1 April 2002
Successful Branding Takes Strategic Planning (Design, Marketing & Communications)(HKTDC Hong Kong Trade Services, Vol 01,2002)
Vol 1, 2002
DESIGN, MARKETING & COMMUNICATIONS
Total Solutions Yield Results For Marketing Pioneer
Design Success Blossoms From Wide-Ranging Service PAL Design Consultants Ltd
|Making products to bear the brands of other enterprises is no longer enough at many factories. Companies recognize the importance of creating and promoting merchandise under their own brand names.|
FOR many years, Hong Kong-based manufacturers ran successful businesses by creating products to be sold under the brands of other companies. They concentrated on adept sourcing, quality design and low-cost production. Eventually, many secured more sustainable advantages by nurturing their own brands.
Now Hong Kong companies wish to expand their retail and brand-building work on the Chinese mainland. This is not entirely new. Brands like Goldlion, Chow Tai Fook, U2, G2000 and Goodway are well known.
In many cases, Hong Kong was a useful laboratory in the early stages of brand building. But the differences between rolling out a brand in a city economy and across the entire Chinese mainland are huge.
Careful planning and sound strategy are as important as a large budget, although effective brand building is unlikely to be cheap.
The process must be taken seriously. Companies do invest huge sums to build up their brand names and to open outlets in major cities. At provincial levels, they establish dealer offices and communication links to government departments. There must be a long-range plan.
Winnington Metal & Plastic Mfg Co Ltd is a leading Hong Kong maker of stainless steel cookware that recently opened a store in Guangzhou and is developing counters in various department stores.
"Market research and familiarity with the local market are critical," says Winnington marketing manager Audrey Wong. "The right marketing team is also essential. You must have a balanced mix and an ideology exchange between Hong Kong and mainland managers."
Developing brand awareness is a key goal. Product brand and corporate identity are increasingly important on the mainland. Winnington relies mainly on magazine advertisements and on posters in public and open places. It started a loyalty programme for customers making repeat purchases and plans to launch more innovative, pro-active programmes like demonstration road shows.
Some SMEs, unable to invest so heavily in brand development, pursue halfway approaches. They participate in mainland exhibitions or trade fairs and open representative or dealer offices. They do hope to increase sales, but this is not all-out brand-building.
Winning Brand Strategies
HONG Kong-based consultancy Brandstorm Asia offers the following advice for successful brand-building on the Chinese mainland:
- Begin with the end objective in mind. Assume your brand will be a success and take steps to protect intellectual property.
- Don't position the brand in a vacuum. Consider the competitive context, and do not dismiss local brands. Chinese mainland production is gaining parity with the quality of imports.
- Focus on end-benefits. Define targets and decide what needs your brand fulfils better than competitors. This usually requires consumer research.
- Remember all brand stakeholders when developing a market-entry strategy. Develop value propositions for consumers, customers, strategic allies, investors, suppliers and distributors.
- Consider that mainland consumers have limited disposable income. They hesitate to spend large amounts for new brands unproven to them. For health and beauty products, food and even household items, they like small "trial" sizes. For major consumer durables, launching with the best possible quality is preferable, even if prices do dwarf those of rivals.
- Use effective corporate public relations. Even companies wishing to promote only brand names can gain on the mainland by attracting attention to the parent corporation.
- If your company has Chinese heritage, remember this can be a strong motivator. Brands with Chinese roots proven successful outside the mainland (in Hong Kong or beyond) can gain empathy and create perceptions of quality.
- Focus on consumers buying into your product category for the first time. Consider if key personal events, like marriage, buying a home or becoming parents, could lead consumers to your brand. Cooperative programmes with real-estate agents, bridal salons or maternity wards might be just the ticket to maximize results and gain association with positive life experiences.
