Introducting Brita to China Global Marketing

BRITA originated in a small town in Germany in 1966, by Heinz Hankammer, and is now the world market leader in water filtration products. The BRITA filtering water bottle is environmentally friendly and promotes healthy drinking habits, allowing one to consume filtered water from virtually anywhere.

Physical Characteristics
China is the world’s third largest country, after Russia and Canada. The surface area of China consists of 9.6 million square kilometers, with a coastline of 18,000 kilometers. Two thirds of the vast land of china is made up of rugged plateaus, foothills, and a vast array of mountains, including some of the world’s largest. One of the most prized physical characteristics in China’s topography is the formation of the Qinghai-Tibet Plateau, which is still one of the most important geological events over the last several million years. China’s terrain gradually descends from west to east like a staircase, the forth and highest step is the Qinghai-Tibet Plateau averaging more than 4,000 meters above sea level, it is also referred to as the roof of the world. On the Qinghai-Tibet Plateau stands the world’s highest peak and the main attribute of the Himalayas, Mount Oomolangma, also known as Mount Everest. China is also home to some of the world’s most compelling rivers such as the Yangtze, and Yellow River. The Yangtze River is the longest in China and the third longest in the world. The Yellow River follows suit making it the second longest in China, this river also carries sufficient emotional connection with the Chinese culture and is named the mother river of the Chinese people.

Population
China ranks comfortably the largest country in the world when measured by population. According to the most recent nationwide census taken in 2010, China has an impressive and growing population of 1,339,724,852. The current growth rate in China is 56% (World Population Review, 2012). Government restrictions on fertility rate have been set in place to control the number of children each family can acquire. The current fertility rate is 1.5 however there has been talk about increasing the fertility rate to 1.8. Age distribution is as follows, 16.60% of population ranges from ages 0-14, 70.14% range from age 15-59, 13.26% are over age 60, and 8.87% are age 65 and over (Wang, 2011). Life expectancy for males is 72 years of age while a female is 76 years of age. By year 2035, it is expected that one in four people in China will be at least 60 years of age (Country Health Information Profiles, n.d., p. 1). This has raised health concerns because an aging population will enhance disease patterns dominated by more chronic diseases and disabilities. The state of health in China is also affected greatly in part by environmental factors; because of overpopulation China has experienced high pollution volumes affecting air and water contamination.

An estimated 400,000 lives are lost annually due to this problem (Country Health Information Profiles, n.d., p. 3). Education is a primary focus in China, since 1964 China’s literacy rate has climbed from 66% to 96% while the number of high school and college graduates has skyrocketed (Zheng, 2012). Economic growth in China has continued to grow supporting a healthy job market and keeping a low unemployment rate of just 4.1%. The standard of living in China has also grown substantially, since the 1970’s personal wealth and household income has multiplied. A recent survey taken in 2011 reported that 72% of the population was satisfied with the standards of living in China, and thought that living standards were continually getting better (Xinhua, 2012).

Political Environment
The People’s Republic of China is run by a communist system of government that is broken up into five key government institutions. Those institutions consist of the Chinese Communist Party (CCP), the People’s Liberation Army (PLA), the State, the National People’s Congress, and the Chinese People’s Political Consultative Conference (Lawrence & Martin, 2012). They have no central leader; they are governed by a 9-person body known as the Politburo Standing Committee who is made up entirely of members of the CCP (Lawrence & Martin, 2012).

The Chinese Communist Party is the dominant political party in China, and is well integrated into their government system, basically running it. The party itself has been around for over six decades and comprises nearly 7% of the Republic’s total population, at around 80 million members (Lawrence & Martin, 2012). The party’s control is maintained by four political pillars, which they use to assert their dominance over the republic. The four political pillars include: the total control over the People’s Liberation Army (PLA), control of all political and personnel appointments along with all state-controlled corporations, total control over the media, and the control over the judiciary and internal security systems. The party is governed by a policy of collective leadership designed to protect itself from any one group or individual from having too much power. Within this system of government, there are provinces, and six provincial leaders. Each leader has designations to rule its own people with its own province’s laws, maintain fiscal responsibility within its own province, and to manage the social and political systems within each province. This decentralized and collective leadership system has led to a stable government system (Lawrence & Martin, 2012).

