China has the largest population in the world. Young consumers’ market in China has changed significantly. Consumers now emphasize on value in every product they purchase. This is the main reason that they spend for a lot of time online comparing the prices of different products before they make the decision of purchasing a particular product. They are also loyal to the brands that they enjoy. Earlier Chinese consumers love trying different brands before sticking to one brand that they prefer (Wang, 2010). The youths of this country are self indulging. It means that they are individualistic in their wants and loyal to the brands that they prefer.
Overview of China’s Market Characteristics
It is critical to understand the market characteristics of China in order to know the marketing and branding strategy that should be adopted by China’s young generation. By understanding the characteristics of the market in this country, it will be easy to know the perfect strategy that companies should use while trying to build their brand to China’s young generation. In addition, it will be easy to identify the marketing strategy that will suit the market needs of this country.
The market of China is categorized under socialist market economy. The aim of this market economy is to ensure that equality is achieved over the control of means of production. Due to this, the working class in such markets is given more control over the ownership of the means of production. Chairman Deng Xiaping introduced this market system in China.This market has several characteristics. One of these characteristics is that it plays the role of allocating resources. The market forces of supply and demand determine the prices of goods and services. The market in this country plays a big role since it ensures that there is free movement of the factors of production. It helps in ensuring that goods are produced within the scheduled time so that there is not any shortage in production. Indirect government macro-control system is also evident in socialist market economy. In China’s market, the Communist Party of China is responsible for exercising macro-controls. Legal rules are also established in order to regulate how businesses conduct their operations in this type of market. Law prosecutes companies that break these rules and regulations that are established by the legal system.
China uses public ownership of industries in order to implement its market economy. Public ownership of businesses and enterprises is achieved using state owned enterprises. The local government and the central government establish these enterprises. State holding enterprises are also responsible for conducting commercial activities in this market. Such enterprises are publicly owned. However, the state of China controls the largest share of their shareholding. This makes China’s government to influence the management of major firms in this country. Total government ownership is retained in sectors of the economy such as infrastructure, energy, and heavy industries. The decision-making in this market is decentralized. Due to this, local managers are given more freedom and autonomy of responding to the market conditions of this country.
China has benefitted significantly because of utilizing the socialist market economy. In the second quarter of 2010, China managed to overtake Japan as the world second largest economy due to its socialist market economy. Poverty in China has also dropped by 80 percent for the last 30 years. This market model also encourages the establishment of private owned enterprises. The development of private industries has caused this country to have massive innovation in its industries making it to become the global leader, especially in its technology industries. Economists have established that the economy of China grew by 43.5 percent of GDP when Chinese government emphasized on strengthening the socialist market economy of this country in 1993. The domestic market of this country consists of about 1.3 billion people. These people support the local investment activities in this country making it to prosper economically.
Automobile market is strong and this is evident due to growth of the automobile industry in this country. Statistics from economists reveal that China’s auto market is the largest in the world. Due to this, companies involved in the automobile industry of this country have been recording positive returns on their invested funds. In November of 2012, China recorded auto sales of 1.79 million. It represented 11.5- time increase in auto sales compared to the auto sales that were recorded in October 2012. McKinsey & Co has projected that the auto market of China will grow by 8 percent each year to reach 22 million sales annually by 2020. The growth at this market will be attributed by the fact that SUV demand from this country has been increasing. One of the foreign companies that has benefited greatly because of investing in China’s market is General Motors. This company sold 260,018 units alone in November. This company states that Chevrolet and Buick are performing very well in the auto industry of China. Ford Motor Company also increased its auto sales by 56 percent in November 2012. Mondeo and Edge car models of this company performed well in 2012. The largest market of Volkswagen vehicles is in China. In November, the sales of its cars increased by 21 percent to make it sale about 704,991 vehicles alone in the third quarter of 2012. This shows that the auto market of China performs very well.