- Explore alternative media plans. TV is not the only useful option. Appropriate
choices depend on brand context - understanding where, when and how the target
consumers make their purchase decisions and what media they consume. Detailed
messages are best delivered by print or direct mail.
|Serious discussion with buyers from a wide range of markets is the main activity at leading international trade fairs staged in Hong Kong and overseas.|
TURBULENCE in traditional markets, including the 2001 economic slowdown in the US, causes Hong Kong and Chinese mainland companies to pursue new markets for their products.
For small and mid-sized enterprises lacking global infrastructure, this can be challenging. Managers are rightly nervous that substantial time and money can be wasted if emerging markets are not approached carefully.
"For SMEs, the process of going global need not be overwhelming if they are armed with commitment and information," says US-based consultant Ruth Stanat, the president of SIS Int'l Research and author of several books advising SMEs on global expansion.
The traditional corporate approach is to work with consultants to map out how a market works, who the key players are, what the regulatory environment is and even simple issues like market size.
Such an approach is not always best for SMEs. Smaller businesses tend to "jump in", testing markets by simply going there. This may cost less at first, but could prove unproductive.
An ideal approach may lie on middle ground between the expensive consultancy route and the "leap of faith". Hong Kong Trade Services magazine asked representatives from India and Mexico, two of the largest emerging markets, for advice.
At India's consulate general in Hong Kong, consul (commercial) Anurag Goel says, "The Chinese mainland and India are the only major economies growing more than 5% per year."
Although the Chinese mainland and Hong Kong do have a long tradition of trading with India, each side tends to regard the other as a "difficult" market. Increasingly, they look to expand business links.
"Begin with the basics," advises Goel. "See what the market is. Do the basic market surveys."
Establishing a preliminary business development office is a good next step. This may feature only 1-2 people, but can be essential to develop a firm understanding of the market.
"It is like the Chinese mainland. Develop guanxi with trade partners in India," Goel says.
Deeper partnerships may develop. Goel says companies entering the India market should work with partners. "Whether through a joint venture or consultancy, you can find the necessary expertise," he says.
Sectors such as infrastructure (including power, telecoms, ports and airports), textiles, jewellery and leather may hold particular promise.
Indian Chamber of Commerce in Hong Kong secretary-general V. Santha Ram offers the following pointers to SME executives interested in the India market.
- Remember that India is a diversified and dynamic potential market with differing lifestyles and consumer preferences.
- Prompted by rising affluence, rural areas throughout India demonstrate strong demand for goods. About 70% of the country's one billion people live in 624,000 villages.
- Global labels and well-established Indian brands compete side-by-side. Exporters from Hong Kong and the Chinese mainland should not underestimate the strength of home-grown brands.
- More than one million market intermediaries participate in product distribution. India's complex distribution structure is a challenge, but not necessarily an obstacle.
- Consumers are quality conscious and price sensitive.
- Tradition-bound consumers hold strong brand affinities. Convincing buyers
to switch brands can require a long-term marketing strategy.
Another market of increasing importance is Mexico. Norma Garcia, the country's deputy trade commissioner in Hong Kong, says SMEs should make the Mexican Bank for Foreign Trade, Bancomext, their first stop.
Bancomext is a government body mandated to promote Mexico-related trade and investment. Each year, it organizes an annual seminar and familiarization trip for Asian companies.
Hong Kong companies can also secure advice through the Hong Kong Trade Development Council's consultant office in Mexico City.
Industries of significant interest in Mexico include textiles, electronics and automotive components. Some companies are pursuing innovative joint ventures combining their textile manufacturing expertise on the Chinese mainland with ability to produce garments in Mexico for export throughout North America via the North American Free Trade Agreement's favourable terms.
In any unfamiliar market, trade fairs and product exhibitions are a popular way to combine promotion with research. Participation allows SMEs without large international sales and marketing teams to see thousands of buyers in one place.
Research by the Hong Kong-based Business Strategies Group Ltd indicates that companies from Hong Kong, the Chinese mainland and Taiwan spend US$70m-100m per year participating at major trade shows in the US, Europe, Asia and elsewhere.
