Marketing Innovation in China Enterprises under Global Economic Environment

Marketing Innovation in China Enterprises under Global Economic
Environment
LIU Cuipingi, ZHANG Yuanyuanii
School of Business Management, Shandong University of Finance,Jinan, P.R. China, 250014
Abstract Economic globalization is an inevitable trend. Enterprises must keep innovating their
marketing in order to survive and develop under such a global competitive environment. This paper
focuses on Chinese enterprises’ marketing innovation in terms of marketing conception, product, market
and marketing method, based on clarifying the connotation of marketing innovation. The purpose is to
help improve the competitiveness of Chinese enterprises facing the condition of economic globalization.
Key words Globalization Chinese Enterprises Marketing Innovation
1 Introduction
Economic globalization is an inevitable trend with the rapid development of science and technology. It
means the boundaries that formerly confine the economic activities between regions and countries have
been eliminated, and that enterprises are faced with a global competitive market. Thus enterprises’
competitiveness concerns not only enterprises’ fate, but also that of the country. In this situation, the
enterprise that can continuously innovate their marketing will be in an advantageous position. Marketing
innovation relates to the survival and development of enterprises, and it is essential for enterprises to
improve their core competence.
The precondition for enterprises to innovate their marketing is to accurately master the connotation of
marketing innovation.
The word “innovation” was first put forward in Economic Development Theories by Joseph A.
Schumpeter in 1912, who considers innovation as the new combination of factors of production and
shop conditions. Here innovation mainly includes five following situations: first, a new product is
invented or a new attribute of the original product is found; second, a new way or method of production
is adopted; third, a new market is exploited (that means a market that a manufacture sector of a country
never entered no matter if it exists before); forth, a new supply source of a kind of material or
work-in-process is found; fifth, a new enterprise structure is used. Here we can see that innovation in
economic sense mainly refers to marketing innovation, which not only explains the form and ways of
innovation, but also shows the content of marketing, like marketing conception, market, product and
marketing organization.
Afterwards, Peter F. Drucker points out those innovation activities are activities that make manpower
and material more productive. Any method that can increase present material wealth and create potential
can be called innovation. He also thinks that the purpose of enterprises’ activities is to create customers.
Therefore enterprises have two fundamental functions: marketing and innovation. And he gave a more
profound narration of the execution, purpose and result of marketing innovation.
To sum up, enterprise marketing innovation can be defined as “the process during which enterprises
pursue change or breakthrough in one or several aspects of marketing elements by combining their
resources and management based on the change of marketing environment”. Invention is not imperative
in this process. If the marketing environment can be adjusted to, the material and spiritual demand of
customers can be better met, enterprise’s competitiveness can be improved, and all these can be attained
legally and reasonably, we can call this type of marketing innovation a successful one.
Although foreign experts like Peter F. Drucker and Joseph A. Schumpeter have made excellent
i
Liu Cuiping, female, 57, professor. Place of work: School of Business Management, Shandong University of
Finance. Address: No.40 Shungeng Rd., Jinan, P.R.China. Zip: 250014. Tel: +86-531-82911259
ii
Zhang Yuanyuan, female, 27, teaching assistant. . Place of work: School of Business Management, Shandong
University of Finance. Address: No.40 Shungeng Rd., Jinan, P.R.China. Zip: 250014
407
explanation, which offered us the foundation and ways of thinking of marketing innovation, they have
not made specific study as to how enterprises in various countries should implement marketing
innovation. It is expected that in this paper the status-quo of Chinese enterprises and foreign experts’
viewpoints and theories can be combined to improve the competitiveness of these enterprises through
marketing innovation, faced with economic globalization, market globalization and increasing
competition.
A growing number of enterprises have been aware of the importance of marketing innovation as market
competition picks up in recent years. Meanwhile academia has begun the study and discussion of
marketing innovation. In particular, from 1990s some scholars published their findings, with high-level
ones among them. But most of them mainly focus on the connotation of marketing innovation, the
necessity of marketing innovation, the confinement factors to enterprise innovation and the principles of
marketing innovation. Few give a prescription as to how Chinese enterprises should innovate their
marketing under the condition of economic globalization environment. Some foreign experts like
2 The Main Content of Chinese Enterprises’ Marketing Innovation
Although many aspects are involved in enterprises’ marketing innovation to face the challenge of
economic globalization, the following four innovations are most important: management conception
innovation, market innovation, product innovation and marketing method innovation.
