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Wen. Zhou Teddy Ben Nina Simon Wen. Zhou Teddy Ben Nina Simon

How do you perceive the regional differences in China in terms of market development, How do you perceive the regional differences in China in terms of market development, culture, customs, lifestyles, and consumption patterns?

 • Seven regional markets: South, East, North, Central, Southwest, Northeast • Seven regional markets: South, East, North, Central, Southwest, Northeast

Market development Growth market • South and East China • more advance in economic Market development Growth market • South and East China • more advance in economic development and have more affluent consumers than other regions • Guangdong's exports have doubled in the past five years to reach $153 billion in 2003 Shanghai: • attracting $21 billion in FDI in 2003 • preferred site for technology firms and heavy industry

Emerging market • North, Central and Southwest of China • increasingly attractive to global Emerging market • North, Central and Southwest of China • increasingly attractive to global companies e. g. Beijing & Tianjin • economy is growing fast and become more open over last few years • attracted billions of dollars of investment from some of the world's biggest manufacturers. • high investment on transportation recent years e. g. high-speed rail & new expressway reduce traveling time (for Beijing's Olympic Games in 2008 )

Untapped market • Northeast and Northwest • limited agricultural output & industrial output • Untapped market • Northeast and Northwest • limited agricultural output & industrial output • limited infrastructure relatively poor backward & poor • Rich of natural resource e. g. oil, gas, coal, electricity • e. g. Xinjiang: significant coal resources basis for future economic growth and development waiting to exposed by foreign firms

Income • Average annual household income: • South China and East China (Growth markets): Income • Average annual household income: • South China and East China (Growth markets): more than $ 20, 000 relatively rich • North China, Central China & Southwest China (emerging market): $10, 000$20, 000 • Northeast & Northwest (untapped market): below 10, 000 relatively poor

Culture • Different regions different culture due to historical background and ethnicity South China Culture • Different regions different culture due to historical background and ethnicity South China • Min-Yue Culture: plenty of contact with the outside world and great emphasis on mercantile entrepreneurship • each province has own main dialect e. g. Cantonese, Fukienese East China • Shanghai: regional cultural nucleus Hai-pai culture: have the best amenities and product for enhancing the quality of life

North China • Beijing • Jing-pai culture: high value to the Confucian doctrines of North China • Beijing • Jing-pai culture: high value to the Confucian doctrines of hierarchy, stability and control Central China • Diverse local cultures in dialects, food and operative styles Southwest China • many ethic minority most culturally diverse region

Northeast • Manchurian and Korean are the biggest ethnic minorities great impact on local Northeast • Manchurian and Korean are the biggest ethnic minorities great impact on local cultures Northwest China • Xian: cultural capital • Mongolians, Muslim & Tibetans are major ethnic minorities

Customs Same Festival has different customs in different region • Lunar New Year • Customs Same Festival has different customs in different region • Lunar New Year • Southwest China & South China e. g. Sichuan, Fujian : flower decoration of house, create happy atmosphere • Northeast China & Central e. g. Heilongjiang, Anhui: different kind of food and vegetable • Wuhan, Nan. Chang : peppers, red lantern hope for good luck

Lifestyles • consumers from developed areas enjoy more active lifestyle South China • have Lifestyles • consumers from developed areas enjoy more active lifestyle South China • have been long exposed to foreign products and emphasize conspicuous consumption • favor foreign brand East China: • Consumers are innovative and cosmopolitan • trend in fashion and lifestyles • Both like traveling, listening to music, going to the park and movies

Emerging market • less exposed to foreign goods • consumers are relatively conservative • Emerging market • less exposed to foreign goods • consumers are relatively conservative • follow the trend in major metropolitan and coastal areas • Like to see movies Untapped market • consumers engaged in less costly activities e. g. Northeast: seldom to see movie but often visit dancing hall

Consumption pattern • little regional difference in purchase of traditional food and beverage items Consumption pattern • little regional difference in purchase of traditional food and beverage items e. g. rice & tea, but income affect the consumption of new or western product and luxury goods ∵ penetration rate in affluent regions is higher than poor region

Growth market • South China: high consumer purchasing power & adopting new and luxury Growth market • South China: high consumer purchasing power & adopting new and luxury goods e. g. CD player, VCD • East China: leading in lifestyle products e. g. microwave oven • tradition durables e. g. washing machine • high ownership of information appliances e. g. private telephone, pager • Many new product have penetrated • pioneers for the rest of China