Trade-fair organizer CMP Asia Ltd president Peter Sutton stresses how effective exhibitions are for companies striving to excel in new markets.
"We organize many Asian pavilions, mostly involving SMEs, as well as participation by individual companies, at fairs in Asia, Europe and the US. From customer feedback and the reality that so many rebook, we know trade fairs are one of most cost-effective ways for SMEs to find new buyers," Sutton says.
Companies regularly appearing at the same fairs soon build customer bases. "The best success comes from repeat attendance. Face-to-face meetings and opportunities to examine products are important to buyers," Sutton adds.
Chambers of Commerce and other business associations offer significant benefits not only by nurturing company-to-company relationships, but also those between associations in different countries.
When entering India, for example, SMEs should recognize that the Hong Kong General Chamber of Commerce and the Indian Chamber of Commerce in Hong Kong are full of potential allies. They also have enduring ties to the Confederation of Indian Industry, the Federation of Indian Chambers of Commerce and Industry and other relevant business groups.
Contact with such organizations can make initial steps into a new market much less risky.
On a more mundane level, many international chambers publish inexpensive guides or directories. SMEs approaching South Korea, for example, may wish to acquire three books published by the American Chamber of Commerce in Korea. Entitled Guide To Doing Business In Korea, Focus On Living In Seoul and Expatriate Cost Of Living Survey, all are readily available to non-members at modest cost. Most countries have similar resources.
Accountants are another source of valuable information. SMEs working with any international accounting firm may find there is an associated accounting company in the emerging market of interest. Most publish simple guides on setting up and running offices or businesses. For clients, they will probably provide copies free of charge.
The Internet is another tremendous resource. Most governments provide huge quantities of business-related information. The Economist Intelligence Unit (www.eiu.com) and Hong Kong Trade Development Council (www.tdctrade.com/mktprof/) both offer useful basic country profiles.
Trade Commission of Mexico
Mexico Consultant Office
Hong Kong Trade Development Council
|Billboard advertising can be effective, especially in reaching Chinese mainland consumers, but the costs vary widely depending on location.|
Mainland consumers are increasingly refined and brand-aware. Typically, they no longer merely differentiate between imported and domestic goods, but rather scrutinize quality, price, reputation and other characteristics before buying. Companies eager to sell must work harder to differentiate their products from competitors.
In response to market changes, many international advertising firms have established mainland operations to serve global clients while luring local business.
"We have a history of working with SMEs in Hong Kong and around the world. Naturally, we offer the same high international standards of service to our SME clients on the Chinese mainland," says business director Erica Kerner of the J. Walter Thompson agency in Shanghai.
Many smaller niche agencies, some with purely a mainland focus, have served clients in the major cities for several years.
Advertising and promotion (A&P) options are increasingly like those in North America or Europe. SMEs may wish to consider television, radio and print; billboards and other outdoor advertising; Internet and short messaging service (SMS) targeted marketing; and point of sale promotions.
In the big cities, no option is cheap anymore. In Shanghai, Beijing or other urban centres, costs for media advertising approach international levels as multinationals and mainland firms compete for prime space.
Billboard ads, a good value in reaching consumers, can cost anywhere from RMB200,000 per year along a suburban highway to RMB2m at a key urban site.
Chief executive officer Henry Winter, from mainland-focused marketing firm Groove Street, says saturation by overseas and domestic companies may prove overwhelming and fail to interest consumers. Appropriate strategy is essential.
"SMEs cannot afford to waste their limited A&P budgets on the wrong customers, no matter if those customers are consumers or companies. They must clearly understand which people make purchase decisions and what influences them. A&P should be focused to hit hard at a few of those factors," Winter says.
One sustainable strategy is to develop long-term partnerships with key retailers. "Instead of paying cash to retailers for rights to do short-term in-store promotions, consumer brands should invest in helping their retailers attract more customers. Co-branded advertising, appealing (permanent) in-store infrastructure and better technology systems can help both brands and retailers," Winter says.
