What Western Marketers Can Learn from China
In 2017, the fast-growing Chinese liquor brand Xi Jiu wanted to launch an ad campaign to boost sales in anticipation of Chinese New Year. If Xi Jiu were a large Western company in a developed market, its brand managers would have begun laying plans many months in advance—consulting with an ad agency; allocating money to TV, online, and billboards; brainstorming creative approaches; and filming commercials.
But Xi Jiu’s approach to its home market was entirely different: It partnered directly with Tencent News, China’s most popular news app. Together, the liquor company and the technology firm created a series of hour-long, live-streamed shows in which great chefs from different regions of China taught viewers to cook local specialty dishes, pairing them with offerings from the liquor brand. The native-advertising content was highlighted across Tencent’s news, social, entertainment, and gaming platforms, and more than 1.2 million people clicked through on their mobile phones to watch each day. Instead of spending months meticulously planning the campaign, Xi Jiu and Tencent produced the content—conceiving, negotiating, creating, and airing the shows—in just five days. And when the programs aired, there was no mention of price promotions or discounts on the liquor—the campaign was aimed entirely at building consumer awareness and engagement.
For decades now, Western executives of multinational brands seeking to expand globally have operated under a simple premise: Although marketing content and channel selection should be customized to local markets, Western marketing principles are universal. Firms are particularly quick to export their media and ad strategies to developing markets, where advertising and media are more recent developments. After spending time in China conducting in-depth interviews with C-level leaders from a dozen Chinese companies (including Tencent, Oppo, and Mengniu) and 15 multinationals with a significant presence in China (including McDonald’s, Visa, and BMW), I am convinced that this view is wrong.
Western managers may underestimate the power of China’s new competencies.
Chinese marketers have developed a unique approach tailored to China’s mobile-first consumer. It relies on the creation of shareable, viral content and the presence of dominant, channel-straddling media giants. It is faster, cheaper, and in some respects more effective than the traditional Western marketing paradigm. It also is more embracing of risk. For companies that hope to enter China or grow existing operations there, understanding the Chinese marketing mindset will be essential to achieving success. And although the holistic approach was born out of the idiosyncratic structure of the Chinese market and thus may not be directly applicable to every country’s media landscape, in some ways it may be better suited to today’s global marketplace than traditional Western methods are.
As a former marketing head who worked to build global brands in overseas markets, and now as an academic studying corporate marketing, I am both thrilled and alarmed by what’s happening in China. It’s thrilling to see a new generation of marketers devising completely new ways to engage with consumers. It’s alarming because Western managers, entrenched in their established mindset, may underestimate the power of the new competencies or dismiss them as a market-specific, tactical nuance. They do that at their peril, however: To compete effectively in China, Western companies must understand that marketing there is not business as usual—and ideally, they will learn to apply some of these lessons to developed markets, too.
China’s Market Is Fundamentally Different
China’s evolving approach to marketing is different from that of developed economies because its market is different, in four key respects:
Channel-straddling media giants.
The first and most important difference is the presence of channel-straddling media powerhouses. These include, most notably, Baidu, Alibaba, and Tencent, which together are known by the acronym BAT. To put this in a Western context, imagine if Amazon, Bank of America, Google, Facebook, Activision Blizzard, CNN, and ESPN were all owned by one company. That’s essentially how the big conglomerates work in China, with the BAT companies controlling most of the digital content across industries. For example, Tencent owns the world’s largest gaming platform, a wide array of news agencies, the dominant social media platforms in China (Weixin and WeChat), financial services platforms (WeChat Pay and QQ Red Envelope Mobile Pay), retail investments (Tencent is the second-biggest shareholder in JD.com, one of China’s largest online retailers), Tencent Video (the largest streaming service in China, with over 43 million subscribers), and Tencent Sports (China’s number one online sports-media platform). Almost all media activity in China is consolidated on mobile devices, with consumers spending, on average, seven hours a day looking at their phones—approximately twice as much time as Americans spend. Remarkably, 55% of all online time spent by Chinese consumers is within the Tencent ecosystem of companies, according to data from Kleiner Perkins.
The regulatory environment in the West prohibits such concentration, and as a result, Western marketers have been trained to use highly fragmented, channel-centric strategies to reach consumers. Marketing theories developed in this kind of media landscape don’t easily translate to China—and perhaps more important, they may blind Western companies to the opportunities that exist when data is aggregated within a single, channel-straddling company.
A world of closed-loop data.
In the West, marketers typically analyze data from, for instance, Facebook, CNN, People, and the Wall Street Journal separately, because information isn’t easily connected across different channels at the consumer level. However, as much as privacy advocates dislike the linking, selling, and integrating of information, companies need access to closed-loop data at the individual level across every aspect of a person’s life in order to develop deep consumer understanding and improve marketing relevancy. This is precisely the kind of integrated data that the BATs have. Marketers can see how a particular customer approaches banking, entertainment, gaming, social media, and news, and then create more-relevant and -engaging experiences for them.
Consider a U.S. computer programmer I’ll call Joe. He is 28 years old and earns $70,000 a year. He buys most of his clothing from one retailer, which captures every purchase he makes at its stores and website. But Joe’s life consists of much more than stocking his wardrobe. Like most people, he also spends a lot of time on his smartphone. Every morning, he checks his social media accounts. He plays an online game on the bus ride to work. Over lunch, he scans the sports news. During the commute home, he reads an online book. Spotting a coupon for pizza on Facebook, he might order one. He gets an email about a concert and orders tickets before it sells out. And he buys a new shirt for the show.
This shirt purchase is the only data point the clothing retailer sees, just as the pizza store notes only the coupon’s effect and the concert vendor captures just the ticket purchase. Each company has a little window into Joe’s life; this context explains Western marketers’ mastery of channel-based marketing—via TV, radio, print, digital, social media, and so forth. By contrast, the BATs’ vast data ecosystem allows an integrated view of customers’ lives across all channels, instead of just snippets. With this holistic understanding, the marketer can create programming that ties shopping, gaming, news, reading, video-watching, and celebrity-following habits into smarter, more contextually relevant engagement.
Courtesy : Harvard Business Review