Marketing management in today’s business world is becoming essential for most of the businesses, as it helps the businesses to achieve expected outcome (Kotler et al. 2014, p. 4). Offering quality products at the most reasonable rates is not enough to increase profitability until the customers are going to purchase the products and services. Most of the companies are now concentrating on offering products and services according to the needs and expectations of the customers and most of the markets, industries and businesses throughout the world are becoming competitive frequently (Hitt et al. 2012, p. 49). As a result, the business environment is changing gradually and the businesses have to make effective strategic decisions to sustain and to achieve desired profitability. Marketing management is one of the most useful activities that help the businesses to such strategic benefits. Marketing management helps mainly to promote the products or services to the customers. Most of the companies are using various strategic tools such as SWOT, Porter’s Five Forces and PESTLE to analyse both internal and external business environment (Hollensen, 2015, p. 565). The outcome extracted from such tools helps the businesses to make effective strategic marketing decisions. The companies also utilise marketing tools like 4 P’s of marketing and STP (Segmentation, Targeting and Positioning) methods to formulate effective marketing strategies and plan (Jiang et al. 2013, p. 193). 4 P’s of marketing or marketing mix tool helps to understand and to make effective decisions regarding the most relevant components of the products or services (Price, Product, Promotion and Place) while the STP model of marketing helps to promote the products to the prospective customers (Jenkins, 2016, p. 159). Segmentation is the process of dividing a market into several subsets of customers based their common needs and expectations while targeting is the method of making all the marketing efforts towards the chosen segments. Positioning is the process of making long-terms impacts upon the minds of the customers regarding a product or service (Ou et al. 2014, p. 211).
The current study extensively analyses the Chinese market in terms of STP method. China has the largest population throughout the world and the country is gradually becoming lucrative for most of the businesses (Möller and Parvinen, 2015, p. 7). China is also one of the biggest economies right after the US. Many experts believe that China will soon lead the world economy. The country is already dominating the manufacturing sectors. The consumer market is also lucrative and most of the leading multi-national firms such as Walmart have already set up their business China (Ziaullah et al. 2014, p. 17). However, it is not easier to penetrate the market, as the economy and the needs and expectations of the Chinese customer are different. Most of the companies are concentrating on setting up physical stores in different states of China to sell their products or services. However, most of the companies have not yet concentrated selling their products or services online. Most of the Chinese customers are now using the internet services most part of the day (Gupta, 2016, p. 1257). Chinese consumers, especially the younger generation like to follow western culture and to adapt to their buying behaviour. As a result, online shopping is gradually becoming the most popular way of shopping (Seeber et al. 2015, p. 329). However, the segment of online shoppers has not been targeted before or a newly evolving segment. Most of the businesses including both domestic and internal firms have not utilised or targeted the segment. Therefore, this is definitely a gap in the Chinese market (Saleh, 2016, p. 12). The key aim of the current study is to design a marketing offering with a recognised positioning strategy to fill in the identified gap in the Chinese market. The marketing offering stated in the current study is about creating, delivering and communicating value to the target market (Gustafsson et al. 2015, p. 425).
Main Report Sections
Identifying the Gap in the Chinese Market
Around 50% people in China are using the internet services for various purposes including Job-search, Social-network and Shopping. Following is the graph shows online shopper statistics in China from 2006 to 2014 (Erevelles et al. 2016, p. 901). In 2007, around 46 Million people in China had bought goods online, while in 2014, almost 361.42 Million Chinese people purchased products or services online (Guo et al. 2014, p. 55).
Figure 1: Number of online shoppers in China
(Source: Wright, 2014, p. 453)
The above figure shows the increasing popularity of online shopping in China. However, most of the companies in China are rarely concentrated offering their products or services online. Online reputed firms are yet to discover the profitability and growth of the segment (Meffert, 2013, p. 256). However, various domestic companies like Alibaba.com have been so far extremely successful for their online operations, but the gap is still there in terms of low marketing investments towards online shopping. Most of the Chinese people are now prefer to purchase products and services online, as online shopping are offering various benefits to their life. Purchasing a product or service from a physical outlet is becoming hectic, especially for the working professionals (Peñaloza et al. 2013, p. 387). The consumers have to wait in the long queues to buy their products and services, especially in the weekends. Online shopping offers the flexibility to purchase a product or service anytime and from anywhere (Kacen et al. 2013, p. 19). The consumers can even pay instantly by using the online payment options. However, very few Chinese and international companies have utilised and targeted the particular segment of online buyers. Online shopping also offers various added advantages and a more sophisticated shopping environment in terms of security and reliability (Lai et al. 2012, p. 1286).
