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The bottle of excellence: Designing the public relations campaign for Luzhou Laiojiao's iconic liquor brands

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The bottle of excellence: Designing the public relations campaign for Luzhou Laiojiao's iconic liquor brands

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Content THE BOTTLE OF EXCELLENCE DESIGNING THE PUBLIC RELATIONS CAMPAIGN FOR LUZHOU LAOJIAO’S ICONIC LIQUOR BRANDS by Xiaohan Gao A Thesis Presented to the FACULTY OF THE USC GRADUATE SCHOOL UNIVERSITY OF SOUTHERN CALIFORNIA In Partial Fulfillment of the Requirements for the Degree MASTER OF ARTS (STRATEGIC PUBLIC RELATIONS) May 2011 Copyright 2011 Xiaohan Gao ii Table of Contents List of Tables iv List of Figures v Abstract vi Chapter 1: Background 1 1.1 History and Brands 1 1.2 Current Customer Basis and Market Position 3 1.3 Financial Situation and Operation Mode 5 1.4 Business Goals 9 Chapter 2: Statement of Opportunity 11 Chapter 3: Situation Analysis 12 3.1 Strengths 12 3.2 Weaknesses 14 3.3 Opportunities 17 3.4 Threats 19 3.5 Strategic Implications 21 Chapter 4: Research 23 4.1 Desk Research 23 4.2 Media Coverage Analysis 41 4.3 Focus Group Study 51 Chapter 5: Communication Goals and Objectives 57 5.1 Communication Goals 57 5.2 Objectives 58 iii Chapter 6: Key Audiences and Key Messages 59 6.1 Key Audiences 59 6.2 Key Messages 61 Chapter 7: Strategies and Tactics 63 7.1 Strategies 63 7.2 Tactics 66 Chapter 8: Timeline and Budget 76 8.1 Timeline 76 8.2 Budget 78 Chapter 9: Evaluation 81 References 83 Exhibits Exhibit 1: Mass Market Product Exhibition: Tequ, Touqu, and Erqu 87 Exhibit 2: Premium Market Product Exhibition: Classic National Cellar 1573 88 Exhibit 3: Iconic Products Exhibition 89 iv List of Tables Table 1: Newspaper Content Analysis Briefing 44 Table 2: Trade Magazine Content Analysis Briefing 46 Table 3: Travel &Geography Magazine Content Analysis Briefing 47 Table 4: Portable Websites Content Analysis Briefing 48 v List of Figures Fig. 1: Sales Revenue in Three Major Areas 3 Fig. 2: Major Liquor Company’s Sales Revenue: 2009 4 Fig. 3: Luzhou Laojiao Liquor Sales Revenue by Year: FY2003-FY2009 6 Fig. 4: Luzhou Laojiao Company Profit by Year: FY2003-FY2009 6 Fig. 5: Luzhou Laojiao Company Assets by Year: FY2003-FY2009 7 Fig. 6: Company Operation and Management Structure 9 Fig. 7: Classic National Cellar 1573 (38 ℃) Retail Price Trend: 2006-2009 16 Fig. 8: National Cellar 1573 Sales Revenue & All Liquor Sales Revenue: FY2003 – FY2009 (RMB in Millions) 18 Fig. 9: National Cellar 1573 Brand Family’s & Other Brands’ Percentages in the Company’s Liquor Sales Revenue: FY2006 - FY2009 19 Fig. 10: Wine Product Hierarchies 26 Fig. 11: Campaign Timeline 77 vi Abstract This paper is for the purpose of designing a public relations campaign for the iconic liquor brands of one of China’s largest liquor companies, Luzhou Laojiao ① . As liquor markets expand in China, Luzhou Laojiao decides to capture this growth and increase its iconic brand’s sales revenue. The public relations campaign will support this goal focusing on increasing the brand’s nationwide recognition. The paper initially covers the internal and external environment to determine the company’s overall situation. Then it summarizes desk research results to decipher the communication experiences in the iconic liquor field. It also conducts media coverage analysis and focus group study to collect necessary information for campaign design. Based on the research results, the paper identifies three communication goals that will effectively help the company to support the company’s business goals: increase the nationwide brand awareness, highlight the brand’s unique features, and enhance the corporate image. Finally, the paper outlines a series of strategies and tactics to achieve those communication goals. Key Words: Luzhou Laojiao; National Cellar 1573; Iconic Liquor; Public Relations Campaign ① The company name is demonstrated phonetically. The semantic meaning of the company name is: the historical wine cellar in the city of Luzhou. 1 Chapter 1 Background 1.1 History and Brands Luzhou Laojiao Liquor Company (Luzhou Laojiao Co., Ltd. Company) is one of the premiere traditional liquor distillers in China (Cultural-China). Its headquarters are in the city of Luzhou, Sichuan Province, the major province in southwest China. The business started as a family-owned liquor distillation house in the 16 th century. The four-hundred-year old company was converted to a state-owned company in 1950. In 1993 it was restructured to Luzhou Laojiao Co., Ltd. Company and then went public in 1994 (EMIS Database). As for the brands, the company mainly uses the “branded house (Frichol)” business strategy. It has two major brand families, Luzhou Laojiao and National Cellar 1573. Within the two brand families, the company has developed several additional sub-brands. Each brand has a close connection and some similarities with the other brands in the same family, yet has its specific target market and price strategy ① . ① The prices listed below are for reference. The actual prices may vary in different sales districts and upon different market demands. 2  The brand family Luzhou Laojiao is mainly for the mass market. It includes brands such as Tequ, Touqu, and Erqu (see Exhibit 1); the price per bottle ranges from RMB 160 to RMB 400 (USD 25 to USD 60).  The brand family National Cellar 1573 is for the premium market.  The dominant and most popular brand in this family is the Classic National Cellar 1573 (see Exhibit 2); the price per bottle ranges from RMB 680 to RMB 1000 (USD 100 to USD 150). In recent years, the Classic National Cellar 1573 became the company’s best selling product.  Besides the Classic National Cellar 1573, this brand family has several other brands with much higher prices, designed for discerning customers. These brands are labeled the National Cellar 1573 Customized Series and include: National Cellar 1573 · China Taste, National Cellar 1573 · National Treasure, National Cellar 1573 · National Blossom, National Cellar 1573 · No.1, etc. The company considers these brands the “iconic brands” of Luzhou Laojiao (Liu). They are made of the finest liquor and have luxurious packaging (see Exhibit 3). The regular price per bottle ranges from RMB 2,000 to RMB 8,000 (USD 300 to USD 1,350). The prices for some specifically customized bottles in this brand family can even reach as high as RMB 100,000 (USD 15,000). Traditionally, these products have limited availability. 