Is Brand Management in China a waste of time? Recent research is starting to show that this is no longer the case. Brands have always been important for the Chinese but in the past this had more to do with status which in turn is more connected to price and exclusiveness. The Chinese have begun to discover that good Brands come with attributes such as authenticity, quality and distinction. This change opens a road to building Brand Equity for Chinese and non-Chinese Brands alike. A recent visit to Beijing made it clear that there is a change from "Made in China" to "Branded in China".
In a market fraud with counterfeits anyone can have a Louis Vuitton bag. So the next thing is to have something genuine from a Brand or to adopt a lifestyle that gives the items an new dimension. But as one can read in the excellent study: The Rise of Chinese Brand Equity by Swiss Brand Valuation Experts BV4, there are a number of reasons behing the rising importance of Brands in China. Some of them are quite obvious and come with economical and social changes. The Chinese middle class is growing and is more and affluent. Contrary to the more collective behavior most Chinese grew up with there is a new tendency towards individualism. Partially this has to do with the one-child policy but being part of a growing middle class there is an increased desire to develop and position oneself as an individual.
The view from within China
On a recent visit to China I spoke about these changes with a good MBA friend, Alex Lin, CEO of Chinavalue.net, China's most influential Business Blog. He confirmed that a growing part of the Chinese are Brand Sensitive and Brand Aware. The German car brands come to mind but also the French luxury Brands are of growing importance. At the same time he acknowledged that local Chinese Brands are beginning to see that national but also internationally there is value in developing a clear Brand Strategy.
Brand significance is not only important in Consumer Products. The Chinese travel easier not only because they are more affluent but also because travel regulations have been simplified over the past two decades. This means that the Chinese are also looking at education elsewhere in the world, specifically in the US and Europe. Also here they search for the better Brands, using the familiar rankings such as the one from the FT.
A European Brand coming to China
My brother Alain Vermeulen is CMO of Vitaminstore.nl. He decided two years ago to move closer to his IT-supplier who happens to be based in Xiamen, a city of 3 Million inhabitants close to Taiwan.
In the mean time he has opened a webshop for his Vitamins and Food Supplement products and a first retail store in Xiamen. His experience is that the Chinese are sensitive to security that Brands could offer. This is specifically true for e.g. Baby Nutrition where a couple of major scandals have tainted the national food brands in China for years to come. The obvious step has been to start selling foreign Baby Nutrition, e.g. Milk Powder from New Zealand.
Yet there is still a lot of exploring to do according to Alain. The Chinese try things out but are less loyal which leads to fluctuations in demand. The optimal mix of Branded products under the Vitaminstore China Brand is still under close scrutiny but the first results are promising.
From China into the rest of the world
There are a great many Chinese Brands that we hardly know or see outside China. Yet Brands like Midea, Haier and Geely are well established in China. They now start to eye the rest of the world. A Brand like Geely 'bought' itself a ticket into the foreign car industry through the acquisition of Volvo. Volvo in return got itself a platform into China. On both sides this partnership still has to grow but one thing is sure. Once the Chinese have mastered safety and reliability issues a bit better they will become an important global player and with that a global brand. For both the Vitaminstore Brand on a small scale and Geely as a corporate giant one thing is true though; only trial and error will show these businesses how to build their Brands for both China and the rest of the world.
Social Media
In the end it is amazing how important Social Media is in China. Although almost none of the Western channels (Youtube, Facebook, Twitter) are officially accessible from within China, the local platforms such as Sina Weibo, are immensely important for the Chinese. They research Brands and Products, look at recommendations but also share experiences and if necessary the occasional warning for dangerous or counterfeited products and services.
The fact that in a society with so many cultural and historical differences Social Media are of equal importance shows one more time how Brands should embrace this channel instead of ignoring it.
The long term view for both sides
The Chinese government has started to address the importance of IP Rights. When building Brand Equity having some form of protection through Trademark Registrations and Patents can be vital. Increased legal action and control of counterfeiting helps the Chinese market also to gain a reputation as more brand friendly environment. This does not mean that it is all of a sudden very easy to establish a brand in China. The cultural and language barriers remain important. The Chinese on the other side will find it hard getting rid of the 'cheap and low quality' image of 'Made in China'. A Brand like Lenovo has managed by simply acquiring the IBM Thinkpad Brand. But the opportunities to buy your way into a Western market are scarce and should be carefully managed.
Fact is that we will have more Chinese Brands coming over, also of good quality with probably an exceptional price/quality ratio. And as for Branding in China itself, I think we're just at the start of an enormous task with an immense upside.
Brand Managers and Agencies, stay tuned!
Audi carefully honed its brand to sheer perfection over the past two decades. From an also ran with little aspiration it is has become the benchmark for top-quality interiors and modern consistent design. A few years ago however it noticed that its reputation was slipping in the polls. The Brand got more and more associated with arrogant and agressive drivers, with similar road manners, an image that belonged more to BMW and some Mercedez Benz drivers. Audi's board then issued the task to its branding and marketing people to turn this around.
