What is meant by Transformational Marketing

The Chinese transformational market is different from the mature Western markets.

Many senior executives of multinational companies who have been involved in the Chinese market for several years can't help but sigh: "The Chinese market is too big, too complex, and changing too fast. China's market is in the process of transformation, one of the process is from the "planned economy" to the "socialist market economy", to reach the end of the mark: the relationship between the government and enterprises to complete the metamorphosis, the realization of the modern enterprise system; the process of two is from the "closed market" to the "closed market". The second process is from "closed market" to "open market", the end point of which is defined by China's entry into the WTO. 1995 study by the State Planning Commission said that the overall marketization of China's economy was about 65%. In this process, China's market environment and market operation in the continuous transformation, obviously, the transformation of the market and the mature market has a variety of different singularities, which is the correct interpretation of the Chinese market the most basic points. In the planned economy and market economy, closed market and open market, these two very different environments, behavioral characteristics, ways of thinking and value system are far apart, the interests of the system is completely different, which directly affects and determines the enterprise will have different behavior.

The planned economy is characterized by the following: the governmental system, the government's authority is very great; the government is bigger than the people; the government is in charge of the people; the enterprises are seeking the government; the enterprises and the people are subject to the constraints (comprehensive approval system); the government allocates the resources; and the government is the referee.

The main features of a market economy are: market (customer) orientation; government serves businesses and consumers; government is constrained; market allocates resources; competition determines winners and losers.

The main features of China's transition market are

●The power to appoint top executives of state-owned enterprises is still vested in the government. For example, Hunan Xiangjiu Ghost (a listed company), because of its declining performance (net profit fell 56% in the first half of 2000), the board of directors was replaced in February 2001 with a new board of directors made up of people with government backgrounds (three retained and six new), and the new chairman, Tian Jiangui, was the former executive vice governor of the Xiangxi Autonomous Prefecture. More than 85 percent of local government revenue comes from the company.

●Enterprise property rights are unclear, and many companies have local government equity participation (major shareholders)

●Government and enterprise interests are intertwined, and business operations are not independent.

●The government's power of approval is too broad, and business activities are overly subject to approval. For example, the 2% advertising fee rule (2000), well-known trademarks are recognized by local governments, and companies are subject to listing quota approval (resulting in high prices for listed companies' shells). The rules of the game of market operation are changeable, and the regulations are incomplete and not detailed, resulting in the arbitrariness of implementation (e.g., the interpretation of the advertising law varies from person to person

This kind of difference is not to be ignored. 1998, after in-depth research, Nobel Prize-winning economist Prof. R. Fogel pointed out the huge gap between the stages of development of the U.S. and China in this way:

China's real per capita income was at the level of about the U.S. level of 1897, and it was the same as the U.S. per capita income of 1897. level of the United States in 1897 or so. China's share of the agricultural labor force is at the level of the United States in 1880. In terms of the ratio of students enrolled in elementary school to the relevant age group, China is at the U.S. level of the mid-1950s. Secondary education in China has reached the 1970 level in the United States. In terms of life expectancy, China has reached the U.S. level of 1966. In terms of percentage of urban population, China is at the US level of 1890.

The market environment in the minds of Chinese entrepreneurs

The deep experience of Chinese entrepreneurs who crawl and fight in the market every day is also one of the evidence of the characteristics of the transformation of the Chinese market: Changhong Ni Runfeng (successive general manager, chairman, CEO): in the Chinese market is "walking straight for fear of walking horizontally, and walking horizontally for fear of not dying! ", "the shoes are afraid of barefoot".

Lenovo Liu Chuanzhi (Chairman): "Eggs hatching chickens need 37.5-39 degrees, but the Chinese environment is 40 degrees, so can only adapt to the environment," thus advocating "paranoia in strategy, the method of mediocrity" (CCTV-22001.2). "2000 Chinese Economic Figures Interview"). The rule of the game in the Chinese market is "the timid wait for death, the bold look for death" (meaning that enterprises in full compliance with the policy regulations will not survive, and those who violate the law will also be caught and will not survive). This statement is recognized by a large number of entrepreneurs, so that there is "to be able to play the ball". Private enterprise giant group former president Shi Yuzhu complained of "China's private enterprises of the 13 ways to die" (Guangzhou Daily 2001.2.19), reflecting the enterprise in the marketing environment of all kinds of problems and the chaos of the market order.