Emerging market (North China, Central China & Southwest China) • high consumption of liquor Emerging market (North China, Central China & Southwest China) • high consumption of liquor and beer • relatively conservative Untapped market (Northeast & Northwest China) • Seldom purchase modern product e. g. computer ∵ uninformed, immobile, relatively poor

Medium for information • Television-most popular medium • • Growth market cable TV (South Medium for information • Television-most popular medium • • Growth market cable TV (South China) Radio usage is very low high newspaper readership ∵high level of education

Emerging market • Radio usage is relatively high • high magazine readership (Central China) Emerging market • Radio usage is relatively high • high magazine readership (Central China) Untapped market • Broadcast TV • lowest newspaper readership • Low magazine readership

Do Chinese consumers from different regions vary in their consumption values and marketing responses, Do Chinese consumers from different regions vary in their consumption values and marketing responses, such as qualityprice tradeoff, husband-wife dyad, decision making style, brand preferences and loyalty, reactions to promotion and sales, service expectations, and perhaps even their complaint behavior?

Quality-price tradeoff Urban areas Rural areas • Less price-conscious • More price • High Quality-price tradeoff Urban areas Rural areas • Less price-conscious • More price • High price for high conscious Quality Source referred: 1. Consumption patterns of Chinese urban and rural consumers, Tao Sun, Guohua Wu. The Journal of Consumer Marketing. Santa Barbara: 2004. Vol. 21, Iss. 4/5; pg. 245 2. Who is the Chinese consumer? , Bernd Schmitt, Oct. 4, 1996

Quality-price tradeoff Price consciousness • Rural consumers were more price-conscious when compared with urban Quality-price tradeoff Price consciousness • Rural consumers were more price-conscious when compared with urban consumers. • Rural consumers were more likely to do comparison-shopping , to negotiate over the price. Quality consciousness • Gallup interviewed 3, 400 people, 52% urban respondents (vs. 38% of all respondents) would pay higher prices for high quality. Source referred: 1. Consumption patterns of Chinese urban and rural consumers, Tao Sun, Guohua Wu. The Journal of Consumer Marketing. Santa Barbara: 2004. Vol. 21, Iss. 4/5; pg. 245 2. Who is the Chinese consumer? , Bernd Schmitt, Oct. 4, 1996

Husband-wife dyad Urban areas Rural areas • Women have more or equal decision power Husband-wife dyad Urban areas Rural areas • Women have more or equal decision power • More equal • Men have more decision power • Men are superior Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期

Husband-wife dyad Decision Power • Generally, the percentage of husband wife make decisions together Husband-wife dyad Decision Power • Generally, the percentage of husband wife make decisions together is high. (夫妻共同決策的比重為最高) • Wives have more says on economic control, housework, leisure arrangement and external relationship. (妻子在經濟支配、家務分 、閒暇安排、對外交往等方面說了算的較多些) • Husbands have more says on housing, decoration and children’s schooling and job seeking(丈夫在住房的選擇或裝修、 子女的升學或擇業等方面有決策權的更多些 ) • However, this trend is only limited in cities, rural areas are in contrast. Husbands have more decision power than wives. (這種 傾向僅限於城市,農村則相反,即丈夫擁有家庭實權的多於妻子) Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期

Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期 Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期

Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期 Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期

Husband-wife dyad Equality on status • Chinese rural females’ family status are lower than Husband-wife dyad Equality on status • Chinese rural females’ family status are lower than females in cities. (中國農村女性的家庭地位不如城市女 性 ) • Urban couples are more equal and wives have more influence and decision power in families. (城市夫妻地 位較平等且不少女性在家庭中更有影響力和決策權 )

Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期 Husband-wife dyad Source referred:徐安琪 , 《夫妻夥伴關係:中國城鄉的異同及其原因》, 《中國人口科學》1998年第 4期

Purchasing style Urban areas Rural areas • More Sophisticated shoppers • Usually go shopping Purchasing style Urban areas Rural areas • More Sophisticated shoppers • Usually go shopping with others • More Productinnovative • Less Sophisticated shoppers • Usually go shopping alone • Less Productinnovative Source referred: Consumption patterns of Chinese urban and rural consumers, Tao Sun, Guohua Wu. The Journal of Consumer Marketing. Santa Barbara: 2004. Vol. 21, Iss. 4/5; pg. 245

Purchasing style Patronage behavior • Urban consumers were more sophisticated shoppers. • Urban consumers Purchasing style Patronage behavior • Urban consumers were more sophisticated shoppers. • Urban consumers were more likely to shop at well-known stores, to visit large-scale stores, and to shop at stores with quality customer service. • For many rural consumers, going to the gigantic shopping malls in the city areas might be simply a once-a-year experience.

