SHANGHAI — A high-energy forum around Asia’s Top 1000 Brands event examined the changing consumer and brand behaviour in what is still one of the world’s most dynamic markets, with observations and insights from companies such as Ping An, Philips, VW and General Mills.
The day began with a rundown of the topline findings from the Top 1000 Brands report by Oliver Rust, global SVP of financial services at Nielsen, who noted that many people in China are now at the stage where they are willing to pay a premium for high-quality brands. He added that brands that "connect emotionally" with people "stand to do much better". In this context, marketers proceeded to share the following observations:
More than just emotional connection, Chinese consumers are looking for brands that make their lives easier.
In a discussion around building digital strategies to connect with increasingly fragmented consumer groups, Winston Phua, head of personal health marketing for Greater China at Philips, admitted that his company’s website could offer a better user experience in terms of ecommerce functionality.
One marketing-led initiative that had worked well however, he said, was the development of an app that alerts people to poor air quality and allows them to control air purifiers remotely. Another was a mobile-centric social initiative that showed people how to enjoy an oil-free reunion dinner over the Lunar New Year. "Always start from the business objective and see where mobile fits into the picture," he said.
At a personal interaction level, China has never been known for having the most attentive customer service, but the consensus of the forum was that that is definitely changing. In a later session, Amy Cheng, executive head of global coverage for Bank of China International, said simply: "Now, service is something you should want to do."
Mobile is a great way to offer utility, but it’s not the only truth.
Enoch Tsui, a member of Ping An Group’s executive committee, said his company had used mobile to great effect in making it easier for people to apply for loans. Where the process in typical financial institutions can take 14 days and numerous visits, he said, approaching it with a digital mindset had shortened the time required to 10 minutes. "We find convenience and speed are the most important criteria for consumers," he said. "We thought we should provide a much better service and our business quadrupled in a week."
But he stressed that a good service makes it possible for people to connect via any device. "Mobile is not doing everything. You can apply for a loan via mobile, but it’s highly inconvenient using two fingers to type. It’s not a desirable experience. When you talk about the customer journey, it’s not confined to mobile. You can use multiple devices—PC, WeChat—it’s how to connect them together that’s the key. Don’t just count on this [mobile] machine. What we need to do is provide integrated services."
Tsui added that he believed the most successful brands aimed to be six months ahead of the competition in their service offering. "You don’t need to win everywhere, but that will earn you a sufficient window to conquer the market," he said.
Enoch Tsui (right).
Segment your consumers, but don’t go overboard.
On the topic of data management, Philips’ Phua said working with Alibaba, which sits on "mountains of data," had helped identify three groups of people who were most likely to be in the market for an electric toothbrush: consumers of premium goods; very health-conscious people who already buy a lot of health-related products; and people who regularly drink coffee and alcohol. "We did targeted marketing [to these groups] and our ROI was 30% higher than normal," he said. "But the key thing is to find balance. If you cut the group too tight, you don’t have enough people to reach out to. If there are only 10,000 [in a group], you cannot build that business."
Media planning should come before the creative idea …
In a market where the consumer journey is often particularly difficult to define, marketing strategies have to begin with "consumer insights and marketing teams sitting with the media agency talking about the path to purchase," said Peter Everett, China CMO for General Mills. "The creative strategy comes after the path to purchase and media strategy has been fully explored."
Everett noted that while in the US his company’s TV-digital split is still around 90:10, in China it has narrowed to 60:40. Echoing earlier panelists, he said hard-selling was no longer effective in China. "As we engage with consumers, the big question is ‘What’s in it for me?’ " Everett said. "If something is purely brand messaging, you can expect just a five-second attention span. [For Yoplait], we recently did a piece of content on how to pick a yogurt. The branding was very soft, and people stayed much longer. If there’s utility, that can be great."
Yan Lee, iClick China; Peter Everett, General Mills.
… But you don’t always need a media agency at all.
In a one-to-one interview with Chris Reitermann, Ogilvy & Mather’s China president and chief executive, Paul Hu, CMO for Greater China and ASEAN at VW, noted that the lines between agencies today are more blurred than ever. A creative agency that doesn’t understand media, or a media agency that only understands media, are of no use to brands, he said, adding: "Many of our companies are signing contracts with BAT (Baidu, Alibaba and Tencent) independently, so if a media agency can’t create value, its role will be reduced bit by bit. Alibaba can do planning; a media agency doesn’t need to teach them how to."
