How to Sell Beer In China: A Lesson in Marketing
The 4P Marketing Model: A Case Study
On a recent business trip to China, tired of taxis, elevators, conference rooms and hotels, I went out for a walk one night. My translator, whose chosen English name was Martin, elected to stay at the hotel to do some work. Always wanting to try something different, my walk coincided with my secret hope to find a new establishment where I could pass my evenings when away from home. It took only 5 minutes before something across the street caught my eye: beer taps. I walked across the street for a closer look and found about a dozen beer taps protruding from the wall inside. A funny sign out front read “As Long As You Are A Foreigner, We Dare To Free.” Though I was a foreigner, I had idea what it meant. But I decided to go inside anyway.
A First Taste
Three members of the staff quickly greeted me as soon as I set foot inside. Looking up at the chalkboard above the bar was the list of beers – all written in Chinese. When I asked for a menu, hoping there was an English version of the drink offering, they looked at each other as if to say ‘What’s he asking for?’ A few funny apologetic gestures and laughs around, the main bartender wrote something into his mobile phone and translated it into English “Would you like a dark beer?” I nodded with amusement.
In just a few minutes, a beer was placed in front of me. As I took a sip, another beer was placed on the bar. The lead bar tender – who turned out to be the owner and whose chosen English name was Bill – came around, grabbed the unoccupied glass. I’ve spent enough time in China to know what was about to happen. As expected, Bill asked another bartender to take some pictures of he and I, first clinking glasses, then with both of us taking a sip, and finally shaking my hand. “Am I the first foreigner that’s been in here?” I wondered silently. After another 10 minutes of inefficient exchange through the translation App on Bill’s phone, I called Martin to see if he could join, and he did.
Marketing An Unpopular Product
Once Martin arrived, a beer was promptly placed in front of him, and a second glass was placed in front of me. Then a third. As we sat and talked with Bill, he began to ask questions – what we thought of the beer, which was our favorite, where was I from, is beer popular in America, did I have suggestions for him, etc.
Bill’s shop had only been open for a month. In a spinoff from the Chinese national brewer, Tsingtao, he and some investors purchased distribution rights of Tsingtao’s specialty, German-style beers. When Bill mentioned he planned to open 6 additional shops around the city over the next two months, it was obvious that a lot of money was involved.
The beer business in China is an interesting one. Unlike in the West, where craft beer is very popular and where more and more breweries pop up each week, the same does not hold true in China. When you do find a place serving craft beer in China, a vast majority of its patrons are actually foreigners – Americans, Australians, British, Germans, and so on. Further, despite the saturation of breweries in the West, the failure rate of new breweries in nearly zero. (Read more about that HERE). By contrast, the Chinese are generally not heavy consumers of any form of alcohol, favoring their plethora of teas. Bill’s challenge, therefore, was to figure out how to sell something that does not have a strong demand, and it was clear that a lesson in marketing was in order.
The 4P Marketing Model – A Brief Overview.
The 4P Marketing Model is a framework that defines the four key aspects of promoting, marketing and selling products of service. (You can find an excellent overview of the 4P model HERE) If we think about the basics of selling, it boils down to providing a product or service that someone wants or needs, in exchange for money. When marketing your products and services, each of the 4Ps – or Product, Price, Placement, Promotion – should be aligned to your target customer. The more closely aligned each of the 4Ps are to your target market, the better your position for success. We will take a closer look at each of these elements as we continue our story about Bill’s Beer Shop.
Selling Beer Using The 4P Marketing Model
The First P – Product
The most fundamental part of the 4P model is your Product (or Service). Without a good product or service, a business will always struggle to succeed as clients and customers are simply not interested. In addition, it’s critical you understand your target customer, to whom the product or service is to be sold. The product should fill a need or want in that market, and hold some level of differentiation from competing products.
As I sampled the beers (through a great deal of scientific research, I consider myself to be an expert), Bill eagerly awaited my response. In short, the drinks were all very good, flavorful, and colored as would be expected of a high quality beer. However, between a menu written in Chinese, and the absence of labels on the tap handles, I had no idea what I was style of beer I was drinking until I tasted it. In addition, the shop itself provided a nice environment – clean and well-lit, but lacked an obvious element of ambiance: music.
MRH Recommendations We Gave to Bill:
- Understand The Target Market – Bill’s beer was good, and it was clear he wanted to sell to foreigners. However, he needed to better understand what his target customer wanted in order to best align is selling efforts to his target market.
