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Electronics vendors like 'grapevine' as sales tool

Overseas consumer electronics vendors are edging out domestic competitors when it comes to brand advocacy, a gauge also closely relevant to company revenue growth in China.

Word of mouth reaping big rewards for Xiaomi, Samsung, competitors

Overseas consumer electronics vendors are edging out domestic competitors when it comes to brand advocacy, a gauge also closely relevant to company revenue growth in China, a consultancy report said on Wednesday.

Lower word-of-mouth scores are sounding the alarm for Chinese companies-especially those with global ambitions-that it's time to change marketing strategies while their products are steadily gaining ground, said analysts.

Price, hardware performance and design are the most looked-at areas for Chinese buyers when purchasing consumer electronics such as smartphones, tablets and smart televisions, according to the Boston Consulting Group, a multinational consultancy and publisher of the report.

The study, which gathered responses from more than 8,500 people, found that advocacy serves as a significant information channel.

Samsung Electronics Co Ltd and Apple Inc are among the most recommended choices in the country because of good device performance and aggressive marketing strategy, it said. By contrast, Huawei Technology Co Ltd, Lenovo Group Ltd and other local brands scored low, even in heavily invested markets such as portal devices and smart TVs.

Lenovo received a merely average score of 58 percent in the handset category, on par with BlackBerry Ltd, a Canadian company that doesn't have a substantial business in China.

The result was particularly bracing for Lenovo, the second-largest smartphone producer in China by market share, which recently said it would buy out Motorola Mobility for $2.9 billion.

Guangdong-based consumer electronics maker TCL Corp also came in low in the smart TV segment, while South Korean and Japanese brands dominated the top five spots, the report said.

"The brand advocacy scores from existing buyers were similar in the smart TV segment, but Chinese manufacturers failed to get a better-than-average score among noncustomers," said Li Shu, head of BCG's Beijing office.

Evaluations from nonconsumers can be used to infer the brands' future earnings potential. BCG found out that companies getting higher scores tend to enjoy higher potential revenue growth.

Although Chinese companies are gaining larger market share, they'll face problems taking on global players because companies such as Samsung enjoy far better brand awareness than Chinese players, said Li.

Francois Candelon, senior partner with BCG Greater China, said young companies in China should know the market thoroughly and ensure their advertising is efficient.

"The power of mass media is decreasing, and buyers tend to listen to friends and relatives for advice. Traditional Chinese manufacturers should give more attention to new marketing skills, including making better use of social media," said Candelon.

About half of the respondents said they seek opinions from friends or relatives about an unfamiliar brand.

"It's not enough for local makers to have good engineers; it is also important to advocate their brands in the most efficient way," he added.

Xiaomi Corp, a Beijing-based smartphone maker, may be setting a good marketing example for other local brands, researchers said. Marketing moves involving multiple social networking platforms meant that Xiaomi received the same score as Apple on the smartphone front.

Even the company's long-time foe, Qihoo 360 Technology Co Ltd's founder Zhou Hongyi, praised Xiaomi's marketing strategy this week. Zhou asked his own marketing team to learn Xiaomi's "successful" marketing mindset.

"Xiaomi needs to be more sophisticated to address customers from different segments, and they did it well," said Candelon.

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