Connecting With Consumers
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AmCham's INSIGHT magazine | July/August 2009

AmCham's INSIGHT magazine | July/August 2009

Cover story titled "Connecting with Consumers"

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    Connecting With Consumers Connecting With Consumers Document Transcript

    • 32 INSIGHT J U LY / A U G U S T 2 0 0 9
    • C OV E R S TO RY BY JUSTIN CHAN Connecting with Consumers Millions of people are talking and it’s time to tune in and start paying attention. The social nature of today’s Internet means that millions of Chinese netizens are redefining the way companies reach consumers across the country. By listening to what consumers are saying about brands, products and services, companies can begin understanding their customers’ opinions and preferences and develop offerings that will cater to their customers’ emerging needs. I t was no surprise when China’s online population surpassed that of the United States in June last year to become the largest in the world. By January of this year, the Internet penetration rate in China surpassed the global average of 21.9 percent and over 298 million Chinese citizens had access to the World Wide Web, a 42 percent year-on-year increase. But the story in China is not simply about the number of Internet users, but rather what they are doing when they go online. The Internet has presented the Chinese consumer with a welcome alternative to the traditional mainstream media of television, radio and print that was extremely influential in shaping opinions and decisions. At the same time, consumers are no longer simply on the receiving end of media – they can now create, publish and share their own content via the Internet. “Previous consumer-brand relationships were one-way,” says Claudia Sun, account director of the Marketing Communications practice at public relations firm Hill & Knowlton Shanghai. “Now, consumers play a more active role so brands need to reflect this change by treating their consumers as equal partners in a sophisticated relationship.” The ILLUSTRATION BY JASON PYM J U LY / A U G U S T 2 0 0 9 INSIGHT 33
    • myriad online tools available for companies – such For several years now, blogs and discussion as blogs, discussion forums and social networking forums (also known as BBS or bulletin board sites – make it possible for companies to interact systems) have been extremely popular in China. with consumers, learn about their tastes and The total number of Chinese netizens with blogs concerns, and share new products and ideas. today, 162 million, exceeds the total number While the Internet is now a major channel to of Internet users in China just three years ago, connect with netizens, companies must examine according to a January report by the China Internet their communications strategy and rethink how Network Information Center (CNNIC). they go about engaging Chinese consumers. Although the number of users who actively “Digital and traditional media are both likely to play update their blog on a regular basis drops to 105 a role,” says William Moss, a director in the Beijing million, the proliferation of blogging and forums office of public relations consultancy Burson- has simply been phenomenal. Today, 91 million Marsteller. “An organization that communicates netizens participate actively in online discussion effectively will use the right mix of online and forums, up from 53 million in 2006, according to traditional media in ways that complement and the CNNIC report. reinforce each other.” Even with new platforms today such as social Brands that are able to stand out from the networking sites Facebook and leading Chinese crowd and create a positive and memorable online site kaixin001.com, microblogging services experience will be the most successful in building Twitter and Chinese counterpart fanfou.com, or lasting relationships with the consumer. video sharing sites such as YouTube or youku.com, “basic BBS discussion forums still dominate the Development trends social media landscape in China,” says Adam Schokora, head of Edelman Digital in China. “I’m “While the Chinese Internet is becoming ever not sure that will ever change.” more complex, Chinese netizens are still going on Although Chinese netizens are still primarily the Internet for the same reasons they did three using blogs and forums for entertainment purposes, years ago: to find information and especially companies are realizing there is more and more to make friends and be entertained,” says Sam business value in monitoring blogs and forums to Flemming, founder and CEO of Internet word of gauge consumer opinions and preferences. Forums mouth research firm CIC. exist for virtually any category or segment, from ONLINE ACTIVITY: Chinese consumers, especially the younger generation, are spending more and more time online. IMAGINECHINA 34 INSIGHT J U LY / A U G U S T 2 0 0 9
