Whisky Target Market
Strategies China market entry – without going through the 1st tier cities
As average wages have risen and consumers have more disposable income and are willing to spend their hard-earned wages of modern products, companies in smaller and medium size around the world have entered the Chinese market imported products ranging from cosmetics to paint French German, Ukrainian Vodka with fruit juice in Malaysia.
As recently as a decade ago, entering in the Chinese market was synonymous with the entry into Beijing, Shanghai or Guangzhou possibly markets. It meant understanding the potential of some regional markets choose markets alone is believed to be profitable. The result has been a massive increase in market competition, along with the growing sophistication of consumers first city level. The new advertising campaigns are attracting legions of consumer curiosity and desire to try new products is high, however, the brand and the loyalty of many products product categories remains low.
Strategy for market entry into China
The dizzying speed of market development consumption in 1st class cities like Beijing, Shanghai and Guangzhou has led to a saturation dynamics of these markets by an abundance of products in constant evolution perceived similar-from around the world. The term "dynamic market saturation" has been used to describe the high turnover of products entering markets in the first tier of the city, all chasing the same consumers, although the size of the market in terms of number of consumers remains fairly stable.
The vastness of China and the sheer size of the population means that opportunities abound for companies interested in participating in this market. However, regardless of the product, a passive entry into the market that resides in the large number of potential consumers in China for products go to every one no longer enough. A methodology for strategic decision making is now essential to determine whether or not to take the plunge in China.
Research in the cities second level
Without going through the highly competitive market of level 1 is a viable option for many companies and can offer many rewards, in fact, should be seriously considered. Just completed a market research study by Labbrand focused on understanding the feasibility of a new brand of vodka to enter the Chinese market, ignoring the level of the prime markets, and identifying areas of consumption that go beyond the competitive battleground nightlife and leisure markets at second. In summary, the objective was to understand that the products of vodka with the customer portfolio are appropriate for whom, and where they are more likely to be consumed.
The scope of the study included an analysis baijiu2 semiotic codes, video ethnography, and qualitative consumer focus groups with regular drinkers of alcohol and other baijiu in Chengdu, Shenyang and Wuhan. The focus groups were held in restaurants with a meal in order to allow a complete product tasting. The following key points were addressed in the study of consumer markets:
• General understanding of minds and habits of consumption,
• The use cases (specifically for hotels, restaurants and cafes)
• understanding Vodka category
• Brand name test
• taste test,
• Tests for packaging design.
The project was completed workshop with a brand positioning and development strategies consistent with brand positioning for China.
Semiotic Analysis
The semiotics phase was to identify the positioning of different brands Baijiu, most used codes in communication and analysis different styles of bottle currently on the market. The semiotic analysis identified the key axis for positioning in China. For brands Baijiu, codes used in the communication were placed along an axis ranging from power and the achievement of universality, tradition and heritage of hedonism and stimulation. The bottle designs were classified as power and status to universalism, from classical to modern, as shown in the following diagrams.
Harvest Data and Recommendations
Focus groups revealed that compared with their counterparts in the city first level, knowledge of foreign alcohol was limited among injecting small town. Foreign types of alcohol did not differ, for example, many participants did not know the difference between vodka and wine. Perceptions sometimes related to drinking and behaviors also varied. Chinese liquors within, consumers were buying the more expensive baijiu to have a drink with his boss, but buying a cheap liquor to enjoy with your friends. With regard to foreign alcohol, beer was considered as an occasional drink can be enjoyed with friends over dinner, while wine, red wine in particular, was considered more sophisticated and romantic. External hard alcohol were associated with clubs and be cool and modern. The idea of having a glass of whiskey for the enjoyment was not present among the respondents. Foreign purchases of alcohol were based mainly on the promotion and availability, while the reasons given focused on wanting to be fashionable or seeking the admiration of his peers.
Information video ethnography and consumer groups also focus helped to improve customer understanding of target consumer and the best way of being engaged. Other recommendations included key areas identified as requiring improvement, namely, the product name and packaging. The semiotic analysis also provide clear conclusions on key and emerging codes bottle packaging.
Labbrand also made several comparisons and recommendations on possible distribution channels or customer interest. By focusing on consumption occasions and locations, new restaurant types currently not considered a priority by the major foreign brands were identified as potentially viable for the introduction of customers Vodka brand. For example, a brand of vodka could develop a partnership with a Western-style restaurant mid-market position managed by a single owner Chinese. The premium brands of alcohol is unlikely that the objective of this type of output, however, many consumers could be reached through this channel restaurant.
Conclusion
There are a lot of information available on Chinese consumers, however, most of these studies often forget to mention that their investigation was limited to a few cities at first and, possibly, some quantitative statistics provided by the statistics office China. A very important learning for our client was that his understanding of Chinese market and the research results were unique and were asked to re-evaluate its strategy of market entry. Consumers first level and second level are very different. understanding of the product, market exposure, needs and expectations be different in different product categories. Only through a well-developed brand strategy based on knowledge of the global market can make large or small, domestic or foreign, hoping to build brand value to be successful in the long term in China.
1. Translated from the German, "Das Risiko, nicht zu sein in China, größer ist als das Risiko in China zu "Sein, Heinrich von Pierer quote
2. Baijiu (白酒, pinyin: báijiǔ) is an alcoholic beverage distilled from China. The name literally means "white liquor"
About the Author
Vladimir Djurovic is the founder and Managing Director of Labbrand, a Shanghai based innovative brand agency specialized in brand research, strategic and creative services. Labbrand website at: http://labbrand.com/ is also the portal to Labbrand branding blog: http://labbrand.com/english/news_and_articles.php/ and reviews of branding related hot topics, with a special focus on China.
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