Effective business-to-business marketing calls for heeding the motivation of purchase managers. "It is not a company buying, but rather a person within that company. What does that person need for a bonus or promotion? How is your product or service going to help achieve that? Your sales and marketing message should begin and end with this explanation: buy from me and here is how you get promoted," Winter adds.
No SME can use traditional means to compete with the bottomless promotional budgets of multinationals. Any attempt can be devastating.
Luckily, most marketing firms can devise creative and affordable alternatives to create impact through building strong relationships with targeted customers and gaining the most from every advertising dollar.
Olympic Gold Beckons Enterprises Of All Sizes
AS more and more major international events occur on the Chinese mainland, domestic and overseas companies search for ways to exploit the related promotional opportunities.
The highest profile event on the horizon - the one with the most grandiose business possibilities - is the 2008 Summer Olympic Games.
While keeping the eyes of the nation and the world trained on host city Beijing, the Games will generate billions of dollars in advertising revenue alone.
Leading international and local brands will be the most prolific advertisers, bombarding consumers with every conceivable form of marketing tool.
"We expect our clients to start their big promotions 24-36 months before the Games open," says business director Erica Kerner from the J. Walter Thompson advertising agency in Shanghai.
Although SMEs may find themselves lacking the scale and scope to compete for certain aspects of Olympics-related work, there actually will be opportunities for companies of all sizes. Travel, tourism and construction industries stand to gain directly. More indirect benefits will flow in sectors like IT, human resources, transport, telecoms, food, office services and advertising.
SMEs up the supply chain from bigger players in these industries could excel, says chief executive officer Henry Winter from mainland-focused marketing firm Groove Street. Those with existing relationships to major suppliers already are strategically poised.
From a marketing standpoint, merely being present and seen at a major event like the Olympics is highly beneficial to SMEs. By providing quality products or prime services in such circumstances, SMEs build their images in a big way.
Resulting word-of-mouth promotion alone can be the business equivalent of winning an Olympic gold medal.
By BC Lo
The author is chairman of the Hong Kong chapter of the Int'l Public Relations
Assn, director of the China Int'l Public Relations Assn and a member of the
Wuhan China People's Consultative Conference. He is also the president of BC
Lo & Associates Ltd, a public-relations company with offices in Hong Kong,
Beijing, Shanghai and Wuhan.
|Working with public relations professionals can facilitate liaison with the media and government officials, says BC Lo & Associates Ltd president BC Lo (left), shown in an encounter with Chinese mainland president Jiang Zemin.|
ALL too often, SMEs eager to market goods and services on the Chinese mainland ignore public relations. They do so despite the effectiveness and cost-efficiency of PR in harnessing immense media power to reach customers, consumers and important government officials.
Now that the mainland has joined the World Trade Organization, the rising competitiveness of companies tapping that vast market makes using the media critical. All SMEs need strong media relations for a competitive edge.
The science of media use for effective promotion develops rapidly as the country's 1.2 billion consumers rely more and more on the country's 3,200 television stations, one million magazines or other publications and the Internet. WTO membership enhances this trend as new media enterprises appear and competition among them intensifies.
As a result, the media is a vital communications tool for business. Although access was once limited by strong government control, today's mainland media is more transparent, interested and approachable.
In recent years, the mainland media has opened, adopting more characteristics of the international media industry. There is more competition, a stronger focus on product, business and entertainment news and rivalry among journalists for intriguing or exclusive stories. Public relations professionals can use this thirst for information to place well-crafted stories about their clients.
Staffed by career communicators, often ex-journalists, PR companies do understand media needs. They know how to leverage good media coverage while preparing and delivering the right messages to the right audiences at the right time.
For SMEs, Hong Kong PR specialists offer an ever-expanding range of services, like strategic counsel, product or company launches, issue and crisis management, government/media relations, event management, internal company communications and charity or sports sponsorship.
