In Western countries where internet and social media marketing is the hot topic, some marketers have called a time of death for the traditional 4Ps. And while marketers in Western countries debate whether the 4Ps are pertinent in their markets, Chinese retailers are discovering that the traditional 4Ps are as relevant and applicable as ever.
In the United States, many shoppers dread the Christmas holiday season. Stores are packed with merchandise, the parking lot is full of autos, and shoppers bump elbows and carts on a regular basis. The panic and pandemonium are palpable.
In China, a Westerner walking into a Carrefour or Lianhua superstore might feel the same way as shoppers jostle for position around tanks of live crabs, clams and eels. Managing down store aisles, shoppers are often accosted by aggressive vendors pitching the latest skin care or food product. And the meat section may contain some surprises as well–to ensure freshness, many Chinese like to “touch and feel” before they buy!
While the Chinese retail market is still dominated by domestic giants such as Lianhua, Gome, Suning and Vanguard, some multi-national companies such as IKEA (Denmark), B&Q (UK), Tesco (UK) and Carrefour (France) are discovering they must, to borrow a phrase from Apple, “think different”. And this includes a back to basics approach for marketing. Everything from products, channels, partners, suppliers, market conditions, consumer mindsets, messaging–must be considered and reconsidered in China.
For marketers tackling the Chinese retail market, the marketing mix is as relevant as ever. Pricing is dictated by tough competitive conditions, market segments, location and tight consumer wallets. Promotion strategies might skew more towards in-store displays and merchandising tactics to capture impulse buys rather than broad based advertising or circulars. Placement strategies must consider myriad supplier networks and their proximity to stores, local customs, demographics, government regulations and possibly utilization of local partners. And stocking the right products (sizes, quantities, locations in the store etc–) to meet changing needs of the Chinese consumer is definitely a science.
Localization–or adapting the marketing mix to meet regional or customer segment needs–is a key strategy to success in Chinese retail markets. Urban stores in larger cities may carry a completely different product mix than rural locations to accommodate different tastes and incomes. Pricing strategies must consider the wide discrepancies in incomes (urban dwellers usually make 3X the income of rural denizens). Promotions might include more personal selling in urban vs. rural locations, and placement strategies must reflect that it’s more difficult to get goods distributed to rural locations at a reasonable cost.
New Marketing Ps vs. the traditional 4Ps–is an argument that can be left to others to debate. What is clear, however, is that the traditional marketing 4Ps are alive and well in the Chinese retail market–and more relevant than ever for marketing decision making in the middle kingdom.
Questions:
* One marketer and author suggests that the traditional 4Ps should be supplanted with, “Preference, Premium Price, Portion of budget, and Permanence of relationship.” Are these suggested new 4Ps applicable to emerging markets? If so, are they applicable now, or in the future for Chinese marketers?
* In China, online communities are forming around B2B and B2C products. What online (social media) tactics might you suggest for Chinese retailers to share, engage and communicate with consumers?
Related posts:
- China: Implications of an Emerging Middle Class
- Going For Growth–In China
- Holiday E-Commerce to Grow in U.K. While Traditional Retail Stays Flat
- China Making Gains in Online Marketing
- The Home Depot Moves Into China
Tags: 4Ps, back to basics, Chinese brands, Chinese markets, Chinese retailers, localization, marketing in China
As a marketing professor I do think the approach to the 4P’s needs to be altered and tend to talk about the 4C’s: consumer, cost, choice of delivery, and communication. This approach puts more focus on consumers and what they want.
This approach is even more critical for doing business in other countries,
China in particular. Consumers in China have a different approach to buying, perceive “value” differently, rely more heavily on mobile technologies for communication, and often pose a challenge for delivery.
Definitely the approach used in the US or Europe can not be duplicated in China. There are enough companies who have tried and left to provide an example of the need for adaptation.
Understanding the consumers and orienting the delivery and promotion of your products around the consumer behavior in a particular county is critical for success.
Nice post, Paul. I lived in Taiwan for a while and it’s nice to see formerly closed markets like China opening up. Some marketers may think that since it is in essence a developing market, China is going through the traditional marketing curve; that this doesn’t apply so much to mature markets. I’m not so sure. SM is great and it gives marketers another valuable tool to glean consumer insights and engage in conversation. But traditional, basic marketing is also essential, in my view–no matter which market we’re talking about.
