By Gordon Chu | May 19, 2009
Everyday, I continue to read the dismal news of the US auto market. From the end of Pontiac (I miss the Fiero) to worldwide drop in auto sales, the auto industry is taking a full-size beating in this global economy. Yet, despite the onslaught of when-it-rains-it-pours bad news, there is a car-haven and a glimmer of hope for the auto industry: China.
China continues to show strong sales and the automobile industry is taking notice. With news such as GM reporting China sales hitting a monthly record in April (50% higher year-over-year in China versus a slumping 34% drop in US sales), how could any automaker ignore the vast market opportunity in China. Granted, much of the sales increase is accredited to a slash in sales tax by the Chinese government, it does not take away the sheer fact China is hungry, they have money, and they are ready to spend.
So, what does this all mean for marketing and business in China. Not everyone is an automaker and not everyone has the same marketing dollars available. But we can all acknowledge the potential and we can all learn a few lessons on just how the automakers are taking advantage of this open season to get their best foot in the door.
Let’s take a look at one of the top US automakers making a big splash in China: Buick. Buick has done an incredible job in positioning themselves to hit the right market at the right time - all the classic scenarios of Business 101 and Marketing’s 4 P’s (Product, Placement, Pricing, and Promotion). They came to China with their homework done and we can all take a few pointers from their early success.
LESSON 1: Know your product. Sounds trivial, right? Let me repeat - know your product. Understand who is it for, how to market the product, and, most importantly, why it makes sense.
Since entering China in 1999, Buick’s primary market has been the emerging middle class - more specifically, the business folks, government VIPs, and entertainment stars that influence what high society is in China. Think what Blackberry did for corporate America, Buick has done the same in corporate China. Getting picked up for a business meeting at the airport? There is a good chance you would be picked up in a Buick. Fancy symphony to catch at night? Buick. In fact, Buick did everything in their power to make sure they hit this market hard and they hit this market “right”. They went as far as redesigning the interior space and engine power to emphasize the comfort and safety factors for their lines of cars in China. Why go through all the hassle and expenses to differentiate? Because Buick knows their products and they tailored it to perfectly mirror their target customer - the successful business person where inner quality is more important than the outside appearance and the status symbol itself.
LESSON 2: Know the market landscape. This goes hand-in-hand with “know your product”, but in a very complex and fragmented market such as China, I felt it deserved it’s own section in this article. Here’s the bottom line: You need to know your way around in China in order to reach and communicate to the customers. Without understanding what you’re dealing with, navigating and spending your valuable advertising dollars can quickly get you a whole lot of nowhere.
Buick understood the difficulties with the Chinese media and they made all the right moves to choose the right basket of media channels to efficiently and effectively advertise their products. For example, Buick assumes that television and print media was the primary way to reach their consumers and, not surprisingly, the company is among the top 3 automakers in television advertising spending. Go one level deeper and Buick’s media buys concentrate on CCTV-2 Economy Channel and CCTV-4 International Channel - both channels with high audience ratings from Buick’s target demographic. Online, Buick recognized how the Chinese consume information and heavily invested in online marketing campaigns including through social networks and viral videos. The proof? On Youku, the top online video streaming portal in China, the number of viral videos Buick vs. Ford: 466 to 36.
LESSON 3: Know your message. This should really read, “Know your people”. This is really a two-step process. Step 1: Take the time to do your homework when figuring out your marketing strategy. Step 2: Look at Step 1. Never assume you know how the Chinese market will react – it’s like a crapshoot and your first impression should be your best foot forward. One thing about Chinese consumers, every purchase is a personal choice with strong emotional connections to the brand and product itself. Remember buying your first car? I remember how I felt sitting in mine for the first time and smelling the faint smell of sun-baked pleather. Nevertheless, it was mine and it was what defined me. Now, imagine that amplified tenfold and that is your Chinese consumer. Connecting to your customer base on the right level has many payoffs and is the only way to market in China.
Since Buick’s introduction into the China market, they have iterated, reinforced, and fortified the same brand message all along: business luxury. This rings true from Buick’s top-of-the-line model to their most economical sub-compact, Buick never sways from the same message of safety, comfort, and luxury.
“Safe and silent” is the mantra Buick follows and that message is specifically positioned to bode well with the savvy Chinese business person - who wants to keep a low-key profile, an essential quality when conducting business in China. Some argue that the message resonates with Chinese consumers on a much deeper philosophical level of Confucianism where one should lead a humble life of inner quality and harmony versus one of glitz and glamour. And some will argue this is a bi-product of marketing persistence, great timing, and plain luck. Whatever the case might be, the purchase decision is a personal choice and needs to reflect the same identity of the consumer. Making sure that message is conveyed should be the top of any marketing priorities.
Buick’s success did not come without their own bumps and obstacles in the road as well. In 2008, as Buick’s official spokesperson, Tiger Woods helped promote Buick’s new model line, “Park Avenue” to the Chinese market. Despite Tiger Wood’s near-rockstar celebrity status here in the US, the same cannot be said in a country where golf is still an odd sport played on a ridiculous waste of good land. Sales were less than stellar and Buick is still reinventing this model to the market today.
It’s a brand new China and there is a vast market yet to be touched. Yes, it is unruly and daunting, but it’s got every marketer salivating and pining the age-old question, “Just how do I do this again?” It’s a market with no right answers but many wrong ones. The auto industry is just one of many industries that we can continue to learn and push the envelope of what works (and what does not). Larry Namer (METAN’s President) says it best about the Chinese market, “China is like chess ‐ it ’s not the next move that wins you the game, it’s knowing what you’re going to do in the next three.”