Online shopping activities have become popular, as most of the people in China have also been using internet service largely since 2008 (Armstrong et al. 2014, p. 352).
According to the following graph, around 50% of the total population of China used the internet in 2014. The average internet penetration rate was around 42% worldwide (Luo et al. 2012, p. 1131). It shows that the popularity of internet in China. The internet penetration rate of China is also above the average rate in the Asia-Pacific. The number of internet users, especially during the past decade has increased significantly. The total number of Chinese internet users in 2014 was around 650 Million (additional 31 Million internet users compared to 2013) (Kleinaltenkamp et al. 2012, p. 1470).
Mobile internet and broadband internet connections are the keys for increasing internet usage. However, the Chinese people are using the internet services mostly from their mobile devices. Most of the people in China, especially the young Chinese people prefer using mobile devices such as Smartphone to access internet. Around 90% Chinese internet users accessed to the web via mobile phone in 2015 (Pressey et al. 2014, p. 1157).
Figure 2: Internet Users in China
(Source: Gupta, 2016, p. 1257)
However, neighbouring countries like Japan and South Korea are slightly ahead of China in terms of internet usage and the regional disparity is there in China. 60% people living in the eastern coastal areas like Beijing, Shanghai, Guangzhou, and Zhejiang are using internet services while the internet penetration is incredible lower the remote western regions (Kim et al. 2012, p. 374).
However, overall China is one of the emerging markets, especially for the internet giants like Amazon. The massive population, purchasing preferences of the Chinese consumers, significant growth of the Chinese economy, business-friendly policies of the Chinese government etc are the most relevant factors making China as one of the most prospective markets worldwide in terms of profitability (Barile et al. 2012, p. 54). Many experts also believe the number of people buying products or services online will also increase gradually. Such increment will help China to become the leaders of online shopping territory. However, most of the companies, especially the foreign companies failed to target such segment or have not recognised the growth and development of the segment due to various factors (Stein et al. 2013, p. 855). As online shopping is becoming popular in China, most of the domestic companies will start offering their products and services online. Therefore, it is essential for the companies to implement effective online marketing strategy and plan to stay ahead of the competitors (Czinkota and Ronkainen, 2012, p. 689). However, the online marketing environment should be different than other countries and the foreign companies may also face language and cultural barriers while promoting their products online. For instance, most of the foreign companies largely concentrate promoting their brands, products and services through Facebook, while Facebook is still unavailable in China (Hitt et al. 2012, p. 49). In addition, most of the people throughout the world are using Google search engine to search their desired products or services, while most of the Chinese internet users are mostly using various other Chinese search engines. Therefore, it is becoming essential for the foreign companies to implement different online marketing strategies and plan to gain competitive advantages over their competitors (Jiang et al. 2013, p. 193). However, it is also important for the companies to understand the online Chinese market and the buying preference of the Chinese consumers in terms of online shopping. Such analysis or process of understanding the online market of China is difficult in terms of accessibility. In addition, the government of China has also been supporting their domestic firms largely over the foreign companies (Ou et al. 2014, p. 211). Chinese government largely discourages acquisitions and takeovers for protecting their local businesses. Therefore, the gap still exists in the market and the businesses have to make effective strategic decisions to occupy the segment (Ziaullah et al. 2014, p. 17).