3 Besides the two major brand families, the company also has some supplementary liquor brands, most of which were purchased from other liquor distillers. The company also has business in other industries: It runs West China Securities, a concierge service company, a travel agency, and several liquor sales companies that sell other brands of liquor as well as Luzhou Laojiao products (Luzhou Laojiao). 1.2 Current Customer Basis and Market Position Although the company has a nationwide sales network, the majority of its current customer base resides in the southwestern part of the country, with many of them concentrated in Sichuan. Figure 1 shows its 2009 sales revenue by geographic areas: 2,612, 62% 1,033, 24% 571, 14% Southwest China North China Middle and East China Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 1: Sales Revenue in Three Major Areas (2009, RMB in Millions) 4 Meanwhile, the company’s existing customers are generally between the ages of 35 and 60, and most are business / working professionals or bureaucratic officers. As for the overall market, there are several major players in the Chinese premium liquor industry. In terms of sales revenue, Wuliangye is accepted as the top-ranked company, followed by Kweichow Moutai and Luzhou Laojiao. There are also several other strong competitors such as Jiannanchun, Shuijingfang, Fen Liquor, etc. Figure 2 shows the 2009 sales revenue of the above-mentioned: 0 2,000 4,000 6,000 8,000 10,000 12,000 Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 2: Major Liquor Company’s Sales Revenue: 2009 (RMB in Millions) 5 As shown in Figure 1-6, Luzhou Laojiao is the third biggest liquor company in China. Moreover, the top two players, Wuliangye and Kweichou Moutai, have a strong nationwide sales network and are considered to be national brands. Luzhou Laojiao, along with the other three followers, focuses its business on regional sales and has relatively weak nationwide influence ① . 1.3 Financial Situation and Operation Mode As the liquor market enjoys a high increasing rate in China in recent years, Luzhou Laojiao company also benefits from this positive market trend. According to the past seven years’ annual reports, both the its liquor segment sales revenue and the its overall profits have increased at a significant rate (see Figure 3 & 4): ① According to the company’s 2010 annual report abstract available at http://stock.jrj.com.cn/share,disc,2011-03- 26,000568,0000000000000411ln.shtml, its liquor sales revenue in Sichuan province takes up almost 40% of its liquor sales revenue over the country. 6 Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 3: Luzhou Laojiao Liquor Sales Revenue by Year: FY2003-FY2009 (RMB in Millions) Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 4: Luzhou Laojiao Company Profit by Year: FY2003-FY2009 (RMB in Millions) 7 The total assets of the company jumped from 2.5 billion RMB in 2002 to 5.98 billion RMB in 2009, as shown below in Figure 5: Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 5: Luzhou Laojiao Company Assets by Year: FY2003-FY2009 (RMB in Millions) The above figures suggest that the company may be able to practically consider strategic business expansion and afford the promotion expenses thereof. As for the operation itself, the company has different strategies for producing and selling the liquor. For producing, the company maintains the centralization mode. That is to say, all the liquor products (except the brands purchased from other distillers) are made and packaged in Luzhou Laojiao’s distillation house in the city of Luzhou (Luzhou Laojiao). That is the company’s only distillation house. The company has not set up 8 plants in other cities. According to the company’s chairman, “this is the way for the company to control the product quality” (Company Blog). However, in selling the product, the company uses the decentralization mode. The company itself does not have sales offices in different districts. Instead, it deals through the local franchisers. These local franchisers pay a fixed annual fee to the company for the franchise license and to purchase the products at wholesale prices. They are not financially associated with the company and they are also allowed to sell products of other liquor brands. While the company does allocate sales personnel in different sales districts, these sales people are not directly involved in the retail businesses; their primary responsibility is to ensure that the franchisers adhere to the company’s policies and regulations, maintain the regularity of the distribution channel, regularly collect and transmit the sales information to the headquarters, and help the company decide where to distribute the product (Luzhou Laojiao). The company’s operations and management structure is shown as Figure 6: 9 Fig. 6: Luzhou Lajiao Company Operation and Management Structure Source: http://www.lzlj.com.cn/html/info/show_info_1_w1_1_5.html 1.4 Business Goals As stated by the company itself (Luzhou Laojiao), the major business goal of Luzhou Laojiao is to increase the sales revenue. By the end of the year 2018, the company estimates the rise in sales revenue to grow to 80 billion RMB (Commerce-Information). Because its core business is distilled liquor, the overall revenue increase will rely principally on the increased liquor sales. 10 Another business goal of the company is to further expand its brands. It has various business strategies to expand its two major brand families, Luzhou Laojiao and National Cellar 1573. The company strives to elevate them to top brands in their own market segmentations. Meanwhile, according to its Mission Statement, the company emphasizes its responsibility to preserve the tradition and culture of Chinese liquor. It also introduces new technology into the archaic liquor distillation industry. By integrating traditional craftsmanship with modern technology, the company strives to have more sustainability in the new era (Mission Statement). 