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Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE
朗标是一家根植中国的领先品牌咨询公司，为客户提供包括市场和消费者研究，品牌策略以及创意服务的综合性品牌解决方案，帮助打造和管理成功的品牌。朗标总部设在上海的 M50 创意园区，拥有国际化的市场调研及品牌建设专家团队。结合创意和科学，朗标启发、引导、创建并评估兼顾本土化与国际化的品牌实践。
Labbrand is the leading China based branding consultancy that provides market and consumer research, brand strategy, and creative services to develop and manage successful brands. With headquarter in Shanghai M50 Creative Industries Park and featuring an international team of market research and branding experts, Labbrand combines creative and scientific methods to inspire, guide, measure, and create local and global branding practices.
Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE
How brands become strong, not how strong brands are
品牌 ( PINPAI ) is the Chinese word for “brand”. With its unique culture and economic growth, China is one of the most ideal markets for international brands. For similar
reasons, China is also at the center of media attention in terms of economy, politics and performance. Unlike most foreign market, the concept of branding is relatively new. Thus, the process of building PINPAI is different.
The Best PINPAI Practices in China 2012 report explores these areas and focuses on the development of strong brands in China. The report consists of two parts with
monthly publications covering 11 major industries and a final annual report ranking the best PINPAI practices company take to build strong brands in China.
Automotive Industry Analysis
For 10 years, from 2001 to 2010, the Chinese automotive industry has experience tremendous growth at a staggering rate of 25.3% per year. This rate is much higher than the average global growth and led to a competitive industry with more than 100 different brands from both local and foreign companies.
In 2011, China has ended its high-speed growth and entered a stage of single digital expansion rate. On the macro level, factors that caused the slow-down include the Chinese Central Bank raising its deposit-reserve ratio for six times in 2011, which increased the difficulties to finance certain enterprises. In terms of regulations, the Chinese government has ended its stimulus packages and introduced tightening limit for new vehicle licensing in major cities. The soaring fuel prices also influenced purchase intention among Chinese consumers. The importance of establishing a strong brand in times like these could not be more evident.
Besides traditional dealerships (called 4S stores in China), consumers are welcoming new innovative purchasing platforms. New methods such as TV shopping channel have been gaining support for the past few years with great sales return and media attention. Recently, purchasing cars online through accredited e-commerce platform also surfaced. Chinese consumers are open to the idea of revolutionary purchasing channels.
On April 18th, 2012, the Chinese State Council issued “Energy-Saving and New Energy Vehicle Development Plan” requiring all passenger vehicles’ average fuel consumptions to decrease to 6.9L/100km by 2015 and 5.0L by 2020. This new regulation will push the already strong momentum of developing and launching new energy vehicles in China. Currently, the two main types of new energy vehicles in China are hybrids (HEV) and electric cars (BEV). However, certain challenges are ahead of electrics vehicles including lack of proper infrastructure and re-charging facilities. Unlike Western living environment, most Chinese citizens live in apartment compounds, thus, finding the right sources to recharge BEV will be difficult. Currently, BEV also faces high battery costs and quality inconsistency.
New energy vehicles are gaining momentum in China:
Chinese consumers are open to innovative buying channels:
http://www.aqsiq.gov.cn/zjxw/dfzjxw/dfftpxw/201110/t20111011_200031.htmhttp://auto.ifeng.com/news/expreview/20120507/778740.shtml
2009 2010 2011
47%
100%
18% Growth Rate of SUV Segment in the Chinese Automotive Industry
2010 2011
76% 73%
Rate of Chinese first-time buyers
Unlike Western markets, most Chinese consumers are buying their first car. These consumers focus on criteria such as costs and performance. German vehicles are growing faster because of their sturdy quality and cost-effectiveness. However, figures do demonstrate a slight change in consumer purchase with 75.9% of first-time buyers in 2010, and 73.3% in 2011 . This drops signals that Chinese consumers are gradually moving into their 2nd or 3rd car.
SUV segment in the Chinese automotive industry has been growing for the past few years with a rate of 47.15% in 2009, 100% in 2010 and even 18.05% in 2011 despite the over-all market’s slow down . During the 2012 Beijing International Automotive Exhibition in April, out of the 120 world premiere models, 25 were SUVs, signaling growing competition from both Chinese and international brands in this segment.
Most automotive customers are first-time buyers:
SUV segment continues to grow with increasing brand competition:
Brands are heading into 2nd and 3rd tier cities with production plans in Western China:
Luxury car segment is growing with competition on after-sale customer service and localization:
With the gradual introduction of most luxury car models in China, the competition is heating up. In terms of communication strategies, major players have already adopted similar routes. As the Chinese market matures, brands will need to focus on after-sale customer service and localization strategies to remain competitive.
Auto companies are gradually shifting more attentions to 2nd and 3rd tier cities due to increasing demand. Compared with 1st tier cities, 2nd and 3rd tier cities will bring difficulties to brands in terms of providing customers with convenient and reliable services due to broader geographic spread. A number of auto companies are setting up production plants in Western China to service these cities.
