"Fight from the villages, surround the cities”

15 Oct 2006|Added Value

 农村包围城市 – “Fight from villages, surround the cities” – When Chairman Mao was quoted saying this as a political guideline in the 1920’s, he probably did not expect this to become a marketing doctrine in modern China around 80 years later. 

It has been more than two decades since large-scale MNCs strive to penetrate China with aggressive ambitions and marketing budgets. All too often, these MNCs focus on gaining foothold in big and major cities like Beijing, Shanghai and Guangzhou. This is undoubtedly a wise move as consumers in these Tier-1 cities are consumer leaders who lead the trend that will in turn waterfall to lower tier cities.

 However, many local brands found it hard to attain a share of the pie in the major cities which are largely dominated by the MNCs with their big spending budgets. To counteract, some local brands have successfully strengthened their market position by adopting and executing a “fight from villages, surround the cities” strategy. This may well prove to be a forward-looking strategy given the overarching goal of the Chinese government to adopt a “levelling up” economic plan in closing the gaps between the rich and poor, particularly between cities.

 If you don’t know the name of Li Yuchun, you probably haven’t been updated with today’s China. The champion of the Super Girl Voice (the Chinese version of American Idol), sponsored by Meng Niu (Mongolia Cow),  has become one of the hottest topics in the country when she appeared as the cover girl on a recent issue of Time Magazine. Behind her sudden popularity is the vast triumph of Mongolia Cow, a local dairy brand with 6 years history that is the first to have been publicly listed overseas in the Chinese dairy industry. Through the Super Girl Voice sponsorship, Mongolia Cow tripled its sales with company profit raised by 33.9% in a year’s time.  

 One of the underlying success factors of Mongolia Cow is a result of its adoption of the “fight from villages, surround the cities” strategy – overthrowing the conventional focus on the 3 major cities (Beijing, Shanghai and Guangzhou) and picking instead smaller but neighbouring cities (Zhengzhou, Chengdu, Changsha, Guangzhou and Hangzhou)as the hubs of their Super Girl Voice program. No longer fighting upfront with its competitors, Mongolia Cow prudently switched its battlefield to the lower tier cities with strategic marketing importance, but less guarded by competitors and therefore of lower cost.

 300 road shows were made by Mongolia Cow in over 100 small cities. This campaign turned out to be a win-win-win-win situation for everyone – dream came true for an ordinary girl (i.e. the contestants of Super Girl), entertainment for the audience (i.e. the consumers), high viewership for the media (Hunan Satellite TV outnumbered CCTV in viewership with the finale watched by 400 million+ people on TV and the record-making 8 million SMS votes), and the brand (Mongolia Cow) rocketed in sales and profits.

 In today’s intensely competitive market, Mongolia Cow sets a smart example on how local Chinese brands manage to succeed against tough competition and with lower marketing costs. With increasingly over-saturated competition in the Tier-1 arena, it is observed that more new entrants are reviewing and considering this strategy.

 It would indeed be a pleasant surprise for Chairman Mao to see his political guideline serving as a signpost on the sea for today’s marketers.

From Oracle Added Value

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