11 Chapter 2 Statement of Opportunity Based on Luzhou Laojiao’s financial situation mentioned in the previous chapter, we can conclude that the company’s success relies upon its performance in both the mass and the premium markets. In recent years, the iconic liquor sector has continued to grow in China; Luzhou Laojiao wants to capitalize on this business climate, increase its iconic brands’ nationwide exposure, and increase its iconic products’ sales volume. On October 20, 2010, the company launched the National Cellar 1573 · China Taste, the newest brand of the company’s iconic series. By planning to create more public awareness upon the new brand, Luzhou Laojiao expects to leverage this opportunity to increase the country’s awareness on its existing iconic brands. To achieve its awareness goals, Luzhou Laojiao would benefit from a public relations campaign that would promote not only the newly-launched brands, but also (and even more importantly) to promote the company’s iconic brand family as a whole. 12 Chapter 3 Situation Analysis This chapter will feature the SWOT analysis as a way of further understanding the company’s overall internal and external situations, which could affect its expansion in the iconic liquor business. 3.1 Strengths  Product’s Special Flavor The National Cellar 1573’s taste represents the “strong aroma” liquor style, which is one of two major Chinese liquor styles ① .  Rich History and Cultural Heritage The company and its cellar enjoy rich history and culture. The company’s oldest liquor cellar was established during the Song Dynasty and has a history of over four- hundred years. Several kings favored these beverages. In more contemporary times, the liquor won first prize in the 1915 Panama Pacific International Exposition in San Francisco. The cellars were certified as “World Cultural Heritage” by China’s Administration of Cultural Heritage in 2006. That same year, the company’s ① Another representative company of the “strong aroma” style is Wuliangye, the top player in this industry. The other major style is called “smoky” style, with Kweichou Moutai as the representative company. 13 distilling technique was also honored as a “National Intangible Cultural Heritage.” (Cultural-China)  Reliable Quality The company reports that it has strict control over the product quality. It has an expert quality assurance department and tests every batch of products in the National Cellar 1573 brand family. According to a famous liquor-appreciation blogger, “National Cellar 1573 is constantly reliable on taste” (Fredriksson). Moreover, while the Chinese liquor industry has been booming since 2002 (M&A), Luzhou Laojiao has made the strategic decision to maintain a modestly increasing rate and keep its handcrafted tradition to achieve the consistent product quality (Fredriksson).  Local Customer Loyalty In the city of Luzhou, where the company’s headquarters are located, Luzhou Laojiao has an unbelievably high support rate, with the National Cellar 1573 brand family being the most consumed high-price liquor in the city’s sophisticated social circles ① . ① Those statements are supported by the focus group study results, which will be briefed in the later part of the thesis. 14  Good Company Reputation The company is highly involved in local and national corporate social responsibility activities. It sponsors building elementary schools and high schools in its headquarters city and in Sichuan province; it donates to hospitals, and it regularly hosts charity auctions to benefit women and kids in under-developed rural areas. Moreover, it publishes annual CSR report to let publics know about their endeavor in social charity participation. (Luzhou Laojiao) The above activities build the company a very positive corporate image in the society. In the year of 2010, it won the title of “The Most Proactive Public Company in CSR Participation.” (Jin)  Deep Pockets As mentioned in Chapter 1, the company’s profits have been constantly increasing in recent years (Figure 1-3), giving it potential capability to allocate sufficient resources to promote their iconic products. 3.2 Weaknesses  Low Production Capacity The production of the iconic liquor requires a very special distillation environment. According to a production manager, the company has only one cellar with the necessary humidity and temperature to produce the iconic products. This 15 limited productivity may affect the company’s profitability in the iconic liquor domain.  Lack of a Wider Range of Brand Awareness Although the company enjoys a dominant market share in its local community, when going outside of Luzhou, the focus group study results, which will be described in detail later in the thesis, reveal that it has a lot fewer loyal customers than the top two players.  Price As the companies in liquor industry generally increase their premium liquor price (see Figure 7 for an example), customer complaints have already appeared in the market (Xing), which suggest a potential dissatisfaction among the customers towards the increasing product price Therefore, since the price of the company’s iconic brand even starts at RMB 2180 (USD 350), the high price may negatively affect the product sales. The company may need to persuade the target customers to be willing to pay for the extraordinary high price of its iconic liquor. 16 0 200 400 600 800 2006 2007 2008 2009 Source: http://www.chinammn.com.cn/trade/365.html Fig. 7: Classic National Cellar 1573 (38 ℃) Retail Price Trend: 2006-2009 (RMB)  Lack of Sales Force and Experience in the Iconic Product Field The company used to focus on promoting the Classic National Cellar 1573, with most of its existing salespersons trained to promote this brand. However, the company would emphasize more on the iconic liquor business from the year of 2010. As iconic liquor is a product category with a different philosophy, the company may not have enough professional salespersons who have the necessary skill to sell the iconic products.  Lack of Distribution Channels Similar to the sales force situation, the company’s existing distribution channels for the National Cellar 1573 brand family are focused around Classic National 1573, instead of around the iconic brands such as National Cellar 1573 · China Taste, National Cellar 1573 · National Treasure, National Cellar 1573 · National Blossom, 17 National Cellar 1573 · No.1, etc. However, since the customer groups of the Classic National 1573 and the more expensive iconic brands are quite different, the distribution channel will accordingly change. Thus, the company needs to develop new sales networks. 