The telecommunication market in China has also been performing very well for the last five years. The telecommunication market of China is the largest in the world considering the number of mobile subscribers that are from this country. In addition, it earns the second largest revenue from subscribers in the world. Economists have established that the mobile sector in China has been expanding by over 15 percent each year. This increase is attributed by the fact that the young generation in this country love to use telecommunication services for social interaction. Due to this, foreign market operators have been expanding their services to Chinese market since it proves as a potential market. BT Group Plc managed to enter China’s market since the telecommunication industry in China is performing very well. This company is the largest telecom service wholesaler in Europe. It wants to concentrate in the telecommunication market in China since Europe’s market has been performing poorly because of the European debt crisis that reduced the purchasing power of consumers in China. AT & T, the largest telecom carrier in the United States considering the number of subscribers, also plans to expand its operations to China since the telecommunication market in this country performs very well (Wag, 2008).
Household appliance market also performs well in China. The success of this market is attributed by the fact that the government of China encourages innovation in the manufacturing of household appliances. China’s government is pushing for the introduction of industry technological alliances. These alliances will help in ensuring that businesses dealing with household appliances in this country are aligned. Due to this, they will be collaborating while researching on ways of innovating products in the household appliance market section. The government of China has been offering subsidies to companies that come up with energy-saving products. Since many companies are introducing appliances that are able to save energy, sales of such appliances have been increasing in China. In September of 2012, the sales of refrigerators and air conditioners increased by 22 percent in China (Li, 2012). The increase in sales was attributed by the fact that 5.6 million units of washing machines were sold in China in September of 2012. This was the highest sales figure recorded in seven years.
Overall, this section shows that China falls under socialist market economy. Due to this, marketing and building of brands in this country will be easy since this country favors free movement of production factors. In addition, private enterprises have been performing well in this country proving that the marketing and brand building strategies targeted towards the young generation of this country will be successful. Since the auto industry, telecommunication and household appliance industries have been performing well in this country, the marketing and brand building strategies should be directed towards this market.
Marketing is an important concept for the success of any business. Through marketing, businesses are able to communicate the value of the services or the products that they offer to consumers. In addition, marketing helps business to transfer service and goods from the producers to the consumers. Since marketing is necessary for the success of any business, companies always strive to formulate a good marketing strategy helping to ensure that they succeed at any market that they introduce their operations. Marketing strategy helps a company to align its marketing efforts to its objectives and corporate goals. Since a company engages in many activities, it is easy for it to forget its corporate objectives while conducting its marketing campaigns. A good marketing strategy helps a company to align its marketing activities to the overall objectives of the one. Marketing strategies also help companies to identify and evaluate new opportunities that may present themselves in the industry. Marketing strategies project new opportunities that may present themselves at the market. Due to this, companies are able to take advantage of new opportunities present at the market.
A good marketing strategy is also able to identify the needs and wishes of consumers. By identifying the needs and wishes of consumers, a company is able to know the appropriate product that it should introduce to the market in order to target a particular market. It will help a company avoid losses that it may incur due to poor choice of a particular product. Companies in China should consider marketing products that match the needs of the young generation in this country. It will make these companies to earn significant revenues from this target market. A good marketing strategy is also able to identify the potential competitors that are in a particular industry. By identifying the competitors, companies are able to develop strategies that will reduce harmful effects of market competition. While marketing products to the young generation in China, companies should consider developing strategies that will help in reducing competition offered by companies targeting older generation consumers. A good marketing strategy also helps companies to test whether the techniques that they use while promoting their products are successful. In case if these techniques are not successful, companies should change them in order to remain profitable and being in business.
Conducting a good market research is critical for the success of any marketing strategy adopted by a company. It shows the necessity of companies conducting good market research while marketing their products to the young generation in China. According to researchers, market research is important since its helps market researchers to collect information that will give them insight about consumers’ mind. By understanding these insights, marketers are able to know the key features that consumers want in a particular product. Market research also helps marketers to identify the trends that are prevalent at a particular market. If companies conduct a good market research on the wishes of the young generation in China, they will be able to identify whether there are cases of changing tastes of these consumers. This will enable them introduce products that match the tastes of these consumers. A good market research will also enable companies in China to set realistic targets. This is because this information will help companies to set targets that are realistic on the growth, sales and introduction of new products aimed at serving China’s young generation.
