Posts Tagged ‘china’

Kimberly Whitler, assistant professor at the University of Virginia Darden School of Business, believes the days of transplanting well-worn Western marketing practices into national markets may be numbered. She has researched marketing campaigns in China and finds they are faster, cheaper, and often more effective than traditional Western ones. Moreover, she argues they may be better suited to today’s global marketplace. Whitler is the author of the HBR article “What Western Marketers Can Learn from China.”

TRANSCRIPT

CURT NICKISCH: Welcome to the HBR IdeaCast from Harvard Business Review. I’m Curt Nickisch.

For decades, marketing theory and practice have been defined and refined in the West, from the four Ps taught in MBA programs to the sophisticated brand management run by multinational corporations.

That’s the world of marketing that today’s guest started out in. Kim Whitler worked for Procter & Gamble. She successfully pushed soap brands in Eastern Europe and also worked in China in the 1990s, when the market was rapidly evolving.

Now Whitler is a marketing professor at the University of Virginia Darden School of Business. She recently returned to China to do research. And what she learned in her interviews there surprised her.

She says Chinese marketing campaigns are faster, cheaper, and often more effective than traditional Western ones. And Whitler believes in some ways they are better suited to today’s global marketplace.

She wrote about this in her article in Harvard Business Review, “What Western Marketers Can Learn from China.”

Kim, thanks for being here to talk about your research.

KIM WHITLER: Well, thank you for having me. I’m excited to be here.

CURT NICKISCH: So, when did you realize that U.S. companies were going about marketing in China the wrong way?

KIM WHITLER: So, I had been doing research on CMOs in the U.S. and I had the opportunity to go to China and to do the same type of research about marketing and CMOs in China, CEOs and CMOs, both from multinational firms working, operating in China, as well as from indigenous firms.

And probably by the end of the first day, I started seeing a pattern that was very different. I expected to hear a lot of similar issues that I hear in the U.S., and I didn’t. And there were, there were a lot of things that I was observing.

For example, the multinational companies seemed to have this gray cloud over them. As somebody who’s done a lot of qualitative research, sometimes it’s not what people say, it’s how they’re saying it.

And there was an energy and an excitement from those who were Chinese-based companies, There’s really no good way for me to say it, other than I felt energy and positivity from the Chinese companies, and I started seeing that there was a malaise, and almost like they were operating in a way that was, that was preventing them from being competitive.

CURT NICKISCH: When you say malaise, this is what you saw at multinational companies?

KIM WHITLER: Yes.

CURT NICKISCH: Yeah. And it’s always been the case that multinational companies tailor their marketing to local markets or regional markets. Is it the fact that China is just so big that it’s, localizing it means that it writes its own rules, or do you think that something fundamentally different is going on here?

KIM WHITLER: First, the structure of the market, the way that the market has evolved, is fundamentally different. So, they have these enormous conglomerates, the Baidus, Alibabas, the Tencents – these enormous conglomerates; it’s like the equivalent of putting B of A, Wall Street Journal, Google, Twitter, Activision, CNN, ESPN, all in a single company.

So they have a different market structure. That market structure leads to a very different mindset. So what I started observing is that what works in the West doesn’t necessarily work in China. The market is different, the tools in some ways are different, the way that they think is different.

And so, then the competencies that they’re building are different. In the U.S., we grew up with billboards and radio, and then one day we had TV, and, I’m sorry we had newspapers too in the early era. And then one day we had TV, and we had three channels. And then pretty soon we had a lot of different channels. Then we had digital, and all this transpired over decades and decades. China didn’t grow up that way. They grew up very quickly, went to a mobile-first kind of platform, where the consumers spend almost all of their time on their phones.

CURT NICKISCH: I was amazed to read in your research that Chinese consumers spend twice as much time on phones as U.S. consumers do – seven hours or something like that, looking at their phones in a day?

KIM WHITLER: Well yes, and then this comes back to the notion of the structure of the market because there’s research done that shows that about 55 percent of the average consumer’s time is spent just on Tencent properties.

Think about, I flip from Twitter to Google, to CNN, to ESPN, to banking, to Wall Street Journal, to gaming. And they have all of that under one umbrella. So, we worry here in the U.S. about privacy and about the power and the type of data that just a Google has. Or just a B of A. Or just a Wall Street Journal.