The People’s Liberation Army is the national military for the Chinese Republic, and is at the total control and mercy of the primary governing body within the CCP. Unlike in the past, the PLA is less involved in political matters, as their political role has been diminishing since 1997. They currently are a military force made up of around 2.25 million people (Lawrence & Martin, 2012).

The State is the second most important political institution in China. They are in charge of the day-to-day governing of the country and its 1.34 billion citizens. The State Council is the governing body within the State itself; they meet once every 6 months. Though they are a separate entity from the CCP, they are under the umbrella of the party, and thus at the mercy of their decision-making (Lawrence & Martin, 2012).

The National People’s Congress is known as the highest “organ” of state power. They are tasked with overseeing the Presidency, the State council, the State military commission, the Supreme People’s Court, and the Supreme People’s Procuratorate. The final institution is the Chinese People’s Political Consultative Conference, which is intended to engage in political consultation with the party, as well as perform democratic supervision of the party (Lawrence & Martin, 2012).

The Chinese government provides many of the same social services to its citizens as the United States; some of these services include, but are not limited to, unemployment, education, healthcare, and worker’s compensation. They do not however have an answer for the problem of providing adequate water resources to all of its 1.34 billion citizens. This is especially true in rural areas, where according to the World Bank over 300 million rural Chinese citizens have no access to safe drinking water. This is not just due to a water shortage, but also to extensive water pollution, which has led to increased and above-average mortality rates among those without access to safe drinking water. According to Business Insider, between 2008 and 2009 there were over 53,000 pollution violations reported. The government has no real answer to address either the water shortages or the extensive pollution that plagues their water supply, and makes its way into the mouths of 300 million of its citizens.

In 2001 China entered the World Trade organization thereby making it easier to do business with and to trade with the Republic. Though some industries still remain off-limits to foreign companies, the opening now exists for companies to begin targeting and marketing to China’s provinces. There are really two main challenges to this task. The first challenge is the overregulation of media and business within the country. Therefore it is critical that a company does the necessary research and diligence to ensure that they abide by the sometimes-stringent regulatory policies put forth by the country. The second challenge is that within each province lies a sometimes completely different market of people.

Economics
China has become the fastest growing major economy in the world throughout the past 30 years. According to the International Monetary Fund (IMF), in 2009 China’s Gross Domestic Product (GDP) was reported at 4908.98 billion U.S. dollars with a total economic share of world GDP at 12.52%, as adjusted by Purchasing Power Parity (Trading Economics, 2012). Currently, China’s Gross Domestic Product is ranked as the second largest in the world, trailing only behind the United States. Although no direct relationship exists, GDP has been known to be a good indicator as to the level of a country’s’ standard of living, meaning over past 3 decades the quality of living in China has increased dramatically. However, standards of living in China are hardly comparable to that of western civilizations, and although economic prosperity is spreading, there remains a big difference in urban cities and rural areas, which remain extremely financially burdened (China Highlights, 2012). China also ranks as the world’s largest exporter of goods and second largest importer of goods. In September of 2012, China’s exports reached an all-time high of 186.35 billion USD, which aids greatly to the rapid economic growth the country has experienced (Trading Economics, 2012).

Socio-Cultural Patterns
Today, China is changing from a rural society to an urban society that outlines the major transformation in China’s social structure since the reform. China has been converted into “one of the world’s most unequal countries” (Minqi Li, 2011) and has to face substantial inequalities and disparities between rich and poor.

China’s social structure is comparable to an inverted “T”. China has a small, rich minority at the top and an enormous mass at the bottom. The Chinese government has to raise the minimum salary and to guarantee a fairer distribution of the income allocation in order to rearrange the shape of the social structure. In addition, the government should extend possibilities for the poor population to enhance living conditions. The aspiration to be part of the “middle-class” is difficult to achieve and college graduates have to cope with extreme competition in the job market and low wage perspectives. Furthermore, a new population of migrant workers has emerged which creates a new social class and modifications regarding national policies. However, the nouveau-riche peasants have made vast money and constitute only a small part of the Chinese population. Thus, it is possible to climb the ladder and to be part of the higher class through hard work and genius. Last of all, the Chinese social structure has become more internally complex because diversification in various economic sectors, changes in the levels of income, and in the forms of ownership.