Multinational corporations: China localization is the basis of victory

With China's imminent accession to the WTO, global multinational corporations are stepping up their efforts to enter the Chinese market. The first to enter the Chinese market of multinational companies, there are winners and losers, the winners have a **** the same slogan: "We are a Chinese company". Motorola Asia Lai President said: Motorola "China as home", "more than the Chinese company in China", determined to do "love, patience, sincerity"; Philips Electronics Philips Electronics Group President Busho Chang said: "Please do not treat us as a foreign company, we are an authentic Chinese company. The winning marketing strategies of multinational companies are: attaching great importance to localization in China; making foreign brands "local"; attaching importance to the relationship with the Chinese government, high-level public relations, etc., so as to adapt to China's transforming market environment. Electrolux refrigerator, Procter & Gamble's "Run Yan" shampoo and desensitizing toothpaste "Shu Min Ling", Coca-Cola's "Heaven and Earth" and "Wake Up", Amway's transformation and so on. Coca-Cola's "Heaven and Earth" and "Wake Up", Amway's transformation, etc. are all winning with localization.

Characteristics of China's market environment

Can be described in five words

Large: vast territory; huge prospects; a paradise for making money

Changing: fast development; rapid change; changeable policies; unsound regulations

Chaotic: chaotic market order; serious counterfeiting and infringement; a lot of anomalous and strange things; a serious lack of credibility (business ethics)

dry :short-term orientation; big ups and downs; excessive competition.

Differences:Regional differences; institutional differences; industry differences; marketing level differences; generational differences are significant.

Chinese consumers, companies and government all exhibit immature market performance. For example, consumers are particularly price-sensitive, lack awareness of their rights, and are superstitious about advertisements; entrepreneurs have official complexes, short-term behaviors, and excessive price wars; and the government is obsessed with power over enterprises, local protection, and arbitrarily interpreting or changing the rules of the market game. Enterprise behavior is y constrained by the government's behavior, and government behavior is sometimes swayed by the interests of power and even corruption, making the whole market more complex and irregular

China's transformation of the main marketing singularity

1. Difficult to prevent access to the trap

In 2000, China's market access to the great competition is very intense. The complexity of access is one of the most prominent differences between China's transition market and the mature market, so even experienced multinational companies are inevitably encountered traps. Because the access road can not be moved in from the outside, sometimes "the strong dragon can not beat the snake". A number of problems are listed as follows

●Payment for goods is not returned: the businessman who does not owe money is a stupid person.

● cross-district tampering: earn a penny is a penny.

●Mutual price killing: expanding sales to get high rebates from manufacturers

●Large domination: bargaining and controlling your sales policy.

●Middlemen jumping ship: profit is the only thing that matters, "milk is the mother"

●Rivals cutting corners: professional managers are more imposing than their bosses

●Middlemen haggling: "If you don't give me concessions, we won't do it for you

●Barriers to entry into a new market: this mountain is mine, this road is mine, and it's my way out. This road is my open, want to pass through, leave the money to buy the road

● high cost of building networks: office buildings, goods warehouse rent is more expensive than the goods

● internal out of control: salesman "in the Cao camp in the heart of the Han", eat a little kickbacks, more part-time work is better than hanged on a tree

● gray The deal: a good deal under the table, the green light on the mahjong table

● store big bully: cheat you no matter what, and even get a "demon-spotting mirror" to spy on you.

●Shelf fight cruelty: what "first come first served", take your absence, first put my products.

●Stocking costs are high: "I'm sorry, to get into my store, you have to pay 300,000 yuan in stocking fees."

●Management is not standardized: few companies to establish access management documents, specification manual.

●Blocked information communication: untimely information communication, backward means of communication, information distortion.

In addition there is local protectionism. For example, Suqian City, Jiangsu Suqian City, in order to protect the local high price of beer, charging foreign beer sticker cost 0.2 to 0.5 yuan / bottle so that it is not profitable (CCTV-1 Focus Interviews 1999.6.24); Hubei market on the Shanghai Santana car price hike of 70,000 yuan, the Shanghai market on the Hubei Fukang car price hike of 50,000 yuan, and so on.

