Both China and India are fast developing into consumer superpower and a large part of the consumers are the youth of both nations. The products mostly bought by this section of consumers from both nations include mainly products purchased for the “Passion” and “Vitality” values i.e. values of thrill and not price based values. Today’s young consumers from these nations focus their expenditure on such consumer products as smart phones, tablets, laptops, clothes, skin care products etc. as can be seen in the following Chinese consumer survey result.
Figure 1 Spending Preferences
Another area of consumption is the fast food market, with international joints opening rapidly across both nations. With 65% of the Indian population under the age of 35yrs more and younger professionals are consuming fast food and takeaway meals; 40% of those who eat out in Mumbai are young adults .
Despite consuming for the thrill value, young consumers everywhere make most purchasing decisions keeping in mind value for money e.g. opting for Café Coffee Day over Barista or McDonald’s over other fast food joints are decision made on this very principle . Nonetheless, the youngsters of both nations are bombarded with overabundance of brands today, consequently reducing their attention to each separately. Thus, to truly make a mark, marketers need to move beyond cash registers and strike a chord with the clientele.
The biggest step towards this goal made by the international companies has been the small but significant alteration done to the products to make them more culture specific to these markets. In the western world, companies like the fast food chains have a set in stone menu- uniformly served everywhere, e.g. in the rest of the world, McDonald’s strictly holds 70% original 30% local menu. In India however, McDonald’s reversed that making a 30% original 70% local menu (Gordon, et.al., 2014).And this is what solidified the company’s position in India while the others faltered. McDonald’s understood that in a predominantly vegetarian nation it’s speciality McRib and Big Mac will not sell, in fact they will end up hurting religious sentiment of 80% of the country’s population i.e. the Hindus who believe consuming beef is a sin. Thus came in the Aloo tikki burgers and a menu based on potatoes, cottage cheese and chicken.
Similarly, Kraft foods adapted the massively famous Oreos to suit the Chinese palate- making them less sweet and bringing flavours like green tea . In fact making such changes have helped these companies perform spectacularly well in these countries e.g. McDonald’s and KFC in China and India. Not reacting at all to the local needs will hurt any international company e.g. ebay which held on to its eastern market based strict card payment policies in China too, lost its market to Taobao which offered cash on delivery option.
The Chinese population was hesitant to make electronic card payment due to various reasons like lack of cards; distrust etc. ebay failed to react to this local demand and thus, couldn’t succeed .
Price is also an important factor; Coca-cola was facing loses in India when it tried selling the same sized ad priced bottles as it did in the US, it only started recapturing the market after it reacted to the spending ability of the common man and started selling smaller bottles for lesser prices(Gordon, et.al., 2014).
Not incorporating any of the local tastes and demands will make a company seem alien while localizing too much will make a company lose its novelty and seem like an expensive version of something local- both of which will lead to a company’s failure. Thus international companies need to tweak their western market based strategies accordingly to strike a balance between both foreign and local in the Indian and Chinese markets.
US companies which will be flexible enough to do so will succeed in both such markets as we have already seen with the fast food chains like McDonald’s, KFC, Pizza Hut etc. Both these nations have tremendous potential and with the onset of e-commerce in them, US companies can tap onto that potential easily, but to do so they will need to assess the local culture and values and act accordingly.
References
Assae, H. (2005). Catch them if you can. In H. Assae, Consumer Behavior A Strategic Approach (pp. 605-612). lDreamtech Press.
Bagri, N. T. (2014, January 8). A growing taste for US fast food in India. Cnbc.com Retrieved from: http://www.cnbc.com/id/101321608#.
Gordon, A., Deshmukh, A., Gupta, D., Hung, S., & Baek, C. W. (2014, December 14). McDonald's adapts to India. Thunderbird.edu Retrieved from: http://www.thunderbird.edu/blog/faculty/washburn/2010/12/14/mcdonalds-adapts-to-india
Internshipschina.com. (n.d.). Why Western Marketing Strategies Fail in China. Internshipschina.com Retrieved from: http://www.internshipschina.com/community/chinainsights2/55-china-insights/634-why-western-marketing-strategies-fail-in-china#.VIhWXDGUdqA
