Archive for the ‘Price’ Category

Will China Pull A Rabbit Out Of Its Hat In 2011?

The Chinese Year of the Rabbit begins on February 3rd. So what will this year have in store for China? Much the same as 2010? Or will there be some surprises on the cards?

Scott Kronick and Jamie Moeller of Ogilvy Public Relations Worldwide gave their views to AdAgeChina recently. Here are the top five issues that they expect will impact China and the way it does business this year:

1. Manage price inflation

Inflation, currently at its highest level in two years, is a major economic concern and soaring food prices could lead to instability. China will wish to avoid this at all costs. The challenge lies in managing China’s ambitions on several fronts: achieve economic growth, create jobs, stimulate domestic consumption and assume greater international responsibilities, all while keeping inflation under control and maintaining stability. Many of these are incompatible with tightening measures.

2. Encourage domestic consumption

Chinese people are estimated to save up to 50% of their income. As the country is projected to enter a new phase of development, the government is anxious to transform the current growth model, largely driven by exports and inventory investment, to one that is more sustainable.

Spurring domestic consumption is the primary focus. The government has adopted measures to give subsidies and tax-breaks on numerous big-ticket items such as cars and appliances. However, online shopping could drive the next wave of China’s consumption growth. China has 450 million internet users and one-third already shop online regularly. Goldman Sachs predicts annual sales could grow 275% over the next five years to an estimated $300 billion in 2015.

3. Manage China’s labor force

Once a workshop to the world, China is finding it increasingly difficult to manage its workers. They have become noticeably more demanding in recent years, as evidenced by the decision to raise the minimum wage in ten provinces by up to 20%.

Meanwhile, as China pushes forward with its urbanization, the rural-to-urban flight will continue. In the next five years, China’s urban population will reach 700 million and, for the first time, surpass the number of rural residents. What’s more, the migrant workforce is expected to hit 350 million by 2050, larger than the entire U.S. population today. With such a vast migrant labor force, the government’s policies to manage this group will remain pertinent.

4. Reform education, environment and healthcare

China’s recent education boom parallels its status as the world’s second-largest economy. Between 1999 and 2008, the annual enrollment of undergraduate students increased by more than 500%. Yet critics worry that the breakneck expansion of universities in China has negatively impacted the quality of education, made the job market artificially more competitive, and kept salaries stagnant.

New and more stringent efficiency measures are anticipated to address environmental challenges. China is expected to introduce a carbon tax in the near future as an incentive to reduce greenhouse gas emissions. Also, China is willing to share more responsibility globally. At the Cancun climate talks China offered to adopt a binding UN resolution on carbon emissions. These events all suggest that China is making steady progress in environmental reform.

China’s rapidly aging population creates urgency around healthcare. In 2009, Beijing unveiled an aggressive healthcare reform plan as part of the stimulus package. The goal was to improve people’s lives, regulate the pharmaceutical industry, and spur domestic consumption.

5. Build brand China

Developing China’s international reputation continues to be a key component of China’s greater integration into the international community. But the country sometimes seems to send mixed messages.

In the Year of the Rabbit, we expect a resetting of expectations, and a renewed push for soft power in several arenas, engaging a larger host of business and government voices. Central government support will be both in front of and behind the scenes, sharing platforms, offering advice and backstopping the finances.
Parallel to such branding efforts is the Chinese state media’s foray into the global market. For example, CCTV International has 45 million subscribers outside China and last year, state-run Xinhua News Agency launched its English-language TV service, CNC World.

Find out more about the opportunities China has to offer by visiting our – China website

Posted in Business Development, China, Price |
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Utilizing Market Research To Validate Product Development

 
More than 25% of all workplace accidents involve hand and finger injuries costing as much as $16,000. Such injuries include cuts, burns, infections and broken bones, as well as skin problems such as dermatitis or even cancer, which can occur when toxic chemicals in the likes of gasoline, solvents or paints come into contact with the skin. Whatever the nature or cause of the injury, many accidents could be avoided by the use of the correct type of hand protection.