Marketing in China has never been more important, or under more pressure to prove its worth.
Considering China’s slowdown in economic growth, or "normalization," Hu admitted things were getting "a lot tougher." He cited single-digit growth in the first half of the year with no growth predicted for the second half. While the health of the automotive industry is ultimately no different to that of other sectors in the country, he said, more effort was needed to get people into the showroom, with consumers becoming younger and requiring new, digitally-focused marketing strategies.
"When competition is tough, marketing has a bigger role to play," Hu said. "Selling cars is becoming a lot more difficult.
"Building the brand to increase equity is a long-term job and you don’t always see it on the P&L, but you have to have a good balance to prove yourself. We don’t think there’s a contradiction between a sales-driven campaign and a brand-building campaign. There are innovative ways you can drive sales, and a lot of derivative services. Many OEMs choose to reduce price, but that’s a lose-lose-lose situation. Marketing has to be more sophisticated in employing new techniques. [It’s] never been so close to sales; it has to prove its result to sales — how many leads it’s generating and how those are cascading — by data and by statistics."
Chris Reitermann, Ogilvy & Mather; Paul Hu, VW.
Most brands are still not set up to innovate — but they need to be, and can learn.
Innovation has been a buzzword in China for some time now, but an afternoon panel looked beyond the hype and came to the conclusion that "Internet startups speak one language and brands and agencies speak another," in the words of William Bao Bean, investment partner at venture capital fund SOSV, which helps connect startups and brands.
While brands focus on selling more products, startups talk about solving problems. Startups also accept the probability of not making any money for a prolonged period of time, and that they will experience failure repeatedly — two attitudes that do not sit well with most major brands. Startups are also far more interested in brands’ consumers than the brands themselves. But all this does not mean the two should not try to work together.
"If you want to be successful and make money, you have to innovate — otherwise you’re not going to be there tomorrow," said Miranda Tan, chief executive of Robin8, a data-led KOL platform.
However, Alvin Foo, head of OMD's Airwave in China, admitted that championing innovation often doesn't make money, at least to begin with. "We're not motivated by money, but if I tell my boss that he will kick my ass," Foo said. "So we say we're motivated by innovation. We believe innovation has to carry on. Hopefully we don't have to pray very hard that we will make money — all the very successful companies you see today were once startups — but we have to move with them because they are setting the trends. I'm willing to lose my job if I don't [eventually] make money."
Foo added that although many agency staff were "amazing people," they are typically "not doing amazing work" due to being weighed down with mundane daily requirements. It is also unrealistic for agencies to be able to recruit talent from top startups like Airbnb and Uber "because they want to work for a cool company."
Samuel Chong, China MD of Gore-tex, admitted his company was "way, way behind the curve" when it comes to innovation and said putting up a relatively small amount of capital to invite startups to pitch ideas had proved valuable.
"We used to do all our innovation in-house, but no matter how many R&D people you have, you can’t solve all the problems in the world," Chong said. "You have to go beyond the mental block of company secrets. Companies should advocate to accept failure within the company. [Innovation] won’t start in the marketing department, so the management needs to agree that they need to innovate. Most of the time they only think they need to when they’re having a bad time, but my advice is that you have to keep telling senior management that it’s very important and must be forward-looking."
Chinese brands must be single-minded to succeed internationally.
A philosophical delivery from Jeffrey Yang, CMO of Huawei’s consumer business, brought the day to a close. Yang considered why, despite China’s numerous "time-honoured" brands, the country still has relatively few truly global ones. He concluded that instead of complicating matters, brands could learn a lot by looking back at traditional Chinese culture and considering the importance of balance — through the elements of yin and yang — and of having a single centre, or a single "sharp sword." Concentrating on a precise point while retaining awareness of nationality is the key to success, he said. Yang added that ‘Big Data’ is essentially meaningless and at best just a tool that cannot be used without the capacity to understand humanity.
This article first appeared on campaignasia.com.