The dilemma of Dabao

Lun Lixin (1155081992)

Dabao, one of the traditional cosmetic brands in China, is really famous in domestic cosmetic industry in past few decades. It was found in 1985 and has launched more than 100 varieties. In 2008, it was purchased by Johnson & Johnson which was believed to tackle the brand rejuvenation problem. However, it seems that it is still trapped in the dilemma. Generally speaking, I supposed that this dilemma was caused by the obsolete understanding towards its consumers and market segmentation strategies.

The multi-segmentation strategies of Dabao

To some extent, the key of its previous success depends on its accurate segmentation strategies towards its consumers. In order to know deeply about the obstacles of marketing nowadays, it is better for us to know the reasons and features of strategies.

Geographic segmentation strategy:

In 80s and 90s, it basically targets the third and the fourth-tier cities, as well as rural markets in China because of the market size in those regions and the cost of advertisement. Compared to just few tier 1 and 2 cities in China, the markets in those less developed cities are more tremendous and the potential is appreciable since the population in those areas are much larger than that in big cities. On the other hand, the promotion channels in those regions (mainly TV and mall selling) are simpler than in larger cities which means Dabao could focus on just a few channels to promote the product and cut the fee of distribution.

Demographic Segmentation strategy:

In order to apply effective promotion methods, it is necessary to discover some demographic common points of the consumers. The consumers it targeted is 26-50 people, in middle class or even the lower class, who had lower income. As a result, the price of products are relatively lower than other brands which had become one of the advantages for Dabao. For example, 15.2 RMB for 165 ml body lotion is almost affordable for everyone.

Benefit Segmentation strategy:

In order to differentiate its brand, Dabao tries to maximize products value for consumers. Different from other cosmetic brand, Dabao propagandizes that it is suitable for everyone in your family, instead of highlighting sole value for the buyer which facilitates consumers to care about their families conveniently. Reinforcing this feature, it creates a warm brand image among the public till today.

Psychographic Segmentation strategy:

Dabao did quite well in knowing deeply about its consumers attitudes towards cosmetic product and life style. According to the China VALS which was developed from VALS and VALS 2 in 2002, it is clear that the consumers are mostly in the 5 groups in middle and lower classes who have some traits that Dabao concerns about, such as sensitivity towards product, caring families and preference towards national brand,etc. As a result, most of its advertisements underlined concepts of family sharing, high cost-effectiveness as well as “the famous national brand” to arouse audience empathy, which enables the warm image to deeply root in audience mindset.

China VALS

Obstacles generated from solidified segmentation strategies

Actually, the obstacles Dabao is facing in recent years are generated from the former successful multi-segmentation strategies which also cause the malposition between brand and consumers. There are 2 main problems:

1.Changes of attitude cause disappeared advantages. As economy develops rapidly in China, consumers become less sensitive towards price and prefer high-end product which provides better user experience. Nonetheless, Dabao still sticks to promote its low price rather than new features in its advertisement that leaves an impression of cheap brand with poor quality on consumers. On the other hand, consumers attach more importance to personality and creativity of products than ever before which are overlooked by Dabao. As a result, even though Dabao has introduced more than 10 new species in the past few years, it is still less welcomed and occupies lower market sharing since it doesn’t improve its core value of product but just provides similar products without differentiated features from that of other brands.

2.Brand rejuvenation causes contradiction between younger generation and the old consumers. To refresh the image, it has planned several campaigns to target the youngsters, such as changing packaging, inviting popular celebrities,etc. Unfortunately, with weakness in persuading youngsters, it also troubles the loyal consumers because they question the updated image and packaging. It seems that Dabao have to balance those 2 kinds of target consumers in the process of refreshment.

In conclusion, we must admitted that Dabao did do a great job in targeted marketing strategies before, although it is necessary and urgent to figure out new insights towards its consumers.

Marketing analysis before purchase:

http://www.zghzp.com/news/yxgl/alfx/22759.html

Brand rejuvenation dilemma after purchase:

http://news.hexun.com/2012-08-05/144384632.html

News about Dabao dilemma in 2016:

http://www.ebrun.com/20160921/193374.shtml

Analysis about Dabao brand dilemma in 2016:

http://www.bbtnews.com.cn/2016/0921/161637.shtml

China VALS introduction:

http://www.doc88.com/p-8972235347313.html