It is undoubtedly challenging to create a protective glove that suits the broad range of applications and hazards in the multitude of industries across the world, as well as that fits every size and shape of hand.

One company that understands the market for hand protection well is Ansell Healthcare, the world’s largest manufacturer of protective gloves and clothing. With over 1,200 different glove styles in its online catalog, it is clear that Ansell has a wealth of expertise in the PPE industry. In spite of its impressive portfolio, Ansell is constantly investigating not only new product development opportunities, but also how its existing products can be improved.

Indeed 90% of market research on new products is focused on product additions and modifications rather than on new product concepts. Product improvements are obvious developments and are much more easily accepted than conceptually new products.

Within its product offering is the Ansell HyFlex® range. These are premium, precision handling gloves which are ergonomically designed to provide a balance of comfort, protection and dexterity. Included in this brand category is Ansell’s most successful glove product worldwide: the HyFlex® 11-800 glove, which is ten years old and was the first product manufactured under the Ansell brand.

Recognizing that every product has a life cycle, Ansell invested in research and development to improve its HyFlex® 11-800 glove offering. In doing so, it created an advanced version of this glove, the new HyFlex® 11-830 glove, which it then tested through independent market research involving placement tests.

Leading business-to-business market research specialists B2B International designed and conducted the research program. The test gloves were trialed by large companies in the manufacturing, metal fabrication and automotive industries among both Ansell glove wearers as well as wearers of competing products. The wearers were asked to rate their current gloves and the test gloves on eighteen glove features, including fit, comfort, durability, flexibility, tactility, grip, and more. The test glove outperformed current gloves on all eighteen features examined. Furthermore, Health & Safety Managers and Purchasing Managers in the study rated the test glove with a very high overall satisfaction score of 9 out of 10.

B2B International’s Research Manager, Julia Cupman, commented, “It is extremely rare to obtain consistently outstanding feedback in product development research. What’s more, our research has shown that quality is the key driver in the choice of glove, followed by price, thus indicating that in spite of price consciousness in the current economic environment, the quality of health and safety protection is not compromised. The superior quality of the HyFlex 11-830 test glove was confirmed in this study and the research will lead to a high return on investment.”

The HyFlex® 11-830 glove will be available to purchase in the USA after April 2010.

Posted in Price, Product Development, Quality |
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What Can Marketers Learn From English Seduction Techniques?

This week Director Matthew Harrison draws the key marketing lessons from his (now dormant) seduction techniques.

Each and every year, the month of March is a joyous occasion for me. The brutal New York winter dissipates and makes way for 8 months of glorious sun. The English football season reaches its climax, as along with the rest of the Western world I fix my attention on Nottingham Forest’s promotion challenge. Most importantly and joyously of all, the month of March marks the anniversary of my wedding, which I should highlight (just in case she’s reading) was a day of unparalleled perfection.

And so this week my mind took a surreptitious walk down memory lane to a warm September day in 1997, a lucky 13 years ago. This was the day when I targeted my now-wife and (eventually) convinced her that I would fulfil her every need. Now, as a marketer first and lady-magnet second, thoughts of this distant time got me thinking. What, if anything, could my seductive exploits of the late 90s teach me and the wider marketing community about appealing to their target audiences? If I can successfully target that most notoriously demanding of audiences, the attractive female, surely there is no limit to my marketing prowess?

That sunny day in 1997 had been an inauspicious one, at least from a professional point of view. My finest achievement had been to break the photocopier and spend 90 minutes failing to fix it. As I returned home at 5.30, I frankly needed a beer. I delicately broached the subject with my housemate Dave, who pondered my request before suggesting we go to the pub immediately.

Two hours and 5 pints of Kronenbourg later Dave and I were deep in discussion, our agile minds flitting between the meaning of life and whose turn it was to buy the next drink. I was just about to walk towards the bar when I noticed the door open and two girls in their early twenties walked in. I salivated, ordered another round and began plotting my next move. My mission: to make the blurred, dark-haired girl on the right fall in love with a drunken photocopier-wrecker. Mercifully, Dave told me a joke about Camilla Parker-Bowles, distracting me for the rest of the evening.