2. Fake goods and intellectual property rights nightmare

International brands such as P&G, NIKE and Microsoft feel that one of the toughest problems in the Chinese market is that there are too many fakes, which are hard to prevent. Counterfeiting not only use a lot of manpower and material resources, more people worry and difficult is that the fanfare of counterfeiting will make consumers step back and thus seriously affect the sales of real goods, that is, counterfeiting into playing the real According to Procter & Gamble's conservative estimate (2001.1), the current market of all kinds of fake P&G brand products have occupied more than 15% of the market share, and P&G annually due to the loss of such counterfeit products and sales of up to P&G loses up to 150 million dollars in sales annually due to these counterfeits. Fighting against counterfeiting is thus listed as an important work of P&G's market management. "Jinlilai" is a famous brand of Hong Kong entering the mainland, but it went downhill later, the main reason is that there are too many counterfeits. Zeng Xianzi helplessly said: "10 years of counterfeiting more and more fight (fake) more and more, a go out can see the fake Jinlilai." Spray Bao Group's agricultural fertilizer "Spray Bao" is the national science and technology key promotion projects, but because of the fakes to lose the market. The group Wang Xianglin said: "more than 10 years, the company was forced to invest manpower and material resources to fight counterfeiting (from 1996 to spend more than a million dollars a year), but the fight does not win the fight, so far on the market counterfeits than the real goods at least three times. 1993 'Spray Bao' in Shijiazhuang, sales revenue of 20 million yuan, in 1995 after the entry of counterfeit goods to a very high level. In 1995, after the entry of fake goods at very low prices within half a year will be the real goods out of the market, in 1997, the city of real and fake 'Spray Bao' are gone, because the farmers victimized no longer believe that they do not buy." According to Southern Metropolis Daily (2000.11.24), China's output value of counterfeit and shoddy products in recent years has averaged about 130 billion yuan annually, with an annual loss of more than 25 billion yuan in tax revenue. A survey of 146 enterprises victimized by counterfeiting showed that: sales of counterfeit goods accounted for more than 50 percent of the real goods in 23; more than 100 percent in 11; and up to 568 times in the worst case

Why is it difficult to control counterfeiting? The reasons are complex, but they have a lot to do with government enforcement. According to CCTV's Focus Interview (2001.2), the reason for the repeated banning of private salt in Huanghua City, Hebei Province, is that the local Salt Administration has taken this as an important source of "income generation", and even grouped together to reach the income target. So when reporters went to the scene to investigate, officials from the Salt Administration were the first to tip off private salt dealers.

3. The market segments are very different

One of the most significant features of the Chinese market is the vastness of the region, the economic, cultural and folkloric differences between different regions, coupled with differences in the implementation of the policies of the local government, resulting in different geographical market segments. As Chinese society is undergoing rapid changes, the contrast between tradition and modernity is even greater compared to the stable social structure of European countries, and the difference between the younger and older generations of consumers can sometimes be vastly different. Some researchers categorize Chinese people into three generations, while some multinational companies focus on the future generation. Many studies have shown that the gap between the rich and the poor in Chinese society is widening (and policies are encouraging "some people to get rich first"), and that the resulting differences in purchasing power and their changing trends are creating dynamic income segments and different market opportunities that must be specifically identified. Certain multinationals have focused on the middle class.

4. High market research error

The role and status of market research is very important in mature markets, but in China's transition market, it seems to be in a lukewarm state. On the one hand, local enterprises are indifferent to market research, only 0.24% of enterprises are willing to do formal market research (Guangzhou Daily 2001.2.2), market research clients are mainly multinational corporations, joint ventures, private enterprises, and some other competitive industries (such as IT, home appliances, health care) pay more attention. On the other hand, the validity and credibility of market research results are not as good in China as in mature foreign markets. For example, the executive general manager of a consumer goods company held by overseas capital (Harvard MBA, with management experience in a large multinational company) relied solely on the data of a famous international research company to make decisions in the office without visiting the actual market, and was forced to leave after a failure. The main reasons for the relatively low validity and credibility of market research in China's transition market are

●Market research methodology is basically western, localization research is very insufficient, and the error is large;

●Poor business ethics in the implementation of market research, and human error is large

●Chinese are not accustomed to and do not accept the western style of surveys, and the psychology and behavior of the respondents caused by the error is large;

●Chinese are not accustomed to and do not accept western-style surveys, and the psychology and behavior of respondents cause error is large;

●The professionalism of the market survey personnel is very high. p>●The professional quality of market researchers is not up to standard

●The "ranking" out of speculation lacks credibility, which will ruin the reputation of the industry

5. Obstacles to marketing in state-owned enterprises and monopolized industries

The marketing awareness and level of various industries and enterprises in China vary greatly. In general, competitive industries are better than monopolized industries; private enterprises are better than state-owned enterprises. In contrast, some large state-owned enterprises, banks and public utilities are still in the stage of "no marketing". Lack of marketing awareness at the top, no marketing functions, not to mention market research and marketing strategy, marketing obstacles.

6. High failure rate of strategic planning

7. Confusion of advertising operation

Since Chinese consumers are even more superstitious about advertisements and strong media than foreign consumers, advertisements have been given a greater role. In addition to foreign brands using advertising as an important weapon, advertising plays a pivotal role in building awareness of new consumer brands or launching new products by local companies. However, it is clear that there are many irregularities in the operation of advertising in China:

●The Advertising Law, which came into force in 1995, has principles but lacks detailed definitions, and is implemented with different interpretations in different regions

●Corporations have teamed up with local governments to support huge advertising expenses (including the cost of advertising). The advertising system of the international advertising industry is subject to the special relationships and gray operations in the Chinese market

●The mature agency system of the international advertising industry has been violently impacted by the special relationships and gray operations in the Chinese market. The mature agency system of the international advertising industry has been violently impacted by special relationships and gray operations in the Chinese market;

● Multinational advertising agencies have difficulty in adapting to local clients, and are often out of touch with the market because of their inability to quickly reflect the urgent needs of local enterprises in the transformed market, and their inability to grasp the rapid changes in competition.

