Some people say that New York is the center of the world
thAnd that 5 Avenue is the center of New York. Why do they say this?
Obviously New York is an important financial center, but what
thabout 5 Avenue? It’s not about the stock market, it’s about marketing.
thTake a look at the rental price for a shop on 5 Avenue. Over
US$10K a month per square meter. This is four times the price of the most expensive street in Los Angeles. Why do these shops pay such extreme rents? Why don’t they simply put their
shops on another street? To make more sales in the shop?
thNo. To make more sales worldwide. Having a presence on 5
Avenue is an advertisement. It’s a billboard to the world proving that it is an important top brand. It’s all about marketing.
thNew York is about marketing, 5 Avenue is about marketing. I
think that’s why I was invited to come and speak today.
Let’s talk about Wuhan for a moment. Just as New York has a
history of commerce and diversification, so does Wuhan. With it’s geographic advantage of the river, roads and rail, it has long been an important trading port. In fact 100 years ago 大汉口
was as important as 大上海. But over the past 100 years the
Eastern coast of China has developed more quickly than Central China has. Our discussion today is on one way that Central China can catch up with Eastern China, and China to catch up with the West.
A big part of the American economy is marketing driven. Just as America has stimulated and met demand for products and services through marketing, so can China. Let’s talk about the
concept of marketing in China vs. that in the West.
I have had association with many companies in China. In most of them the Marketing Department (市场部) is actually the sales
department. There is no difference.
Marketing = Sales is the same as saying Marketing = Nothing. In the West, Marketing and Sales are related, but separate functions, and they are different departments in a company. I will briefly describe both marketing and professional sales from a Western point of view.
First Marketing. Perhaps you have heard of the four P’s of marketing. They are Product, Price, Place, and Promotion. This is called the Marketing Mix. A complete marketing plan must have all four components. Let me explain them in more detail:
Is there a market for your product? Is the market growing or shrinking? Is the product new or established? Will it need lots of promotion and explanation? Does the product have lots of competition? Is it the best or the cheapest? Does the product have a unique selling proposition (USP) - something that makes it truly different, better and more useful than the competition?
Will you sell at a premium price, or will you undercut competitors? Will the price be influenced by factors outside your control? If so, how will you cope? Does your whole business depend on the success of one product, or on lots of different products? Can you add value to your product, allowing you to increase your price and margin?
Where will people buy your product or service? What other companies will you rely on? How can you protect your business from potential difficulties with distributors?
How can you reach your target audiences cost-effectively? What type of promotion will work best? Will you place advertising in specialist press or send out targeted direct mail? What return on your investment will you need to justify your spending? What are your communication objectives - to raise awareness and establish credibility? To sell directly? This is the Marketing Mix that every successful company must have. In a mature market (and the China market is becoming more mature every day) it is not possible to succeed long-term without good planning of all of these factors.
What I have just told you, you can learn in any MBA program. I have learned over the past 20 years in the business field, however, keys to making the Marketing Mix even more successful. How to do it? By changing the P’s to C’s. Take a
Product = Customer Wants and Needs
You can't develop products and then try to sell them to a mass market. You have to study consumer wants and needs and then attract consumers one by one with something each one wants. You have to find out what people want and then "build" it for them, their way.
Price = Cost to satisfy
Rather than thinking of price in terms of your company’s
income, think of it in terms of a cost to the consumer. And you have to realize that price is only one part of the cost to satisfy. If you sell hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of feeling bad from eating junk food, etc. The price you choose will be more correct if you consider all factors, from the point of view of
Place = Convenience to buy
You must think of convenience to buy instead of place. You have to know how each subset of the market prefers to buy –
physical shopping, on the Internet, from a catalogue, using credit cards, etc. Dell Computers became very, very successful by avoiding the standard wholesale/retail channels and selling directly to the customer through the Internet.
Promotion = Communication
Think about communication instead of promotion. Promotion is manipulative – it’s from the seller. Communication requires a
give and take between the buyer and seller. Be creative and you can make any advertising "interactive." Use phone numbers, your web site address, etc to help here. And listen to your customers though surveys and focus groups.