    • car owners and cat owners to new mothers and food critics. On one mobile phone discussion forum, detailed reviews and comments can be found on 1 298 new products within days of release, outlining new ISTOCKPHOTO features, design elements, production quality, bugs, troubleshooting solutions and the users’ overall experience. In the automotive sector, CIC analyzes over 10 million consumer forum comments written by hundreds of thousands of unique users China’s ranking each month. in terms of total The way people are blogging has also changed, Internet users million adds Schokora. Personal blogs are growing China’s total beyond simply vanity and diary-type blogs, 41.9 number of and knowledgeable netizens who previously netizens % contributed to the Internet community through BBS forums may now use a blog as their own China’s Internet personal platform. “There is now a more robust penetration rate blogosphere of experts and opinion leaders on Year-on-year increase in (percentage of population different topics,” he says. Internet users with access to the Internet) Digital surge Companies today have a truly unique opportunity China’s ranking in 72.5% The U.S.’s Internet penetration rate 22.6% 105 to observe online discussions about their brand, terms of Internet 87 products and services. “Never before have penetration companies had access to so much naturally occurring feedback,” says Schokora. Each blog 91 entry or forum post represents an excellent market research data point for companies to gain insight into what consumers are really thinking and what they are really after. Another key benefit of monitoring online million Netizens who actively update blogs million 59.1% media is the ability to see crisis situations coming ahead of time and being prepared to respond Netizens who think “life Netizens who use appropriately in a timely manner. would be very discussion forums “The Internet has established itself as a key monotonous without medium for citizens to air their grievances,” the Internet” says Jeremy Goldkorn, Beijing-based publisher of Danwei.org, a website covering media and advertising in China. There are plenty of horror 82.5% Netizens who think “the Internet strengthens stories in China about how blogs, forums and contact with friends” Netizens who access more recently, video sharing sites have caused Internet video content or magnified major public relations crises. The 24.8% 67.7% Netizens who reach and velocity with which the Internet can engage in deliver information around the world mean e-commerce that companies must be positioned to respond genuinely in a prompt manner. Internet users by age Therefore, it is also very important to ensure any online outreach is in line with the company’s Under 19 Age 20-29 Age 30-39 40 and above business goals. “The online world changes so rapidly that it is easy to make one of two mistakes,” cautions Moss. “Jumping in too quickly because 35.6% 31.5% 17.6% 15.3% SOURCE: Statistical Survey Report on the Internet Development in China, J U LY / A U G U S T 2 0 0 9 I N S I G H T 3 5 January 2009, China Internet Network Information Center
    • to be online: critics when posting product reviews, IMAGINECHINA or artists when submitting designs for a contest, or rock stars when posting a music video. This is the case especially for the younger demographic in China, which considers digital technology an essential part of life and feels that the Internet is an outlet for a “second life,” according to research on Chinese youth conducted by advertising agency JWT and internet firm IAC. “It has become crucial for brands to change their media approach to become more engaging by exploring social media to create real relationships with consumers,” says Sun. While the first step to engaging online consumers is simply to learn how to listen to what consumers are saying about a company, there are many different approaches to building actual connections. For some companies, a corporate blog could be the right approach to start, although Chinese SOCIAL SITE: Tencent’s there is pressure to “be digital” without thinking internet users have proven to be scrupulous QQ.com is one of China’s about what it really means to the business; or in spotting heavily polished and edited entries largest Internet portals hanging back so long that competitors move in or posing as the CEO’s viewpoint. Instead, experts complete with blogs, customers move on.” recommend writing in a human voice so readers forums, video sharing To structure an approach that properly supports feel like they are having a conversation. For larger and social networking. a business, Moss advises spending time to research corporations, it is often effective to have rank- and understand the online environment in the and-file employees blog so that the company has context of the business or particular stakeholder a human face. and then devising a meaningful strategy. “Netizens are very receptive to any type of Every brand will have a different posture for its content that adds value to their online experience,” online activities depending on its target consumer says Schokora. “If companies want to participate, and price range, says Ed Tam, director of invention they need to do so in a meaningful way that brings in the Shanghai office of Mindshare, a global media value to their key audiences. Otherwise their key agency. “Luxury brands for instance, are all about audiences just won’t listen or perhaps will just be what they represent, so a one-way website is ideal,” put off.” he says. “But as you work down the demographic Another method companies have used in the and price continuum, brands tend to be a lot more past to engage online audiences is to establish conversational and that is when you need to have a relationships with “efluencers,” which is what CIC more interactive socially driven presence.” calls the people most passionate about brands and products that are driving conversations online. Roadmap to engage Keeping these knowledgeable bloggers and forum administrators informed and developing Companies who are not committed to the digital a meaningful relationship with them can pay and social media space and are not focused on dividends when other consumers seek their opinion what consumers are saying online about them and knowledge about a company. They typically go are in big trouble, says Schokora. “There is just so to great lengths to share their opinions and in the much online content in terms of conversations and process often influence other consumers. discussions about companies and their brands, However, there is a fundamental issue that products and services, it is essential for companies makes it very difficult for corporations to really get to pay attention and participate.” involved with the social Internet, says Goldkorn. The Internet allows for unprecedented self- “The marketing staff will go home at the end of expression and consumers today have more the day, while bloggers and forum writers stay up and more avenues to express their thoughts and till the wee hours putting love, hate or just a lot of opinions. They can be virtually anything they want effort into their online activities.” 