Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE
Labbrand is the leading China based branding consultancy that provides market andconsumer research, brand strategy, and cr...
Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE                 品牌 ( PINPAI ) is the Chinese word for “brand”. With its ...
Automotive Industry AnalysisFor 10 years, from 2001 to 2010, the Chinese automotive industry has experiencetremendous grow...
New energy  vehicles are gaining  momentum in China:                                                                      ...
SUV segment                                                                                                      continues...
Luxury car segment                              Brands are heading                          is growing with               ...
Chinese indigenous     brands are facing     slow sales growth and     branding challenges:Recent report from the Chinese ...
Best PINPAI Practices in ChinaAutomotive          Using personalized localized communication to establish high   Mini   re...
Strong CSR programs to sustain brand esteem even in tough   Toyota       times                Further enhancing brand este...
Using personalized localized communication to           establish high regards among consumers           On the global sca...
Localizing communication messaging doesn’t simply mean translating the global             message into Chinese. Mini was a...
Increase relevance among a broader range of           consumers by extending models in the Chinese           market       ...
The Chinese auto industry is packed with a plentiful of brands. For Audi, how to             transform its brand image and...
Strong CSR programs to sustain brand esteem           even in tough times           In 2011 Toyota faced several difficult...
When companies face challenges such as recall, strong direct promotion following             it will not work in China. Co...
Further enhancing brand esteem through           implementing innovative initiatives which           resonate with consume...
Mercedes-Benz’s 125 yearAnniversaryHonoraryService Plan  Why is it   The luxury segment of the Chinese automotive industry...
Aspiring communication design to integrate           brand relevance with younger consumers           The fundamental prin...
Aspiration and dreams are important for Chinese consumers. Brands who wish             to target younger, post 80s consume...
Expert InformationYE Ming Hai                                                Thomas E. CallarmanProfessor at Tongji Univer...
SONG Jian                                                 LI GengExecutive Director of China Association of Automobile    ...
Contact UsShanghai OfficeAddress: M50 Creative Industries Park | Building 7 - Unit 202          50 Moganshan Road | Shangh...
www.labbrand.com
Best Branding Practices in China: Automotive Industry
Best Branding Practices in China: Automotive Industry
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Best Branding Practices in China: Automotive Industry

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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.

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.

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Best Branding Practices in China: Automotive Industry