Due to an accelerated development of China’s economy, the distribution of wealth is not consistent. The rapid growth and the privatization of state enterprises have contributed to rich individuals and the outburst of private wealth; conversely, the dissimilarities between the rich and poor population have expanded. Consequently, China has to cope with major wealth disparities and inequalities, which have surpassed the United States. Moreover, China has dominant differences between rural and urban areas and the country still constitutes a highly rural economy. For instance, the annual average income per individual in rural areas was $898 in 2010. Nevertheless, the average per capita income of the urban population is considered to be $2900, which illustrates a high discrepancy between rural and urban residents (Damian Tobin, 2011). Nobody will deny the fact that half of the Chinese population remains in rural areas and this aspect underlines the high level of inequality regarding the average income per capita. Thus, the gap between rich and poor is a serious problem, which has constantly increased.

With regard to Chinese household consumption, urban households spend their income particularly on modern goods and they also prefer global brands and luxury items; for example, luxury cars from Germany, such as Audi or BWM, are very common. Chinese people desire “control” of their own destiny and ascendancy over the problems of daily life. In consideration of rural households it is notable that they spend most of their monthly income on food. The poorest regions in China including Tibet, Sichuan, and Yunnan rarely have admission to financial services. The rapid economic growth has resulted in vast wealth, but it has enlarged the gap between rich and poor.

Product
BRITA filtering water bottles are a comparison to a simple everyday plastic water bottle, with a built-in removable water filtration system. BRITA filtering bottles are not only reusable, but allow consumers to hydrate with filtered water from virtually anywhere. BRITA bottles have an easy to remove filtration system that needs to be replaced after every two months of use. Just one BRITA filtering bottle can replace 300 plastic bottles saving over $25 a month (BRITA, n.d.). BRITA filtering bottles are BPA free, dishwasher safe, reduce the taste and odor of chlorine, and leave a healthy level of fluoride behind (BRITA, n.d.). BRITA filtering bottles promote healthy drinking habits, while reducing plastic waste pollution drastically. BRITA filtering bottles would have a significant impact on China’s pollution problem; for instance, if only half of the population of China, roughly 670 million Chinese consumers used the BRITA filtering bottle, that would eliminate an average of over 200 trillion plastic water bottles per year.

Price
The BRITA filtering water bottle will be sold at a standard retail price of $14.95 in the United States Dollar, which equates to around 94.00 Chinese Yuan (CNY). This is higher than the current valued price in China but is required to cover the manufacturing and distribution costs of the free product promotion. The price may seem expensive to many citizens of China, especially those in rural areas. Conversely, with BRITA’s increased brand awareness, Chinese consumers are willing to pay a premium price. Due to the increasing distribution costs, the company will utilize worldwide retailer Walmart to handle the distribution within China. In addition, introducing a relatively high purchase price for the BRITA bottle hinders us from being able to cater to the lower income household needs. To fix this problem we have announced a promotion so that for every purchase of the BRITA bottle, one will be given to a Chinese consumer in need; however, we will not be able to collect revenues from the free product promotion.

Place
BRITA is a specialist in worldwide sales and distribution. In China, the company will particularly concentrate on indirect distribution through the global retailer Walmart in urban areas. Walmart is the perfect distribution strategy for BRITA with its focus on brilliant customer service and sustainability. The strategic placement of distribution centers, e.g. in Tianjin, guarantees to extend the distribution efficiency. In addition, working together with local partners to comprehend where and how the local policies can be used or adapted for BRITA’s success, ensures Walmart’s supremacy in the Chinese market. With reference to rural areas, the target is to provide BRITA trucks that distribute free water bottles to the poor population on a regular basis. The direct marketing strategy emphasizes a benefit for the company by developing brand awareness and by enhancing a positive brand image in the Chinese population.

Promotion
We plan to steadily increase the promotion of the BRITA filtering water bottle in China. Promotional marketing mediums targeting the upper-middle class would include the use of television commercials, product placement, and billboards in urban centers. There is little to gain in promoting the BRITA filtering water bottle within China’s lower income and rural areas; instead, we will build our promotion around an idea that will provide clean water for many of China’s less fortunate citizens. For each bottle sold in China, BRITA will donate one bottle to a less fortunate Chinese citizen who has little to no access to clean water and cannot afford to purchase the bottle. This direct marketing campaign will be called ‘Buy One, Give One’ (BOGO) and will emphasize both an optimistic and progressive brand image within the minds of the consumers.