The current study implements a marketing strategy and plans to target the identified segment effectively. The key aim of the marketing strategy and plan is to create, communicate and deliver value to the target market (Seeber et al. 2015, p. 329). In order to create, communicate and deliver value to the target market, it is essential to evaluate the issues that the marketing offering is going to resolve. The current marketing offering will be to encourage the Chinese consumers to involve the online shopping activities. It is confirmed that online shopping is effective in terms of both saving time and costs (Gustafsson et al. 2015, p. 425). However, the customers may feel various issues with the online shopping experience, which may include security concerns, inability to justify the physical presence of the products and reliability of the business etc. It is also essential to offer a user-friendly and sophisticated shopping environment (Guo et al. 2014, p. 55). Such shopping environment will help all the customers including one with limited experience in online shopping activities. Online shopping also comes with various incredible features like shipping, comparison etc. The customers can easily avail such features, without really visiting any physical stores. The online shopping also has various advantages for the businesses too. It helps to minimise the costs of setting up a physical store (Meffert, 2013, p. 256). In addition, the companies can target broader areas. Physical stores can only attract the people near the area while the people from anywhere in the world can purchase the product and service through online shopping. The companies have various options to place their products and services. The online shopping experience is also available for the mobile users too. In fact, mobile optimised websites or Mobile Apps are offering more sophisticated shopping environment than the desktop version e-commerce extension (Kacen et al. 2013, p. 19). Therefore, it is essential for the businesses to apply effective positioning strategy, which promotes the benefits or features of online shopping.
Most of the successful online businesses are able to achieve significant success, as they have a more clear idea about the needs and expectations of the customers in terms of online shopping (Armstrong et al. 2014, p. 352). Those companies have also given value to the demands of the customers. Therefore, it is essential for the business to target the demands of the customers. In the case of brand positioning various components such as target market, key competitors, key products, vision, brand essence, benefits hierarchy and brand personality are significant (Kleinaltenkamp et al. 2012, p. 1470). In order to formulate an effective positioning strategy, it is essential for the businesses to evacuate the target market, key competitors and key products. The target market can easily be considered by implementing segmentation process while recognising the key competitors is also easier tasks. However, it is important to analyse the preference of the customers to determine what the customers are actually like about the products or services of the customers (Kim et al. 2012, p. 374). As an online marketing or the segment of online shoppers is newly emerging, it is likely that most of the key competitors have not yet started their online marketing campaigns. Therefore, it is an advantage for the businesses to target the customers by making a positive impact upon the minds of the customers. However, it is also essential to understand the products or services effectively in line with the needs and expectations of the customers (Stein et al. 2013, p. 855).
Branding is also important for making effective positioning decision, especially when the company is making marketing strategy and plan to attract the customers to encourage purchasing products online (Czinkota and Ronkainen, 2012, p. 689). Brand essence helps the businesses to promote what the brand is offering and what the customers should expect from the company. It is essential that the brand should reflect that the company offers value to their customers. The businesses should also offer both functional and emotional benefits to their customers (Barile et al. 2012, p. 54).
Introducing Marketing Offering (Creation, Delivery, Communication)
The marketing offering will concentrator upon 7 factors of the marketing mix, which include Product, Place, Price, Promotion, People, Processes and Physical Evidence (Pressey et al. 2014, p. 1157).
Products strategies are essential, as ultimately the key aim of the marketing strategy and plan is to encourage the consumers to buy the product. Most of the online stores do not offer immediate tangibility unlike the physical stores (Luo et al. 2012, p. 1131). However, many experts do not indicate such as a disadvantage. Most of the online stores clearly discuss the overall information and facts about the products or services. Therefore, the customers have the ability collect valuable information regarding their preferred products. In addition, the buying decisions of the customers are not influenced by the assumptions and comments of the sales persons (Lai et al. 2012, p. 1286). There are no sales persons to provide vague information in order to mislead the consumers to purchase the product in case of online shopping. The customers are completely free to make their buying decisions based on the facts and information that they are extracting online (Peñaloza et al. 2013, p. 387).
Most of the online stores offer customised features to the returning customers for making the shopping environment further easier to access (Wright, 2014, p. 453). The businesses can also offer ancillary products or related products immediately along with the main purchase. For example, the businesses can also display the headphones or mobile covers to the customers, who are buying mobile phones. It is also essential for the business to offer products customised to the needs of the customers (Erevelles et al. 2016, p. 901).