3.3 Opportunities  Positive Luxury Goods Consumption Environment In recent years, Chinese market has seen an increasing trend in the purchase of high-price products. Research shows that luxury goods sales in China rose 30% in 2007 (Bowman). As shown in a 2008 TNS research report (TNS), a wider range of Chinese citizens began to appreciate and embrace luxury goods. This trend suggests that Chinese people’s traditional credo of “being thrifty” is changing. More people are starting to embrace a comfortable lifestyle and enjoy consuming premiere products.  Rising Market Demand for Chinese Liquor Besides the overall rise in luxury goods consumption, the market for premium- priced Chinese liquor is also promising. Although the major domestic high-price liquor brands increase their retail prices every year (Xing), the consumption of high- 18 priced liquor continues to increase (China Investment Consulting). This suggests the consumer’s growing willingness to pay for more expensive Chinese traditional liquor products. As for the Luzhou Laojiao company itself, the National Cellar 1573 brand family has a continuous increasing rate (Figure 8), making it the major revenue and profit source for the company (Figure 8 & 9): 0 1000 2000 3000 4000 5000 2003 2004 2005 2006 2007 2008 2009 National Cellar 1573 Family All Liquor Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 8: National Cellar 1573 Sales Revenue & All Liquor Sales Revenue: FY2003 – FY2009 (RMB in Millions) 19 Source: http://stock.jrj.com.cn/share,000568,ndbg.shtml Fig. 9: National Cellar 1573 Brand Family’s & Other Brands’ Percentages in the Company’s Liquor Sales Revenue: FY2006 - FY2009 (RMB in Millions) 3.4 Threats  Strong Competition Besides Luzhou Laojiao, there are also several other major companies in the Chinese liquor industry. They have a similar historical tradition and reputation to Luzhou Laojiao’s. Some of them even have a much larger market share and established their iconic brands ahead of and more strongly than those of Luzhou Laojiao. The top liquor company, Wuliangye, launched its iconic brands in 1995, four years earlier than Luzhou Laojiao (Wualiangye Company). It also sells much more high-priced liquor than Luzhou Laojiao (Stockstar). Kweichou Moutai, the second largest player in the market, is historically famous for its iconic- level products (Shi). 20 Other companies, such as Jiannanchun and Shuijingfang, also have their iconic brands and plan to increase their market share in this field (Jiannanchun Company). Thus, the competition that Luzhou Laojiao will face in the iconic liquor market will be fierce.  Government Policy The Chinese government maintains stringent control over the liquor industry expansion by designating a substantial tax (Ma). Although the liquor industry itself has a high profit margin, this unfavorable tax policy may affect a company’s financial performance. The government also has strict jurisdiction over the quality and safety of liquor products. The inspection period of these products takes longer than that of the other types of products. That may affect the products’ turnover and harm company profitability. The government also limits liquor companies’ advertisements in public areas. Every single year, it applies the strict quota against liquor companies’ advertisement amounts on media outlets such as TV, billboards, news print, etc. ①  Product Counterfeits Illegal business practitioners take advantage of famous brands. As one of the most famous liquor brands in the country, Luzhou Laojiao has to deal with the ① This limit on public advertisements, on the contrary, makes the other and more invisible way of promotion, the public relations, more imperative and important for the company. 21 possibility of counterfeit product problems, which could cause severe trouble for the company, including: a damaged reputation, lawsuits, and reduced sales of authentic products, etc. 3.5 Strategic Implications As revealed in the SWOT analysis, Luzhou Laojiao is a company with a rich history and stellar reputation. Its products provide a special drinking experience with its unique flavor style, and the quality is dependable. As the company wants to achieve nationwide recognition of its iconic brands, those strengths can be considered as major talking points and fully utilized in the campaign. However, the company faces the competition from both the market leaders’ side and the followers’ side. The government policy and fake products may also have negative influence to the company. It also needs to address its internal weaknesses: the production capacity, the new channel development and staff training, lack of the wider range of loyal customers, etc. The desired public relations campaign is thus aimed to advocate the company’s and brands’ major advantages: positive corporate image and special product features; and help the company to leverage rising iconic liquor market trend in China. The campaign is 22 also expected to help the company and the brands to stand out among the competitors and increase the nation-wide awareness. 23 Chapter 4 Research The research consists of three parts: the desk research, the media coverage analysis, and the focus group research. As the above analysis reveals the company’s unique advantages that can be leveraged as the contents of the campaign, the author expects to find out the right instruments and methodology to deliver those contents. Thus, the research will first look into the existing literature to find out the referable experience that can enlighten the campaign design. Then the research will do the media coverage analysis and focus group study to collect elements that are specifically required by the campaign this time. 4.1 Desk Research Overview The desk research examined the existing communication activities related to the iconic alcoholic beverage industry. It aimed to summarize the existing major communication activities for iconic liquor products and to reveal provisions concerning the handling of luxury goods in the China market. 