1

Lecture8. Product Management and Pursuit of Brands

第10章品牌追求轨迹

Economic development

• Consumer behavior is influenced by economic development– Consumers in highly developed countries tend to

demand extra performance attributes in their products

• Price not a factor due to high income level

– Consumers in less developed countries, value basic features as more important

• Price remains a factor due to lower income level–Cars: no air-conditioning, power steering,

power windows, radios and DVD players.

• Product quality and reliability are more important

2

Consumer Demands and Product attributes• There are cultural differences that affect consumer needs.

– Differ in social structure, language, religion and education– Impact of tradition and local customs: alcohol– Although some tastes and preferences becoming cosmopolitan

• China is a developing country (middle income) with several distinctive market segments compared with a developed economy with a majority middle class.

• Thus, there are heterogeneous needs and wants– Different products and features: basic features to multi-functions– Targeted marketing with a unique product or a wide mix

• As income grows and the gap widens, different need segments have emerged:– Working/salary class: basic features and good price/value– Upper class: quality, brand, and luxury items– Mass marketing with a uniform product is no longer effective.– Creating needs for product variety and upgrades

Integrating R&D, marketing and production

• High failure rate ratio– Between 33 % and 60% of new products fail to earn

adequate profits

• Reasons for failure:– Limited product demand– Failure to adequately commercialize product– Inability to manufacture product cost-effectively– R&D generally lower among Chinese firms, but some

domestic firms have better understanding of local customers: Lenovo vs. IBM, Taobao vs. eBay,

– More MNCs have set up R&D centers in China

3

Management of Product Lines

Each company has a product mixEvaluation existing products and lines• Line extension: add new items, downward or upward• For great market share and profitability• Line filling: add new items in between• Line reduction: item reduction, due to proliferation• Line adjustment• Differentiation, cannibalization

Product Line Management: Extension and Trimming

• Extension– Upward extension to develop more upscale and luxury

products – for Midea– Downward extension to include more economic (and bare-

bone) models– Filling the gaps to meet the unfulfilled needs (dryers)

• Trimming– Product and brand proliferation dilute resources and lead to

ballooning costs and thin profit margins– Terminate the slow-moving items.

4

Coca Cola Product lines可口可乐 Coca-Cola香草味可口可乐 Coca-Cola Vanilla Flavor健怡可口可乐 Diet Coke柠檬味健怡可口可乐 Lemon Flavor Diet Coke青柠味健怡可口可乐 Lime Flavor Diet Coke香草味健怡可口可乐 Vanilla Flavor Diet Coke樱桃味健怡可口可乐 Cherry Flavor Diet Coke雪碧 Sprite雪碧冰薄荷 Sprite Icy Mint雪碧姜汁汽水 Sprite Ginger Soda芬达 Fanta雪菲力 1 Chivalry "Xue Fei Li"雪菲力苹果味汽水 Chivalry Apple Flavor Soda雪菲力橙味汽水 Chivalry Orange Flavor Soda雪菲力柠檬汽水 Chivalry Lemon Soda雪菲力乌梅汽水 Chivalry Plum Soda雪菲力饮用纯净水 Chivalry Purified Drinking Water美汁源 Minute Maid美汁源果粒橙 Minute Maid Orange Juice with Pulp醒目果味碳酸饮料 Smart (Xingmu) Fruit Flavor Carbonated Beverage醒目苹果汽水 Smart Apple Soda醒目西瓜汽水 Smart Watermelon Soda醒目水蜜桃汽水 Smart Peach Soda醒目葡萄汽水 Smart Grape Soda醒目桃汽水 Smart Peach Soda醒目椰子汽水 Smart Coconut Soda醒目提子汽水 Smart Grape Soda醒目香草冰淇淋汽水 Smart Vanilla Ice Cream Soda