Interesting, Paul. I’ve done a bit of reading about the Chinese consumer market. It seems that the older generations of Chinese prefer to continue to purchase heritage Chinese brands. Younger consumers are dying for anything and everything Western–even beginning to go through the status acquisition phase young Japanese and Eastern Europeans embraced a few years ago. Cultural considerations are very important for Western companies to understand when trying to do business in China. Traditional marketing concepts can be molded to fit this market and ought to be in play. As young people purchase PCs, SM can be added to the mix, but conventional marketing is going to have to be front and center from what I can see. Good stuff, Paul.
Camille, you bring up a terrific point. There are more than a few case studies available where Western companies have sought to standardize their Western best practices in operations, marketing etc for emerging markets. The result of many of these efforts is a quick realization that these “global” strategies don’t work and that they must in fact take a local approach to the market. In some instances, this means tearing up the corporate playbook and starting anew in the emerging market.
I appreciate your insights and thanks for commenting.
Ted, it’s sometimes difficult to not get too frustrated with blanket commentary such as “the 4Ps are dead” or “here are the new 4Ps…”, especially when the 4Ps are alive and well, as you said, “no matter what market we’re talking about.”
It is going to be very fascinating to watch (and participate) in the evolution of marketing in China as Chinese consumers get much more savvy and expectations increase. The growing middle class (estimated at 200-300 million) will make sure that it will be an interesting ride!
Thank you for taking time from your busy day to share your thoughts!
Claire, there’s a great HBR article where Gallup surveyed Chinese consumers and discovered that there are indeed differences in sentiments for Chinese brands among young vs older consumers in China. It is probably the same article you read, although I cannot be sure.
Dissecting the differences in brand sentiments of various demographics in China would make for a terrific post all by itself! Something to consider anyway, right? Thank you for commenting and adding your insights!
While I can agree with Camille that a shift towards user needs is needed, I’m affraid that even the concept of 4P’s has been widely misused and misunderstood.
In my masters work, I’ve actually propsed switch in customer satisfaction measurment.
Instead of measuring
how much a customer is satisfied with part X of our product,
We should be measuring
how much our product satisfies need X (need of food, socialising,…) of the customer.
Now – even tough my work was focusing on customer satisfaction measuerment shift, I came to conclusion that there are other dangers to marketing in this path. Mainly – interpration and cooperation to/with other departments in the company.
Even now marketers have tough time explaining 4P’s (and saying we should develop the products). Going into customer needs – well, noone in the company that makes computer monitors will ever understand that they should be perhaps satisfying customer need to socialize.
As for china communications with customers… it’s complex. I think that it depends on who the customers are? (Denmark customers are way different then Italian)
Dusan, thank you for commenting! Is it your premise that not only are the 4Ps misused by most marketers, but also that they are not well understood? Or is it that some marketers just don’t care about customer needs and are going to push product anyway- regardless of fulfilling customer desires?
I believe there is a lot of potential in spending more time and going back to basics before we progress to potentially other Ps. Still too many products and services in search of a market…
Paul, I’m certain that 4Ps paradigm is very bad understood. Actually, 90% of its power is unused. At least in our environment.
Reasons?
1. Marketers don’t understand it completly.
2. Marketers prefer to work on communications.
3. Other company departments see marketing only as a communication/sales function.
4. Everyone wants to be Kotler, so everyone wants to come up with “new emerging incredible marketing social future tools”. That includes new P’s and C’s discovered.
Marketing actually doesn’t need a paradigm shift. If you look closely at 4P’s, you’ll find everything there (yes, even social media is there). If you don’t want to look at it, you won’t find anything.
Finally, to me 4P’s paradigm shift is the same unexploited as CRM models. We can go to 1on1 social media models – but if we don’t understand databases, it’s useless.
Dusan, you have made some very powerful points that bear repeating.
First, a fair percentage of marketers are most comfortable with communications and marcom functions. This is definitely a subset of marketing, but not one in the same. Second, we should not rush out to create new C’s or P’s when we haven’t taken full advantage of the 4Ps as summarized since the 1950’s/60s. Third, much of the focus – all the rage these days is social media (which is important) but is geared towards the online channel. There are many more channels in which to interact with customers. Fourth and last point, all customer interactions whether they are online or offline, should be captured into an analytical infrastructure for data collection, analysis and then action or execution on learnings gleaned from analysis. This is the next big paradigm shift in marketing.
Thank you for adding your experience and wisdom to the conversation.