24 It is worth stressing that although the research is aimed at finding inspiration to design the campaign for the Chinese liquor product, it resorts a lot to the Western iconic wine public relations theories. While the liquor is considered to be a different product category in the Western culture, Chinese traditional liquor has a similar cultural position as fine wine does in Western cultures. Because they both have long history in their own countries, their techniques to some extent represent the countries’ culture and are considered as heritages and mysteries; and the consumption of them conveys to a degree information about ones’ lifestyle and even social status. That also helps explain why the author tends to compare the Chinese liquor with the western wine, not the whisky line. Thus the author assumes that the Western iconic wine’s public relations theory can shed light on the communication campaign design for a Chinese iconic liquor brand. To achieve those goals, the desk research conducts a series of literature reviews to:  Define the features of the iconic alcoholic beverage,  Examine how alcoholic beverage companies in the Western countries handle the communication activities for the iconic products,  Find out the special modes for conducting broad research regarding luxury goods in China, and  Describe drinking habits in China 25 The Features of the Iconic Alcoholic Beverage The iconic alcoholic beverage has the general features of the luxury goods, and it also has its unique segment features. On one hand, the iconic alcoholic beverage has a high price and limited availability; it takes longer than the fast-moving goods to produce; it meets people’s specific desire and wishes to be distinctive; it has a rich history and heritage; and the stories created should be consistent with the target consumer’s mentality. On the other hand, as an independent luxury product sector, the iconic alcoholic beverage has its own unique features. It attracts a group of consumers who are very knowledgeable and selective about their liquor; it emphasizes the cultural heritage and history of the brands; and it relies heavily on promoting the country (county)-of-origin feature to attract its target customers. (WineIntelligence) A wine study conducted by several scholars in 1999 shows the hierarchical categorization of wine products, as illustrated in the figure (Figure 10) below: 26 Source: Geene, A., Heijbroek, A., Lagerwerf, H.A. and Wazir, R. (1999) The World Wine Business, Netherlands, Rabobank International. Fig. 10: Wine Product Hierarchies The study divided the wine products in the market into five levels. From the bottom level (the cheapest ones) to the top level (the most expensive ones), they are categorized as: bulk, premium, super-premium, ultra-premium, and iconic wine (Geene). The iconic wine is the most expensive category and has the most limited supply quantity. Meanwhile, according to Chevalier and Mozzalovo in their 2008 study: Wines and spirits are as problematic as luxury goods given that they are available at supermarkets…In fact, in the product concept and positioning of wines and spirits, there is a level of sophistication that sets these products away from beer. They are also away from the fast-moving, repeat-purchase products 27 because they are expensive, are often gift items and are clearly part of brand identification constructions. This combination and sophistication and selective consumption entitle wine and spirits to be included in the luxury category (Michel Chevalier). Therefore, we can consider the iconic alcoholic beverage as the “luxury” goods; it possesses the common features of the luxury products. Merriam-Webster Dictionary defines a luxury good as “something adding to pleasure or comfort but not absolutely necessary”. In her book Luxury, Emile de Laveleye described the features of the luxury goods as in her book in 1891: I understand by a luxury anything which does not answer to our primary needs, and which, since it costs much money to buy, and consequently much labour to produce…It satisfies people’s wish to distinguish one’s self and to appear of more importance than others (Laveleye). Uché Okonkwo mentions the importance of the history and stories about luxury brands in his book in 2007, Luxury Fashion Branding: Trends, Tactics, and Techniques: 28 History does matter in crafting a luxury brand. …At the same time, they (consumers) appreciate other “background stories” of the brand which increases the brand’s appeal level. These stories could also include the brand’s association with the environment, arts, culture and entertainment. The current luxury consumer is also interested in the brand stories related to the ethics, morality, corporate social responsibility and other ways that the brand provides substances (Okonkwo). Beyond the generic luxury goods features, one successful iconic alcoholic beverage brand should have its uniqueness.  Connoisseur Customers Unlike the customers of the other luxury goods segment, however, the iconic wine consumers are partly comprised of experts in the alcoholic beverage appreciation domain. According to Tony Spawton’s point of view, “Connoisseurs and aspirational consumers are the most likely to be consumers of luxury wines.” (Spawton) The customer of the Louis Vuitton handbag does not have to be savvy about leather production. However, the wine connoisseur may have been drinking wine for many years and have a deep understanding and appreciation for a particular vineyard or even the history of a particular variety of grapes. The Chinese iconic liquor drinkers share these same traits of discerning as Western wine connoisseurs. 29  Cultural Heritage Although other luxury good segmentations also rely on brand storytelling, the iconic wine especially emphasizes this aspect. According to WineIntelligence.com, a famous UK wine connoisseurs’ website, “Heritage is the most important factor, it emerged. Consumers expect that luxury wine should have a history to it.” (WineIntelligence) In the article Building Iconic Wine Brand: Exploring the Systematic Nature of Luxury Wine Brand, the famous luxury wine marketer, Michael Beverland, describes how Western wine companies leverage brand history to market their iconic wine: This (brand story telling) would consist of a detailed description of when and how the house was founded, the age of the house, and the back catalogues of products that they could produce to the public.…It was not uncommon for these producers to be able to provide a complete back catalogue of their wines, in some cases going back to the late 1800s (M. Beverland, Building Iconic Wine Brands: Exploring the Systemic Nature of Luxury Wines). Chinese traditional liquor brands also always have a long history. Most of these liquor companies have rich and old stories and are now purposely using those stories to market their products. 