Recent report from the Chinese Association of Automobile Manufacturers (CAAM) indicates that China’s own branded passenger cars had a sale volume of 6.11 million vehicles in 2011, down 5.42% from the year before, accounting for 42.23% of total passenger car sales. Besides decline in sales and shrinking market share, local Chinese brands also face branding challenges including becoming increasing conservative in market strategies and a lack of signature car models for each brand. With foreign brands’ gradual introduction of lower-price-range models, Chinese indigenous brands are losing its competitive advantages.
Chinese indigenous brands are facing slow sales growth and branding challenges:
Increase relevance among a broader range of consumers by extending models in the Chinese market
Using personalized localized communication to establish high regards among consumersMini
Audi
Best PINPAI Practices in China Automotive
Strong CSR programs to sustain brand esteem even in tough times
Further enhancing brand esteem through implementing innovative initiatives which resonate with consumers’ habits
Aspiring communication design to integrate brand relevance with younger consumers
Toyota
Mercedes-Benz
Chevrolet
Branding Story
Using personalized localized communication to establish high regards among consumers
On the global scale, the Mini brand is “unconventional” and “different”. In China, the same umbrella principles still apply, but during its initial stages, most branded messages and product positioning were completed using English, which were hard for Chinese consumers to understand. Starting in 2009, Mini shifted its strategy by crafting creative communication messages with a Chinese flare to generate positive responses from consumers.
When Mini launched its convertible vehicles in China, many people challenged the move by pointing out that certain cities are too dusty and are not suitable for convertibles. Mini’s reply was “my five elements are missing soil”. The slogan was bold, unique, and memorable yet utilizing ancient Chinese elements to make a point. In 2011, Mini Countryman’s launch in China also demonstrated its localized communication. Mini Countryman represents people’s yearning for a getaway. Mini China’s members felt that a simple “escape” ( 逃 离 tao li) cannot express the brand. Thus, members created the nickname “ 开 溜 ” (kai liu, loosely translated as “leaving in stealth mode”) for Mini Countryman which is more playful and local. Mini’s distinctive localized brand platform paid off with a dramatic sales increase of 4000 vehicles in 2009 to 10,000 in 2010, and 15,000 in 2011.
Why is it important in China?
Localizing communication messaging doesn’t simply mean translating the global message into Chinese. Mini was able to leverage on Chinese local humour and craft brand messages which are memorable, straight to the point with bright personality. While most automotive slogans can be applied to many brands, Mini’s messages can only be used for itself. This localized strategy helped Mini to create a recognizable and respectable niche market among over-competitive automotive brands in China.
Increase relevance among a broader range of consumers by extending models in the Chinese market
Branding Story
Audi was previously known by consumers in China as the “government’s car” because of the procurement of Audi A6 for officials. Over the past few years, Audi is shifting away from this brand image by gradually extending its product lines in China to reach a broader audience.
Audi has introduced a variety of more personalized models such as A3, A5, and Q5 over the past few years targeting different segment of the market. In 2011, the new entry-level model Audi A1 was brought to China. A1 is priced starting at 224, 800RMB (35,000USD), which is slightly lower than Mercedes-Benz’s A Class and BMW 1 Series. The car is targeted towards a younger audience with a drive for “fashion”, “confidence” and “intelligence”. By introducing lower-priced models in China, Audi successfully moved away from its rigid brand personality and tapped into new market segments in China and building a stronger portfolio. The Audi brand is now more relevant for the younger consumers, which could also be considered as cultivating future brand loyalty. In 2012, Audi also plans to introduce 7 new models such as Q3, Q5 hybrid Quattro, and Audi S/RS Series.
The Chinese auto industry is packed with a plentiful of brands. For Audi, how to transform its brand image and increase its brand relevance among consumers will be the key to ensure future sales growth. By extending Audi’s product offerings and introducing entry-level vehicles such as A1 and A3 in China, Audi is not only tapping into the low-medium price segment, but also constructing long-term brand loyalty. Labbrand’s research suggests that most consumers in China are first-time buyers, thus the entry-level market currently holds great potential. Audi also sees the potential of these consumers fiver years down the road when they decide to purchase an upgraded vehicle; experts suggest that many of these consumers tend to stay with one brand if they’ve experienced positive services.
Why is it important in China?
Strong CSR programs to sustain brand esteem even in tough times
Branding Story
In 2011 Toyota faced several difficult situations in the market partially due to recall incidents in 2009/2010 and the March earthquake in Japan causing concerns over auto parts shortage. Instead of heavily promoting its products after these incidents, Toyota’s strong consistent corporate social responsibility (CSR) programs in China greatly helped the brand to maintain its brand image among consumers through giving back in three major categories: safety, environment, and education.
In China, there are two joint ventures for Toyota: GAC-Toyota and FAW-Toyota, each company is responsible for its own vehicles’ branding strategies. However Toyota’s CSR initiatives are part of both companies’ culture. FAW-Toyota has established over 600 libraries over the past seven years and created scholarships for under-privilege students in rural areas. The company also organizes environmental activities such as planting trees and eco-conscious seminars on an annual basis. GAC-Toyota focuses on funding students and building education facilities in China (9 schools). Both companies’ environmental initiatives also coincide with Toyota’s leading knowledge in eco-friendly HEV. The company sponsors and participates in Tsinghua University’s automotive competition and emphasis on training future talents. Their sustainable CSR initiatives helped Toyota to establish a strong brand influence in the community.
