quality issue and implications in china
Download
Skip this Video
Download Presentation
Quality issue and implications in China

Loading in 2 Seconds...

play fullscreen
1 / 43

Quality issue and implications in China - PowerPoint PPT Presentation


  • 654 Views
  • Uploaded on

Quality issue and implications in China. Group members: Yue Wenchao , Tom Qian Fang, Tracy Lam Chi Fai,Benson Mak , Edward Chan Waileung , Jonavon. SK-II Introduction. SK-II . a Procter & Gamble Beauty brand

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about ' Quality issue and implications in China' - PamelaLan


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
quality issue and implications in china
Quality issue and implications in China

Group members: YueWenchao, Tom

Qian Fang, Tracy

Lam Chi Fai,Benson

Mak, Edward

Chan Waileung, Jonavon

sk ii introduction
SK-II Introduction
  • SK-II

.a Procter & Gamble Beauty brand

.over 25 years ago in Japan

.four years ago in the United States

  • Unique raw- material : Pitera

.the \'Secret Key\' to beautiful skin

. Pitera is a single blend of

. Vitamins

. Amino acids

. Minerals

. Organic acids

sk ii introduction3
SK-II Introduction
  • Products

.Skin care products :

Purifying , Renewing, Brightening, Nourishing, Anti-Ageing , Finishing

  • Price

.Average consumption around 700 RMB

- It belongs to luxury skin care products in mainland Chinese

  • Place

-- SK II’s counters are located in each big shopping mall in mainland China

  • Promotion

-- Advertising

--image representative

--super movie stars

http://www.56.com/u12/v_MzU4NDY1Mzc.html

quality product issues
Quality product issues
  • SK II Quality problem
  • Happened In 2005 in Nanjing
  • Happened in 2006 in Shanghai
  • SK-II products with heavy metals of chromium and neodymium in Mainland China
  • It injured consumer’s facial skin, after used this product, and consumer complainted SK II

http://www.youtube.com/watch?v=-n35bCnivM0

quality product issues5
Quality product issues

-- Response from consumer and government

  • The products with quality problem have to be recalled by company
  • Chinese customers attempted to refund the money on fake SK-II
  • Those products are banned from import to China
  • Consumer very care about the quality of product in mainland, especial the product which close or relate their bodies and healthy
quality products issues
Quality products Issues

Chinese quality-milk powder

--the milk powder contaminated with melamine sickens 1253 babies

After use the quality-milk products ,baby was silken—kidney calculi

quality products issues7
Quality products Issues
  • Response from consumer and government

--the milk companies stop all production, recall and detection all milk products, destroy all quality products

-- injury compensation, the babies who used products

--Government will impose the product quality control

Destroy the quality milk powder---Sanlu

Consumer response: http://www.youtube.com/watch?v=-n35bCnivM0

slide8

Other Foreign Production Quality scandal In China:

  • Kraft’s GM Incident
  • Johnson&Johnson Baby Care Probe
  • Lipton Tea Fluotin incident
  • Fenbid Bad for Hearts
slide9
Why Chinese consumers are increasingly more demanding about product quality and services from both domestic and multinational firms?
globalization
Globalization
  • Global competitions among MNC more choices provided to consumers
  • Increase in information flows enable consumers to know more about the standard of products and services
  • Different kinds of consumer may vary in demand on quality, service or other factors  force companies to improve their products to increase their competitive advantages
2 rapid income growth
2) Rapid income growth
  • Consumers demand not only a greater quantity of food, but also higher quality performance
  • Frugal consumption diminishes as income rises, the majority of consumers are not only satisfied on cost-effective, but value added on the product

Price Quality

  • Consumers with higher incomes tend to purchase more expensive products with higher quality
3 culture and customers perception
3)Culture and customers’ perception
  • Mix of western culture
    • The introduction of western quality standards Increases awareness of product quality
    • E.g. ISO9000
  • Perception of domestic and multinational firms
    • China made products should not be bad in quality because of “FACE”
    • Imports should be good in quality because customer paid a higher price on it
4 discovery of unsafe products
4) Discovery of unsafe products
  • Customer became more and more impatient on quality issue after a series of quality accidents.
  • These incidents began as early as 2004
      • 2004 - Soy sauce made from human hair
      • 2005 - Sudan I Red Dye(蘇丹紅)
      • 2006 - Fake drugs & Poisonous mushrooms
      • 2007 - Potential carcinogen used in frying oil
      • 2008 - Baby formula & egg products with melamine(三聚氰胺)
q2 is this a sign of overzealous consumer advocates a conspiracy theory double standards

Q2. Is this a sign of overzealous consumer advocates, a conspiracy theory, double-standards?

