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What Chinese Consumers Want: Interview with Tom Doctoroff (Part II)

Joel on July 25, 2012 - 7:35 am in Archive, Interviews

For Part I of the exclusive interview with Tom Doctoroff, click here.

As JWT’s CEO of Greater China, you have seen the full range of best and worst practices as Western multinationals attempt to entice Chinese consumers into weaving their foreign products into the fabric of their everyday buying behavior. What is one example where a Western company seriously missed the mark? On the other hand, what is the best campaign you have observed or have been a part of during your nearly 20 years working in advertising in Asia?

The most egregious campaign I can recall was a Toyota print ad – I think for trucks – that reinforced the power of the vehicle by having traditional Chinese lions bowing in front of the truck.  Chinese are fiercely nationalistic and also very sensitive regarding Japanese lack of “sincere” apologies for their aggression during the 30s and 40s.  This ad was shockingly insensitive.

The best campaign?  I am most proud of the work we did for DeBeers, transforming “foreign” diamonds into a Chinese cultural imperative.  In America, De Beers’ slogan, “A Diamond is Forever,” glorifies eternal romance. In China, the same tagline connotes obligation, a familial covenant—rock solid, like the stone itself. In the PRC, where the clan, not the individual, is the basic building block of society, marriage is less a union of two souls than two extended families. It is not truly consummated until a new generation is produced. Romantic love, desired and even useful as a bonding agent, is a secondary concern, a means to an end. Men demonstrate worthiness via proof of commitment. Marriage is a protective union, a bulwark against the vicissitudes of a world in which individual rights do not exist, self-expression is often viewed as a threat to the established order, and institutions designed to protect individual interests are rare.

What are the top three pieces of advice you would give to marketing professionals getting started in the Chinese market?

I’ve already discussed two “golden rules” – that is, generating higher margins by maximizing public consumption and externalizing benefits so brands become “tools of advancement – so I’ll tick off three more.

First, to generate both margin and scale, brands should be stretched “out and down.”  Margin isn’t enough.  Given the trust Chinese consumers have in “big brands,” the link between category and brand is relatively weak in China.  That means one brand can stretch across more than multiple categories, assuming credibility in related categories.  Johnson & Johnson, for example, could launch an infant formula and consumers would accept it despite lack of experience in this category.

Relatedly, the only way to target a broad swath of price-sensitive consumers is to extend premium-priced brands downward across lower price tiers, always by reducing costs and simplifying benefit structures. At the same time, great care must be taken to avoid degraded quality perceptions, usually by advertising the most premium variants. Colgate toothpaste was an early innovator on the mass-market front. Colgate Total Oral Care premium toothpaste, composed largely of imported ingredients, cost approximately 200 percent more than local brands and maintained a 3 percent share. Colgate Herbal and Colgate Strong, however, used local ingredients, had a lower cost of goods, and were priced slightly higher than or at parity with local brands. The combined Colgate franchise controls a phenomenal 20-plus percent of the toothpaste market, one with hundreds of regional and national competitors. In recent years, Nestlé and some Procter & Gamble brands—notably Crest—have adopted a similar strategy. So, too, have higher-involvement categories such as mobile phones.

Second, Chinese, irrespective of income or geography, are overwhelmed—yet excited—by the explosion of brands, both local and international. Twenty years ago, the public phone was the only way to make a telephone call; today, there are over three hundred brands of mobile devices, ranging from U.S.$30 basic models to state-of-the-art smartphones. Making matters worse, China’s media landscape is extremely cluttered.  The average Shanghai resident is exposed to three times as many ads in one day as U.K. consumers. In Beijing, television screens, mostly owned by Focus Media, are ubiquitous—in taxis, elevators, restaurants, building exteriors, locker rooms, and bathroom stalls.

Complicated messages, therefore, are not easily digested, even amongst the most brand-literate subsets of the population. Consistent messages must be conveyed directly, requiring as little cognitive processing as possible. Advertising must be ruthlessly single minded about the visualization of key benefits, leveraging demos as creative ideas, slice-of-life formats that dramatize product performances in extreme circumstances and so on. Celebrities must be carefully selected so that their star attributes reinforce a core brand proposition.

Third, never – ever – underestimate the importance of trust lubrication.  The dramas of Enron and financial crises notwithstanding, western business people assume that the playing field is basically fair.  Impartial commercial courts protect us.  Stock markets are relatively transparent.  Credit is broadly available, assuming adequate risk-return calculations.    Chinese institutions exist to reinforce the ruling power of the Communist Party and, therefore, are much less developed and will likely remain so for decades.

Trust must be lubricated one-on-one, in the CEO’s office or in private dining rooms at round tables. Unfamiliar people or new ideas elicit anxiety, so informal pre-meetings must be set up between trusted third parties. Email contact gets you nowhere, since executives are uncomfortable with “mechanical” communication (although, these days, many issue one-way tweets). Common business objectives must be established at dinner, but only after the ice has melted.

***For additional insights from Doctoroff on China’s digital marketing landscape, reserve your copy of The China Observer’s upcoming white paper here (to be released in the coming weeks)***

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