Marketing in China
Influence of e-Commerce on China’s Marketing
Marketing in China has been greatly influenced by the boom of e-commerce in this country. According to a study conducted by Barclays Capital, online retail generated sales of about $ 121 billion in 2011. Analysts have projected that e-commerce in China is expected to triple for the next three years to reach about $420 billion by 2015 (Mohaptra, 2012). China has about 193 million online shoppers. The growth of e-commerce in this country has been fueled by the factor such as increase in the number of middle class people in this country. Currently, the number of middle class citizens in this country is about 200 million. In addition, China’s government has subsidized the provision of Internet in this country. Subsidies have made broadband Internet access in this country to become as low as US $ 10 per month. The shipping costs of products sold in this country are also cheaper compared to the shipping costs of the products sold at the e-commerce market of the United States. One of the companies that have fueled the growth of e-commerce in China is Taobao. Consumers describe this online site as China’s e-Bay. In this site, consumers are given the chance to purchase and sell new or used goods at negotiated or fixed prices. Sellers are not allowed to list the selling prices of the goods that they may be offering for sale in this website. No transaction fees are also incurred while selling goods in this website. Most of the revenue of this company comes from advertising. Taobao Mall is also involved in e-commerce in China. Alibaba owns this website. This website has about 200,000 brands and 50,000 merchants. Some of the brands sold in this website include Gap and Nike. Taobao Mall had sales of about $ 16 billion in the end of 2011. Taobao Mall and Taobao are responsible for 81 percent of the online transactions in China. On average, China’s consumers spend about $ 600 on online shopping each year. 81 percent the young generation in China check online comments before making a decision on whether to purchase a particular product offered for sale on online websites.
Since e-commerce has been expanding significantly in China, marketing companies in this country are targeting the consumers conducting online transactions in this country. Marketing companies in China use social media to inform online consumers about new products that are on sale at the market. According to research, young consumers in China trust the recommendation that they get from their peers considering the quality of a particular product compared to the information that they get from marketing campaigns conducted by that product. Moreover, China’s young generation trust the information that they get blogs and users’ review sites while making decisions on whether to purchase a particular product being offered for sale by a particular online company. This has made companies extensively to use social media sites while reaching for the young generation in China. Companies are using social media marketing in China due to several reasons. There has been a magnificent growth in the number of new users of social media each year. The penetration rate of social media in China is about 40 percent. The top social media websites in China include Qzone, Tencent Weibo, Sina Weibo, Renren and Kaixin. Kaixin has about 536 million users while Tebcent Weibo has about 310 million users.
Marketing in Sina Weibo has been growing significantly for the last two years. Most of the users in Sina Weibo are younger than 28 years old. Siena Webo’s fans spend about $159 to 478 each month on online transactions. Due to this, companies in China have been opening up fan pages in Sina Weibo in attempt of marketing to the young generation in this country. Companies target the users of this social media site since it has many domestic and international celebrities. Companies can use these celebrities to endorse their products to consumers and this will lead to high positive returns earned by such companies. Sina Weibo also has key distinct features that can help a company to market to the young generation in this country. These features include Weibo Voting, Weibo Live Interviews and Weibo on the Wall (Baumann, 2011). Weibo Voting consists of a built-in polling system that allows companies to conduct surveys in order to get critical information about a particular product that they may be marketing. Weibo Live Interviews allows users to broadcast live events. Consumers are able to interact with companies introducing a particular product in this feature.
