October 7, 2005

Marketing 101 gets Shanghaied…

Filed under: Marketing — Administrator @ 11:32 am

Marketing in China, for a long time now, can be summed in two words “hypnotic marketing.” A classic example is Focus Media’s (NASDAQ: FMCN), a Shanghai based media company that has build a network of LCD screens in grade A and B office buildings, strategy of repeatedly playing the same package of commercials in 3 to 4 minute loops.

However, over the past year we’ve noticed a gradual shift away from hypnotic marketing in favor of, well, more creative (though not always better) marketing campaigns. Some of the more notable campaigns are listed below.

Case Study One: Free Eyelash Curling Iron
The Lead Up: Shanghai’s second largest consumer electronic franchise (e.g. Best Buy) put and advertisement in the daily paper announcing a promotion whereby for two hours on a specific day they would be giving away free eyelash curling irons to anyone who came to their store on Hauihai Zhong Lu (a major shopping street). On the day of the event, to the obvious surprise of the store’s management, customers began lining up 2 to 3 hours prior to the designated “give away” time. As the crowd thickened, people’s patience grew thin, and confrontations between customers broke out; and thus the police were called in to bring some order. Very quickly, to the store’s management realized their marketing campaign had a critical design flaw…

The Flaw: The campaign’s goal was to increase traffic and sales at that particular store, and while traffic did increase, sales fell dramatically…the program’s major design flaw was that customers didn’t have to buy anything to get the eyelash curling iron. All they had to do was show-up between 9am and 11am, stick their hand out, and grab a gift. Furthermore, customers didn’t even have to walk into the store as the gifts were distributed at the front door. The knock on affect was that the crowds blocked the entrance to the store preventing “paying customers” from entering the store. This campaign was such a disaster the store’s manager stopped it midway through which further angered the crowd…

Case Study Two: The Gucci bag and the Microwave
The Lead Up: Executives at Gucci’s Shanghai headquarters wanted to find some interesting ways to market their products to China’s up and coming middle class. One bright idea was to design a co-branding campaign with locally manufactured products, such as microwaves. So Gucci got together with a local manufacturer of home appliances and designed a campaign to give one Gucci bag away with every microwave sold.

The Flaw: The details are sketchy but my understanding is that Gucci sold the appliance manufacturer the bags at cost and in return the manufacturer put the microwaves on sale, hoping to generate additional demand. The campaign launched and was an overnight success, at least as far as the appliance manufacturer was concerned; microwave sales went up dramatically overnight as every woman in Shanghai desired the Gucci bag. However, things were not so rosy at Gucci, a company which spends hundreds of millions of dollars a year on positioning itself as a luxury goods design house (and not a microwave popcorn supplier); and thus when the head of Gucci Asia found out about the campaign the preverbal “shit hit the fan” and the campaign was abruptly suspended. Or was it…as Gucci was contractually bound to this relationship they encountered significant push back from both the appliance manufacturer and its customers…and so, Gucci bags and microwave popcorn continued to flow out the doors for sometime until divorce negotiations were concluded…

The takeaway is clear, marketing (and brand building) is still very much in its infancy in China…you think traffic in Beijing is bad…try finding a qualified marketing manager with interactive experience in loyalty programs (hint hint)?

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