Several evenings later, a group of friends and I decided to meet up in the same bar. Word was that a selection of females would be present, some of whom would be more than happy to meet the man of their dreams this evening. Even better, one or two discrete enquiries amongst the local cognoscenti revealed that the blurred girl was called Caroline and would be making an appearance along with her friends.

I sensed my chance, and quickly set about polishing my shoes, getting Dave to iron my shirt, and splashing myself in enough Fahrenheit to make a cactus wilt. I donned my leather jacket and, fusing debonair cool with rugged Anglo-Saxon masculinity, unbuttoned the top 2 buttons of my shirt. It would be no exaggeration to say that I looked irresistible.

Scanning the bar as I arrived mid-way through the evening, I immediately saw Caroline, chatting with her friends in the far corner. She was tall and slender with long, dark brown hair. Her dark knee-length skirt and tailored jacket clung enticingly to her figure and her top revealed a hint of décolletage. Her outfit reminded me of the perfect hors d’oeuvre: just enough to keep the interest; not quite enough to make me feel queasy and rush for the exit. I wonder if anyone’s ever delivered a finer compliment than that to her? I do hope so.

Rather than striding confidently towards her and delivering a killer chat-up line in front of her friends, I bravely decided to wait until she was on her own and then pounce. This must have been my lucky day because a few minutes later I found myself standing next to her at the bar.

We started talking. Now when I talk to attractive ladies, I have something of a magic touch – I start talking and they immediately disappear. Strangely, however, for an apparently sane woman with all of her faculties intact, Caroline responded – and not with a restraining order. She laughed at my jokes. She nodded as I told her all about my big-shot job in the photocopying room. She gasped with relief as I finally asked her a question. She seemed to believe me when I said that it must be the man behind me that stank of vinegar.

We met up a few more times over the following week or two, each encounter becoming slightly more relaxed than the last. I took her to a restaurant and tried to show off by buying some expensive wine that I’d never heard of. We went to a football match with a group of friends. Gentlemen, I hope you are learning as you read this. After 4 or 5 ‘meetings’ we were officially an item and I was congratulating myself on my marketing expertise.

So, when I look back at the seductive marketing techniques I employed in my early 20s and reflect upon how they changed the course of my life, I am struck by how similar the art of attracting a business-to-business customer is to the seduction of a beautiful woman. I therefore leave you with my key tips on how to attract and keep the most demanding of b2b customers:

Make the first impression count – A sober, well prepared marketing approach is always likely to be more effective than an impulsive dash in the direction of the target customer. This applies to all aspects of the marketing mix, from promotional materials and interpersonal contact through to pricing and proposal preparation. By the time you get to undoing an early bad impression, the object of your desire will already be looking elsewhere.

Expect the sales process to take 4 or 5 contacts – Business-to-business buyers, like women, are complex creatures. The quick ‘hard sell’ is far less suited to their multifaceted needs and their focus on interpersonal contact than it is to the more impulsive and impersonal world of consumer marketing. It is critical to take the time over a number of conversations to understand customers’ rational and emotional needs, before providing a personalized solution built around these.

Ask lots of (intelligent) questions – Like the most boring of inebriated men, bad b2b marketers focus so much on their own offering that they forget to ask the target customer what makes them tick and what would make their lives better. This is a fatal mistake when each target customer has needs that are often technical, complex and unique.

Always leave them wanting to find out more – Successful business-to-business marketing is a long-term, dynamic process built around frequent conversation and mutual exploration. The effective b2b marketer answers every question concisely, whilst hinting at new, intriguing ideas that make the target customer want to find out more next time.