The growth of social media marketing in China has been fueled by several factors. One of these factors is the affordable broadband that is being offered by the Chinese government. This makes marketing companies in this country to reach a wide consumers’ base located in the social media sites of China. Consumers in this country also do not trust the Chinese government that controls the media since. It makes them to doubt in the credibility of the product reviews that may be offered in Chinese media.
P’s of Marketing in China
The 4 P’s of marketing represent product, pricing, placement and promotion of marketing. Product focuses on the specifications of the actual services and goods that are to be marketed by a particular company. In addition, it focuses on how a particular product relates to the needs and wishes of the consumers. It is considered how a particular product should be branded, its name, how a particular product is differentiated compared to the products offered by other companies and what the product should look like. In China, products that are offered by major companies should be molded according to the culture of this people. Chinese people still follow and observe their traditional cultures (Simeon, 2010). Therefore, it is important for companies to market products that are centered towards the culture of the Chinese people. Chinese people purchase products that are centered to their particular needs and wishes. It suggests that companies marketing products in this country should concentrate on offering products that match the needs and desires of consumers. Researchers have established that European products do not perform very well when they are marketed at Chinese market. When European companies want to introduce products in Chinese market, they need first to tailor these products to match the culture and needs of the Chinese market in order for these products to penetrate successfully in the Chinese market. This suggests that companies wanting to market products to the young generation in China should consider introducing products that match the needs and culture of the young population in China.
The second P of the 4 P’s of marketing deals with the price of a particular product being marketed. The price of a product covers the value of a product being offered at a particular market. If a company charges too high on a particular product that is being offered at the market, then there is a very high possibility that the public will not purchase this product. Price also covers whether a particular company offers discounts on a certain amount of goods being purchased. Before a company puts a particular price on the product that it may be offering to consumers, it should ensure that its price does not deviate too much from the prices offered by the competitors in the industry. If a company charges a price that is too low compared to the price offered by other competitors in the industry, people will start associating the low price with low quality product. In China, the pricing strategy that fits this market is mid ranges pricing. Companies are advised that they should use minimal approach while pricing their products. This is because when a company decides to market a product whose price is below the minimum price that is allowed at the market, consumers will start associating this product as low quality. Moreover, when a company decides to charge a price that is above the price offered by other companies in the industry, consumers will start viewing this product as too expensive driving the sales of this product down. It suggests that companies marketing products to the young generation of this country should consider offering products that are affordable to all consumers in this country.
Placement considers how the product offered by a particular company reaches to the final buyer. It also covers the channel that a particular product will be sold to the market. A company may consider marketing its products using online distribution channel or retail distribution one. The choices of channel that will be used to supply marketed products depend on the geographical position of the consumers. In China, e-commerce has been growing at a very promising rate. Due to this, companies are using online distribution channels while marketing their products. This is because it is cheaper to use this distribution channel compared to using retail channel. Companies in China should consider using online distribution channel while marketing products to the young generation in China. This is because young generation in this country purchases their products from online sites offering these products. Place also considers the chief location from where a company will be selling its products from. Some companies prefer selling their products in towns in order to target the urban population. In contrast, some companies sell their products in rural locations since this is where their target market might be located. The young population in China is mostly located in the urban regions of this country. Due to this, companies marketing products to the Chinese young generation should concentrate on being located in the urban regions of China. It is because this is the location that they will have an opportunity of targeting the largest market share.
Promotion refers to the efforts that a particular company puts while trying to communicate the benefits of a particular product to the final consumer so that the consumers may purchase that product. Promotion activities include all the efforts in advertising that a particular company puts forward in order to make the public to know about a particular brand that they may be introducing in the market. Moreover, promotion includes activities such as individual selling, sales promotion, creating publicity and promotional education. Companies should always choose a promotional strategy that matches the needs of the consumers. The boom of e-commerce in China has made companies to consider promoting products that they may be offering for sale through their e-commerce channels. Companies can put their advertisements on websites conducting e-commerce. Companies targeting the young consumers at China’s market should therefore promote their product by creating advertisements on the e-commerce platforms offered by online companies in this country.