醒目冰柠檬茶汽水 Smart Lemon Ice Tea Soda醒目苹果汁汽水 Smart Apple Juice Soda醒目香橙汁汽水 Smart Orange Juice Soda雀巢冰爽茶 Nestea Ice Tea雀巢柠檬绿茶(冰极) Nestea Lemon Green Tea (Iced)雀巢咖啡 Nestea Coffee即饮雀巢咖啡 Nestea Ready to Drink Coffee酷儿果汁饮料 Qoo Juice Drinkr酷儿苹果味 Qoo Apple Flavor酷儿香橙味 Qoo Orange Flavor爽白酷儿乳酸味饮料 Qoo Lactic Beverage活力酷儿运动饮料 Qoo Sports Drink阳光茶饮料 "Yang Guan" Tea岚风蜂蜜绿茶 "Lan Feng" Honey Green Tea天與地矿物质水 Tian Yu Di Mineral Water飛雪矿物质水 Bonaqua Mineral Water冰露纯净水 Ice Dew Purified Water水森活纯净水 "Shui Sen Huo" Sensation Purified Water茶研工坊 "Cha Yan Gong Fang"保锐得运动饮料 "Bao Rui De" Sports Drink津美乐苹果汽水 2 JinMeiLe Apple Soda津美乐菠萝汽水 JinMeiLe Pineapple Soda津美乐橙汽水 JinMeiLe Orange Soda津美乐清柠檬汽水 JinMeiLe Apple Soda津美乐荔枝汽水 JinMeiLe Lychee Soda玉泉汽水 3 Schweppes Brand Soda

Boundaries of Product Management

Price

Quality

Target

Segments?

Of course, there are many ways of doing the perceptual mapping and positioning.

5

Product Management

• Decision about the nature of product: – positioning and unique selling proposition (USP)

• Brand Management• Product packaging• Quality assurance and warranty• Safety• Product introduction: understanding customer needs,

washing machine (size of Whirlpool machines), pick-up truck (GMC)

• Learn from local firms

Developing and Communicating a Positioning Strategy through the PLC:

implications for foreign products that are new to China

• Market research

• Market segments

• Target market(s)

• Positioning

• Value position

• IMC

6

Perceptual Mapping

7

Gap Analysis

Product

Existing New

Market

Existing

New

Market penetration Product

Ford Motor Development 3M

Market Development Diversification

Haier GE

Growth Strategies

8

Product Adaptations

• Mandatory– legal requirements– infrastructure– physical requirements

• “Discretionary”– local tastes: KFC– fit into cultural

environment– E.g., GMC pickup trucks in

China– Iced water in Refrigerators:

• Cold drinks in NA

• Cold/hot water

• Clean water in China

2013/11/3 16

9

Physical Product vs. Communication Adaptations

Brand Management

• What do brands do for consumers?– Awareness, consideration, and choice (sets).– Decision aid and shortcut (heuristic)– Image and social-emotional appeals– Signals of quality -- willing to pay for a higher price (premium)!!!

• For marketers:– Reduce price sensitivity– Cultivate customer loyalty

• Global brands dominate the market– Greater awareness, top choice, premium price, blamed for less in case

of product failure

• Building brand image and equity is essential and an on-going project involving all levels.

10

History of Brand Development品牌发展历程及动力品牌发展历程及动力品牌发展历程及动力品牌发展历程及动力

• Initiation period of brand consciousness.品牌意识启蒙期– Few brands with clear positioning, with uniform product

designs, few features and little variety or differentiation: Yili, Changhong

• Brand creation period.进入自创品牌期– Introduction of new brands: MengNiu, Wahaha– Promotion of brand and quality guided by the government

• Brand competition period.进入品牌竞争期– Rapid growth of new brands and products– Brand proliferation and hypercompetition

• Brand globalization period.进入品牌国际化期– With government support, Chinese brands are going global.– Haier, TCL, Huawei