Imagine when all of that is combined under one ecosystem. It’s a double-edged sword. On one side, you have all sorts of privacy concerns. But on the other side, you have so much greater insight into the consumer. You’re able to build better products, you’re able to create better engagement with the consumer because you know a lot more about them.

And so the power to create better marketing programs is far greater. And so the challenge is, is if you’ve grown up in a Western world, and that’s the way in which you think, we tend to think in a channel-centric model. So, you’ll have an organization where you’ll have a digital group, and then you’ll have an email group, and you’ll have a TV group, and you’ll have radio, and so you have all these different channels.

The marketers in China are not thinking this way. They’re thinking first about the consumer because their consumer connections are all connected. So the way in which they think about marketing is different.

CURT NICKISCH: So, part of it is because of the leapfrogging into a mobile-first economy. I also wonder just how much has to do with size – the number of consumers, the number of businesses, it’s almost like you add an extra zero at the end, another order of magnitude, and there’s so many more experiments and things going on, and also noise that you have to break through if you want to reach consumers, too. So, I just – how much does the size of the market influence what, what’s happening here?

KIM WHITLER: I think it gets a lot of attention because of the size. It’s so important globally, and when I worked in Eastern Europe, we were at the time, one of the world’s most competitive laundry detergent markets. We had all of the big global players competing for market share in the same space.

When you have such a competitive marketplace like that, you get the best from all over the world, you get money, and so speed is fundamentally paramount, and I think this is one of the – I had, I was interviewing the CEO of Google China, and he said the pace at which they move in China is intimidating.

I think in the West, we’d be surprised to have somebody from Google talk about the pace being intimidating, but it is. The way in which they operate, they recognize that speed means dollars, and in many cases, for the large multinationals that have been focused for decades on driving efficiency and scale, they have not been focused on speed. In fact, the way in which they operate is the opposite of speed.

CURT NICKISCH: Yeah, they plan ahead for, by season, and yeah, years in advance for big sporting events, or whatever, right?

KIM WHITLER: Yeah. I was, there’s a really interesting story. I was talking with the head of marketing for Visa – Greater China, and she had worked extensively in the U.S. for companies like PepsiCo, Ghirardelli Chocolate, McKinsey, and Unilever, and she said let me give you an example of how this works. She said, in my previous CPG jobs – CPG being consumer packaged goods jobs – in the U.S., she said we would sit down with Walmart one to two years in advance, and we’d think about what seasonal promotion we’d want to have way off in the future.

Most of the time, we’d think about what type of promotion, dollars and cents promotion, location in the store promotion, could we create to drive volume? She said what the Chinese would do instead is that they would think about creating seamless content across multiple platforms that were temporally relevant. And what she meant was, that would be relevant in two weeks. That’s relevant right now.

So, they create, they co-create consent, and they would try to air the content immediately. And so, all of a sudden, you see this planning, plotting, methodical, we’ve got to do things in two or three years, competing with a system where they recognize that if I know what’s happening next week, and I build systems that are really agile and really fast, then I can actually be, I can potentially win.

When you look at China versus the Western mindset, the Western mindset has been really around scale and efficiency. Be slow, risk-averse, create systems, reduce from five plants to one plant, create one global product platform, and the China system is a growth mindset. How quickly can we grow our market share? And these two contrasting approaches are colliding.

CURT NICKISCH: Yeah. And when you say colliding, it really makes it sound like a lot of multinationals or Western companies are losing, then, if that’s how Chinese consumers respond?

KIM WHITLER: So, I would answer it this way. One is that in some cases, the Western company loses out. For example, Uber. Because they’re not as fast to expand or to move, and so that prevents them from being able to compete when speed is paramount.

One of the CEOs made a very good point. He said look, right now in China, you have to end up being one of the largest one or two brands in a category in order to ensure funding. And so again, this comes back to the structure of the market is creating a mindset that then creates a capability, and the capability that they’re building is one of speed, one where they can move quickly, where process isn’t paralysis, but where they build agile processes that enable them to be adaptive and to be quicker in reacting to or making changes as necessary.

CURT NICKISCH: So, let’s talk a little about what Western companies should do, with this in mind, with your insights in mind, what should they be thinking about? What should they be shooting to do, and how should they do things differently?

