Sports marketing strategy: A consumer behavior case analysis in China
Geng, Lizhong
Marketing research that targets consumers’ influences and financial implications is a worthwhile sports marketing effort. To implement effective marketing strategies in a specific country, it is pertinent to understand consumer behavior in that country. In this paper, 11 major findings related to the unique behavior, attitudes, and buying patterns of Chinese sports consumers are highlighted. From the results of questionnaires administered to 2,155 mainland Chinese consumers in 10 selected cities, different economic, social, and personal factors in the China’s environment are determined. The marketing implications of the Chinese culture and lifestyle are also discussed.
INTRODUCTION
With a quarter of the world’s population and a fast-growing economy, China is rapidly turning into one of the busiest market centers in the world. Sports marketing has the potential to emerge not only as an effective vehicle in imitating the development of the Chinese economy, it also affects the Chinese culture and lifestyle.
Since sports marketing in China has not been analyzed or researched, it is appropriate to study the consumer as well as general financial implications. A look at American success in sports marketing will be helpful. However, implementing such strategies in China creates special considerations because of the existence of cultural and economic differences between the two countries. This study attempts to identify the proper marketing strategies in China through an analysis of Chinese consumers’ behavior, attitudes, and buying patterns.
METHODOLOGY
The methodology used in this study consisted of exploratory research of interviewing managers of retail outlets, secondary research of literature review, and primary research of a total of 4,000 questionnaires distributed in 10 selected cities (Beijing, Chendu, Guangzhou, Nanjing, Qindao, Shanghai, Shenzhen, Tianjin, Xian, and Xiamen) in China. Questionnaires were administered to a judgmental quota sample and assigned to one of four age groups with equal males and females. The rate of response was 53.9%; 2,155 questionnaires were returned.
The analysis of the data include editing, coding, analyzing coded observations, and interpreting results for solutions to the research problems. Tabulations and measures of central tendency were used to describe the distribution of characteristics in the subject population. Crosstabulation and chi square statistics were also used to show relationships between consumer segments.
SURVEY FINDINGS
Eleven major factors affecting consumer purchasing emerged from the questionnaire data analysis: 1. purchasing reasons; 2. purchasing experience evaluation; 3. income level relative to the expense level; 4. type of sporting goods purchased; 5. product factors affecting purchasing; 6. people influencing consumer purchasing; 7. sources of information about where and how to purchase;
8. influence of advertisements; 9. brands consumers prefer; 10. where goods purchased; and 11. time spent in sports
Purchasing Reasons: The major reason why people purchased sports products was “for exercise.”
Purchasing Experience Evaluation: Approximately half of the respondents indicated that their purchasing experience was “positive.”
Income Level Relative to the Expenses Level: The Chinese consumers’ income levels range from less than $173 U.S. per year to over $863 U.S. a year. The middle income level accounted for 72% of the respondents.
However, most respondents indicated they spent “less than $40 U.S. per year” on the purchase of sporting goods.
Type of Sporting Goods Purchased: “Shoes” were the No. 1 favorite type of sporting goods for Chinese consumers. Females tended to purchase apparel; males were more likely to purchase all type of sporting goods.
Product Factors Affecting Purchasing: “Quality,” “style,” and “price” were the three most important factors influencing purchasing decisions. People Influencing Consumer
Purchasing: “Boy-and-girlfriend” had the most important influence in the decision process. “Parents” had the least important influence.
Sources of Information About Where and How to Purchase: The major information channel for Chinese consumers was their “going to a shopping mall” experience.
Influence of Advertisements: Of those responding to the survey, more than half said they either “occasionally” or “rarely” believe advertisements.
Brands Consumers Prefer: Adidas, Asics, Nike, and Reebok were identified by the Chinese consumers.
Where Goods Purchased: Most of those surveyed purchased their sporting goods from either “a sporting goods store” or “a department store.”
Time Spent in Sports Activities: Almost 90% of the Chinese consumers spent “less than 5 hours a week” participating in sports activities. However, three meaningful findings emerged: 1) those who participated “less than 5 hours per week” in sports activities spent more money purchasing sports products than those who participated “over 5 hours” per week in sports activities; 2) those in the income level of “$402 to $863 U.S.” spent more time participating in sports activities; 3) young adults and “unmarried” persons spent more time per week participating in activities than those who were “married” or elderly.
DISCUSSION ON CONSUMER INFLUENCES
The following discussion focuses on economic, social, and personal influences. These three categories have unique Chinese environmental and cultural meanings and thus need to be considered when engaging in marketing in China.
