1. REPORT INTRODUCTIONCompanies around the world are entering a new era of global competition.
In this fast-changing environment,effective business-to-business and business-to-customer relationships are essential to the survival andsuccess of an international enterprise. However, building and maintaining profitable relationships, raisingbrand awareness in huge overseas markets, and earning customer loyalty is becoming increasingly difficult.This research report will explore a number of global marketing perspectives for the Danish furniture andhome interior brand House Doctor and consider potential strategies for how the brand can successfullyincrease its presence on the Chinese market. The primary objective of the report is to analyze currentconditions in China to determine how House Doctor can strengthen its positioning within this market.House Doctor was established in 2002 and operates on an international scale in many European countries aswell as in America and Asia. House Doctor is a Scandinavian furniture and home interior brand thatmanufactures the majority of its products in China.
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The brand’s vision is specific and focused: “Together wewill create an inspiring lifestyle universe.” Its mission is to continue to extend its vision to new markets andadvance its presence globally. House Doctor values honesty, passion, and innovation (Rhétier, 2017).
Thiscan be observed in the way the company communicates these values through the House Doctor brand, itsproducts, services, and attitudes towards its customers.2. DELIMITATIONSThe research report is limited to the analysis of China to aid House Doctor in determining the possibleopportunities for further international expansion of the company among Eastern countries. There will be afocus on broader conditions in China (such as government, demographics, culture, and politics) and a morespecific focus on conditions on the Chinese market relating to furniture and home interior.The BMC model is not utilized, as the primary purpose of the report is to not to conduct an in-depth analysisof House Doctor and the company’s innerworkings, but rather to identify effective marketing strategies thecompany might be able to implement internationally on a new or unfamiliar market, in this case China.
Furthermore, budget data about costs and revenues are not publicly available, therefore the model cannot beused to an acceptable degree of accuracy.The data in the research report is mostly qualitative, as there is limited internal information made availableabout the brand. The report does not focus in depth on listing definitive competitors to House Doctor on theChinese market, as the marketing strategies proposed will be based on the company’s unique selling pointsthat already distinguish it from many other companies on the market that have their basis in China. However,the report does include research on competitors in terms of consumer behavior.3. TARGET MARKETDefining House Doctor’s customer segmentation in China is based out of understanding the consumer’sneeds, wants, demands, and values.3.
a. DEFINING THE CUSTOMER SEGMENTAccording to an interview conducted with House Doctor’s digital and ecommerce manager Mickael Rhétier,House Doctor considers the consumers of its products in China to be both women and men aged 25-50 whoprefer minimalistic, simple, yet high-end Scandinavian style (Rhétier, 2017). The brand is positioned toattract younger people who have just moved away from home and are living for the first time on their own,as well as slightly older individuals who might simply be looking to redecorate or renew their place. HouseDoctor offers a diverse range of high-quality products that could prove attractive to an even broaderspectrum of Chinese consumers upon further expansion into the market. 33.b.
CUSTOMER SEGMENT SIZESocial media statistics gathered under the research period indicate that Chinese users of social media consistof 43% women and 57% men. The age group 19-25 make up 19% of all users, while the age group 26-30makes up 30%, 31-35 makes up 21%, 36-40 makes up 12% and 40+ is 18%. Most Chinese consumption ofhigh-quality, European-style furniture stems from bigger cities, such as Beijing, Shanghai, Shenzhen, andother urban areas with high per-capita income and strong purchasing power (Kemp, 2014).According to an overview of the government’s 13th Five-Year Plan, it’s estimated that 60% of the Chinesepopulation will live in urban areas by 2020, meaning that more than 100 million additional people willbecome urban consumers and thus have better access to brick-and-mortar boutiques, shops, and fairs. Thesenew consumers living near or in large cities will also be exposed more frequently to different forms of mediaand advertising, representing a great opportunity for House Doctor to market its products to this growingsection of the target market.In 2015, there was an estimated number of Chinese online networking users that reached 650,000,000, whichis twice the total population of the US. In 2014 alone, the volume of social sharing in China went up by morethan 65%, indicating an overwhelming growth pattern in relation to social media interest among Chineseconsumers.