KIM WHITLER: If it were me, if I were building an organization, I would want somebody who has this sort of expertise from China. I would want to add them to my team. Because let me give you an example. All right? So, I was, I was doing a session with a group of students here at Darden, as our MBA students are, they come from all over the world, and I asked them a question.

I said: here’s your job. You have to come up with some way to drive growth, but you cannot use TV, radio, billboards, digital, traditional media, any of those vehicles. So, you can’t use any promotions, you can’t use any advertising through digital or traditional means. How would you drive growth?

And here’s what happened. My Chinese students’ hands immediately shot up. Those from the West kind of looked around, they were trying to think, that’s a hard question because we’ve grown up in a system and a structure, that has us thinking first about advertising and about promotions. And when I asked the Chinese students, they immediately go to KOLs.

CURT NICKISCH: And KOLs being?

KIM WHITLER: Key opinion leaders. They said, you immediately go find the influencers in the marketplace, and you find a way to engage with them. Or they say, how can I go create engaging content? How can I create stories? How can I create books? Or how can I create games? How can I go create content that consumers want to engage with and partner with my brand? They naturally think that direction, where we are not necessarily trained to do that. So what I would do, if I were building an organization, is to hire that capability so I could infuse it within my team.

CURT NICKISCH: And then it sounds like due to the fact that a couple of these companies – Baidu, Alibaba, and Tencent – are so massive in their scope and reach that there’s no way around them. It sounds like you need to go through them to get to customers.

KIM WHITLER: Yeah. One of the things that surprised me, I was interviewing an executive from Tencent, and as all of these pieces were coming together, it reminded me back in the 1980s and 1990s of what the P&Gs and Unilevers of the world did with Walmart.

We knew that the power was shifting from the manufacturer to the retailer. And so all of a sudden, the Procters of the world starting collocating teams down at Walmart. They had all this data on the consumer, we had a lot of analytical horsepower, but we didn’t have the data.

And so we partnered to try to glean insights from the data that would benefit Walmart and benefit Procter & Gamble. And so, it seemed obvious, when I started listening to what was happening, I asked this executive from Tencent, I said: how many companies are collocating with you? The nature of the data they have far exceeds anything that Walmart has.

CURT NICKISCH: Right.

KIM WHITLER: He said: The potential is unlimited, but we’re just beginning to start doing this type of work. Many of the multinationals have not, have not yet moved fully into that model.

CURT NICKISCH: Gotcha. Have you seen a Western company do this successfully?

KIM WHITLER: Yeah. So, that’s exactly what I asked them, and a couple of the examples that they used were BMW and McDonald’s. McDonald’s really did one of the most integrated across platform programs with Tencent and is kind of a pioneer and a bit of a leader on this front. They’ve done a nice job.

BMW also started collaborating directly with Tencent, again in collaboration with their agencies, but rather than working through their agencies and counting on their agencies to do everything, the multinationals are saying: Wait a second, they’re too big and they’re too important, I need to work directly with you.

CURT NICKISCH: And when you say agencies, you’re talking about advertising agencies.

KIM WHITLER: Yes.

CURT NICKISCH: Yeah. So, was there a campaign that McDonald’s or BMW did, that really stood out?

KIM WHITLER: Yeah.

CURT NICKISCH: It’s funny, I call it campaign, too, but that’s probably the wrong way of thinking about it.

KIM WHITLER: Yeah. BMW did something really interesting. What’s the process that you go through to buy a car? You are made aware of it through some sort of advertisement, and then at some point you decide I want to go, you might search for information about it, then you go test drive it. You go to the dealership, and I want to test drive the car, right?

And so they know that test driving cars is really a very important feature of the experience. And so what they wanted to do to launch a — I think the car was the X1 — again, their first objective was, how do we launch this as quickly as humanly possible across China, with as much engagement, without spending a lot of money? Because advertising costs a lot of money.

CURT NICKISCH: And that means not building dealerships all around the country and getting these cars shipped there for everybody to test drive?

KIM WHITLER: It means that; it means not spending a lot of money on ads that talk about the X1. It’s how do we create a viral engaging experience that people want to participate in because it’s so much fun?

And so what they did is, they decided to create a virtual concert. So they had a real live concert, OK, and they had a number of celebrities from across different generations so that they appealed to a large group of their target audience. This concert was available live on mobile, OK, so you can sit there and watch everybody on your phone.

So they brought in key opinion leaders, big influencers across different target demographic groups, and those influencers were there live at the event, and they were talking about the event to their fans.