Services are best customized to the needs and budgets of individual companies. Those launching new products may require high-impact events tailored to build consumer, industry and government awareness. Other companies need assistance with licences or government liaison on issues of market access, unfair competition, predatory pricing or parallel importing.
Whatever the specifics, PR programmes need not be expensive. A single advertisement in a leading mainland newspaper will cost 10 times more than a carefully tailored media story nurtured and successfully placed by an agency.
PR is all about carefully targeted approaches, aiming at the right media, fully briefing journalists and subtly influencing outcomes. The results, like a special feature or media interview, can unlock access to key audiences. Editorial coverage even has the benefit of appearing newsworthy, making the readers or viewers more likely to act.
A single press release distributed to a wide media cross-section can dramatically extend promotional reach at modest cost.
As more companies enter the mainland market, they pursue every opportunity to bolster promotional programmes. SMEs can gain distinct marketing advantages by using the services of Hong Kong-based agencies to nurture media relations and take their messages to the appropriate audience.
PR consultancies come in all shapes and sizes. For SMEs, choosing the ideal one often comes down to budget and needs.
Some PR companies have large international networks while others operate regional offices. The scale is usually reflected in costs to clients, no matter if the work is local, regional or international.
Many firms, often the smaller operations, forge strategic alliances with other independent agencies to cover larger or overseas projects. For SMEs, they may work with smaller budgets and strive to build long-term relationships while growing with clients.
Specialist consultancies may focus on specific industries like IT or consumer products. Others concentrate on government liaison, financial relations or particular markets.
SMEs need a realistic understanding of what they hope to achieve, be it more media coverage, better customer relations or improved government contacts. They should tell any agency the objectives and ask how to achieve them. Real advisors are more useful than PR people who merely follow instructions.
How To Pick A PR Advisor
PUBLIC relations advice is available from large or small services providers and from companies with various areas of expertise. Here is more advice to make choosing the best possible public-relations firm for any SME's needs as easy as possible.
- SMEs should do some research, seeking recommendations from other companies or business associations.
- Meet recommended agencies at their offices. The atmosphere and presentation can reveal much about operations.
- Ask a few selected agencies to "pitch" for a project by submitting written proposals.
- Provide a good brief that presents PR objectives, expectations and requirements. When evaluating proposals, look for an understanding of this information, creative ideas and a common-sense approach.
- Consider how much experience any agency has on the Chinese mainland and in the relevant industry, as well as the locations of mainland offices or joint-venture operations.
- Consider what other clients an agency represents. Ask to meet the executives who would work on your account and do assess their abilities.
- Ask for detailed cost estimates. Set an affordable budget and tell the agency if this is a fixed sum. Make a contract clearly specifying budget and business details.
Bon Market Int'l Ltd
Among the recent winners of 2001 Hong Kong Trade Development Council Services Awards for Export Marketing was Bon Market Int'l Ltd. Here is a profile of this outstanding company.
|Providing a full range of professional consultancy services to SMEs commands high priority in the meeting rooms of Bon Market Int'l Ltd.Bon Market Int'l Ltd|
MARKETING consultancy Bon Market Int'l Ltd is the brainchild of Benjamin Li, a former television personality familiar to millions of viewers in Hong Kong and the southern Chinese mainland.
A pioneer in marketing property developments in the mainland's booming real-estate market, Bon Market is a total solutions provider offering such services as market research, promotional strategy development, project selling, TV commercials, art and graphic designs.
Established in 1987, the company has expanded to 100 employees with offices in Hong Kong, Beijing, Shanghai, Shenzhen, Guangzhou, Chongqing and New York.
"When we started, companies traditionally used print advertising. Yet we used television and did a lot of heavy promotion," recalls the one-time TV host, who also holds a bachelor's degree in computer science and an MBA in marketing from Canadian universities.
Bon Market's first project was to build a multilingual, multimedia database of tourism information for five-star hotels in Hong Kong. Next Li applied his broadcasting and networking skills to direct marketing.
