The China Casebook

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Brand extension naming strategies: An exploratory study of the impact of brand traits

When a known brand extends into a product category that involves sophisticated and state-of-the-art technology, consumers face uncertainty and perceive a financial risk when considering the extension for purchase. This study explores how the brand's perceived expertise in the extension category and various brand traits (predictability, dependability, and faith) affect that consideration decision and how these interact with particular extension naming strategies (direct versus brand-bridging). Exploratory results from a field study give three insights. First, a consumer's faith in a brand appears to improve the extension consideration independent of what naming strategy is adopted. Second, brands with good predictability seem to benefit only by using a direct naming strategy in the brand extension. Third, a perceived lack of expertise appears to reduce the extension consideration even when a brand-bridging strategy is adopted. A discussion of these insights and their implications is provided

When Good Guanxi Turns Bad

In China, guanxi, or personal connections, can divide the loyalties of the sales and procurement people your company depends on. If you're alert to its potential to cause mischief, you can head off relationships that could work against you

BRAND SWITCHING AND MARKET PARTITIONING: AN EMPIRICAL STUDY OF BRAND COMPETITION

Insight into the competitive environment and its inherent dynamic properties is of primary importance in designing successful marketing strategies. Little attention has, however, been devoted to this issue in the marketing literature. The main objective of this research was to illustrate the potential of a stochastic brand choice model in characterizing the nature and magnitude of brand competition within frequently purchased, low priced consumer product categories. The Hendry partitioning methodology and its underlying premises concerning aggregate switching were relied on to assess the competitive structure of a market. The fundamental axioms of the HendroDynamics were validated empirically and compared to those of alternative random choice models suggested in the literature. The partitioning algorithm was detailed and illustrated using switching patterns obtained from purchase recall data for four different paper products. Some very interesting insights into the competitive relationships among the various brands were obtained. These results were validated subsequently against the outcomes of two pure empirical procedures. First, joint space configurations were generated internally from rank-order preference data. The resulting market structures were cross-validated against the hierarchical preference structure obtained from the partitioning analysis. Even though the Euclidean distance patterns showed some consistencies with observed switching, the nature or dimensionality of the competition was not captured in the configurations. Subsequently, the partitioning results were validated against preference hierarchies obtained from a clustering procedure. Here, the heterogeneity in actual choice structure across consumers could be observed. Some consistency was noted but the aggregate insights were not fully captured. Finally, some immediate managerial implications especially relating to new product introduction and cannibalization were outlined

Entering China : an unconventional approach

While EJVs are still necessary in some regulated sectors, and foreign investment is prohibited in still others, there is a growing trend toward a new and possibly much more effective way of doing business in China -- as a WFOE, that is, a wholly foreign-owned enterprise. For all intents and purposes, EJVs and WFOEs are substantially the same in terms of taxation and corporate liability. They also operate under similar foreign exchange rules and comparable import and export regulations for licensing, quotas, and duties. In fact, their only real differences are that WFOEs take less time to establish than EJVs, are not technically required to have a board of directors, and are currently prohibited in some sectors in which EJVs are approved. This paper investigates in some depth the question of whether WFOEs are a realistic alternative to EJVs, using the examples of Johnson and Johnson, and Shanghai Jahwa Corp