As the battle continues between the American fast food juggernauts, McDonald's and KFC, some interesting strategies are being employed by each brand in hope for enhanced market share.  As the two giants have launched and counter-launched lunch time promotions that offer "lunch sets" or "combo meals" at 15 RMB (between the hours of 11AM and 3PM), the role of branding and the establishment of emotional and intangible perceptions about each brand is becoming more and more important.  Over the past few months, close observers can see that the companies have taken two clearly distinct paths toward attempted differentiation.  First, KFC has branded itself as not only the leader in high quality fast food chicken, but also a provider of tasty new meals & snacks that appear & rotate almost every quarter.  McDonald's on the other hand has decided to focus on its traditional offerings with only slight variations, while it has begun to rely more on advertising to support and enhance the claims of its trademark hamburgers: 

In the above, we first see an example of how McDonald's has specifically identified young males as the target audience for the Big Mac.  With sound marcom fundamentals, this comedic, well focused ad seems to have been well received in the marketplace so far.  On the other hand, KFC has become well known for diversity in their menu and always having something new to try.  Though not always long lasting, the new dishes provide a level of excitement to China's young consumers - a service aspect that McDonald's has not yet seemed to capture nor attempted to achieve.  It will remain to be seen how these strategic decisions play out, but for now the perception of KFC's superiority in terms of food quality, diversity, while maintaining equal or lower prices than McDonald's has allowed it to maintain its market leadership.

From a marketing communications standpoint, it appears Jack Daniel’s is positioning itself with a superlative message – no other whisky brand represents America like Jack Daniels – a logical choice of message indeed.  As foreign products in China are naturally regarded as higher quality products that can demand a price premium, the strength of the company’s brand story is an enormous asset.  As the beverage is still at the onset of establishing a foothold in China, such brand awareness campaigns are certainly critical while gaining share of voice, top of mind and eventually enhanced market share within the category.  

Observing the placement of such ads within the metro system, however, leads one to wonder if the company put the cart before the horse in terms of its marketing strategy. Is Jack Daniel’s really targeting the masses who ride the metro system to work every day?  Are these workers who on average earn less than US$670 per month (Shenzhen Statistics Bureau) really those that the brand expects to become loyal customers? Early on in planning, the ideal consumer segment might have been more carefully identified and targeted, so that the core message of the brand awareness campaigns could reach consumers who are most likely to be receptive and responsive to it.  It seems instead, the company was advised to appeal to the masses – after all, a small percentage of sales from a large pool of consumers is good right?

In China Brand Consulting’s opinion, this ad’s message was right on the mark, but the placement within public transport is incongruent with a highly targeted integrated marketing communications strategy for a premium brand. While most riders of the Shenzhen metro system are undoubtedly impressed by the classy design of the advertising, few are anywhere near the point where they could become repeat brand loyalists. Faced with the choice of dedicate a full 6% of their monthly income to buy a bottle of alcohol at the nearest corner store is a habit that is extremely unlikely to develop, especially when the lower middle class can simply grab a decent tasting one-liter bottle of Tsingtao beer for a mere 4.5 RMB (US$ 0.71) at the same store.  In truth, the part of the “middle class” that Jack Daniel’s seeks is not made up of those who use public transport, rather those who own cars.  If only these ad dollars were spent on billboards along roadways in the bar area!  If it were this campaign would have reached the correct target audience – achieving high percentages of top of mind that would have translated into more sustainable market share.

Also, speaking of corner stores, Jack Daniel’s indeed is available at a good number of them, though they often have a bit of dust formed on the bottle.  Of course, having as many sales outlets as possible allows for convenient purchase of the product.  However, again, brand managers launching products in the Chinese marketplace must understand who will be purchasing their product.  The demographic that would be susceptible to the purchase of higher-end whisky is that of the upper middle class – a group that drives to large supermarkets like Carrefour, Jusco and Walmart for their frequent purchases of quality food & drink.  This group also seeks out specialty stores for purchases related holidays and business. 

With a perfect opportunity to position itself as the premier American whisky, it could be suggested that Jack Daniel’s is in the process of diluting its natural placement as a premium whisky in a young marketplace that inherently values American products.  China Brand Consulting would caution the company and suggest that it seriously reconsider the placement of their brand awareness campaigns to ensure that they are meant for a specific target segment of consumers.  While the whiskey market is still relatively young in China, it is recommended that an intense focus toward the affluent and upper middle-class consumers be maintained.  In this fashion, the brand can remain highly profitable with strong brand equity as it nears the critical early majority stage of the diffusion curve.