Economic Factors: Unlike the past, when most income was spent on basic necessities such as food and clothing, the current Chinese consumer spends more money on entertainment and durable goods. However, the general tendency of the Chinese consumer to have stronger purchasing power and the fact that their buying decisions reflect creative purchasing beyond bare necessities are not reflected in sports marketing. It could be concluded that not all Chinese consumers are willing to spend a certain percent of their income on sports products. This phenomenon can be explained either by consumers’ lack of sufficient income or too high a price for sports products. On the other hand, however, a great potential exits for marketers who appeal to the Chinese consumers with creative strategies. Those who know desires and needs in specific areas, while being sensitive to economic restraints, may capture a slumbering Chinese market.
Social and Culture Factors: With the implementation of an “open-door policy” in China, the lifestyle of the Chinese people changes constantly. Several social and cultural trends may stimulate marketers to be optimistic about Chinese consumers.
* The most important trend is growing fitness consciousness. No matter the gender, age, occupation, and education of those surveyed, all tend to tie their purchase of sports products with exercise and entertainment.
* A second trend the survey revealed is a movement toward use of sports products for casual reasons. Chinese consumers are embracing a more casual and health-conscious lifestyle.
* There is a growing consumer preference for international products. The Chinese people, especially the younger generation, are very fond of wearing and using brandname sporting goods from around the world. Owning high grade sporting goods seems to be a symbol of wealth and a new fashion for those young consumers.
The social and culture trends just discussed will lead to different pricing, promotional, and distributional strategies.Since marketing principles are applicable throughout the international arena, what has proved successful in the American market could basically be transferred and applied to the China market.
However, to implement a successful marketing strategy in China, several environmental differences must be taken into account:
1) “Shopping on Sundays” is a hobby for Chinese consumers. Marketers should create an attractive shopping environment in a prestigious shopping center.
2) Chinese consumers believe what they see rather than what they hear. They know that some imitation products exist in the market, and dishonesty in advertising is publicized. Marketers should increase their image by eliminating imitation products and dishonesty advertising.
3) Although consumers’ attitudes toward the international sports products are positive, devotion or loyalty to brands is subject to rapid change. Marketers should have a strategy to keep consumers’ loyalty.
4) Nonathletes have greater purchasing power than most athletes or sportspersons. Nonathletes buy sporting goods either to impress others or simply because their friends have those items. Marketers should consider how to design sports product with attractive sports features.
5) The type of sporting goods desired by the older and younger generations is widely dissimilar. And a large gap exists between the desire to purchase and the ability to purchase sporting goods. It causes problems of bringing the right products to the right person and establishing an appropriate price policy.
6) The purchasing decision of Chinese consumers is heavily influenced by social values and the social environment. Marketers should establish an educational program to either match or lead a social value.
Personal Factors: Because of recent social changes, Chinese consumers have learned much from other cultures. They are more independent and more knowledgeable about commerce and business. There are at least three particular changes which may create opportunities for marketers:
1) The nuclear family has become the baic economic unit, and it has more power to make purchasing decisions. With the implementation of the “one child per family” policy in China, the nuclear family, consisting of parents with one child, has replaced the traditional clan family which consisted of two or more generations living as one family.
2) Chinese wives are viewed as decision makers for goods purchased in families. Since wives control family finances, it is important to target wives.
3) Individuals who live in the urban locations have stronger purchasing power. The Chinese government predicts that by the end of 1995, people in large urban areas will increase to 30% of the population. This modernization movement will undoubtedly create business opportunities.
MARKETING IMPLICATIONS
It is generally agreed that a great potential exists in the Chinese sports market. However, questions concerning political stability, the uncertainty of economic development, and cultural differences have not only slowed Chinese sports marketing efforts, but have caused confusion and indecisiveness among sports marketers who strive to implement effective marketing strategies in China.
The marketing mix that should be modified to accommodate the Chinese situation includes: 1) choosing target market segments; 2) determining the services and products to be offered; 3) selecting appropriate pricing strategies; 4) designing promotional programs; and 5) providing a proper distribution system.
Choosing Target Market Segments:
Identification of market opportunities and targets should be based on a specific market. Findings from this study suggest that marketers target consumers who want to improve their social acceptance, longevity, appearance, or feeling of well-being. The following is a consumer profile which emerged from this study: a male or female in a nuclear family in an urban area; age 18 to 35; works either for a company or for an enterprise; unmarried or married with light family burden; middle-class with $550 U.S. annual income or higher; four years of college; high achievement motivation; a fitness participant with three to five hours of activity time per week.