2.1 Management conception innovation
Conception innovation is the first thing enterprises should do to innovate their marketing. Besides the
social marketing conception that takes into consideration of the enterprise, consumer and the society,
Chinese enterprises should also establish newest management conception that is compatible with the
condition of economic globalization. Three of them merit further attention.
The first management conception is global marketing conception. Economic globalization means
resources should be allocated in the whole world and social production should be based on global
division of labor. Thus many enterprises expand their operations beyond their host countries to find new
opportunities. This indicates that the market that enterprises are faced is a broad market full of potential
and it is also a more complicated one with fierce competition. Therefore, enterprises should establish
global marketing conception in order to adjust their marketing strategy and tactics that formerly fit only
domestic market to meet the demand of global market.
In fact, many big MNCs have marketed globally. Coca-cola is a good case in point. It has become a
global company headquartered in U.S.A. with dozens of production factories around the world and
markets in more than 100 countries. Airbus is no longer a French company but a European one. Haier, a
Chinese company the produce home appliances, has been aware of this very early. Their slogan is to
internationalize Haier and be international Haier. Haier has presence in many countries both by
exporting immensely and building foreign factories. It is reported that Haier made the first step in
America where intellectual economy advances most quickly and then set up its design center, marketing
center and production center in America. Then this strategy is duplicated in other parts of the world.
The second one is intellectual marketing conception. Intelligence will be the most important capital that
determines the future competitiveness of the enterprise with the coming of intellectual economy.
Intellectual strength is the key strength in an age of intellectual economy. The total asset on the balance
sheet of Microsoft established by Bill Gates is only 4% of that of GM, but the former one’s market
quadruples the latter’s, because software produced by Microsoft is typical in an intellectual economy
and autos produced by GM is typical in industrial economy. The core of intellectual marketing
conception is knowledge, information and intelligence. The key is to capture and utilize market
information, develop and produce hi-tech products, and select and adopt modern marketing methods.
Instead of competing with experience, enterprises should compete with knowledge and intelligence.
The third one is green marketing conception. It is an improved conception on the foundation of social
marketing conception. Its emergence is inevitable. First, the concept of sustainable growth is put
forward since 1970s and many countries established sustainable growth strategy. The implementation of
sustainable growth requests enterprises to combine their marketing activities with natural environment
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and social development in order to make them suitable for the development of the environment. That is,
sustainable development strategy asks for green marketing. Second, people are more conscious of
environmental protection and self-protection with the development of science and technology and the
increase of people’s consumption level. When selecting goods, people pay attention not only to the
performance and quality of the product but also to its impact on the environment and their health.
They’d rather spend more on those green products that are free of chemical pollution. That is,
consumers who favor green consumption ask enterprises to establish green marketing conception and
develop green products. Third, rules and regulations around the world tend to protect consumer’s rights
and ecological environment and any acts that may damage consumers’ rights and ecological
environment will be punished. This also requests enterprises to establish green marketing conception.
Green marketing conception emphasizes that enterprises should save resources and protect environment
as well as develop green products in their marketing activities in order to reduce and eliminate harm to
the environment and achieve sustainable growth.
2.2 Market Innovation
Market means demand in marketing sense. It is both the start point and the end point for the production
and sales of enterprises. All activities should center on market. As it turns to buyer’s market, competition
among enterprises sharpened. The question is, should they compete in existent market or find unmet
potential demand or even create a new demand. Wise entrepreneur will look at new market, i.e. market
innovation. Market innovation not only means entrance into different segment markets, but also
penetration and expansion of new markets, which mainly refer to new inter-region market, new
specialized market, and new group market. Based on the status-quo of Chinese enterprises and both
domestic and foreign market environment, the following measures can be taken.
To begin with, market segmentation should be used to find new market demand. The globalization of
world economy and the disappearance of country boundary between markets provide enterprises’ market
innovation a broad market space. Whereas compared with the complexity and changeability of world
market demand, marketing capability of an enterprise is limited. Therefore enterprises must segment the
whole market to find the ones that they can best utilize their strength and potential and develop
corresponding products and services. Some Chinese enterprises thus effectively have penetrated into
rural, grey-hair and African market where consumption level is relatively low and have achieved quick
development.