30  Emphasis on the Country (County) of Origin Luxury handbags may also label themselves as “Made in Italy” or “Made in France.” Those country-of-origin claims are used to assure the product quality and craftsmanship. However, the reasons that wine companies emphasize their products’ county-of-origin features are not just about quality and reliability. Because the wine products made in different regions represent different styles (due to different geologic and climatic conditions), companies need to emphasize the product’s birth place to attract those customers who have an established taste for those styles. This is why Bordeaux wine brands always have a big “Bordeaux” label on the bottles. Similarly, the iconic liquor brands in China always label themselves according to cities: Luzhou, Yibin, Zunyi, etc., which are historically famous for liquor distilling and have the most suitable geological conditions for liquor producing. Existing Iconic Alcoholic Beverage Communication Activities For this project, the author reviewed similar iconic wine communication practices in the Western countries. Most of them were in U.S., Australia, and France, which have rich traditions of wine-making. 31 In a 2000 study, Deeter-Schmelz defined five factors that influence the successful luxury goods marketing (Deeter-Schmelz). Those five factors are: brand image, product quality, fashion, store atmosphere, and patron status. Deeter-Schmelz recommends that, as an organic part of a company’s holistic strategy, the communication should also address those five factors to promote the products’ sales. Using the existing communication strategies as a benchmark, promoting the Chinese iconic alcohol products should focus on telling the brand history, assuring the product authenticity, respecting customers’ social status, and raising target customers’ awareness. In the new era, the brand promotions also begin to use new media tools and target younger customers.  Promote the Brand’s History Value In another article published in 2003, Michael Beverland, along with Sandra Luxton, wrote, “Increasingly, marketers are turning to brand histories and historical associations as sources of market value” (Michael Beverland). The public relations activities echo this trend. In another article published in 2004, Michael Beverland gave two examples. Some French wine companies give out catalogues or brochures of their wines, which illustrates that some wine were produced as early as the late 1800s. (M. Beverland, Uncovering "Theories-In-Use": Building Luxury Wine Brands). Yet, according to him, the younger wine companies leverage history in 32 different ways. Some young wine companies in New Zealand and California promote themselves as pioneers, stating they were the original producers of their own regional styles (M. Beverland, Uncovering "Theories-In-Use": Building Luxury Wine Brands).  Assure Customers of Brand Authenticity and Reliability (Dubois) According to Gilmore and Pine’s book, “Authenticity communicates what the organization stands for and conveys its core value and tradition” (Gilmore). As Brown, Sherry, and Kozinets state, "the search for authenticity is one of the cornerstones of contemporary marketing" (Brown). Moreover, authenticity is not just about the product reliability and quality. According to Nikki Goldstein, authenticity also means “something meaningful and subtle for customers” (Goldstein). That means the public relations activities need to build mental and emotional connections with the target customers. The typical tactics to promote authenticity in premium liquor market include repetitive appellation of the original producing region and behind-the-scenes wine tours (Beverland, Lindgreen and Vink).  Associate Brand’s Representation with Social Status A 2001 study explored the connection between wine drinking and social and economic status presentation. According to the study, “Wine drinking was significantly associated with higher IQ, higher parental educational level, and higher socioeconomic status” (AP Chicago). Wineries are aware of this information. In 33 promotional materials for iconic wines, the wine is always associated with other luxury goods and sophisticated social lives. The in-store atmosphere in the iconic wine stores is also often elegant, making customers feel like they’re being treated like social elites.  Gain Awareness According to Michael Beverland, the big wine companies use media endorsements to raise their brands’ awareness among the target customers. He wrote in an article, “This awareness was deliberately cultivated, either through endorsements from the press…or through promotion and experiential strategies” (M. Beverland, Uncovering "Theories-In-Use": Building Luxury Wine Brands). The related promotion tactics generally include:  Finding a suitable event to sponsor. In 1996, in order to launch its new luxury Vodka brand, the Belvedere Company sponsored a series of bartender events around the US. Those events taught the bartenders about the finest points of the product (Michael J. Silverstein);  Gaining celebrity endorsements. In the same product launch, Belvedere Company invited celebrities such as Bill Clinton, Barbara Streisand, Robert De Niro, and many others. The company sends them the products with elegant packaging as gifts, along with beautiful notes (Michael J. Silverstein); 34  Getting food & drink experts’ recommendations;  Pitching to the finest restaurants to get on their recommending menus;  Pitching product profiles to trade magazines, travel guides, wine / liquor guides, and TV cooking / gourmet shows.  Keep Pace with the Ever-Changing Environment In a society like today’s, as the youth culture gradually becomes the voice of the mainstream, some historical wine brands have begun to reinvent their images by holding events or creating buzz that reaches younger target customers. For example, the world famous Bacardi has started to promote its rum as party drink. According to an article examining its recent promotional strategies, the brand is now “focused on drinkers more accustomed to art openings and movie premieres” (Hein). It also conducts “product trials with bartenders in focus groups and at trendy night clubs” (Hein). In recent years, companies are also beginning to leverage new communication tools to reach target customers. An article analyzing interactive wine marketing summarized the new media tools utilized by the wine makers as follows: direct database marketing, email marketing, telemarketing, Internet marketing, and digital TV and mobile marketing (Quinton). 