The COVID-19 epidemic and the confinement of over two months have triggered an unprecedented crisis for Chinese companies. How should enterprises overcome the difficulties brought about by such abrupt external changes? Is it necessary to maintain interaction with consumers in times like this? What role does digitalization play in the recent crisis management?
Xu Cong, CMO of McDonald’s China, and He Xinhao, Founder and CEO of ROI Festival shared their insights in these issues and more with Professor Jiang Qingyun, Director of the Department of Marketing, Fudan University School of Management.
Is the epidemic altering the pattern of the mass consumption?
Xu Cong: There has been a great surge in our Drive Through sales. Maybe when the epidemic recedes, the consumers’ need for this service will drop, but we believe its popularity will still be higher than before. Consumers may not always tell you what they need. You must gain the insights and keep developing new ways to please them. Then when they experience these new services, they may realize to their own surprise, "wow I need this."
How to keep the business growing in times of uncertainty?
Xu Cong: The epidemic has challenged our ability to meet the needs of customer in extreme situations. The contactless takeaway service makes high demands on the digitalization of a company. If you don’t have an APP or a Wechat mini program ready for the customers to order online, you wouldn't have been able to provide any service during the past two months. The epidemic changed the competitive landscape for the catering industry.
He Xinhao: We did a survey in February and according to the feedback from 100 executives of enterprises, the sales of offline outdoor media and advertising companies specializing in offline retail have been affected most severely. Things are similar overseas. Meanwhile, sales for companies in certain industries such as online games, online education as well as for advertising companies based on e-commerce have increased by 30-40%. In this economic winter, the priority for an enterprise is survival. If you see a difficulty with that, you must consider transformation.
Jiang Qingyun: Some companies did get eliminated after an era of great uncertainty like this. Brands should always maintain their interaction with consumers even if the advertising budget is reduced. This may entail inventing a low-cost communication model. Of course, companies that are highly prepared and have enough resources are more likely to survive hard times like this.
What abilities do companies need to survive such a crisis?
Xu Cong: McDonald’s risk response mechanism is very advanced. We initiated several charitable projects during the epidemic, including free food delivery to the hospital. From the marketing point of view, this is a way of telling the consumers "I am still here. The food you like and the services you are familiar with are still around". This system of contingency plans prepares everyone in the company for what they should say and how they should say it when faced with an emergency.
He Xinhao: I think in a crisis, the company's core competitiveness is adaptability.
How to deploy the digital marketing?
Xu Cong: Digital transformation is really expensive. While there has to be an immense investment at the beginning, the initial output may not often be as good as expected. However, companies with a vision will understand that this is the future for the industry and they must make plans for digitalization and traffic marketing in advance.
During the epidemic, we noticed a very interesting phenomenon in customers during the breakfast hours: after ordering by their mobiles, they want to know how many people are in the line for the takeaway – obviously because they think that queuing is potentially dangerous. This poses a challenge for the functions of our app and mini program. Not all needs of the consumers can be foreseen. But if you have a solid digital foundation, it takes you less time and efforts to meet their requirements.
He Xinhao: There are many complexities in the digital transformation of the enterprises. The concept of the DMP platform, or the private domain traffic management, has been around for seven or eight years, but companies that have succeeded in building such a platform can be counted on the fingers of one hand. Why? Digitalization means long-term investment and involves not only the technology, but also the team-building and the seemingly endless process of trial and error. We see McDonald’s has succeeded in this, but few people noticed how much tuition it has paid in these years.
Jiang Qingyun: International companies like McDonald ’s need to build their own data management capabilities. But for many Chinese companies, a more effective way is to rely on platforms and cloud computing for digital marketing.
Should digital technology be used to improve the operational efficiency first, or the user experience first?
Xu Cong: It depends. Every enterprise has its own core competitiveness. If there must be a priority, I think the most important is to first enhance the ability to create values for customers. Otherwise there is no base for the efficiency.
Have you got any marketing insight for the new generation of consumers like the post-95s?
Xu Cong: This is a subject that we have been studying for a while, and I certainly haven’t got a good answer yet. In the past, we would simply study our competitors, see what their advantages are and what we can do to top that; now we really have to focus on standing in the shoes of the consumers. If this consumer group wants to eat conveniently, eat well, and at a low price, our research is to see how many methods we can possibly have to meet these needs, to the largest extent.
Jiang Qingyun: The core of the marketing ability lies in the customer insight. And the customer insight is not about what you find, but about what you can do when you combine the values for the customer and the preferences of customers.
How to conquer the low-tier markets?
Xu Cong: This depends on the industries. For the retail industry, the challenge includes whether we can find a suitable storefront, whether the supply chain can support such a large scale, and whether the community selected has enough purchasing power during the development stage. These are the concerns of "unit economics". Besides, when McDonald's is entering a 4th or 5th tier city, we need to recruit many people and train them in advance – this is something the customers may never see. What we deliver are services done by people, so the personnel reserve is essential.
He Xinhao: From the point of view of the advertising company, in terms of efficiency and management, it is ideal to dedicate one video to present each core concept of a brand. But for the advertiser, it is going to be very expensive if you plan to target each market with a tailored video. Besides, after going through year in and year out of programmatic propaganda, I believe even the most experienced CMOs of the large companies can no longer be very confident to make judgments about a certain video or an idea. They have no choice but to leave it to AI and analyze the ideas through data.
How to use the influence of internet celebrities to upgrade the brand?
He Xinhao: Nowadays everyone wants to reach consumers faster, even more so under the impact of the epidemic. Now everyone realizes the best way to do that is to get your products or services on the live broadcast of an internet celebrity. In the past, you might need 100 distributors; but now, you go find 100 internet celebrities.
Jiang Qingyun: celebrities on internet now play the role of distributors or sales agents. Their biggest advantage is that they can create surges of traffic for a brand in no time. But these celebrities may not be very stable and they may lose their influence in a blink of an eye. Therefore, internet celebrity promotion and traditional distribution should be combined. At the end of the day, everything is based on the values of the brand. Internet celebrity promotion is just one part of the sales promotion program and the overall brand strategies.