The board simply issued a simple brief: Audi should delight customers as a Brand. That's a clear call for more emotion. Through a host of changes in the Corporate Image guidelines, changes in sponsoring programmes and in marketing, the brand transformed itself to the more solid, cool and somewhat understated brand it is today. The excitement was clearly achieved via the R8 and the victories at the 24 Hours of LeMans. In the product marketing, even the faster and more agressive models, such as the RS series, come with descriptions that are not referring to its extreme speed and acceleration capabilities. Instead the focus its on the design details that set the RS5 apart from the standard A5 model.
The interesting aspect of the branding repositioning exercise is not that the fact that every now and then a Brand has to go through such an exercise. These days, a shit-storm in the internet can create more damage in a few days than a branding department can handle and correct in a few months.
"Vorsprung durch Identity"
What makes Audi an interesting case is the fact that their branding is fairly monolithic. The often called 'Marushka' dolls design principle leads to cars that look alike between series. You need a trained eye to spot the difference between an A4 and an A6, specifically from the back. Audi only does one type of design for a series of cars that sell extremely well, specifically in Asia. The brand has become extremely recognizable but also more one-dimensional and it has also gained substantial global presence.
The associated brand identity works well because with brand promise, 'Vorsprung durch Technik'. The advantage is reflected in the design and in the specifications of the actual cars.
Audi has what I would call substantial Brand Mass. Whether you like it or not, as soon as you get in touch with any Audi product or touchpoint you will meet the same 'Audiness' everywhere. Its comparable to an oil tanker. Once pointed in a certain direction it is hard to change its course and even harder to reverse.
Brand Mass in itself is not bad. Its come with efficiencies that consumer product giants like Nestlé and P&G can only dream of. Yet it also comes with a certain risk. If consumers keep seeing Audi as an arrogant brand for drivers of the single-male-macho kind it could loose its appeal as a whole to a group of consumers that suddenly associate the monolithic brand experience as one big affront.
In other words, increased Brand Mass means increased Brand Risk, specifically in the reputational area.
Is there a way to mitigate this risk? The obvious answer would be, yes through diversification, i.e. the creation of Sub Brands. Toyota and Nissan have done this through the creation of the Infinity and Lexus luxury brands. Although it requires the creation of new Brands it does help spreading reputational risk, specifically if the sub-brand are still subtly but firmly attached to the 'Master' Brand. The Best in Class example here is BMW with their superbly integrated MINI and Rolls Royce Brands.
Audi seems to have taken one step in that direction by acquiring Lamborghini and recently Ducati. But for now this connection is hardly ever highlighted. Its mostly the Automotive Media that refer to this connection.
Audi remains though a class-act when it comes to the total integration of Corporate, Brand and Product Strategy with a superbly consistent Design and Experience based on the Brand's values.
For further reading:
Audi's Corporate Strategy
A very good Audi SWOT by marketingteacher.com
Red Bull's rise as a global brand is phenomenal. It created singlehandedly the energy drink category and rules it in over 160 countries around the world. A great case of Blue Ocean strategy in a business that many thought would be the playground of Coca-Cola and Pepsi for years to come. Red Bull seems to be able to apply their own slogan 'Red Bull gives you wings' perfectly to their own business. In an almost perfect orchestration of sponsoring extreme sports that are adventurous, fast paced or downright dangerous, Felix Baumgartner's jump from the edge of space fits completely.
Or does it? Interestingly enough Felix was taken into near orbit by a helium balloon slowly rising for nearly two hours. Getting out of the cabin came across as a needlessly long and tedious process. When he finally made through the hatch, having no wings he plunged back to earth, exceeding the sound barrier in the process and landed after only 4 minutes. Where were the Red Bull wings in this process? Felix speeding down made me think about the story of a certain Icarus and has hand-made wings.
From a Brand perspective this whole thing should have been the other way around. Felix should have been catapulted to 39 kilometers altitude in some crazy plane, preferably of some obscure Russian brand. Then we would have seen him whizzing down in a space suit with wings that would unfold once reaching the earth's atmosphere allowing him to slowly glide back to earth while being followed by a helicopter or flying camera.
But so much for the Wings in Red Bull's Brand slogan.
Of course the whole Jump from the Edge of Space is a great fit with the Red Bull brand, I would even say a Branding Masterpiece. The world records that were set or broken will stay for a while to come and will be associated with the brand's extreme-sports image. Red Bull's wings do apply to dare-devil character of this event and today you wouldn't be able of another sponsor that would remotely have the means and the Brand story that Red Bull has.
The big surprise to me though was that only 7 Million people followed the jump live on the web on YouTube. I have not seen any other 'eyeball' statistic so I am really wondering, did only 7 Million people watch this fantastic project? I hope not.
For the other Millions who missed this fantastic stunt, here is the Red Bull Stratos website.