Furthermore, the average Chinese adult spends up to 90 minutes a day on social media sites. Thisfigure is almost double for individuals under the age of 25. 400 million people in China use mobile devicesto access social networks (Spencer, 2015).3.c. CUSTOMER BEHAVIORDue to accelerated advancements in technology, the evolution of consumer behavior nowadays is morepointed than ever. Increasing interest in foreign market goods, government regulation improvements, andsocial media integration in people’s daily lives play a significant role in this rapid change. While overallliving conditions are still improving in China, there are more and more people willing to invest in qualityhome furnishings and well-designed home decoration.
In 2016, the total sales of furniture manufacturingenterprises grew 8.6%, while total profits grew 7.9% (Liang, 2017).Modern Chinese consumers have a penchant for minimalistic and simple styling in their furniture and homedecor, abstaining from too many details or colors. This is in stark contrast to historical / traditional Chineseinterior design trends, which were highly colorful and detailed. This is the reason why customers usuallyseek Western style products, especially items originating from the Scandinavian market.
When moving into anew home, there is a trend in China for the individual to refurnish the home completely, meaning that old orexisting furniture is rarely kept. The individual is attempting to start a new chapter in their lives by creating atotally new atmosphere. In China, up to 40% of all new builds purchased in desirable, high-income areas areoccupied upon completion. The remaining 60% are kept empty and regarded as pure investment propertiesby the owners, who often make no attempts to rent them out (Wei Wang, 2016).In past decades, product function and price were the principal factors Chinese consumers cared about.Nowadays, consumers have become more intelligent and more selective about their spending and usuallytake a variety of criteria into consideration before deciding to make purchase. The modern Chinese consumeris trading up, from mass market products to premium products, as living standards improve and people havethe ability to focus more on high quality and good-taste items (Zipser, et al. 2016).
A lot of the consumer’sattention is based on personal preference and the value of the item, not necessarily the popularity of thebrand. However, the emotional connection with the brand or product being considered is often extremelyrelevantChina is a highly relationship-based society. To be successful in this market, House Doctor will have to builda strong relationship with buyers and research diligently to establish the needs and expectations of eachcustomer segment. Chinese consumers want to feel special and indispensable. They want to be able toexperience this through their product choices. Brand awareness and sophisticated advertising are beginningto play a major role in attracting Chinese consumers.
4In China, social recommendations often serve to be the most powerful influence on the consumer’s buyingprocess, over concentrated marketing efforts and traditional methods of advertisement. The individual spendsa lot of time researching the product before purchasing it. Reviews from other consumers play a critical roleas well. Buyers depend highly on product recommendations from online reviewers, and they are oftenwilling to spend large amounts of time in the comments section of an online purchase or review page, wherethey have the opportunity to find out more about the product or service from other people’s points of view(Spelich, 2017).The price a customer in China is willing to pay for a product has increased in recent years, especially if theproduct is foreign. As more possibilities for business and commerce present themselves on the global market,Chinese consumers increasingly seek out higher quality products and services. A large majority of them caremore about the shopping experience as a whole and the availability of an item than they do about the item’sprice (Youku, 2017).
Buyers in China are willing to part with some extra money to ensure that they aresatisfied with their purchase.As e-commerce opportunities continue to expand in China, consumer companies race against each other tocreate new ways to integrate online and offline marketing elements. Designing meaningful touch points thatmight allow for a deeper level of engagement with consumers could help House Doctor attract members ofthis new, international market, proving the company’s interest and willingness to invest in the wants andneeds of Chinese buyers.E-commerce appears to have taken off in China. There are more than 700 million monthly active socialmedia users, and 300 million of them shop online on sites such as TaoBao, Tmall, or Xiao Hong Shu (WeiWang, 2016).
Although e-commerce is growing, traditional shopping in China is far from dead. Shopping inmalls and standalone stores is still very popular, especially in non-urban areas, and many people even makethe trip to showrooms in-person to buy luxury goods. Shopping makes the modern Chinese consumer reallyhappy (Spelich, 2017).