is this a sign of overzealous consumer advocates
Is this a sign of overzealous consumer advocates?
  • Ans: Yes!
  • The rising fear due to a lot of quality problem

e.g.: Mengniu

mengniu
Mengniu
  • Mengniu daily regional sales volume is decreased 98% after tainted milk was disclosed
  • The executive director of Mengniu drank the milk themselves to save the customer confidence of Mengniu
is this a sign of overzealous consumer advocates18
Is this a sign of overzealous consumer advocates?
  • The uncertain rumors stimulate customer overreaction
  • E.g: Mandarin orange in Shantung
mandarin orange
Mandarin orange
  • There are rumors of warms inside the mandarin orange in Shantung
  • The demand of mandarin orange downturn rapidly

- 300 tons a day dropped to 60 tons a day

- Price dropped 70% to $0.8 per kg

is this a sign of a conspiracy theory
Is this a sign of a conspiracy theory?
  • Ans: It is possible
  • The conspiracy theory is unconfirmed but caused some speculation
conspiracy theory
Conspiracy Theory
  • China took advantage of consumer response to the quality problem of foreign company in an attempt to retaliate some unfriendly country
  • E.g.: SK-II from Japan
sk ii
SK-II
  • The relationship between China and Japan is poor at that period
  • At the same time, P&G halts sale of SK-II in China due to the harmful elements was found in the product
  • SK-II deny such issue and assure that their product meet the standard of quality and

safety

  • Is there any conspiracy?

Customers wait in line to return SK-II skincare products in Shanghai

is this a sign of double standards
Is this a sign of double-standards?
  • Ans: Yes!
  • As mentioned above (the SK-II case)
  • We are suspicious that…

China Government perceived that:

Foreign Company, who makes profit by using Chinese resources, is needed to take more responsibility than local company

is this a sign of double standards24
Is this a sign of double-standards?
  • Some local company is protected by local government.
  • E.g.: Sanlu
sanlu
Sanlu
  • Sanlu food scandal is covered by Shijiazhuang Government over several months
  • It is discovered that there were the collusion between the government and Sanlu to conceal the issue
is this a sign of double standards26
Is this a sign of double-standards?
  • Chinese customer give more support to local enterprise due to nationalistic ties
  • E.g: Coca Cola buy HuiYuan juice group Limited
coca cola buy huiyuan
Coca Cola buy Huiyuan
  • Huiyuan is consider as the national brand of China
  • Coca Cola plan to use 17.92 billion dollar to buy Huiyuan
  • 79.8% of people disagree and

prefer drink water instead of

Coca Cola

slide28

3) Recommend integrated marketing communication strategies to build up brand image and also shore up company image in China, after a crisis or scandal has occurred.

slide29

Customers:

- lost confidence to our products

- are more demanding about product quality

Objectives of the IMC strategies:

-Ease Consumers’ anxiety

-Rebuild the brand image

-Rebuild customers’ confidence to our products

where are we now31
Where are we now?
  • After the crisis or scandal

 go back to the Prepurchase stage

IMC strategies:

  • Advertising
  • Sales promotion
  • Public relations
  • Personal selling
  • Direct marketing
advertising
Advertising

Use the strategy: Celebrity Endorsements

Celebrity: Chinese celebrity (黃聖依 Huang Shengyi)

advertising33
Advertising
  • On television

- reach large audience

- to let Chinese consumers know ‘we will take the responsibility”.

  • On magazine

- reach our target customers

public relation
Public relation

-Invite media to visit our production plant

- increase the transparency of the production procedures

E.g. Foreign press is invited to visit to Mengniu dairy production line

public relation35
Public Relation

-Third party endorsement

e.g. government endorsement on new non- melamine product

sales promotion
Sales promotion
  • Sale at discount price
  • Samples

- give free sample to customers

- reduce customers’ risk

- may also cooperate with magazine

packaging
Packaging
  • With a label on the package

- safe

- only available after passing the safety test

- White rabbit change package to clean the image of its tainted food

rebuild customers confidence to our products
Rebuild customers’ confidence to our products
  • Enhance product quality and safety

- strengthen the quality control on production and quality assurance on sourcing

Meet the international standard

Get the third party certification

ISO

long term action
Long-term action
  • Involve more charity

- donation to some charities or Sichuan earthquake

  • Improve the transparency of the company’s responsive action

- showing social responsibility to calm annoying customers

- more emphasis on problem solving than the problem itself

conclusion
Conclusion

China consumers is vulnerable

Quality problem could ruin the whole business of MNC

Key solutions:

Short-term: the use of IMC to calm customer

Long-term: Quality control

Charitable events

slide41

Crisis management:

Short-term: the Use of IMC

Long-term:

quality control

establish a responsible image

slide43

Mengniu:

  • Sanlu: http://hk.news.yahoo.com/article/080915/4/889q.html
  • SK-II: http://www.chinadaily.com.cn/china/2006-09/22/content_694757.htm
  • Orange: http://news.sohu.com/20081026/n260247361.shtml
  • Huiyuan: http://www.chinareviewagency.net/doc/1007/4/5/0/100745040.html?coluid=5&kindid=110&docid=100745040&mdate=0914001817
ad