35 Specifics of Luxury Goods Public Relations in China After reviewing the communication activities in the Western countries, the next step is to examine the domestic activities to promote iconic liquor in China’s market. However, since the communication campaign for promoting the iconic liquor is a young professional domain in China market, the author could find few domestic campaigns regarding iconic liquor product promotion. Meanwhile, iconic liquors share some general features with other luxury product sectors, such as handbags, jewelry & watches, apparel, etc. Thus, the author researched communication activities for the general luxury good categories while seeking campaign inspiration. The luxury goods communication campaign’s generally focus on the following factors: discriminating brand education; the power of influential people; general public’s awareness of the brand; link with local culture and famous landscapes; contribution to local philanthropy; and careful handling of relationships with Chinese media.  Different Brand Education to Different Customers The word “luxury” as a concept of lifestyle was not generated in China. According to Ronald Degan’s research, affluent Chinese customers consist of four generations. The elder two generations, aged over 70 (the founding generation) and 50 to 65 (the Cultural Revolution generation), seldom consume luxury goods (Degan). The younger two 36 generations, aged between 30 and 49 (the upwardly mobile generation) and under 30 (young emperor generation), are more enthusiastic about consuming luxury goods (Degan). Thus, the luxury category’s public relations activities focus primarily on educating the elder two generations about the luxury lifestyle, conveying that one can get pleasure and enjoyment from consuming luxury goods. For the younger generations, the brands do not have to focus on perception change. Instead, they provide knowledge education and brand essence cultivation.  The “Ripple Effect” Public Relations A typical East Asian society, one of China’s mainstream cultural values is conformism. This value also influences customers. Chinese customers are used to following the recommendations of others (peers, authorities, celebrities, and other people with key opinions) and emulating the social elites. Thus, the luxury brands communications in China make full leverage of the “ripple effect.” By persuading one person, who is the center / the dominant person in a social circle, to use the product, the brand can reach out to more potential customers. The ripple effect can be realized through both the traditional media outlet and the new media vehicle. For example, cosmetic brands in China / Taiwan now always pitch their products in the related entertainment TV programs. As the celebrities on TV endorse or praise the products, the brands have the large chance to sell well. They also pitch to the beauty 37 blogger, sending them the free sample and try to get recommendations from the famous beauty bloggers.  Emphasis on Raising the Brand Awareness Among the General Public A 1998 article studying China consumer behavior points out that Chinese customers’ luxury goods consumption motivation largely comes from the “face” issue. Consuming and letting people know that one is consuming luxury goods will satisfy one’s vanity (Wong). Thus, besides promoting to the target consumers, luxury brands also do lots of mass media promotions in China. Although the general public is not the potential consumer of these luxury products, the more people know about the price and the reputation of the brands, the more pleasure that brands’ consumer will have when they are using those products.  Sponsoring Local Cultural and Art Events Foreign luxury brands frequently sponsor China’s traditional cultural and art events. For example, Mont Blanc set up the Mont Blanc Award for Arts Sponsorship after it entered China. It annually awards generous funds to notable Chinese traditional art performers (Xinhua News Agency). This strategy helps the brand raise awareness and build a positive image in among Chinese consumers - especially those who appreciate the arts. 38  Utilize Local Places of Interest In recent years, lots of luxury brands use China’s famous places of interest to hold their product launch press conferences. For example, Vacheron Constantin rented the Palace Museum in the Forbidden City to host a press conference, announcing its first store opening in China (Vacheron Constantin Press Release). Fendi borrowed a section of the Great Wall to host its 2008 Spring & Summer product launch show (Borrelli). These activities can produce win-win results: when the luxury brands successfully raise awareness and refresh their images by combining themselves with local environments, the Chinese places of interest also gain more international awareness.  Participate in Philanthropy As traditional Chinese culture values the virtue of being thrifty, luxury brands may incur complaints because they encourage the over-spending. Many luxury brands try to avoid this negative image by participating in social philanthropy and making generous donations. For example, Omega has a long term partnership with the UNIFEM program in China. Advocated by famous Hollywood star Nicole Kidman, the program provides funds to help poor women in rural China (United Nations). 39  Manage Good Media Relations Since Chinese media has overwhelming power on leading public opinion, the luxury brands always strive to maintain good relationships with the media. Besides the in-house communication personnel who are specifically assigned to handle the media relations, they always give generous gift to the media who show up in their events and reimburse their trip expenses. Drinking Habits in China As this thesis focuses on developing a PR campaign for promoting a Chinese liquor product in its domestic market, it is necessary to examine Chinese drinking habits. Generally, in China, high-priced liquor is always consumed by a group instead of by an individual. Both the consumption quantity and cost of the high-priced liquor can easily reach a high level when it is consumed by a group of people. The importance of the liquor can become more important than the food on the table. This type of drinking behavior is always linked with Chinese traditional culture. Besides drinking, iconic liquor can also be gifted to others or saved as collectibles.  