Strategies for Developing Chinese Brand Competitiveness

Strategies for Developing Chinese Brand Competitiveness

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Strategies for Developing Chinese Brand Competitiveness

Since the entry to the World Trade Organisation (WTO) in 2001 Chinese companies have to fierce international competition and do their best to fit into the brand competition. The gap of knowledge between them and the Western companies is not fixable in a short time, but the efforts will definitely pay out.

This part of the report tends to give out some possible strategies to increase brand competitiveness.

Definition
What is a brand? A brand is a promise a company makes to its customers. It becomes an emotional relationship that builds customer loyalty. A brand includes a logo, colour, scheme, slogan design and more.

3.1. How to create a brand

The following part is to give you an overview of the steps how to create a strong brand and to resist the increasing competition.
3.1.1. What to sell?
First of all a company has to think about what they want to sell and why a consumer should choose their brand and especially their product. Why is that brand better than the one of the competition?

3.1.2. Quality product
To build up a strong brand it has to be a quality product. This is the condition to enter a market, but not enough to be the best.

3.1.3. Determine the brand’s disparity, place the brand on the market
The most important aspect of a brand is to know the difference to the competitors. Is the brand the best, the cheapest, the fastest etc in a category? If not, create a new category where it is the leader. It will keep that position for years. For example IKEA was not the first company that sold furniture, but the cheapest and now most famous; it is still the leader in this category. It is still going strong because they concentrate on this difference.

A company should not try to be the best in different categories, it will not work, and it will just become an average product.

3.1.4. Design
The brand name should be simple, visible, easy to remember and easy to read (pronounce). There has to be a logo. Write a slogan that stays in mind. The brand image has to be the same in all parts of communication.

3.1.5. Market the image
All marketing communications, the brand name, logo and advertising should describe the message of the brand. Use marketing strategies e.g. sponsorships, events, billboards, mailing, TV ads etc. Educate everyone on the staff about the brand and its message.

3.1.6. Keep the promise
Companies have to keep the promises they make to the market.

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If customers are satisfied they will be loyal.

3.1.7. Innovation
Be always up to date, continue to build and refine the brand. Measure the brand equity against the competition to know how the brand is doing on the market. Improve and innovate if necessary. Consumer needs are changing. Do market research. The secret is: “Change to survive!”

3.2. Increase corporate creativity

How long a brand will survive on the market depends on creativity and this relies on the technological innovation. In the today’s economy world the upgrading of technical aspects of the product is crucial, this leads to a shorter product life cycle than before. Innovation is therefore the ultimate resource of brand competitiveness, without it, any effort in market development and communication is of no avail. Several things are to be noticed in this regard:

3.2.1. Investment in R&D
The most importance must be attached to Research and Development because this is the base for product innovation. It also adds to the knowledge of a company. Particularly an independent R&D centre with good infrastructure should be established.
3.2.2. Market orientation
There are three long-term considerations of market orientation:
Consumer orientation, competitor focus and interfunctional coordination.

• First find out what the consumers want, not only for today also what they continue to require.
• Then search out about the strengths and weaknesses of the competitor and avoid his mistakes.
• At last develop horizontal structures in the company and focus on value.

A market-oriented guideline for R&D is very important, they must always communicate well with each other. In a word a modern company should be “technology-based and market-oriented”.

3.2.3. Recruiting
Recruiting is another very import aspect. China has to attract and keep their talents. It is a country with a grave brain drain problem. With an already very low national investment in education (3.41% of GDP in 2005) China is suffering from serious brain drain with highly educated people. Since the late 1970s there is a total number of more than one million Chinese students who went abroad for superior education. There is merely a third who came back after finishing their studies and a big part of them went to foreign-funded companies.

Furthermore Chinese companies need to establish a much more efficient and convincing recruitment and incentive mechanism to deal with this urgent problem. The personnel, especially the researchers and engineers, are the fundamental dynamics of a company. As long as a company needs core technology and an innovative technology structure, it needs researchers with high competence and creativity.

Chinese companies must struggle with foreign competitors to keep their talented personnel, especially with the USA.

3.3. Consumer needs

Consumer needs form the base for consumer orientation. Its identification, proper description and the right interpretation play a decisive role. Consumer needs are often confused with solutions, for example if you ask a consumer what he expects from a TV, he would probably say: “70 cm screen size”, “plasma display”, or “Trinitron television tube”. But these are not consumer needs, these are just technical solutions. The real needs are hidden behind these statements, in this case: excellent pictures, a big screen and pleasing to the eye.