China’s Top Brands

• 1 Haier Home appliances 2 CIMC Freight containers 3 Tsingtao Beer 4 Tong Ren TangTraditional medicines 5 Yanjing Beer 6 Pearl River Pianos 7 Legend/Lenovo PCs 8 AncaiTV tubes 9 Shanghai Zhenhua Container cranes and port machinery 10 Erdos Cashmere 11Wanxiang Qianchao Automotive parts 12 NCPCPharmaceuticals 13 FAW Cars 14 Broad Air-conditioning 15 COSCO Shipping

11

Shifting of Brand Focus品牌关注焦点转移品牌关注焦点转移品牌关注焦点转移品牌关注焦点转移

• Factors of brand equity: brand prominence, brand image, brand positioning, customer satisfaction, and brand loyalty.品

牌资产的个别要素

– Chinese customers are not known for very loyalty

– Perhaps due to lack of brand knowledge

– More price sensitive

– A challenge for marketers to educate consumers

• Brand extension and brand core value.品牌延伸与品牌核心

价值

– Haier – white appliances – pharmaceuticals?

• Brand generalization.品牌化的泛化– From toothpaste to schools

• Brand equity valuation品牌资产评估

12

The Brand Transmission of Fame Orientation知名知名知名知名度导向的品牌传播度导向的品牌传播度导向的品牌传播度导向的品牌传播

• Brand bidding“标王”创牌– During Chinese New Year

• Celebrity effect 明星造牌Li Ning, Yaoming

• News sensation,新闻炒作– Hard to tell advertisements from news

– Ethical concerns, relationship with the media, and tuo 拖?

– Deceptive advertising

• Enthusiasm in brand ranking– National and local rankings 热衷排行榜

Brand Recognition with Visual Orientation视觉导向视觉导向视觉导向视觉导向

的品牌识别的品牌识别的品牌识别的品牌识别

• According to local ad agencies, it is important to design a beautiful and meaningful Logo first when planning for a brand recognition system.本土广告公司认为，规划一个品牌的识别系统，首先要思考如何设计一个

简练美观且寓意深刻的LOGO。• Brand recognition with vision orientation has a certain discriminative

communication effect. 视觉导向的品牌识别能起到一定的差异化沟通效果

• Too many brands lack unique brand identity with many copycats!• Some Chinese brands also use foreign names (去中国化）.• With the entering of international brand, development of local excellent

brand, and the increasing in number of competitors, it is more difficult to build a brand image only from the visual perspective.随着国际品牌的涌入，本土优秀品牌的崛起，竞争对手的增加，只从视觉上来企求品牌新形

象的树立变得越来越难

13

Building up Corporate (company) Brand• According to brand theory, the brand strategy has two extremes:

every product uses different brand (P&G); all products use the brand of the corporation (Lenovo), an umbrella corporate brand with many product bands.品牌理论认为，品牌化战略有两个极端：每个产品或产品线使用不同的品牌；所有产品都使用

公司品牌

• But in China, they have the P&G brand!• Chinese firms prefer corporation brand strategy for the following

reasons: limited fund, cultural differentiation, platform of trust, and difference in demand and competition environment.与美国

品牌相比，中国的品牌似乎更喜欢公司品牌战略，主要有以

下原因：有限的财力；文化差异；信任的平台；需求和竞争

环境的差异

– Sometimes one cannot associate corporate brand with products – what are they trying to sell?

– Another pitfall: bad publicity affect all products with the same brands

Entrepreneur-driven Brand Value企业家驱动的品牌价值企业家驱动的品牌价值企业家驱动的品牌价值企业家驱动的品牌价值

• Entrepreneurs contribute a lot to the brand value.• 企业家的贡献对品牌价值起到了极大的作用Haeir,

MengNiu, etc.., Entrepreneurs are like stars and heros!• Entrepreneurs put their values and characteristics into the

corporate brand. 企业家把自己的价值观和个性融入到公司品牌中

• Entrepreneurs guide the direction of brand development and determine the brand’s future.企业家牢牢把控品牌发展的方向，决定品牌的命运