I think you can see the difference between the P’s and the C’s. The difference is the perspective. One is from the company’s point of view and the other from the customer’s point of view. In today’s competitive world, a company that focuses on the
customer will move further, faster.
This leads very well into the topic of professional selling. Why? Because the difference between bad selling and professional selling is what I was just talking about – focus on the customer.
How many of you have ever had a salesman come into your office, pull out a product brochure and start talking and talking about why his product is better than other products? Who wants to sit and listen about why some person or product or company is great? Who cares?
Let me ask you this. Can you think of a conversation that you had yesterday that you really enjoyed? If you can, think about it now. Who did most of the talking? Most people enjoy conversations in which they do the talking, because the conversation is then about something that interests them. Did you have any conversations yesterday that you did not enjoy?
There is a good chance that someone else did most of the talking in those conversations.
We are all sales people. If you are the president of a company, then you are a sales person. You are selling the company every day to shareholders, the media, customers, investors. So understanding professional selling is important for you, and of course, also important for helping your sales team to do a better job.
The number one key to professional selling is listening to the customer and understanding his wants and needs. Find out what his needs are, then fill them with your product or service. So first understand the needs, then speak in terms of benefit to the customer, not in terms of features of the product.
For example, a copy machine salesman might say this to a customer: “Our XX3000 copy machine has all the functions you need. It can copy, fold and staple your papers and even make coffee.”
But if that salesman had done his job right, he would first have a conversation with the customer in which he would learn what the customer’s specific need was. Perhaps this customer doesn’t care about folding, stapling and making coffee. Maybe
he’s just worried about his copy machine breaking down all the time so his staff cannot use it. If that’s the case, then this would be a much better approach:
“The 99.9% uptime guarantee on the XX3000 means that the machine is ready to use when your staff need it. Think of how much better you can serve your clients and how cost efficient your staff will be when they no longer waste time waiting for the copy machine to be fixed.”
In the first approach, the salesman told about features of the product. In the second he discovered a customer need and filled it with a benefit.
When I listen to a speech, I hope to learn at least one new thing that I can do to improve my business. I hope that I have provided some useful information today. I tried to target my remarks to the audience. When I began to prepare my speech, I called Mr. Fu and asked him who the audience would be. He said that they would be senior managers and marketing managers in commercial and industrial companies. That’s all I
knew about the audience. Before speaking today, I did not have time to meet each of you individually to understand what you would like to learn from the meeting today. Even if I did, each of you would have a different need, and I would not be able to fill this need in a speech. Do you understand what I am saying? A seminar like this, a speech like this is form of communication. It can be interesting and we can learn something from it. However, it is certainly not the best means of communication. I could learn much more from you and you from me if we could communicate individually for half an hour.
A sales call that is done wrong is like this speech. I say many things and they may or may not be of any use to you. A sales call that is done correctly is very different.
I will not go any further on this topic. I could spend several hours talking about it. I just hope that you understand from this that sales and marketing are two very, very different disciplines, and that they both must be done from the perspective of the customer if they are to be highly successful in the long term.
Perhaps Mr. Fu had macro-economics in mind when he invited me to speak. But I don’t believe that this is how the world works. For 大汉口to develop as strong a market as 大上海, for
China to develop as strong a market as the United States, it must begin one person at a time and one company at a time.
Last time I visited Wuhan was to see the new development at Han Zhen Jie. It was very interesting to see how the developer has managed to maintain the 500-year-old wholesale culture on the street, while adding a modern consumer market for top brands. For those brands to succeed in Wuhan, however, they must look at the local market. They must truly understand their potential customers here to determine product and pricing points. The same is true of your businesses, whether product or service. Success in the local market can lead to success in China and success in the whole world, but each market must be studied carefully – one by one. We hope to sell thousands
and thousands of products to the world, but none is more important that the one product you are selling to one customer in one market today. That is where “business” truly takes place.