- Establish Unique Names for Each Beer – The styles of beer on offer included an IPA, Jasmine Lager, and a stout, among others. We recommended to Bill to establish intriguing names for each, which makes the drinks more memorable for customers, and is often a source of delight for customers.
- Play Music to Improve Ambiance – Bill’s Beer Bar was dead silent, except for the sound of a handful of conversations from a few guests. Bill’s target patrons seeking a relaxing place will want appealing music to accompany an evening with friends.
The Second P – Price
Moving past the basic product or service, the second P is Price. The price point of a product or service impacts profit margin, supply, demand, and everything else associated with the economics of selling. Price is often associated with the perceived value product. Further, things like competition and market positioning of the product may also influence the price point.
I looked at the chalkboard menu above the beer taps at Bill’s Beer Shop. Price points ranged from about $4 to $6 per pint, which is actually low for a quality beer in China. These prices were certainly something that would entice customers as they were more affordable than the big imported brands from Belgium, Ireland and Germany.
MRH Recommendations We Gave to Bill:
- A Dual Language Menu – A duel language menu of the offering was necessary, so foreigners could easily select the drink of choice. The absence of a translated menu was a deterrent to new patrons.
The Third P – Placement
The third of the Four Ps is Placement. Placement refers to the location where the product or service is offered relative to the market – the closer you are to your target customer, the better your sales will be. We see a great example of Placement when we get in our cars only to notice the fast-food restaurants that occupy retail space at rest areas along the highway. These outlets cater to drivers who seek a quick bite so they can continue on their way.
Located within a 10-minute walk of Bill’s Beer Shop were four major Western hotel brands – Westin, Hyatt, Hampton Inn, Wyndham – which meant his location was prime real estate for his target market. Though the national brand, Tsingtao, is a staple beverage across the country, foreigners in China who enjoy craft beer would certainly appreciate Bill’s offering given the variety they’re used to back home. Thus, Bill’s target customer was just minutes away at nearby hotels, and would likely seek out his shop if they knew where to go.
MRH Recommendations We Gave to Bill:
- Place Local Map on Coasters and Distribute – Bill had coasters with his shop name on them. The back of these coasters, however, were blank. To maximize the potential of his location, we suggested that Bill print a local map on the blank side with all the hotel locations and distribute these coasters to local restaurants and hotels where his ideal customers were.
- Offer Free Beer With Stamped Coaster – We suggested to Bill that a great way to get first-time customers would be to ink stamp the aforementioned coasters, such that if a customer brought a stamped coaster in, they would get their first beer free. When there is a good product to be offered, first-time customers often become repeat customers.
The Fourth P – Promotion
With the product (or service) understood, the price defined, and location decided, the final P relates more closely to what we traditionally think of when it comes to marketing – promoting the product. Promotion includes things like advertising, online marketing, social media campaigns and public relations activities. Promotion is the means by which you make your market aware of the product.
The Fourth P represented Bill’s biggest area of opportunity. Given the obvious language barrier, Bill’s target client of non-Chinese consumers will have a difficult learning about this shop without a little help. Thus, finding ways to make his business known to his market was critical.
MRH Recommendations We Gave to Bill:
- Jump Into the Right Social Circles – The world is heavily influenced by social media these days. We introduced Bill to the beer drinking social App Untappd so he could look to list his beer and beer shop which would help enthusiasts find his business.
- Promote Business in the Local Expatriate Magazine – Every major city in China has an expat network, where foreigners share their recommendations for a taste of home. As was the case in Bill’s city, there are often free monthly magazines loaded with recommendations, tips, and articles about new points of interest for expats. We suggested Bill advertised in that magazine.
- Contact Concierge Desks At Western Hotels – A foreign hotel guest who goes to the concierge desk at the Hyatt asking for a place to get a good beer is an ideal situation for Bill. By making his shop known to the concierge staff at local hotels, he can draw interest and referrals.
- Offer Business Cards – For expats and foreigners spending extended periods of time in China, collecting of business cards of favorite watering holes and restaurants is commonplace. We suggested Bill place a stack of cards on the bar, such that patrons could hand them to a taxi driver the next time they wanted to go to Bill’s beer shop.
Closing Thoughts on the 4P Marketing Model
The 4P Marketing Model provides a simple, yet effective framework for evaluating your company. As in the case of Bill’s Beer Shop, looking at the aspects of his business through each of the Four Ps helped us identify several ways to help him improve his marketing campaign and building brand awareness with his target market.
Struggling with your business? Contact MRH and we can help!