8. Relationship Marketing in China

Relationship marketing has been emphasized globally since the 1990s, but it has taken on a special meaning in China's transition market. In the West, the focus has been on strengthening customer relationships, including the use of IT to build customer relationship management (CRM). In China's current business environment, business relationships are more important than customer relationships, as companies are too much in the hands of the government, and relationships with the relevant government departments are critical to the survival of the company.

Foreign companies can't get around this when they enter the Chinese market. In the West, it is often the case that a cooperation treaty is signed before a toast is made, but in China it is always the case that a toast is made before business is done.

9. Chinese-style new product development

The Chinese market is likely to see the emergence of certain unique products, such as VCDs, cabinet air conditioners and so on.

10. Chinese culture-oriented brand building

Because of the deep cultural history of the Chinese market, brand building in China must be more localized than in other countries.

Injecting Chinese cultural values into brand management becomes an important strategy. For example,

●The naming strategy of international brands has a neutral principle, i.e., the name has no meaning. In the Chinese market, a more effective strategy is to learn from the naming of old Chinese brands and create good associations with Chinese cultural meanings.

●To build brand value in the minds of Chinese consumers, it is more effective to emphasize Chinese cultural values as well. For example, Mai's Coffee has achieved better results in Taiwan than in the U.S. by establishing its brand value with the slogan "Good things should be shared with good friends.

The marketing characteristics of China's transition market

1. Transition mixed marketing

Sense of marketing is the marketing characteristics of local Chinese enterprises, they first pursue the "feeling of the right way", although there are reasons in the transition market, but there is also a big risk of the Chinese business community. The phenomenon of "big ups and downs" and "meteoric rise and fall" is the price.

It is worth emphasizing that the local enterprises are stepping up learning to enhance the level of marketing, mixed with the proportion of the changes in the direction of development is the "scientific" proportion is rising, and gradually to the international multinationals of the marketing model close. Some excellent enterprises (such as Haier) is making rapid progress, has shown a strong ability to learn, competition and innovation.

2. Sales promotion dominated

A considerable proportion of Chinese local enterprises are still sales promotion oriented, treating sales promotion as marketing and aiming at sales promotion, which is why there are endless price killing and promotion wars. In fact, since the mid-1990s, the main theme of competition in the Chinese market is price competition, although the brand, a non-price competitive advantage is widely shouted, but not many really work.

A considerable number of enterprises facing a life-and-death crisis in the market, the lack of competitive advantage and core competitiveness, can only go to the helpless short-term marketing, simply the pursuit of sales.

The enterprises in a better state often have no sense of crisis, confined to the sales concept can not be improved, or in the management of the inability to break through the solidified sales-oriented concepts and performance system.

3. More planning than strategy

The prevalence of "planning" is a phenomenon unique to the Chinese market, and many local enterprises have problems with planning, as if a farmer is sick and asks the local doctor, who can sometimes cure the disease or even magical results, but most of them are experience-oriented, non-specialized.

The accompanying phenomenon is that the market speculation more than market research, or more than a single marketing tool (such as advertising bombardment) sloppy implementation without the fine integration of marketing operations.

This short-term behavior will inevitably lead to failure after the escalation of competition, color TV price reduction war led to industry-wide losses and the fall and winter of 2000 warm underwear war and overboard, etc. are the bitter lessons of local enterprises.

4. Lack of expertise

Marketing professionals in China's transition market is in very short supply, with real-world experience, in well-known companies as a marketing manager, in the talent market is very much in demand, and its price is getting higher and higher. The lack of specialized talents is also the basic reason why the marketing level of Chinese enterprises is not high. In the increasingly popular MBA education, there is an urgent need to strengthen the "marketing MBA" education.

5. Primary school level

China's different industries, different enterprises of the marketing level varies greatly, some industries, some enterprises marketing professional to improve very quickly, the performance is not bad. But in terms of international standards, a large area of China's marketing is still in the primary stage, or "elementary school stage". Starting point is low is the majority of enterprises **** the same point, a large number of enterprises must start learning from the basic ABC.

In short, the globalization of marketing trend, the Western marketing theory and method has universal significance, China is no exception. Just because China's transition market is not the same as the mature market in the West, then our mission is to realize the international marketing theory and methodology and the adaptability of the Chinese market docking. This requires a thorough understanding of Western theories and methods and an in-depth interpretation of the local, to achieve the Western marketing theory and method of China's localization of innovation.