Besides, enterprises should utilize the spatial and temporal difference in consumers’ demand and transfer
product to new market. Generally speaking, the demand of one product in different regions and
countries varies dramatically and the time and place the product is needed also varies since the
economic development level and consumption conception in different countries is not the same.
Therefore, product in its maturity or decline phase in local market can be introduced into other market or
abroad with or without change and its sales and enterprise profit will grow again. This is also an
effective way to rejuvenate an old product through extending product life cycle to have more profit
given that currently science and technology advance so rapidly and products are frequently upgraded.
Last but not least, new demand should be created since consumers have various and changing demand.
People’s consumption has extended beyond physical matters like food, clothing and shelter to spiritual
and cultural consumption as people get richer and have new consumption conception. It is estimated that
tourism will be the pillar industry in 21st century since more and more people will travel and
correspondingly spend money with more money people have and the betterment of transportation. It is
also estimated that China will be a key tourism consumption country in 21st century, which is testified
by the people’s enthusiasm towards tourism after the two main holidays are prolonged. Therefore,
related enterprises should devote themselves to this new market. China is an ancient country with long
history, glorious culture and many nationalities. But for a long time we have not attach much importance
to the development of cultural industry and expansion of cultural market. Some places only take it as a
decoration to economic development. In fact, cultural market has great value potential. Hollywood,
Disneyland and Splendid China miniature in Shenzhen, China are successful examples. Therefore
related enterprises should pay attention to the expansion and development of cultural market.
2.3 Product Innovation
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The fact that product life cycle is continuously shortened for the fierce competition at home and abroad,
the variation of consumers’ demand and the rapid development and application of science and
technology requests that enterprises develop new products. As the proverb goes “The Company whose
new products are constantly launched will survive and develop”. Products must be innovated to make an
enterprise survive and develop, so product innovation is the core of enterprises’ marketing innovation.
Product innovation should be based on the whole product, which includes the physical product
innovation as well as invisible service innovation.
Physical product innovation is also called hardware innovation. It can be implemented from the
following aspects. First, product quality and performance innovation, since they are the basis on which
consumers make their purchasing decision. It means enterprises should increase the reliability,
convenience, performance and environment-friendliness of products to adapt to consumers’ various
demands and achieve a competitive edge over rival’s product. Second, product appearance innovation.
Given the same performance, consumers mainly select product based on its appearance like the look,
color, pattern, package and brand. It asks enterprises to continuously launch new category, new pattern
and new package to make the product fashionable and artistic. Package in particular should match the
attribute and value of the product, and over packaging and under packaging should both be avoided.
Packaging material should be chosen to help to protect the environment, save energy and facilitate
recycling. In terms of brand, its design and application should be updated based on current development
and competition. And its popularity should be enhanced to be the future domestic or world brand.
Meanwhile hardware innovation should match the global trend, which means products should have
attributes like multi-functional, highly efficient, safe, comfortable, and miniaturized, energy-saving and
environmental friendly.
Invisible service innovation is also called software innovation. Service is an additional benefit
accompanied with the product, and it is an important part of the whole product. Consumers will find the
best product as well as best service when choosing products. Service therefore is vital for enterprises to
capture customers and expand market, and service quality directly connects with the result of
enterprises’ marketing. Standards used to measure service quality include service attitude, reputation,
efficiency, timeliness and complete and advanced service fixtures. Enterprises should make an in-depth
research on customers’ demand for service and future trend in order to improve the quality of staff,
improve service condition and fixtures, adjust service strategy, establish new service standard, launch
new service, and offer some special service and thus improve enterprises’ competitiveness.
2.4 Marketing Method Innovation
Enterprises should learn advanced marketing method and experience in the world and use them as
references. During their marketing practices they should also continuously create and use new marketing
method based on the changing marketing environment and their strength. These are the main content
and the key of enterprises’ marketing innovation. Some new marketing methods that can be used by
enterprises at present are flexible marketing, internet marketing, relationship marketing and zero-defect
marketing.