Why is it important in China?
When companies face challenges such as recall, strong direct promotion following it will not work in China. Consumers tend to associate negative comments to the campaign which might result in unwanted response. Brands need to allocate time and efforts to CSR programs in China on a regular basis. When facing tough times, they could act as buffers and maintain a healthy flow of positive information to the end consumers. Parts of Toyota’s CSR programs’ focus on environment and helps to indirectly promote and sustain its leadership in new energy vehicles (HEV).
Further enhancing brand esteem through implementing innovative initiatives which resonate with consumers’ habits
Branding Story
In 2007, Mercedes-Benz rolled out its “brand rejuvenation” strategy and successfully became brand relevant among younger consumers partially through introducing new vehicles models. For 2011 and onward, the brand focuses on increasing consumer’s regard through implementing new initiatives in the industry by understanding and broadening its target audience and excelling in customer care.
Mercedes-Benz has redefined its target customer segments for certain models such as the B and CLK classes to include younger consumers, epically in China where the average owner of the S-class is only 39, compared to 55 in Europe. Mercedes-Benz’s decision to purchase a 10 year naming right of the Shanghai Expo Arena, now the Mercedes-Benz Arena, shows its understanding of younger consumers’ lifestyle habits. The arena was often used for performing concerts by both local and international superstars; by frequently appearing next to celebrity names during concert promotion news, Mercedes-Benz was able to achieve high regards and recognition from younger consumers. This is also the first Mercedes-Benz Area outside Germany.
Mercedes-Benz’s “125 year Anniversary Honorary Service Plan” in late 2011 also promises that vehicles bought in the following year will enjoy 3 years of warranty regardless of the mileage. This makes Mercedes-Benz the first German manufacture to promote a 3-year warranty in China.
Why is it important in China?
The luxury segment of the Chinese automotive industry has entered a stage of intense competition. Brand’s initiatives to increase consumer’s regard have to be ground-breaking in order to stay competitive.
Mercedes-Benz’s 125 year Anniversary Honorary Service Plan
Aspiring communication design to integrate brand relevance with younger consumers
Branding Story
The fundamental principal of a communication design is successfully pinpointing target audience to develop relevant key messages and choosing the right platforms to release. Chevrolet Cruze’s communication structure is an example.
Research shows that 70% of Chevrolet Cruze’s target audience is under 35 years old and are striving their way up in China. The tagline “true to oneself, unremitting effort, chase your dream, willing to show” 坚持本我、不懈努力、追逐梦想、乐于表现 was created to increase the relevance of the car to its key demographics’ believes. These principles are applied to different communication channels. For online, Chevrolet partnered with Youku to produce “11 Degrees New Media Film Project” which featured 11 short films concentrating on young Chinese’s aspiration to succeed and chasing one’s dream. Bring Chevrolet Cruze a step closer to its key consumers.
For offline, its communication effort focused on the buzzing Transformers 3. In China, Chevrolet Cruze has the nickname “Little Bumblebee”. The association between Chevrolet Cruze and Bumblebee represents the characteristics which Cruze hopes to transfer from Bumblebee (such as loyalty, sturdy, helpful, and always diligent); traits which its target audience hopes to achieve or represent. In July 2011, Chevrolet Cruze even launched a China-only Transformers edition of the vehicle styled in yellow paint and black stripes.
Why is it important in China?
Aspiration and dreams are important for Chinese consumers. Brands who wish to target younger, post 80s consumers often relate their brands to these ideas to enhance relevance. Chevrolet Cruze identified clear messages and channels to deliver these concepts and yielded in great word of mouth effect. The need to succeed is important in current Chinese culture; brands who can relate to this perception will become more relevant.
*Audi, Mercedes-Benz and Chevrolet are extending toward younger consumers, but to different sub-segments. Inspiring and reaching one’s dream are important for Cruze’s target audience, which is not necessarily the same for Mercedes or Audi.
Expert Information
YE Ming HaiProfessor at Tongji Univeristy
Mr. Ye has been engaged in automotive brand marketing research and providing advisory services to numerous international automotive brands over the past decade. Mr. Ye is also a published author regarding market research and forecasting.
Thomas E. CallarmanProfessor of Operations Management at China Europe International Business School (CEIBS)
Mr. Callarman a professor at CEIBS and also the Director of CEIBS’ Centre of Automotive Research (CCAR). Mr. Callarman is a frequent speaker at international automotive conferences.
SONG JianExecutive Director of China Association of Automobile Manufacturers (CAAM)
Mr. Song is a professor at Tsinghua University and also the Deputy Director of National Automotive Safety and Energy Laboratory.
LI GengEditor in Chief of “Auto Intelligence”
Mr.LI is the Editor in Chief of “Auto Intelligence”, co-published in 2002 with the world’s oldest car magazine “Autocar”. Auto Intelligence focuses on China and international automotive news, vehicle test reports and general automotive knowledge.
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