Determining the Services and Product to be Offered: The product or offering must be carefully defined. Since purchasing “for exercise” plays the leading role in Chinese consumer practices, tangible products such as fitness machinery, shoes, and uniforms should be designed according to customer preference rather than product or sales orientation. Product modification for all types of situations and for all types of people might be the best product development strategy to serve consumers’ needs and demands at different levels. Basically, technology-based products with recognizable advantages are more acceptable.
Selecting Appropriate Pricing Strategies: Price directly affects consumers’ demand. Chinese consumers are not willing to pay high prices right now for sports products and activities for three major reasons: 1) The Chinese are accustomed to living in a low-income and lowconsumption environment because of the long period influence of the socialist economic system. 2) Their incomes are still low in relation to prices. 3) The prices of products are strongly affected by where they are made. Consumers agree that products with excellent value and quality should be higher priced, but they argue that domestic made international brandname products shouldn’t be that highpriced.
It takes time to educate consumers on the role of price. At the first stage of a long-term project, marketers may target a specific segment of the buying public by carrying products only in a specific price range. The price strategies that succeed in western countries, such as flexibleprice policies or price escalation strategies, will probably be accepted by Chinese consumers.
Designing Promotional Programs: Promotion is a process of sending messages to target consumers, with the intent of helping to sell products or services. In China, promotional programs can be based on diverse buying patterns such as spending more time shopping, relying on social values and friends, or enjoying group activity.
Since products must be pushed in a developing country, educational programs on the influence of individual and group values and behavior and promotional campaigns on social values and new lifestyles should be given. Sponsorship is another effective promotional tool in marketing. A good example of sponsorship is Nike’s success in China in the 1980s. Nike’ sponsorship not only supported the Chinese track and field team, it also acted as a major promotional opportunity for its business in China.
Sports involvement is also an excellent promotional vehicle. Because physical fitness activity is a social force that changes patterns of interaction and lifestyle, family-oriented activities related to childcare, or activity-oriented environments where singles gather, can increase consumer loyalty. Such fitness activities as aerobics, weight training, and flexibility will invite strong emotional involvement, high interest, and opportunity for promotion.
Some standardization of advertising techniques, such as product-quality ads, lifestyle ads, emotional ads, and endorsement ads are also effective promotional tools to increase the image of the marketers. Advertising and sales efforts can be increased by using attractive appeals through the proper media channels.
Other strategies and promotional vehicles that marketers could use may include public service, youth camping, lectures by opinion leaders, and other highly visible activities.
Providing a Proper Distribution System: An analysis of buying patterns of Chinese consumers reveals that Chinese consumers are either bargain hunters or impulse buyers. Thus a distribution system with better service and fast delivery, and a shopping environment with customer enticement will narrow the distance between marketer and consumer.
Investigation shows that those sports marketers already in the China market distribute their products through usual channels, such as sporting goods stores and department stores. However, an established fact is that some brandname products have been copied and distributed through the black market or discount stores which give the brand a tarnished image. To solve these distribution problems, a marketer can choose two viable directions. One is to establish its own distribution network to protect its assets of trademarks and patents. Another way is to establish a good working relationship with government officials to obtain top management support.
SUMMARY
The objective of this paper was to identify an effective sports marketing strategy in China by understanding Chinese consumers’ behavior, attitudes, and buying patterns. The results from this study strongly support our assumption that sports marketing in China has a great potential to emerge not only as an effective vehicle in imitating the development of the Chinese economy, it also affects the Chinese culture and lifestyle.
In summary, two results stand out from this study. First, a growing fitness consciousness and a movement toward use of sports products for casual and health-conscious lifestyle reasons is becoming the major trend in sports marketing field; Second, Chinese consumers’ purchasing power is getting stronger. Their buying decisions reflect creative purchasing beyond bare necessities. In sports marketing, a great potential exits between consumers’ income level and their expenditures for sporting goods, and usage and distribution gaps also undoubtedly exists, especially for international products.
REFERENCES
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Baxter, J.L. (1993). Behavioral Foundations of Economics. St. Martin’s Press, New York.
Geng L. (1994). A Perspective of Sport Consumer Behavior in the People’s Republic of China. Unpublished Master’s Thesis, Brigham Young University, Provo, UT.
Mullin, B. J., Hardy, S., and Sutton, W. A. (1993). Sport Marketing. Human Kinetics.
Copyright College of Business Administration. University of Detroit Mercy Spring 1996
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