• The speaks and talks of the entrepreneurs become the lively advertisement of the brand.企业家演讲和言论成为对自己品牌最生动的宣传

14

Market Entrance by Joint Venture合资方式的市场进入合资方式的市场进入合资方式的市场进入合资方式的市场进入

• Joint venture is a common module to enter Chinese market by joint venture for international corporations.跨国公司在中国的品牌发展战略，一个较为普遍的模式是以合资形式进入

– Thus, joint venture brands are very popular; Ronshida (Maytag)

• When entering western countries, corporations often use their own investment.进入欧美国家时，通常采用独资的方式

• With the familiarity of Chinese market, many corporations will no longer choose joint venture.随着对中国市场的熟悉，许多合资企业选起了独资浪潮

• Joint venture brand: foreign brand, local brand, or hybrid brand? Shanghai-Volkswagon, – The appeals of foreign brands: quality, advanced, modern– The advantages of domestic brands: friendly, close, and good value

Government and Public Relation Marketing政治营政治营政治营政治营

销和公关营销销和公关营销销和公关营销销和公关营销

• Politics power and public relation are very important for marketing.政治权力和公共关系对于营销很重要

• International corporations concern about government and social public relation because they can both obtain supports from government and local people跨国公司重视政府和社会公关，一方面可以获得政策倾斜，另一方面可以赢得当地

人好感.• Social public relation activities of international corporations:

education support, sports sponsor, cultural communication promotion, disaster rescue, and support for western development.跨国公司的社会公关活动：支持教育事业；赞助体育事业；促进中外文化交流；为赈灾救济作贡献；

支援西部开发

15

City Centric Marketing Strategy城市市场的重点战城市市场的重点战城市市场的重点战城市市场的重点战

略略略略

• Compared with local brand, the international brand mainly focus on the city markets, where brand awareness is higher.与

本土品牌相比，国际品牌普遍以城市市场为根据地并定位

于市场高端

• Rural markets are complicated and dominated by local brands. 农村市场跨度大，情况复杂

• City consumers have more purchase power and can accept foreign brands more easily. 城市消费者购买能力高，容易接收新进洋品牌；

• City consumption behavior can help promote similar consumption behavior in rural markets. 城市消费行为可以带动农村消费行为。

Global or Local Brands?• An effective brand is one that has both a clear "global" identity

and delivered locally to create meaningful experiences for consumers in their own language, culture, and context.

• The global marketing highway is littered with examples of bad brand localization, with results ranging from the humorous to the culturally offensive (Chevy Nova). The cost of these cross-cultural faux-pas can be measured in lost dollars, damaged customer relations and slower time to market.

• Position, and communicate your company's brand for an effective and meaningful local experience in China through gap analysis and value analysis.

• Identify your core brand attributes and build a roadmap to deliver them effectively to your target market with cultural sensitivity, linguistic accuracy, and meaningfulness.

• The Glocal strategy – global appeals but also meaningful in local culture and language – Generali 中意, IBM G1

Slide 30

G1 Geng, 10/23/2008

16

Coca Cola Product lines可口可乐 Coca-Cola香草味可口可乐 Coca-Cola Vanilla Flavor健怡可口可乐 Diet Coke柠檬味健怡可口可乐 Lemon Flavor Diet Coke青柠味健怡可口可乐 Lime Flavor Diet Coke香草味健怡可口可乐 Vanilla Flavor Diet Coke樱桃味健怡可口可乐 Cherry Flavor Diet Coke雪碧 Sprite雪碧冰薄荷 Sprite Icy Mint雪碧姜汁汽水 Sprite Ginger Soda芬达 Fanta雪菲力 1 Chivalry "Xue Fei Li"雪菲力苹果味汽水 Chivalry Apple Flavor Soda雪菲力橙味汽水 Chivalry Orange Flavor Soda雪菲力柠檬汽水 Chivalry Lemon Soda雪菲力乌梅汽水 Chivalry Plum Soda雪菲力饮用纯净水 Chivalry Purified Drinking Water美汁源 Minute Maid美汁源果粒橙 Minute Maid Orange Juice with Pulp醒目果味碳酸饮料 Smart (Xingmu) Fruit Flavor Carbonated Beverage醒目苹果汽水 Smart Apple Soda醒目西瓜汽水 Smart Watermelon Soda醒目水蜜桃汽水 Smart Peach Soda醒目葡萄汽水 Smart Grape Soda醒目桃汽水 Smart Peach Soda醒目椰子汽水 Smart Coconut Soda醒目提子汽水 Smart Grape Soda醒目香草冰淇淋汽水 Smart Vanilla Ice Cream Soda