36 INSIGHT J U LY / A U G U S T 2 0 0 9
    • Broad-reaching tool “Most major consumer products companies in China understand the importance of online their brand to create a fully interactive and mutually rewarding relationship,” says Sun. In today’s interconnected world, there are very few communications objectives that cannot “ As social media continues to gain marketing and communication, and in many cases be achieved digitally. But no matter the medium, are using it aggressively,” says Moss. But that does whether traditional mainstream media or online, popularity, the not mean companies whose primary business isn’t companies must find out what audiences want and reach of Internet selling to consumers cannot use the Internet to need and then find the best way to provide it. “It their advantage as well. is also important to remember that consumers word of mouth These companies can still harness the benefits of are not receptive to media but the content that it will only continue. digital media to engage other stakeholders such as carries. Media and content are symbiotic in nature investors or partners and develop their corporate and marketers need to remember that,” says Tam. It will fall on reputation. “These areas will drive fewer headlines Companies certainly have the tools to begin companies to and perhaps fewer outrageous viral videos, but learning about what consumers want and need. have a pulse on they can be just as essential,” adds Moss. As social media continues to gain popularity, Although China’s younger generation is leading the reach of Internet word of mouth will only current trends in the Internet push, from spending the most time continue. It will fall on companies to have a pulse order to engage online to feeling the most engaged online, the on current trends in order to engage consumers. array of digital tools available means a very wide “The key is listening to consumers’ Internet word consumers.” audience can be reached. “Even when looking at of mouth, figuring out what they want and then broader and older demographics, the Internet can creating campaigns that really connect to them,” be a highly effective way to communicate,” says says Flemming. “The buzz will naturally follow Goldkorn. “If you know what you’re doing, it is a after that.” lot cheaper than any other media.” While experts agree that the online environment Another straightforward way for companies is one that should be engaged within the proper to manage perceptions of their brand and to context as a part of broader communications maximize exposure is through organic search strategy, there is no denying that the Internet engine optimization, which involves improving a has empowered consumers in China. Although website so that it ranks high in search results and there is certainly some criticism of companies helps potential customers find the site. and products online, there remains a massive “Most consumers’ digital experiences with opportunity to harness the passion that Chinese a company’s brand or product starts at a search netizens have for particular companies, brands or engine,” says Schokora. When a consumer is trying products. to find out about a certain company or product, “The source of a hot trend is just as likely to the starting point is often the results page of search come from a 16-year-old netizen sitting in his engines such as Baidu, Google or Yahoo. dorm room in Gansu Province as it is from the “Companies should have in place the creative mind of an advertising executive being appropriate search engine optimization to make paid thousands of dollars a year,” says Sun. sure that their online visibility is maximized and However, the dynamic and complex nature of the first page of search results gives the desired the Internet means that each company will have image,” adds Sun. to spend the time and resources to understand the online environment for its particular business and The big picture what digital tools would be most effective. There is no single best solution to connecting The Internet is changing the way the whole with consumers online. “Remember that all of world communicates. For companies looking the digital ad agencies and social media gurus to engage consumers in China, where the – every single one of them – are making it up as Internet plays such an important societal role, they go along,” concludes Goldkorn. “There is it is important to recognize the paradigm shift no proven formula to advertising or corporate taking place today. communications on the Chinese Internet.” “We are seeing a shift in the communications approach of brands from pushing things out, Justin Chan is Editor-in-Chief of Insight. He can be towards enticing consumers to put things into contacted at justin.chan@amcham-shanghai.org. J U LY / A U G U S T 2 0 0 9 INSIGHT 37