Chinese shoppers are renowned for their price sensitivity and intense negotiations. I spend a lot of time there, yet I’m constantly surprised at the pace of change.

Big changes are afoot. Consumer behaviour have caught up to the West in a matter of years and blown past us.

There has been an explosion of brand and luxury shopping in the past few years to coincide with the massive growth of electronic commerce. .

We’ve all seen the playbook. 

Price Value And Brand

Much maligned telecommunications manufacturer Huawei is the latest example. In recent years they have surpassed Ericsson and Nokia to become the world’s biggest telecom equipment supplier. Their phones have gone from the cheapest to compete with Apple and Samsung.

Consumerism starts with price, then moves to value and then brand. But selling value and brand are not as easy as it sounds.

Competing on price is simple (if you get the production right). Bang out a product and just suck in the small margins. But as you move along the value chain, different things happen.

  1. You need to stand out (this will happen automatically if you are selling on price)
  2. You need to be marketing (also not so tough when you sell on price)
  3. You need to be clear about the ‘value’ (value is defined around price when you are the cheapest)
  4. You need to be clear about the service (this is where it falls apart when you sell on price)
  5. You need to be clear about your positioning (when selling on price, you have an easily replicated position).
  6. You need to be clear about your purpose

Selling on price gets you as far as the third step. If you want to move away from price then you will fail at step 1, because you no longer stand out.

Each of these “needs” require a cohesive strategy, but where do you start?

So reverse the order

Start with Purpose and move back up the list. That’s right, start at the end.

Standing out will be an outcome, not a strategy.

When you are selling on price, purpose seems as far from reality one can imagine, but it will become your North Star.

  1. Purpose – be clear on your organisation’s purpose in this world (e.g. Google – make the world’s information freely available to all)
  2. Be clear about the positioning – How do you position the company in the customer’s mind around your purpose.
  3. Service proposition – How we will we execute our positioning around our purpose.
  4. Value – What value will we provide within the service around our positioning around our purpose.
  5. Marketing – How will we promote the value within the service around our positioning around our purpose.
  6. Stand out – This becomes an outcome rather than a step in the process.

The Chinese are moving from (cheap) price strategies to brand, as are the consumers. You should too, because your consumers probably have already moved.

#purpose #strategy #why