Strengths
BRITA is the quality market leader in the context of water filtration for more than 40 years and is particularly valued for sophisticated quality products. BRITA has the ardent desire to improve the future of this essential resource. Besides, the company enjoys an excellent reputation in the marketplace and highly developed expertise knowledge. BRITA constantly enhances the relationship with customers and they appreciate good internal communication. Moreover, the company is a specialist in worldwide popular marketing strategies and for their innovative production. The company represents a strong brand image and persuasive advertising strategies. They are very successful in the area of building a loyal customer base. The great-tasting drinking water and their global vision make the company unique in their field of expertise. In the future, BRITA will guarantee its worldwide technological leadership through perpetual research and development.

Weaknesses
Weaknesses associated with the BRITA filtering bottle include BRITA bottles requiring a filter replacement after just two months of use. BRITA filtering bottles also treat chlorine, fluoride, and lead but no other microorganisms or chemicals. BRITA filtering bottles also cost more than a standard plastic bottle of water, so we will need to compete on price. In seeing how there is not an existing manufacturing process, we will have to endure high startup costs. In addition, introducing a relatively high purchase price for the BRITA bottle hinders us from being able to cater to the lower income household needs. To fix this problem we have announced a promotion so that for every purchase of the BRITA bottle, one will be given to a Chinese consumer in need; however, we will not be able to collect revenues from the free product promotion.

Opportunities
Numerous opportunities exist in the external environment for introducing BRITA filtering water bottles in China. The main opportunity in the external environment is the pollution in China; moreover, clean water is not readily available to over 300,000,000 citizens of China. An additional opportunity for BRITA filtering water bottles is incorporating social responsibility. BRITA cannot only increase awareness of the environmental water issues in the country but also increase their brand awareness. Studies also show that domestic made products dominate the Chinese market. Chinese consumers also tend to be value oriented, meaning our advertising campaign needs to incorporate the notion that the BRITA filtering water bottle can be used repeatedly for years. Lastly, an opportunity exists in that China has a high growing rate of the older population: by 2035 1 in 4 people will be of 60 years of age, leading to increased health concerns.

Threats
Threats associated with BRITA may include other water filtration options. The habit of boiling and treating water at the tap is deeply rooted in many Asian countries; therefore, effort must be made to convince those who participate to try something new and more effective. Many water filtration companies have entered the market that offers filtration straight from the tap, such as Culligan; moreover, these companies appear to have an advantage in comparison to BRITA. This advantage ties in with the previously stated and deeply rooted practice of self-treating water at the tap. The competition is now fierce in China for water filtration companies, as the drinking water remains poor. The government is anticipated to continue and expand its investment in the improvement of the water conditions for China’s 1.34 billion citizens. Other threats include difficult distribution channels, or logistics, due to the vast rural geography.

Marketing
BRITA’s advertising strategy in China will concentrate on the pollution dilemma and the fact that 300 million citizens do not have any access to clean drinking water. The target is to promote this issue with the help of television commercials and product placement in popular television shows that will resonate highly with the Chinese consumer. In addition, the television commercials will have a feeling of collectivism which still remains a major part of the Chinese culture. Furthermore, BRITA will present commercials with the whole process: from the first purchase of the bottle to the point when BRITA trucks distribute free bottles to the poor rural population.

Due to dense population in urban areas, Billboards will help to increase brand awareness and to enhance the actual purchase action. With regard to the billboards, they can say “300 million without clean water” or “400,000 lives lost annually due to pollution” that will underline the emotional approach and will have an important impact on the urban population.

Due to the fact that BRITA water bottle filters need to be replaced every 2 months, it will guarantee brand loyalty and a strong customer base. In rural areas, the direct marketing strategy using BRITA’s distribution channels will create a positive brand image and resonance.

Last of all, the BRITA filtering water bottle will have the BOGO logo (“Buy One, Give One”) that highlights the effectiveness of the marketing approach.

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