Purchasing style Shopping partners • When asked to tell with whom they go shopping Purchasing style Shopping partners • When asked to tell with whom they go shopping the most often, 37. 1 percent of urban consumers reported going shopping alone, as opposed to 56. 9 percent for rural consumers. • With relatively easier access to shopping outlets, it is possible that urban consumers tend to consider shopping as a group entertainment activity. • It seems that friends can wield bigger potential influences (especially situational influences) than spouses do to rural consumers.

Purchasing style Product innovativeness • Rural consumers were less product-innovative. • Compared with urban Purchasing style Product innovativeness • Rural consumers were less product-innovative. • Compared with urban consumers, rural consumers were more likely to buy products that : – were already used by everyone else, – to adopt the products recommended by friends and relatives, – to buy those "trendy" products only after they are already consumed by everybody else. Source referred: Consumption patterns of Chinese urban and rural consumers, Tao Sun, Guohua Wu. The Journal of Consumer Marketing. Santa Barbara: 2004. Vol. 21, Iss. 4/5; pg. 245

Brand preferences and loyalty • Interiors • Coast • Concern about effectiveness and less Brand preferences and loyalty • Interiors • Coast • Concern about effectiveness and less in their personal image. • Career does not require a formal dress up. • highlighting trendiness and a relatively strong sense of individuality and image. • It is obvious in fashion and electronics industries. • Chief Executive China magazine, Global Sources, released that Nokia is the top in "Top 10 Executive Brands in China. " • Top Cell phones: Nokia • Desktop PCs: Lenovo • Men's Clothing: Armani • Less conscious of brand name http: //www. cellular-news. com/story/17931. php

Brand preferences and loyalty • Interiors • Coast • Concern about effectiveness and less Brand preferences and loyalty • Interiors • Coast • Concern about effectiveness and less in their personal image. • Career does not require a formal dress up. • highlighting trendiness and a relatively strong sense of individuality and image. • It is obvious in fashion and electronics industries. • Chief Executive China magazine, Global Sources, released that Nokia is the top in "Top 10 Executive Brands in China. " • Top Cell phones: Nokia • Desktop PCs: Lenovo • Men's Clothing: Armani • Less conscious of brand name http: //www. cellular-news. com/story/17931. php

Reactions to promotion and sales • Interiors • Simple live and low income. • Reactions to promotion and sales • Interiors • Simple live and low income. • Focus on Satisfying the needs. • More likely to believe ads: Product effectiveness. • Coast • Materialistic and high income. • Focus on quality of life. • More likely to believe ads: Contain drama; Promote corporate image; Product features.

Service expectations • Interiors • Coast • Product is the main part. • Service Service expectations • Interiors • Coast • Product is the main part. • Service is not essential or useless. • Service is also a part in purchasing product such as pre-sell, post-sell service and maintenance. • Not care about the service and with low service expectations in general. • Much care about the service and usually with high service expectation.

Complaint behavior • Interiors • Coast • Low education level. • sense of abasement Complaint behavior • Interiors • Coast • Low education level. • sense of abasement • High education level. • Not brave enough to tell and complain • Not shy to voice out their opinion.

How regional differences affect marketing strategies in China? How do you compare the effectiveness How regional differences affect marketing strategies in China? How do you compare the effectiveness of standardized approach vs localized strategics, and why?

Regional culture value • Mass media • Foreign brand commercial Ad affecting Major cities’ Regional culture value • Mass media • Foreign brand commercial Ad affecting Major cities’ culture and value • Northest cities has totally different Ad medium • Different culture and value develop • Not prefer to buy foreign goods

Pricing • price is also a determinant factor for different region people • In Pricing • price is also a determinant factor for different region people • In untapped market, people would more concern of the price of products • In growth market, they would more prefer to buy foreign goods and luxuries

Geographical disparity • Wide place and countless geographical obstacle • Northwest China where is Geographical disparity • Wide place and countless geographical obstacle • Northwest China where is around the mountain • Transportation problem

Product segmentation • Segmentation is significantly important • Shanghai people like fashion • consumers Product segmentation • Segmentation is significantly important • Shanghai people like fashion • consumers from poorer regions engaged in less costly activities. • Some regions like drinking tea, some regions like drinking beer

Standardized v. Localized • Easy • Efficient • Risky • • • Time consuming Standardized v. Localized • Easy • Efficient • Risky • • • Time consuming Effective Penetrating the market cutting down the risk For example- P&G, before they penetrate the market of China, they spend 3 years time to do research.

End Thank you very much End Thank you very much