Flexible marketing is a kind of marketing method that is adjusted constantly to meet individual demand.
Enterprises adopting this marketing method no longer implement centralized management that is highly
standardized and uniform and no longer produce only one standard product on one assembly line. They
will set up computerized system that can produce various products that varies in terms of appearance,
pattern, specification and color on one assembly line to meet the individual demand of various market
segmentation.
Internet marketing is a kind of marketing method that enterprises use network to market products. It is
composed of target marketing, direct marketing, customer-oriented marketing and distance or global
marketing. The characteristics are: it is not limited by space or time; marketing cost is low; marketing
levels are minimized; obstacles to market expansion are few. Marketing activities that can be currently
carried out on the internet include: publishing online advertisement to transmit market information;
making market research to master economic information and market information; setting up e-business
to offer sales service; strengthening relationship with suppliers and sellers to find ideal partner;
communicating closely with customers to cultivate stable customer group. It is forecasted that internet
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shopping will be the major way people buy things in 21st century. Therefore, faced with economic
globalization, enterprises should make full use of modern network technology to set up websites in order
to expand into world market.
Relationship marketing refers to building and maintaining long-term good relationships with customers
and other publics to help marketing. It is believed that enterprises’ marketing is a process that enterprises
interact with consumers, competitors, suppliers, government agencies, social public and staff, and good
relationships with them, customers in particular, is core of enterprises’ marketing. Satisfied customers
are vital for the success of any enterprise. Compared with traditional marketing, relationship marketing
pays more attention to the long-term interest and the impact of those non-economic factors on
enterprises’ marketing. Every completion of a transaction is regarded as the setup of a new relationship
or the improvement of an existent relationship. The final result of relationship marketing will bring an
enterprise a unique marketing network of capital relationship which also brings the enterprise a good
marketing environment and a stable market. Relationship marketing will be a new marketing method in
21st century, so those forward-looking enterprises should appropriately utilize it.
Zero-defect marketing means enterprises make customers satisfied and no pity during the whole
marketing process. It means no defect in product design and production which ensures product quality,
no defect in selling process which indicates that customers find what they really want and no defect in
service which ensures that customers are satisfied. Zero-defect marketing helps to build and maintain
good relationship with customers, set up good image and reputation and enhance enterprises’
competence. It really is what customers want from enterprises, and it should be enterprises’ target
though many of them can not make it now.
Besides the above-mentioned innovations of marketing method, there are integrated marketing, culture
marketing, and event marketing etc.
3 Conclusion
We can see here that marketing innovation is an important method for enterprises to face the challenge
of international competition under the condition of economic globalization, and is vital to their survival
and development. Marketing innovation involves all aspects of marketing activities like marketing
conception, product, market, sales, service, management and marketing method. In a certain sense,
innovation is the soul and life of enterprises’ marketing. If there is no innovation, there is no marketing,
let alone the survival and development of enterprises.
The following points should be noticed for enterprises to succeed in their marketing innovation:
First, marketing innovation should be oriented towards the market, i.e. any aspect of marketing
innovation should be centered on the demand of domestic and foreign customer and make customers
satisfied. A certain product and technology will be outdated and updated with the development of society,
but customers’ demand will exist forever.
Second, factors of marketing innovation should be integrated. Marketing innovation is a process that
restructures various factors in enterprises. Innovation in a certain marketing level or a certain marketing
process is hard to succeed without matching other marketing levels or processes. In essence marketing
innovation is the innovation of the combination of various marketing factors.
Third, marketing innovation should be both feasible and workable. Certain internal and external
conditions should be met to implement marketing innovation. And any innovation that is not feasible
will end in failure. Therefore, any innovation should be based on the analysis of macro and micro
environment and the enterprise’s status. Meanwhile innovation scheme should be workable, easy to
implement, different from that of competitor’s and can be easily accepted by customers.
Forth, international standards and practices should be taken into consideration during innovation process.
Faced with the condition of economic globalization, enterprises should study and apply international
standards and practices during their marketing innovation process. On the one hand, innovation made on
the basis of international standards and practices can help enterprises protect their legal rights with
international practices; on the other hand, marketing innovation in enterprises can be regulated.
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