Monday, May 5, 2014

Brand Names Can Set Expectations Even for Known Imitators in China

In an article in The New York Times about the imitation of well-known international brand names in China's hotel industry (HT Helen Gao), Julie Weed shared a viewpoint from one international hotel:
“We do take steps to protect our brand, " said Sian Griffiths, director of communications for the Hong Kong Peninsula Hotel. “However, we also feel that our target customers are sufficiently discerning not to confuse the Peninsula-branded hotels with the copycats.”
But an example Weed shares shows why The Peninsula Hotels may still have reason for concern:
Li Quan, a pharmaceutical sales representative traveling on business this week in Shanghai, said he knew the Hengsheng Peninsula International Hotel was not part of the international Peninsula chain, but believed it would be an “upscale hotel because of the obvious name resemblance.”

He was disappointed to find “so-so facilities and worse-than-average service,” and said that some domestic hotels tried “to boost their value and brand awareness by sharing names with other reputable hotel chains so they can achieve a make-believe attachment to those hotels.”
Using similar logic as Li, people may also buy mobile phones, such as the iPncne I saw in Yinchuan, even if they are recognized as imitating a well-known international brand. Several years ago in a post about how local rates, fashion, and fakes are relevant to mobile phones in China I shared a relevant example from Shuolong, Guangxi:
Her dream phone was a Nokia. Not because of any concerns regarding fashion but because she believed it would be very reliable and rugged. However, a real Nokia phone was not a possibility given their relatively high price so she wanted to get a fake Nokia phone since it would be cheaper.

Unlike many other examples I've seen of purchasing fake products, her choice of a fake Nokia versus other relatively inexpensive options did not appear to be driven by how others around her would perceive the product. It was about her own internal expectations for what the product could provide to her based on its name - even though it would be a fake.
The hotel and mobile phone examples show if brand X's name is used in some way by an known imitator in China, people can have an expectation that an X-ish level of quality or type of experience will be delivered. If the imitator is then chosen, those expectations may positively color later perceptions, or they may draw attention to any shortcomings. That brand names can have such powerful carryover effects for known imitators is yet another sign of their value.

Surely this effect is not limited to only hotels and mobile phones. And it is one reason why customers' being able to distinguish genuine from imitation isn't necessarily enough for a company to avoid losing business to its imitators.

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