Advertising

The advertising environment

Advertising is without doubt an effective means of communicating brand information to the consumer or customer. However, China is a very different country with distinctive features compared with the western world. For firms who either have a production presence in China, or who want to market their products directly in China, they are advised to design their marketing campaign, or more specifically advertising campaign, very carefully . The first thing they should do is to study the advertising environment.

In general, insufficient demand and excessive supply have characterized the consumer market. Lack of motivation to consume has resulted in an accumulation of cash savings in the hands of consumers, which the lowered interest rate has failed to release. As a result, many advertisers are having sales problems and will have to reconsider their marketing strategies. Some have chosen to downsize their advertising input and increase sales efforts.

The conventional problem of a short supply of media seems to have been a problem. One of the reasons is that many media have expanded their resources to cash in on the fast-growing advertising market and competition for media has intensified. Apart from cross-medium competition, there is also inter-medium competition, typically the competition between terrestrial and cable television stations. As part of the effort to integrate television resources by the State Administration of Radio, Film and Television, most local terrestrial and cable television stations have undergone a merger process, bringing cable and terrestrial TV stations under one roof. It was reported that there are over 3,500 television channels, more than 1,000 newspapers and 7,000+ magazines. By the end of 2000, there were over 70,000 advertising- related entities employing 0.64 million workers.

Fragmentation of the advertising industry has remained a problem plaguing the growth of the industry. The trend of fragmentation seems to have continued over the last few years . The problems that come along with fragmentation are diseconomies of scale and fiercer competition. Fragmentation has also impeded the promotion of the advertising agency system and the relationships between advertisers, advertising companies and media are distorted .

The government has enhanced its monitoring and control of the advertizing industry, with the intention of disciplining the conduct and organisation of the advertising industry and protecting the interests of consumers and advertisers. The first attempt to regulate the advertising industry was made in 1987 and further key legislation on advertising censorship was implemented in 1993. In 1995, the Advertising Law was officially promulgated. A new version of the Advertising Law has been drafted and reviewed and will be promulgated in the latter half of 2002.

Brand communication

There are many options when it comes to communicating brand information in China. But it is important to recognize that consumer attitudes have been changing fast over the past two decades. It is no longer possible for a company like Nestl , one of the few pioneers of advertising in the early days of China opening up, to establish brand awareness virtually overnight. Consumers in China are more complex and sophisticated in receiving product and brand information. Increased consumerism has made consumers more critical of marketers' efforts to communicate product and brand information. The frequent use of celebrities in TV commercials, for example, has been criticized by consumers who question whether these celebrities are communicating the brand and product information for the sake of money or in the interests of consumers. De Beers' decades old slogan 'a diamond is forever' has faced challenges from Chinese consumers who have different judgements on what values diamonds suggest. The kind of values that can be associated with diamonds, such as being symbolic of long- lasting love, gifts of love and purity of love, were all interpreted quite differently. One cause of the different reactions is deep- rooted cultural values which do not really recognize diamonds as an expression of love. In addition, the impact of western culture and associated changes in people's lifestyle has also had some influence on people's perception of love.

While taking cultural elements into consideration, marketers will also need to take a holistic approach in designing brand communications. Demographics are important in determining your target consumers and segmenting the market, but the complexities of the consumer world require more effort in the study of psychographics and geographics, which will help in establishing brand appeal . In a country as vast as China, people in different locations tend to have different consumption preferences. One example of this is that in north- eastern China, people tend to pursue common fashion values, while in southern China, for example Shanghai, consumers tend to be more individual and the emphasis is on personal taste.

Advertising congestion

Advertising congestion here does not mean that there are not enough media to carry advertisements, but rather refers to a phenomenon that almost all media are congested with advertisements to the extent that few could effectively catch the attention of viewers . Chinese firms seem to believe heavy advertising will help establish brand recognition and natural acceptance. There have been too many cases in which advertising created miracles , and almost all of them have ended up being closed down. However, people can still see enthusiastic advertisers lining up at CCTV's annual open bid and the top bidders are always Chinese companies. Very rarely, if ever, does one see any joint ventures or foreign firms among them.

In this situation, it is advisable for foreign brands to take an integrated marketing communications approach. As the cultural preferences, eating habits and dialect can be differ substantially from region to region within China, any attempt at national promotion in the early stages of market development will be a costly exercise. Combined use of different media at different times in different target markets can be more effective than an effort to cover the national market. PR events in priority markets can add a special twist to the advertising efforts.

One encouraging fact is that Chinese people are increasingly brand-conscious. When they purchase, they not only take products as products, they look to value at the same time. They make comparison with using knowledge and information about the product before they are willing pay for it. Therefore, the 'advertising' on the product packages is also an important means to communicate brand information.

Rampant branding

In the mid-1990s, Chinese enterprises were prompted by the continued influx of foreign branded products to come to realise the importance of branding. They found that branding as a marketing strategy would not only create additional value, but also maintain a group of loyal customers. Academics began to study the branding strategies of these international companies and came to the conclusion that for China to survive in the world market, it would need a large number of globally recognized brands. Therefore, a 'famous brand strategy' approach was incubated and created great enthusiasm among Chinese enterprises who were eager to catch up with the lessons of branding strategy. This enthusiasm also found an echo in central government policies regarding improvement of product quality. At the central level was the China Council for the Promotion of Famous Brands, an organization that is responsible for 'uniform evaluation, management, publicity and cultivation' of brands. At the provincial level were 'leading groups' who drafted concrete plans to develop a certain number of 'national level famous brands' and 'provincial level famous brands'. The same process was copied at lower levels of government, all with plans to nurture their own famous brands.

Almost immediately, people found themselves besieged by brands, many of which had the label of 'famous brand' at county, city or provincial level. Some government departments were also involved in rating famous brands for enterprises that fell under their jurisdiction. Some foreign companies even found their way to milk the brand enthusiasm by offering foreign awards or accreditations to Chinese enterprises just for the money!

This desperate craving for famous brands has cooled down as a result of government efforts to stop various brand evaluation or rating exercises, which were regarded as misleading. But the sequel seems to be a rampant branding exercise. You can hardly buy a pair of shoes that do not bear a metal badge or an embroidered logo. The same is true with shirts: on the pocket of almost every shirt is an embroidered logo. You will be lucky if you can buy socks without an embroidered logo. Excessive branding has in effect caused problems for consumers, who are more prudent than before in selecting their preferred brands.

The above is intended to provide a portrait of the competitive situation is in China in terms of branding awareness by Chinese enterprises. The truth is that some enterprises did succeed in building their brands in the process, which helped them win over their foreign rivals. This is particularly true in the consumer electronics industry. The message here is that Chinese consumers have become buried in an onslaught of brands, and winning their trust and loyalty is not the job of advertising alone.