醒目冰柠檬茶汽水 Smart Lemon Ice Tea Soda醒目苹果汁汽水 Smart Apple Juice Soda醒目香橙汁汽水 Smart Orange Juice Soda雀巢冰爽茶 Nestea Ice Tea雀巢柠檬绿茶(冰极) Nestea Lemon Green Tea (Iced)雀巢咖啡 Nestea Coffee即饮雀巢咖啡 Nestea Ready to Drink Coffee酷儿果汁饮料 Qoo Juice Drinkr酷儿苹果味 Qoo Apple Flavor酷儿香橙味 Qoo Orange Flavor爽白酷儿乳酸味饮料 Qoo Lactic Beverage活力酷儿运动饮料 Qoo Sports Drink阳光茶饮料 "Yang Guan" Tea岚风蜂蜜绿茶 "Lan Feng" Honey Green Tea天與地矿物质水 Tian Yu Di Mineral Water飛雪矿物质水 Bonaqua Mineral Water冰露纯净水 Ice Dew Purified Water水森活纯净水 "Shui Sen Huo" Sensation Purified Water茶研工坊 "Cha Yan Gong Fang"保锐得运动饮料 "Bao Rui De" Sports Drink津美乐苹果汽水 2 JinMeiLe Apple Soda津美乐菠萝汽水 JinMeiLe Pineapple Soda津美乐橙汽水 JinMeiLe Orange Soda津美乐清柠檬汽水 JinMeiLe Apple Soda津美乐荔枝汽水 JinMeiLe Lychee Soda玉泉汽水 3 Schweppes Brand Soda

Swire Pacific Beverages

• Swire Guangdong Coca-Cola produces and sells Coca-Cola, Coke Light, Lemon Coke Light, Sprite, Fanta, Smart, Tian Yu Di mineralised water, Sensation purified water and Qoo juice and also distributes Minute Maid, Nestea and Modern Tea Workshop beverages.

17

Localization Strategies全方位的本土化战略全方位的本土化战略全方位的本土化战略全方位的本土化战略

• Localization is the need for strategy and also a result of the specific Chinese environment. 本土化原因：营销本土化是战略占领需要；中国独特的环境所致

• Some foreign companies have either developed or acquired local brands, such as Coca Cola.

• Because of the marketing competition, international corporations adopt the localization strategies, including perspectives of product research and development, manufacturing, brand, promotion, distribution channel, purchasing, human resource and capital operation.为了应对激

烈的市场竞争，跨国公司纷纷采用本土化策略：产品研发，

产品制造，品牌，促销，分销渠道，采购，人力资源以及

资本运作。

The Mainstream of Wholly-Owned Subsidiaries

• Wholly-Owned Subsidiaries became common in the late 1990. The popularity of self owned enterprises not only means the independence of operation and management of international corporations, but also indicates that, international corporations begin to consider themselves as local corporations.

• With more and more competition, international corporations start to increase the investment and set a higher entrance barrier.

• M&A of brands– Coca Cola wants to buy out Huiyuan Juice.

• Brand extension to other categories increasing popular –according to JWT CEO – as consumers trust the big brands, to minimize risks and uncertainty– http://learn.ouhk.edu.hk/~etpmsp/broadcast2002/windows/ten_mistakes

.wvx