We Marketing Group

Executive Brief

This paper analyzes the situation of We Marketing Group, multinational advertising agencies, other local Chinese advertising agencies, and China’s advertising industry, using tools of environmental scanning, segmentation and target markets, product life cycle, marketing mix, SWOT analysis, competitive analysis, and branding analysis.

Considering all these factors, the paper brings forward the marketing problem of We Marketing Group is how should they grow in the future. Then it raises many detailed questions to further explain why this is really a marketing problem of the company. It suggests the company to make strategies plans.

Based on the analysis, the paper recommends We Marketing Group to penetrate the Chinese market and build the brand in the coming two to three years, to develop new kinds of service in the next three to five years, and to expand overseas in about ten years since now. Then it analyzes and explains the possibility and necessity of the company to adopt these marketing strategies in each stage, synthesizing all the information provided by the case and the analysis made in former parts.

Analysis

Environmental scanning

Segmentation and target markets

o    Of China’s advertising industry


o    Of We Marketing Group:
(1)    Chinese companies that want to go global
(2)    Multinationals in China that need to localize

Product Life Cycle (PLC)

Currently, the advertising industry in China is undergoing the growth stage. In general, the advertising market is to grow 23% annually over the next five years. Advertising expenditure doubled in the past 4 years, and will go on to increase. Specifically, more products and service are advertised. From traditional product categories like food, and clothing, to new product categories like health care products, to service like entertainment, telecommunications, and financing, more and more are being advertised. Besides traditional advertising media, new media such as the Internet, mobile, outdoor, focus media are developing fast. Also, advertisements are not limited in key cities and the developed southeastern region any longer, but have expanded to many secondary cities, towns, and countryside and west regions of China. More importantly, many foreign advertising agencies are entering China, and even more local agencies come into being, generating more competition and more need to differentiate and build market share. However, there is still enough space for every competitor, as China’s advertising turnover made up less than 1% of the GDP, compared to 3% in developed countries, where the advertising industry has come to the maturity stage.

Marketing Mix of We Marketing Group

SWOT analysis of We Marketing Group

Product-Market Growth Matrix of We Marketing Group

Competitive analysis

Branding needs of Chinese companies:

•    Want to shake off the image of low-cost manufacturer
•    Build own brands (independent)  for export (international influence, stand international competition)  increase price, increase competitiveness
•    Imitate brand names (lack of confidence, feel safer, not enough effort in branding)  cultivate own brand names
•    Not consistent, changing brand benefits periodically, inexperienced  aware of branding needs and brand image

Marketing Problem

The marketing problem of We Marketing Group is how should they grow in the future. The company has been developing pretty well so far, but can they continue to grow, and how? What environmental factors would influence their growth? How can they benefit from the positive influences of political/legal, economic/financial, social/cultural, and technological factors and reduce negative influences of them? How can they benefit most from the growing advertising industry? What segments should they target? Should they target all the segments or choose the most promising ones? What marketing mix is most suitable for them? What combination of service, pricing, distribution and promotion can bring most synergy effects? Should they penetrate the current market, develop new kinds of service, expand business into foreign countries, or diversify? Is their current positioning suitable for long-term development? What other branding efforts should they put into to build the brand, add brand equity and satisfy the market’s growing needs of professional advertising and branding? How can they stand out from the competition posed by multinational advertising agencies and other local advertising agencies? How would they best exert their strengths, take advantage of the opportunities, make up weaknesses, and avoid threats?

To grow fast and sound into the future, We Marketing Group needs to diagnose the situation comprehensively, consider these questions carefully, and finally make strategic plans. Based on these strategic plans, the management can bring forward specific tactics and execute them effectively.

Solution and Recommendation

Based on the analysis, I recommend We Marketing Group to penetrate the Chinese market and build the brand in the coming two to three years, to develop new kinds of service in the next three to five years, and to expand overseas in about ten years since now.

The advertising industry is growing exponentially on an unprecedented scale. Many Chinese companies have begun to see the importance of branding and professional advertising. The strong developing tendency of China’s economy also predicts it to be a lucrative market. Under this situation, it is possible for We Marketing Group to focus on the current Chinese market at the time being. There are also several factors making it necessary for the company to carry out the market penetration strategy during the incoming two to three years. First and most importantly, the newly established We Marketing Company has no history and adequate associations to draw brand awareness from. The company must develop from inside before extending and expanding toward outside. I suggest the company to spend at least two to three years to focus on building a strong brand, through strengthening the clear positioning and distinct value proposition, further differentiating from multinational and other local advertising agencies, adding brand equity, and creating favorable brand associations and experiences. Second, compared to multinational advertising agencies, We Marketing Group lacks global resources. This weakness limits the company’s growing speed. Third, the company has only established offices in key cities in east coast, the most developed area of China. It should further dig the potential of massive rural population, promising with less competition. However, these markets are highly diverse and fragmented. Although the founders of the company are seasoned advertising executives, they need efforts to train all the new employees to deeply understand the complex Chinese markets. Fourth, the company needs time to build distribution channels and establish favorable business relationships with advertising and marketing communication partners.

For the development of the second phase, I suggest product development. This stage will last three to five years. With the popularity of social trends such as the 24-hour society and wireless worlds, the perfection of market infrastructure, the development of supporting technologies, and the growth of We Marketing Group itself, the company can and should begin offer new kinds of service, such as e-commerce, wireless advertising, and network communities. This strategy is consistent with the company’s positioning: an integrated marketing communications company, offering integrated marketing communications service. Presenting professionalism and expertise, We Marketing Group would stand out from competition posed by multinational advertising agencies. At this stage, the company should continue the efforts of market penetration and branding itself, but the focus should be on product development. With continuous developing efforts, the company will build offices all over China, penetrating to secondary cities gradually. Already a strong brand, We Marketing Group will have more leveraging power, enjoy more competitiveness, and obtain more profits through charging a premium price and expanded business.

In about ten years’ time, the development of We Marketing Group will come into the third stage – market development. Benefiting from all former developing efforts, the company can expand into other foreign countries now. By this time, globalization would have developed into a higher phase, with more Chinese companies going abroad, more foreign companies coming to China, and more foreign companies establishing business relationships with China as a third party. The need for an integrated marketing communications company with both deep understanding of the complex Chinese markets and professional international practice will be more intense. We Marketing Group would then be able to provide service for companies all over the world, satisfying their diverse and specific needs. Not only going abroad is a good idea, it is also a necessity. Considering the current annual growth rate, China’s advertising industry might have gone into the maturity stage in ten years, with fierce competition and decreased profit margin. Although No. 1 in the field, the idea of We Marketing Group would be imitated by followers, making it difficult for the company to differentiate itself from competitors. Therefore, it is reasonable for We Marketing Group to expand broad at the third stage. Gradually it will combine all the efforts of market penetration, product development, market development, and diversification smartly while the company is becoming more and more mature.

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2 Comments (+add yours?)

  1. S
    Jan 13, 2011 @ 10:46:17

    One insightful paper. It just occurred to me that WMG has a branch in Shanghai. Was this school project or research findings at work?

    Reply

    • Yue
      Jan 13, 2011 @ 13:51:53

      Thanks for the comment. It’s school work for Cathy’s Marketing Management course.
      Planning to share more school papers and blogs for work.

      Reply

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