Pricing is one of the key factors within the marketing mix. Most of the Chinese customers prefer to check the product or service prices online, even if they are considering purchasing the items from the physical stores. It is essential to consider three factors in the case of deciding the most appropriate price for the products or services (Saleh, 2016, p. 12). The businesses should consider the costs associated with manufacturing the items. In addition, the businesses should also consider the price that the competitors are offering and the price that most of the customers are willing to pay (Gupta, 2016, p. 1257). However, due to online shopping, the pricing becomes very competitive and most of the traditional suppliers and retailers are facing tremendous market pressures, as the online companies do not have to incur various costs such as store costs, staff cost. Most of the online shoppers can even compare the prices of different businesses online (Möller and Parvinen, 2015, p. 7). Such information helps to maintain prices within the online world. Emerging online shopping concepts such as online auction are becoming very popular gradually, even in China. Most of the online businesses are also offering discounts to the returning and loyal customers. The technologies are also helping the businesses to track and to target the loyal customers. Internet payment gateways such as PayPal and online credit cards usages are also making internet payment easier and secure (Jenkins, 2016, p. 159).
Online shopping activities have brought revolution to the marketing mix, as most of the customers are now capable of purchasing products directly from the manufacturers. The retailers are now becoming irrelevant. However, the online retailers have to deliver the products to the customers within a reasonable time (Hollensen, 2015, p. 565). The businesses should promote their products or services on various places such as social networks (Facebook, YouTube etc) and search engines (Google, Yahoo etc), where most of the Chinese spend most part of the day. Understanding the needs and expectation of the customers and their preferred places in terms of internet surfing will help the businesses to make effective marketing strategy and plan (Kotler et al. 2014, p. 5).
Promotional strategies of online businesses are typically different than the traditional strategies. It is essential for the businesses to position the brand online. Most of the organisations that are selling their products or services online have a website with e-commerce integration. Google AdWords, PPC, Facebook Ads, E-mail marketing etc are the most popular forms of e-promotion (Kleinaltenkamp et al. 2012, p. 1470). Such advertisements are placed strategically to the particular web-pages, where the customers are visiting mostly (Kim et al. 2012, p. 374). Most of the Chinese customers, especially the younger generation prefer spending most of their times on the popular social networking websites. Therefore, such social networks are definitely the most effective places to target the customers. The companies are also investing towards search engine optimization or SEO marketing to promote their websites higher on the search engines (Lai et al. 2012, p. 1286).
The strategy suggests analysing whether there are enough people in the Chinese market that prefer using online shopping. By mentioning people, it also includes the employees and staffs, who have an active role in formulating and implementing marketing strategy and plan, as they are ones, who will perform the marketing activities (Meffert, 2013, p. 256). Genuine employees often help to increase the confidence of the customers. The employees can help the company to gain competitive advantages over their competitors (Erevelles et al. 2016, p. 901).
The processes and the systems of the organizations also affect the marketing performance of the organizations. The companies should formulate their marketing strategies in line with the organizational processes in order to make the strategies more effective (Seeber et al. 2015, p. 329). Understanding the processes can also help minimising marketing costs. The processes can also help the companies to make effective strategic marketing decisions in terms of their available marketing resources and costs (Ziaullah et al. 2014, p. 17).
Physical Evidence Strategies
Physical evidence is also essential for the businesses to grow. Brands such as Amazon, Alibaba are well-established and they create positive impacts upon the minds of the customers, especially when the customers are planning to purchase products online (Jiang et al. 2013, p. 193). Therefore, it is essential for the companies to concentrate upon creating and recognised brand and to develop physical evidence for achieving success. The companies should also consider making their customers aware of the benefits and reliability of the online shopping environment (Kim et al. 2012, p. 374).
The current study concludes that online shoppers China are relatively new and very companies have targeted the particular segment. However, the segments will go be profitable for the businesses, as most of the Chinese customers are gradually becoming online shoppers. Therefore, it is essential for the businesses to offer their products and services through online shopping integration in order to gain competitive advantages over their competitors. For the purpose, the companies should formulate and implement their marketing strategies and plan according to the outcome extracted for the marketing mix strategies. As most of the Chinese customers prefer to purchase products online and most of the companies are yet to penetrate the online segment of online buyers, this is definitely a gap of the Chinese market and the companies should make effective position strategies to utilise the gap in favour of their business to gain competitive advantages over their competitors.
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