Darren Paproski - final PhD submission.pdf - University of ...

Walmart in 2007, who explained that Walmart will retain its premium positioning and "foreign"
retail strategy while TrustMart will continue to act like a traditional Chinese retailer (Cheng,
2008). This strategy is manifest largely in Walmart's maintenance of its "Every Day Low Price"
strategy while TrustMart will continue its strategy of short-term deep price discounts which act
as loss leaders (Cheng, 2008).
In a study of how best to translate foreign brand names into Chinese, Dong and Helms (2001)
proposed that the translation method should match the target segment. Dong and Helm
conceived that brands could be literally translated to sound like a foreign brand, creatively
translated to be neutral, or translated to sound Chinese. They hypothesize, for example, that
brand names translated with a Western flavor that suggest a foreign origin will elicit a favorable
image among college graduates and students more than among urban middle class and rural
residents or farmers. They further proposed that translations with a Chinese flavour that do
not suggest foreign origin will be more likely to elicit a favorable brand image among urban
middle class and rural residents and farmers. While confirmatory research is lacking to support
their propositions, their conceptions suggest different possible reactions to marketing stimuli
among different segments within China.
A2.3 Price
In countries where demand tends to exceed supply, price is not usually used as a competitive
tool as Saurazas (2000) observed in her United Arab Emirates study. In contrast, price in many
product categories in China tends to be used as a major competitive tool because supply in
many cases exceeds demand. This is particularly acute in the light manufacturing and garment
sectors.
Many manufacturers produce products to fit into one of three common price ranges: low,
medium, and high (Cheng, 2008). Consumers then generally choose products at one of the
price points. Within price points, producers often use price discounts to drive product sales.
The most competitive price point is the low end of the scale because of strong competition in
producing medium- to low-quality products where price is the main differentiator. At the very
low end of the pricing scale many consumers are limited by disposable income and are
attracted to value pricing promotions, giveaways, and on-pack promotional items. Therefore, in
order to achieve significant market share in rural markets, such as those achieved by Unilever
and Colgate-Palmolive, marketers need to occupy the lower price points because that is where
the volumes are (Eckhardt and Cayla, 2003).
Prestige pricing is most often seen with respect to imported foreign brands and in particular on
electronics, vehicles, wines and spirits, wrist watches, and other conspicuous products as well
as in most foreign-owned franchise restaurants and hotels. Pricing thus plays a key role in
product positioning at the high end of the scale. Foreign producers who have established joint
venture production in China retain premium pricing but their price point falls below imported
foreign brands because of the avoidance of tariffs and other costs of import. In most cases
these cost savings are passed on to consumers.
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