  1. 1. Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE
  2. 2. Labbrand is the leading China based branding consultancy that provides market andconsumer research, brand strategy, and creative services to develop and managesuccessful brands. With headquarter in Shanghai M50 Creative Industries Park andfeaturing an international team of market research and branding experts, Labbrandcombines creative and scientific methods to inspire, guide, measure, and create localand global branding practices.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。
  3. 3. Labbrand Best PINPAI Practices in ChinaAUTOMOTIVE 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 similarHow brands 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 relativelybecome strong, new. Thus, the process of building PINPAI is different.not how strong The Best PINPAI Practices in China 2012 report explores these areas and focuses onbrands are 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.
  4. 4. Automotive Industry AnalysisFor 10 years, from 2001 to 2010, the Chinese automotive industry has experiencetremendous growth at a staggering rate of 25.3% per year. This rate is much higherthan the average global growth and led to a competitive industry with more than 100different brands from both local and foreign companies.In 2011, China has ended its high-speed growth and entered a stage of single digitalexpansion rate. On the macro level, factors that caused the slow-down include theChinese Central Bank raising its deposit-reserve ratio for six times in 2011, whichincreased the difficulties to finance certain enterprises. In terms of regulations, theChinese government has ended its stimulus packages and introduced tighteninglimit for new vehicle licensing in major cities. The soaring fuel prices also influencedpurchase intention among Chinese consumers. The importance of establishing astrong brand in times like these could not be more evident.
  5. 5. New energy vehicles are gaining momentum in China: Chinese consumers are open to innovative buyingOn April 18th, 2012, the Chinese State Council issued channels:“Energy-Saving and New Energy Vehicle DevelopmentPlan” requiring all passenger vehicles’ average fuelconsumptions to decrease to 6.9L/100km by 2015 and5.0L by 2020. This new regulation will push the alreadystrong momentum of developing and launching newenergy vehicles in China. Currently, the two main types Besides traditional dealerships (called 4S stores inof new energy vehicles in China are hybrids (HEV) and China), consumers are welcoming new innovativeelectric cars (BEV). However, certain challenges are purchasing platforms. New methods such as TVahead of electrics vehicles including lack of proper shopping channel have been gaining support for theinfrastructure and re-charging facilities. Unlike past few years with great sales return and mediaWestern living environment, most Chinese citizens attention. Recently, purchasing cars online throughlive in apartment compounds, thus, finding the right accredited e-commerce platform also surfaced. Chinesesources to recharge BEV will be difficult. Currently, BEV consumers are open to the idea of revolutionaryalso faces high battery costs and quality inconsistency. purchasing channels.
  6. 6. SUV segment continues to grow Most automotive with increasing customers are brand competition: first-time buyers: 100% 76% 73% 47% 18% Growth Rate of SUV Rate of Chinese Segment in the Chinese first-time buyers Automotive Industry 2010 2011 2009 2010 2011Unlike Western markets, most Chinese consumers are SUV segment in the Chinese automotive industry hasbuying their first car. These consumers focus on criteria been growing for the past few years with a rate ofsuch as costs and performance. German vehicles are 47.15% in 2009, 100% in 2010 and even 18.05% in 2011growing faster because of their sturdy quality and cost- despite the over-all market’s slow down . During theeffectiveness. However, figures do demonstrate a slight 2012 Beijing International Automotive Exhibition inchange in consumer purchase with 75.9% of first-time April, out of the 120 world premiere models, 25 werebuyers in 2010, and 73.3% in 2011 . This drops signals SUVs, signaling growing competition from both Chinesethat Chinese consumers are gradually moving into their and international brands in this segment.2nd or 3rd car. http://www.aqsiq.gov.cn/zjxw/dfzjxw/dfftpxw/201110/t20111011_200031.htm http://auto.ifeng.com/news/expreview/20120507/778740.shtml
  7. 7. Luxury car segment Brands are heading is growing with into 2nd and 3rd competition on after- tier cities with sale customer service production plans in and localization: Western China:Auto companies are gradually shifting more attentions With the gradual introduction of most luxury carto 2nd and 3rd tier cities due to increasing demand. models in China, the competition is heating up. InCompared with 1st tier cities, 2nd and 3rd tier cities terms of communication strategies, major playerswill bring difficulties to brands in terms of providing have already adopted similar routes. As the Chinesecustomers with convenient and reliable services market matures, brands will need to focus on after-saledue to broader geographic spread. A number of auto customer service and localization strategies to remaincompanies are setting up production plants in Western competitive.China to service these cities.
  8. 8. Chinese indigenous brands are facing slow sales growth and branding challenges:Recent report from the Chinese Association of AutomobileManufacturers (CAAM) indicates that China’s own brandedpassenger cars had a sale volume of 6.11 million vehiclesin 2011, down 5.42% from the year before, accounting for42.23% of total passenger car sales. Besides decline insales and shrinking market share, local Chinese brands alsoface branding challenges including becoming increasingconservative in market strategies and a lack of signaturecar models for each brand. With foreign brands’ gradualintroduction of lower-price-range models, Chineseindigenous brands are losing its competitive advantages.
  9. 9. Best PINPAI Practices in ChinaAutomotive Using personalized localized communication to establish high Mini regards among consumers Increase relevance among a broader range of consumers by Audi extending models in the Chinese market
  10. 10. Strong CSR programs to sustain brand esteem even in tough Toyota times Further enhancing brand esteem through implementingMercedes-Benz innovative initiatives which resonate with consumers’ habits Aspiring communication design to integrate brand relevance Chevrolet with younger consumers
  11. 11. 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 challengedBranding 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 Story 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.
  12. 12. Localizing communication messaging doesn’t simply mean translating the global message into Chinese. Mini was able to leverage on Chinese local humour and craft Why is it brand messages which are memorable, straight to the point with bright personality.important While most automotive slogans can be applied to many brands, Mini’s messages can in China? 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.
  13. 13. Increase relevance among a broader range of consumers by extending models in the Chinese market 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 newBranding 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. Story 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.
  14. 14. 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 Why is it tapping into the low-medium price segment, but also constructing long-term brandimportant 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 in China? 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.
  15. 15. Strong CSR programs to sustain brand esteem even in tough times 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, eachBranding 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 Story 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.
  16. 16. 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 Why is it campaign which might result in unwanted response. Brands need to allocate timeimportant 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 in China? 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).
  17. 17. Further enhancing brand esteem through implementing innovative initiatives which resonate with consumers’ habits 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,Branding now the Mercedes-Benz Arena, shows its understanding of younger consumers’ lifestyle habits. The arena was often used for performing concerts by both local Story 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.
  18. 18. Mercedes-Benz’s 125 yearAnniversaryHonoraryService Plan Why is it The luxury segment of the Chinese automotive industry has entered a stage of important intense competition. Brand’s initiatives to increase consumer’s regard have to be ground-breaking in order to stay competitive. in China?
  19. 19. Aspiring communication design to integrate brand relevance with younger consumers 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 andBranding chasing one’s dream. Bring Chevrolet Cruze a step closer to its key consumers. Story 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.
  20. 20. 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 Why is it important in current Chinese culture; brands who can relate to this perception willimportant become more relevant. in China? *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.
  21. 21. Expert InformationYE Ming Hai Thomas E. CallarmanProfessor at Tongji Univeristy Professor of Operations Management at China Europe International Business School (CEIBS)Mr. Ye has been engaged in automotive brandmarketing research and providing advisory services to Mr. Callarman a professor at CEIBS and also the Directornumerous international automotive brands over the of CEIBS’ Centre of Automotive Research (CCAR). Mr.past decade. Mr. Ye is also a published author regarding Callarman is a frequent speaker at internationalmarket research and forecasting. automotive conferences.
  22. 22. SONG Jian LI GengExecutive Director of China Association of Automobile Editor in Chief of “Auto Intelligence”Manufacturers (CAAM) Mr.LI is the Editor in Chief of “Auto Intelligence”, co-Mr. Song is a professor at Tsinghua University and also published in 2002 with the world’s oldest car magazinethe Deputy Director of National Automotive Safety and “Autocar”. Auto Intelligence focuses on China andEnergy Laboratory. international automotive news, vehicle test reports and general automotive knowledge.
  23. 23. Contact UsShanghai OfficeAddress: M50 Creative Industries Park | Building 7 - Unit 202 50 Moganshan Road | Shanghai 200060 | ChinaTel: T 86 21 6298 8956Fax: F 86 21 6298 0775Media ContactYing Mu | ying.mu@labbrand.com
  24. 24. www.labbrand.com

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