As real-estate development on the Chinese mainland accelerated in the early 1990s, Li saw an opportunity to export his expertise. Bon Market cultivated its niche and expanded city-by-city on the mainland.
Li attributes Bon Market's success to its comprehensive approach to marketing. "We do all the research. We start from when a project is a piece of land and go through the architectural, building, sales and property management phases," he says.
Bon Market operates its own production studio, crafting commercials and advertisements in-house. "We have better control if we can avoid contracting out the work, and it is less costly for clients," Li adds.
Although property developers are its main clients, the company nurtures business in sectors like garments, pharmaceuticals and telecoms products. Increasingly, it caters to SMEs.
"Our SME market is growing fast. With large companies, there are intermediaries to deal with, but with SMEs we can work with the bosses," Li says.
Plans call for expanding into more mainland cities because "China is our future" and for building higher on the reputation Bon Market has developed in the past 15 years.
"What I like is that our work is very challenging. If sales are good, people do see the results of our marketing efforts. That makes our job very satisfying," Li declares.
Bon Market Int'l Ltd
Park-In Commercial Centre,
56 Dundas St, Mongkok,
Kowloon, Hong Kong
PAL Design Consultants Ltd
Among the recent winners of 2001 Hong Kong Trade Development Council Services Awards for Export Marketing was PAL Design Consultants Ltd. Here is a profile of this outstanding company.
|High-quality, functional interiors emerge from PAL Design Consultants Ltd's efforts to balance the wishes of clients with user needs.|
WIDE-RANGING design services from PAL Design Consultants Ltd cover the full spectrum from interior design to project management.
This full-service company specializes in hotel-interior work, public spaces, clubhouses, sales offices, show flats, commercial offices, restaurants, luxury houses and apartments.
"Some companies do only the concept, layout planning and contractual design, but we also handle the working drawing, all the decorative accessories and site supervision," says design business manager Norman Lui.
"We care about the quality of our designs, which is more important than anything else. We believe 'simple is best'."
Founded in 1994 by Patrick Leung, a 1978 graduate of the School of Design at Hong Kong Polytechnic University and member of the Society of Chartered Designers in Britain, PAL Design is best known for its high-quality interiors and successful marketing strategies.
Prior to launching his own firm, Leung played a key role at several interior design/architectural companies and worked on projects like the Standard Chartered Bank headquarters in Hong Kong, the Bank Negara Indonesia headquarters and the Convention Centre in Jakarta, the Shanghai Stock Exchange, the Hotel Holiday Inn in Zhuhai and the Tian Lun Dynasty Hotel in Beijing.
One demonstration of PAL Design's strength and expertise is the various accolades it has captured, including Asia Pacific Interior Design Awards in 1999 and 2001.
With much of the company's business on the Chinese mainland, it maintains branch offices in Beijing, Shanghai and Shenzhen. An associate office in London is also active on projects in the Asia-Pacific region.
"Hong Kong and the Chinese mainland are our main markets. About 70% of our work is on the mainland and 30% in Hong Kong," says Lui. PAL Design's award-winning mainland projects include the Panorama Club in Shanghai and the Shenzhen Tycoon Golf Club.
The company's design philosophy combines client requirements, user needs and a subtle, restful concept of timeless space. "We must strike a balance between what a client wants and the needs of actual users," Lui says.
He describes the company's primary mission as being to make people care for and enjoy their living and working environments.
The company markets its services through direct and indirect channels, including media exposure, direct contacts with potential clients and attendance at trade fairs and seminars.
Building on the success of its projects, PAL Design has forged a strong referral network and customer base. Business should rise due to Beijing's successful 2008 Olympics bid.
"About 300 hotels must be renovated for the Olympics. We look at that market very closely," Lui says.
Although most of PAL Design's projects are large-scale, Lui welcomes all enquiries from SMEs. "We want to encourage their business," he says.
PAL Design Consultants Ltd
6/F, Effectual Bldg,
16 Hennessy Road,
Wanchai, Hong Kong
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