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Branding Basics and China

Branding has been a popular buzzword for the past decade. Articles about branding appear in popular business magazines regularly, and management books about branding now number in the hundreds if not thousands. These days, it seems that everyone agrees that branding is a critical business function which can deliver competitive advantages and long-term growth.

In China too, the branding bug has bitten. You can pick up any Chinese business publication on any given day, and there's a reasonable chance you will find an article about how companies use brands to succeed. Most of the popular books on branding have been translated into Chinese. And branding has worked its way onto the business cards of numerous local consultants. What then is all the fuss about?

Branding - A Brief History

In the earliest usage of the term, branding was the act of marking livestock (using a red hot "brand") to denote the owner of an animal. In this way it was used to protect the owner of the brand from theft. Later, it came to be used to refer to the practice of affixing a company's name, or some other specially developed "trade" name to a commercial product to help buyers distinguish the product from competing products.

Until the 1930s, commercial brands were fairly simple names given to products to help consumers distinguish their origins and to ensure quality. Often brands were descriptive of the product itself or provided an explanation of the product's purpose or use. In practice, these early brands became opening statements in extended paeans on the wonders of the product, delivered either by a salesman or a newspaper advertisement.

In the early 1930s, a producer of packaged consumer goods from the Midwest United States named Procter & Gamble began to consciously structure its organization around

brands. Each of the company's brands was to be managed by a dedicated group of executives, and they competed against each other for resources and achievements. This was perhaps the first usage of "branding" in the modern commercial sense.

Up to the late 1960s, large advertising firms and major corporations in the United States and other Western markets, plumbed the depths of consumer psychology and utilized mass media (particularly the new media of broadcast television) to build strong positive associations for their brands. Moving beyond descriptive claims, brands were now being infused with cultural context, emotional associations and personality.

The 1960s, such a tumultuous period in the United States and Europe also marked a turning point for branding. Along with the widespread questioning of the ethical foundations of society, consumers began to also revolt against advertising which had become increasingly paternalistic and condescending. Rather than being dictated to, consumers demanded the freedom to determine their own lifestyles, even if that meant shunning all forms of commercialism.

In response to this backlash, marketers sought new ways to connect with their customers. Once content to be told what was "good for them," they now wanted to express their own aspirations and emotions. Successful brands in this era were brands that didn't take themselves too seriously, that related to the authority-questioning attitude of the times and that accompanied their customers on their own journey of self-expression without dictating the path.

The modern form of branding which is taught in most business schools, developed during this period. The theories and practices honed through the last few decades of the 20th century form the foundation of the explosion of interest in branding that we see today. Methods of research and analysis of consumer trends have led to more quantitative and measurable practices.

The revolution in information technology has also been a major contributor to growth in the field, starting in the late 20^th century. Brands, after all, are information. They are compact, highly charged memes that are managed in the consumer "mind-space" to further the goals of a company. The ability to instantly gather massive amounts of data and then comb that data for trends has been invaluable to modern marketers.

As we enter, the 21^st century, globalization and media fragmentation are bringing about a further shift in Western companies' approaches to branding, their methodologies and their channels. There is an increasing focus on tailoring brands to ever smaller sets of customers, and even lately talk of one-to-one marketing, with new media such as the Internet and mobile telephones being used to build direct relationships between consumers and their brands.

Brands in China

When it comes to branding, China is one of the hottest markets around. Not surprising perhaps when one considers the size of the market and recent, rapid increases in gross domestic product and consumer spending. Still beyond the raw numbers, which with China are often startlingly high, marketing in China has developed into a hybrid form that shares as much with the accumulated learning of Western marketers as it does with the current reality of today's China market.

One of the most intriguing aspects of the market for brands in China is that much of the history outlined above, which unfurled over the course of a century in the West, has been compacted into the course of two decades in China. For decades after 1949, the biggest brand, and in many cases the only brand was the PRC. Since the "open-door" policy was instituted in 1978, marketers have had roughly 30 years to make up for lost time. Branding and the entire marketing industry have grown rapidly, often leapfrogging into areas that took years to develop in other markets.

This "time-lapse" has fostered a market where sophisticated, integrated communications campaigns coexist alongside "snake-oil" outfits, extolling the benefits of "secret recipes" of Chinese medicinal herbs. All points in between are represented as well, as China marketers now have a full range of media channels to utilize, including broadcast and pay television, mobile phones, online, radio, print. These marketers and channels serve a vast consumer population that, because of geography and demography, is as different in its tastes as all the European nations are from each other.

With these stakes, the job of branding in China requires a healthy dose of flexibility and creativity. While sophisticated models developed in the West may work very well in those markets, allowing marketers to zero in on their target customer and ensure their brand fits that customer's needs, China exhibits a potpourri of competing social and demographic trends that can resist the most robust analysis and strategy. And with the shifting media landscape, the best method of communicating a brand is in constant flux.

Socially, the changes that China has encountered in the past 20 years are remarkable and unique. It is impossible for anyone, regardless of their experience in marketing to say: "I've seen this before." What is possible, and has been fruitful for more successful brands in China, has been to look carefully for social trends that are likely to thrive and shape lifestyles. Then, a brand can begin the process of weaving itself into the social fabric.

Branding in China is an exciting challenge. It is one that requires a strong grasp of the fundamentals of brand management theory, but can not rely on theory alone. In practice, one must temper business school theories with an honest, in-depth understanding of the market. Successful brands in China know exactly why their customers choose their brand over their competition, and are able to move and change with customers as those customers adjust to their constantly morphing society.

It may sound like a moving target … because it is. But, with careful aim and persistence you can hit a bullseye and establish a strong brand in China.

Christopher Millward is the CEO and "brand guru" of Firebrands, a Beijing-based consulting company. For further information contact Millward at: Tel: +86 10 8447 2575 or e-mail: chris@millwardconsultants.com