Haier Article Presentation - Final

7/31/2019 Haier Article Presentation - Final

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THE STUDY OF HAIERS MARKETINGSTRATEGY OF HOUSEHOLD APPLIANCE

GOING TO THE COUNTRYSIDE

By:

1) KOO SUET YAN (JERRY) 806665

2) WONG HUI YEE (CHLOE) 806667

3) YAP ZIE TIENG (DENICE) 809530


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1.0 OVERVIEW OF ARTICLE

Financial crisis in September 2008 left companies with problemssuch as poor sales, decreasing corporate profits, decliningproduction and increased of unemployment.

On February 19th 2009, China further emphasize on the policy ofhousehold appliance to the countryside. It extended its policy from 4types to 8 types of household appliance to 4 province.

The policy implementation provides several significant impact suchas below:

a) promote the organic docking among household appliancemanufacturing, distributing and absorb excess capacity.

b) improve rural residents spending power directly and start up

domestic demand.

c) Improve the convenience of exchange between urban and ruralareas which narrow the gap between urban and rural areas.

d) as a guidance to enterprise to enter the rural market which willchange the urban-rural dual structure.


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Haier Group is Chinas most valuable brand. By responding to the government policy of household appliance

going to the countryside, Haier promote one of their products,refrigerator to the rural areas.

Their sales increase by about 80% in the rural market in 2008 and tilltoday, Haiers after sale network can be found throughout the Chinacountryside.

Haier established more than 6000 packet-service contact station toensure that there is sufficient products to support the policy and ifany out-of-stock situation occur, Haier would open green channelsfrom production, logistic to guarantee the rural residents that theproducts will arrive on time.

In order to understand the customer, Haier conducted a randomsampling survey, grouping questionnaire survey in whole countriesand follow up survey by telephone to obtain information about thecharacteristics of market demand, competition status, consumerbehaviour, channel network, way of promotions and other issues inthe rural refrigerators market.

1.1 ANALYSISOFMARKETDEMANDFORHOUSEHOLDAPPLIANCETOTHECOUNTRYSIDE


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4 market survey was conducted within more than a year andhousehold survey were used in different provinces within China withtotal of 88105 copies of questionnaires issued in 4 surveys, and

73797 were retrieved with 65845 copies of valid questionnaires. Haier processed and analyzed the survey data using the SPSS

software and establishes a database specifically for the refrigeratormarket in the rural area.

From the survey results, Haier developed a One to One strategy fortheir refrigerators. Through the results also, enable Haier tounderstand that the city market had matured and whoever firstpenetrate the rural market, will gain competitive advantage.

Haier understand that in order to be successful, they need to fulfil thebelow requirements:

a) ensure all products are suitable for the rural environment

b) perfect logistics needed in order to deliver the products to the ruralareas

c) understand the importance of after sales service

d) the guarantee of smooth development and improvement of theproducts, ample of products supply and on time delivery


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2.0 HAIERS PROMOTION STRATEGY INRURAL AREAS

In recent years, Chinas per capita income in rural areas keep on growing.The rural residents savings is op to about 9000 billion Yuan with 800 billionYuan cash in hand which tells that they have purchasing power.

Therefore, Haiers objective are mainly on promoting the brand in the ruralmarket, make rural consumers to accept and approve Haier refrigerator,search rural markets promotion and a new marketing mix strategies, developnew refrigerator products which are affordable and suitable for the ruralconsumers and lastly, to explore the rural refrigerator market.

The promotion strategy adopted by Haier is close to rural residents andpromoting in a farmer style.

Promoting in a farmer style simply mean that the strategy needs to appeal tothe people in the local area, specific products that people tend to need andthe promotion strategy should emphasize on it.

There are 4 promotional strategy implement by Haier which are:

a) One-to-one marketing

b) Advertising

c) Word-of-mouth publicity

d) Non-business promoting

e) Public relation strategy


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One-to-one marketing is a new variation of an old concept which

depends on a customer relationship management strategy that focuson personal interaction and investing in personal communication.

This type of strategy serves a number of important functions.

Through communication, it let the potential consumers know thatthey had been noticed.

It also provides easy access to the types of products that theconsumers have expressed interest in which will increase thechances of sale.

The consumer interactions and appreciation is also a key to delivergreat customer service. The data that collected will helps company toprofile their customer better in order to be more effective in meetingtheir needs.

Haier had used this strategy when they tried to penetrate to the ruralmarkets with their refrigerator.

They hired one-to-one promoting staffs which main priorities is tointroduce Haier refrigerator to the potential consumers at theirdoorsteps.

2.1 ONE-TO-ONE MARKETING


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Besides, they also aim to introduce the refrigerators to consumerswhich with demand within six months in order to get the accurateinformation about their need, keeping track and promoting toconsumers with demand within one year.

They further develop the plan by reaching out to consumers withdemand within two years.