Brand differentiation becomes difficult over a period of time; brands are forced to concentrate on consumer needs. Therefore it is important to cover the effective wants of a consumer, in stead of already existing solutions.

There are 3 types of needs:

• Basic needs are needs that a consumer takes for granted, e.g. a calculator has to handle the first rules of arithmetic, a TV has to broadcast the channels in sound and vision or an airline company has to carry you from A to B.

• Descriptive needs are needs that can be described easily, for example a consumer wants a computer without flickering.

• Unconscious needs astonish a consumer positively in case of fulfilling. Normally these needs will not be fulfilled by already existing solutions. They do not influence the purchase decision.

3.3.1. Market success
In the course of time requirements change their importance and with it the group they are allocated to e.g. unconscious needs are fulfilled by some available solutions and soon they will be uttered by an increasing demand, this leads to a new grouping: they become a part of the descriptive needs. If all solutions fulfil nearly all wants of a consumer they will become a part of the basic needs.
There are several examples especially in the area of entertainment electronics. Nowadays flat screens are basic needs and mobile phones and digital cameras are tiny, in comparison to the past. These changes enabled the technological development.

In practise it is important to cover all three types of needs:

• A product is successful if the basic needs are fulfilled.

• A product is competitive if the descriptive needs are fulfilled.

• Unconscious needs provide the opportunity to eliminate competition and win new costumers.

3.4. Learning from the successful international brand IKEA

Learning from successful international brands is a very effective way to develop one’s brand, both in technical terms and inspiration.

The following part is to give you a typical example of a very well succeed brand: IKEA

3.4.1. History
IKEA was established in 1943 by Ingvar Kamprad. The name is made up of the initials of his name I.K. and the fist letters of the farm and village where he grew up: Elmtard and Agunnard.

IKEA disposed primarily pens, wallets, picture frames, table runners, watches, jewellery and nylon stockings.

Now it is a low cost home furniture retailer. The chain has 252 stores in 35 countries and in the next few months they plan to open 21 more.

3.4.2. Marketing strategy
• The IKEA vision is “To create a better everyday life for the many people.”

• The business idea is “To offer a wide range of well designed, functional home furnishing products at prices so low that many people as possible will be able to afford them.”

• The market positioning statement is “Your partner in better living. We do our part, you do yours. Together we save money.”

3.4.3. IKEA marketing communication: How they fulfil their customer needs
• Concept: “We do our part”, they concentrate on product design, customer value and smart solutions. They use economical materials, keep their production, distribution and retail costs low, therefore the prices are low.

• Product range: They have everything for everybody; the products are practical for everyday use.

• Home furnishing specialist: The products provide the opportunity to enhance people’s life at home. They are practical and appealing.

• Low price: The costs are low and the quality is good. This is IKEA’s singular distinction. They have a good connection to their suppliers, they buy the products not packed, and they pack them flat to save transportation costs. This is another reason why the costs are low.

• Function: The products do not have unessential performances; they are practical, easy to use and appealing.

• The right quality: There is no need to use expensive equipment for products if less expensive equipment does a great job, too, as long as it is used for the aim it was built for.

• Convenient shopping: Most of the products are straight to go. There is everything in one store. IKEA exhibits their products in a proper style and describes them correctly therefore it makes choosing easily.

3.4.4. The IKEA marketing mix
• The product range is the most important marketing instrument. All other instruments have the function to enlarge it.

• The store is the main medium for displaying and conveying the range, its low price and the concept.

• The IKEA catalogue is the primarily marketing instrument. They spend about 70 % of the budget on it. There are 38 different editions, it is printed in 17 languages for 28 countries.

• They also have many campaigns like TV and radio ads, billboards, publicity in magazines and internet.

To survive at the top of a category in a changing market IKEA does a lot of market research, especially emphasised on researches on consumers, reports and statistics.

All areas of the marketing department work together. They do what they promise, they fulfil their customer needs.

4. Conclusion

It is not easy for a big country with different challenges, like the lack of standardisations and certificates, low financial funds or low degree of corporate information, to compete with international brands.

However, success will not come easily. Chinese companies have to overcome some obstacles e.g. intense competition, open markets and a world which is not pleased to see companies from developing countries going global.

Only companies which have strategies and the knowledge how to handle the competition on a big market can get the chance to become a global player.

Bibliography

Hirn, Wolfgang: Herausforderung China; Wie der chinesische Aufstieg unser Leben verändert. Frankfurt am Main: Fischer Taschenbuch Verlag, 2006; ISBN-13: 978-3-596-16608-4

Strategies for developing Chinese brands

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http://www.dti.gov.uk/innovation/randd/why-invest-in-randd/page10549.html (28.05.2007)

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