – for success in China.
12. Challenges in the Wild East: Marketing Ethics
1) Unethical business practices in various industries and in marketing
2) Laws and regulations concerning ethnical practices: fraud, deception, unfair competition, bribery,
kickbacks, piracy, IPR issues,
3) Why have consumer rights and corporate social responsibility become more important than ever?
4) Ethical philosophies: guanxi and relationships
5) how to handle customer complaints and PR crises.