The one-to-one promoting staffs also responsible in in promotingHaiers culture and brand in any holidays and local customs activitiesto establish a good brand and product image.


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2.2 ADVERTISING

Advertising is a form of communication used to encourage orpersuade the audience to continue or take some new action.

In the Haier case, advertising plays an important role in the processof encouraging the rural consumers to notice, recognize, understandand finally buy their products.

Through advertising, Haier is seeking to local conditions andinnovate as the rural consumers have their own characteristics incultural quality, living region and habitual way to access to the media.

Haier choose to use television advertising because the survey thatthey conducted shows that about 17.3% of the existing refrigeratorsusers were affected by the impact of television advertising andtelevision is their most important sources of information.

The television commercial is generally considered as the mosteffective mass-market advertising format

The effectiveness of advertising also depends on the time andchannel that the advertisement being advertised.

For most of the rural area, the peak hours of watching television isfrom 19:00 to 22:00 and preference channel is CCTV1.

Therefore, Haier advertise their refrigerators during that time periodusing Shandong cable television as advertising media, targeting atlocal news program where the rural consumers most concerned.


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2.3 WORDOF MOUTH PUBLICITY

WHAT anyone says become fact after people around them echo thesame often enough.

Researcher says individual are more inclined to believe WOM thanformal forms of promotion methods because the receiver of WOMreferrals believe the communicator is unlikely to have an ulterior

motive. Survey done by Haier proves and shows that 20.4% of existing rural

users got introduction and recommendation from their relatives andfriends.

Majority rural buyers made their decision based solely on influence of

the people they trust. Therefore promotion staff grasp key consumers and existing users,

utilize trust of their relatives, friends and neighbour to enhance theword of mouth image of Haier.


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2.4 NON-BUSINESS PROMOTION

Non-business promotion can secure consumer buying behaviorefficiently and increase sales in a certain period of time.

There is a typical plotting with off season and peak season in ruralrefrigerator market, the Spring Festival Eve and the fall and winterseasons which are peak time for wedding are peak seasons.

Survey showed the time rural families purchase refrigerators ismainly in May to June and October to December.

Based on this characteristics in off season and peak season, Haierhas developed different non-business promotion method , gave fullplay to the role of non-business promotion, seized the opportunity to

increase the market share.


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There are presently 34,400 townships and 614,000 villages in China.

How to satisfy such a huge market may be the next hotspot fordifferent enterprises.

This is spurred by the home appliances going to the countrysidepolicy by China government, the countryside market is now openingits gate.

However, it is not easy to have a foothold at the countryside market.

The rural consumer may not take the effective urban promotion andsales strategies.

Corporations must humbly study the necessities and consumingpsychology of countryside consumers.

Development of the advertising of ones industry in the countrysidewill not be easy.

Although rural residents constitute two-thirds of the total population,their income is currently only one-third of that of urban residents.

Since Chinas Open Door policy in late 1978, the annual capita netincome of Chinas rural residents has increased at an average 7.2%per annum. It nevertheless remains very low, resulting in low levelsof consumption in the countryside.

3.0 RESEARCH POTENTIAL


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In urban areas TVs, refrigerators, washing machines and computersare commonplace in every household.

But in the countryside it is still a tough challenge to solve electricitysupply problems due to limited power output and/or high production

costs. It will be some time before there is any substantial demand for

electrical appliances.

Although rural areas represent a huge potential market, massmarketing will not work in the countryside.

Enterprises cannot just move into the countryside and expect to sell

commodities that are unmarketable in urban areas. The current rural market is typically at the functional demand stage,

which means that the basic requirement is for goods that are usefuland cheap.

Development of the advertising industry in the countryside requiresmore than extending the urban market. It needs a different mind-set.

Another challenge concerns the creation of marketing channels.Instead of living close together, rural residents are scattered over aconsiderable area with poor transport links and many marketingterminals. Goods are sold primarily in local grocery stores or minisupermarkets. Different distribution strategies are required here.


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The information imbalance between town and countryside posesconsiderable challenges and severely hinders the circulation ofgoods and capital in these markets. The limited economic andcultural conditions, coupled with poor infrastructure, meanunderdeveloped utilization of information in rural areas.

These challenges suggest that the advertising for ones industry as a

whole must carry out thorough research before formulating strategiesfor penetration of the rural markets.

As with any new brand or new client, the first step towards identifying

and creating opportunities must be research and understanding ofthe existing situation.


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Precisely speaking, targeted advertising and marketing strategiesmust be based on solid investigation and in-depth research in rural

areas. Conventional advertising strategies will not work. We must find the

appropriate way to promote advertising in rural areas.

Advertisements can direct rural consumption to a considerableextent, but word of mouth is also critical.

From the angle of communication theory, in rural areas it is advisableto concentrate on infiltration advertising promotion like its done byHaier.

Documents

Haier Article Presentation - Final