So as you’re watching, I’m just making this up, as you’re watching Justin Bieber sing, there’s a KOL who’s a big influencer of that demographic, who’s then connecting directly with the fans who are watching the concert via their mobile phone.

The influencers then went and did a virtual test drive, where the fans could watch them experience the car and do the test drive with their favorite influencer. And then there was all sorts of fun things like vote for your best drive, and so what this was able, what they were able to do is get thousands and thousands of people to do the virtual test drives.

They had over 10 million people who participated in the concert. Now, remember, this all happened in one day. And so it’s just a different way of thinking about developing a program. It was not advertising first, it was not promotion first. It was how do I create content that consumers want to engage with? And then find a mechanism to get as many consumers in your target demographic as possible to engage.

CURT NICKISCH: OK. So, that sounds very digital, and it may not sound all that different from how we see brands work with Twitter to promote things, or I covered the Super Bowl, right, so there were lots of key opinion leaders there, for brands and for products, that are just part of all of the digital marketing that goes on at a huge event like that.

So, to somebody who hears that BMW story and says oh, that sounds like a great thing that they did, it worked pretty well, but it doesn’t sound like that different. What is the difference? What makes this so remarkable?

KIM WHITLER: I would ask you to show me an example where a company like BMW in the U.S. does this for a launch. I mean, it’s like saying, how do we go create a cultural event like Woodstock and use that cultural event to create excitement around the product? It’s not that at some point during the concert it’s “brought to you by,” it’s that it’s woven into the fabric of the experience, and then the test drives are part of the experience.

And then there’s a gaming part of this, a competition. Right? We love competition. One of the things that I find most fascinating about China is because gaming is so popular, and it’s embedded into a company like Tencent, the way in which they think about engaging with the consumer starts with principles around games.

How does Candy Crush get somebody to spend four hours a day on their mobile phone? And that type of thinking – because gaming is a whole different industry. How many marketers are looking at the psychology of gaming, and saying what can we learn, and bring that into the way in which we create content and engaging experiences for the consumers?

CURT NICKISCH: This obviously applies to companies that do business in China, but I just wonder how much this applies to other markets in Asia, I wonder how much this applies to the potential for disruption of marketing efforts in the United States?

Because this could be Chinese companies that deliver products over here, or it could just be somebody in Silicon Valley who gets an idea from how things are done in China and just wants to compete head-to-head with the U.S. company in the United States with these new strategies and tactics.

KIM WHITLER: You’re absolutely right. I think historically our mindset has been, we created marketing theory out of the West. We exported it to the world through our books, our textbooks, our education.

The reality is that there’s a different – because of the structure, because of the mindset, because of the competency that is being built there, we need to learn from them. This isn’t just about exportation. We need to be importing and understanding it because even if you don’t compete in China, many of these companies are investing in American companies.

And so, if you’re competing here, you could be competing with a company that has a Chinese backer, that has some of this competency. And frankly, there’s a whole other reason to do it. I’m somebody who’s lived around the world and managed businesses around the world. Your goal is to become the best marketer you can. And if we think that all the ideas need to be invented in the West and exported, I think that’s myopic.

There’s a lot that we can learn, and it’s not just adaptation. It’s not like we, we learn here, and then we adapt for other markets. There’s a lot you can learn about markets that are evolving in a different way. It forces them to learn capabilities and competencies that we might not have, that can make us stronger.

And so, more than anything, this article was really not about how China is going to beat the U.S. or the West, it’s more that there are things that they’re learning there, that because we are, we like to learn and grow, at least the marketers I interact with, they like to learn and grow. That there’s something that we can learn and take from China that can help make us better and more competitive in the markets in which we compete.

CURT NICKISCH: Kim, this has been great. Thanks so much for sharing these insights.

KIM WHITLER: Thank you so much. And I really enjoyed it.

CURT NICKISCH: That’s Kim Whitler. She’s an assistant professor at the University of Virginia Darden School of Business. She wrote the article “What Western Marketers Can Learn from China.” It’s in the May-June 2019 issue of Harvard Business Review and at HBR.org.

This episode was produced by Mary Dooe. We get technical help from Rob Eckhardt. Adam Buchholz is our audio product manager.

Thanks for listening to the HBR IdeaCast. I’m Curt Nickisch.

Source: Harvard Business Review