As China's thirst for consumer goods grows, the marketing plans and activities of companies that have their eyes on this huge market grow as well. Fueled by the past few years of growth in household income, there have been impressive increases in ownership of products that range from color TVs and refrigerators to computers and mobile phones. And surveys conducted by The Â鶹´«Ã½AV Organization show that large numbers of Chinese consumers are actively planning to buy even more. They increasingly have the means, and it's apparent that they also have the desire. (See "China's Emerging Affluents" and "China's Global Opportunities -- and Domestic Challenges" in the "See Also" area on this page.)
But which companies will be the winners in the race to meet the needs of this attractively large and seemingly ripe consumer market? And which ones will be the losers?
Clues as to who is setting the pace, as well as the formidable nature of the competitive marketing challenge, can be found in Â鶹´«Ã½AV's surveys of Chinese consumers. For the past decade, we've been asking them about the brands that come to mind and the names they recognize. Examination of these 10-year trends reveals some important, and even surprising, findings.
Some brands are rapidly growing in familiarity and in marketplace position, evidencing the results of marketing and advertising investments. But some brand names remain unfamiliar despite efforts to promote them. In the rapidly expanding world of TVs and home electronics, for example, awareness of Philips has doubled in the past decade -- while awareness of Hitachi hasn't grown at all. In the important and highly competitive Chinese auto market, awareness of BMW has increased more than six-fold, far surpassing the relatively slower growth in awareness for Suzuki or Ford.
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It's clear that companies cannot hope to rest on their brand-building laurels. Aggressive competitors will continue to apply pressure. Successful growth in China requires ongoing investment. In many ways and for many companies, the race has just begun.
World famous?
Some otherwise dominant global brands have made comparatively minor inroads in China. Only 41% of Chinese consumers are aware of Microsoft. In addition, despite the huge interest in computers, less than half of Chinese consumers (43%) have ever heard of Intel. (See "Chinese Consumers Go High-Tech" in the "See Also" area on this page.) Interestingly, only half (50%) know the Nike name, and that's considerably fewer than those who know China's Li Ning sportswear brand (67%).
Being a familiar name in New York, Paris, or Singapore does not guarantee that a brand will enjoy that same sort of recognition in Shanghai. In addition, while companies have routinely kept a close watch on their established global competitors, that's not enough in China. They must also keep an eye on some very powerful, and equally ambitious, domestic competitors.
Yet some global brands have become almost as familiar to Chinese consumers as their own domestic brands, especially in the larger cities. Almost everyone in China's "big three" cities -- Beijing, Shanghai, and Guangzhou -- knows the name Tsingtao beer (96%), but nearly as many know the name Budweiser (86%). In those same three cities, about as many consumers know about Mercedes (93%) as know about Shanghai VW (93%) or Beijing Jeep (85%). These brand-familiarity numbers reflect the strategic focus in targeted marketing expenditures pursued by companies such as Anheuser-Busch and DaimlerChrysler.
Importantly, some brands that once dominated all others in their category are now seeing their competitors catch up or sometimes even surpass them. Hitachi led the consumer electronics awareness derby in 1994 (with 65% awareness), but a decade later, its awareness has been surpassed by five other brands, ranging from Changhong's 87% to Philips' and Samsung's 70%. Marketplace dominance in China is not static, nor is it necessarily enduring -- even for a decade.
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In categories ranging from mobile phones to soft drinks to autos, the competitors are many, and the race is tight. The battle is clearly on.
The longest journey …
Brand-name awareness, of course, represents only one stage in the battle for brand dominance. It's certainly necessary, but it's seldom a sufficient reason for buying a brand. Around the world, there are plenty of brands that consumers have heard of, yet have no interest in trying. That's equally true in China. (See "Connecting With Consumers" in the "See Also" area on this page.)
Still, awareness remains an important first step on the road to building a brand relationship. And as marketers strive to entice consumers into taking that all-important first step, it's clear that Chinese consumers see multiple routes -- and that they're now well aware of multiple options. Wherever there is obvious consumer interest, there will be marketer competition. And, as the Â鶹´«Ã½AV surveys show, that competition isn't lessening; it's intensifying.