Tell a coherent, authentic story and stick to it – This is the most difficult and most critical trick of all. Just as the single man identifies an overall impression he wants to project to the fairer sex and attempts to dress, smell and speak in a way that authenticates that impression, so the successful b2b marketer must identify the story that target segment wants to hear and ensure that every customer touchpoint authenticates that story. This requires consistency, and – most fundamentally – a deep and accurate understanding of what the target market wants from you. Master these two basics and you are on your way to becoming a seductive b2b marketer.

Posted in B2B Marketing, Business To Business, Customer Satisfaction, Marketing, Marketing Strategy, Matt Harrison, Needs, Price, Pricing Strategy, Thursday Night Insight |
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Recognising the Price Typology

At a time when consumers and businesses alike are watching the purse strings, Carol-Ann Morgan reiterates the importance of understanding what buyers of your products and services really value.

The newspapers tell us today that the recession is subsiding, and that we are fighting back to economic recovery. Times have been hard for businesses and for individuals, and everyone has felt the need to tighten their belts. We find ourselves watching the bank balance, cutting costs, and curbing spending; frugality is in and excess is out (for now at least!). This, in turn, can impact on the pricing strategy adopted by many companies, as some consumers change behaviours of past times; buying less, buying differently, reappraising the value of their purchases. This pattern then impacts down the supply chain, affecting both B2B and B2C companies.

Price has always been a subject of much debate; how to do it, how to value products, competitive pressure, product lifecycle, buyer behaviours, customer loyalty, etc, etc. However, the key element of price is in the value of the product and/or service to the customer, and strategies have to reflect this.

Market segmentation enables companies to better serve the market, developing and marketing products which resound more closely with the intended customer base. Most needs based segmentations will reveal a price driven segment; one where, above all, the price is the major decision making driver. Interestingly, it is usually a much smaller segment than people suppose. Of course, price always has a role in decision making, and it is important to establish how and where it is positioned for our customers and potential customers.

I see several typologies for price positioning, based on the relationship between price and perceived value. These four, in particular, are common and easily recognisable…

• Cheapest Price: Firstly, price driven buyers who are simply looking for the lowest price available in the market. Nothing else matters, lowest price is king. These buyers are the absolute price segment. They are easy to spot, and they search around looking for lower and lower prices, sometimes using a competitor price as a bargaining tool. They are not concerned about brand and tend towards the view that all products are the same and the additional cost is in name only.
• Best Price in Class: This group values certain products/services and their features. They are more choosy about what they want and may operate within a “brand division” and only place products from certain brands in their consideration set. For example, they want a premium quality boiler and will only look at products within this product value grouping. However, they will consider any of the brands in this grouping and will buy the cheapest they can get within the division. They value the product group (e.g. premium boilers) but are looking for the best possible price across the brands that fall into that group, without being hard set on one particular brand.
• No Compromise: They know what they want (exactly!) and are usually unwilling to compromise on what they want (product, model, brand, supplier, etc). They negotiate hard to get the lowest price for this. They use other suppliers’ prices as bargaining tools but their choices are limited, usually to a specific product and a specific, (often) very well known, reputable brand they value highly, usually from recommendation, from reviews or from personal experience. They will, however, settle for a price above what they wanted to pay if they cannot get suppliers to meet their need on price, such is their desire for the particular product and brand.
• Value Pricer: This group will be likely to balance price against the value that can be gained from a certain product and a certain supplier/brand. The value to them may be in safety, security, image reflection, performance characteristics, reputation, etc, but whatever it is, it has a value which they are prepared to pay for. The higher that value to them, the higher the price tag they are prepared to pay. It is a question of identifying where the value is. However, if the product/service fails to meet the standard, a “value gap” occurs which can cause re-evaluation of that value to them.

The question now is whether or not the global frugality has made us all more price conscious than we were previously. Thus, the way in which the price and the product are valued needs to be understood in depth in order to accurately evaluate the position of price in the mind of our target customers. This is especially the case for B2B companies where the value of an order or longer-term supply relationship can be critical to business survival.

Posted in B2B Marketing, B2C, Carol Ann Morgan, Price, Pricing Strategy, Segmentation, Thursday Night Insight |
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