In China, drinking is most closely associated with social relationships, while the wine in Western countries may be savored during more private occasions. The author of 40 China: Alcohol Today points out, “Drinking is socially accepted and plays a significant part in major events of daily life such as the New Year Festival, wedding ceremonies, birthday parties and so on” (Hao). This rule especially applies to high- priced liquor, which, in most cases, is consumed during social situations.  Because drinking occurs more often in social life, its consumption may lack portion control. On one hand, the host always encourages his or her guests to drink more to show their hospitality and generosity. On the other hand, people in social life conditions (parties, dinners, reunions, etc.,) may tend to lose self-control easily.  Drinking, especially consuming liquor, is always associated with dinner. Moreover, while an iconic wine is considered in Western countries as a dining complement, iconic liquor’s role in China is more important than the meal on the table.  “Drinking liquor” is also associated with traditional and upper-class Chinese culture. The creation of many traditional Chinese art works (Chinese paintings, Chinese poems, ancient hand-crafted bronze containers) are closely related to drinking behavior.  Expensive liquor can be considered a precious gift or collectible. Some limited edition liquor’s price can be boosted greatly in the auction market. In an auction in January of 2011, a gift set of Moutai liquor was bid at the price RMB 48,000 (USD 7000) (Lv), costing nearly an average Chinese white-collar’s annual salary. 41 4.2 Media Coverage Analysis Overview Media coverage analysis was conducted to help benchmark the Luzhou Laojiao’s communication achievements regarding its iconic brands promotion. It also revealed some potential shortcomings in its present media strategies ① . The author selected a period of time (from January 2010 to January 2011) and monitored various major Chinese media outlets’ coverage of Luzhou Laojiao’s iconic liquor brands. The selected media outlets included: newspapers (print version), magazines (trade magazines for the liquor industry, travel and geography magazines, gourmet magazines, men’s style magazines, life and culture magazines, collectors magazines, and free magazines distributed in flights, first-class trains, and high-end urban apartments), major portal websites, liquor blogs and liquor business websites, and TV features. The author assumes the above outlets were suitable channels through which National Cellar 1573 promotes its iconic brands. ① It is worth noticing that those results may be inaccurate and not exhaustive because the research was conducted individually and subjectively. However, they can partly reflect the company’s situation in terms of media leverage. 42 Below are the summaries and conclusions about the company’s media coverage situation regarding the iconic brands, followed by the tables showing the numerical results. Newspaper The author used the CNKI Chinese newspaper database to search the related news reports and has the following key findings:  The dominant player in this field, Wulaingye, generated 70 articles on general newspapers and 20 on industry newspaper on its iconic brands in the same period of time, as opposed to Luzhou Laojiao’s 56 and 14, respectively. Thus the numbers for newspaper coverage on National Cellar 1573’s iconic brands is considerably large. However, while the news coverage in the industry newspapers was quite positive (most of the contents are about the sales increase, technological advancement in its brewing process, etc), the author found that general newspaper coverage had the following problems: 43  Lack of news reports from the most influential newspaper in the country and in the major cities. The news coverage mostly came from economic and financial newspapers, which have a limited number of readers. As mentioned in the secondary research, the iconic product promotion in China should aim to raise the general public’s awareness of the brand. The iconic brands of National Cellar 1573 need to generate more coverage with the comprehensive and influential newspapers in the country and in the major cities (People Daily, Beijing Daily, Jiefang Daily, etc.).  Lack of positive news coverage in the general newspaper. A large proportion of the news stories were debates over the iconic liquor’s high- priced phenomenon and counter-imitation activities. This kind of news can rarely be reported in the positive tone; the company needs to generate more positive news stories.  Lack of proactive media relations activities. Most stories in the general newspapers seem to be generated by the newspaper staff themselves. The company needs to cooperate with and pitch to the newspapers more. 44 General Newspaper Industry Newspaper Total Number of Articles 56 14 Number of Articles Featuring Luzhou Laojiao’s Iconic Brands 14 7 Examples of Names of the Media 21 Century Business Herald; Financial Times Chinese; China Times, etc. China Wine News; China Food Quality News, etc. Target Readers General public; people who pay attention to macroeconomic situations. Liquor fans and connoisseurs; Liquor industry practitioners (producers and distributors). Apparent Story Sources Staff writers Staff writers and company’s spokesperson Story Themes Observation and comments on liquor price increases; Reporting the counter- imitation activities by the brands; Reporting iconic brand launches; etc. Reporting iconic brand launches; Reporting revenue increases; Featuring new brand strategies or brand stories; Reporting on awards winnings; Reporting on event sponsorship, etc. General Favorability Towards the Brands Neutral (description of the social phenomenon of the price debate, the counterfeit product issue, etc.) Positive Table 1: Newspaper Content Analysis Briefing (Jan 2010 - Jan 2011) 45 Trade Magazines The author also monitored four major liquor industry trade magazines for coverage of National Cellar 1573’s iconic brands. They were: China Drinks, Liquor Making, Liquor Making Sciences & Technology, and Wine World. Competitor Wuliangye generated 25 articles in the same period of time in those four publications, which was only four more than Luzhou Laojiao (21). However, those 13 articles were specifically featured about its iconic brands, which was more than twice Luzhou Laojiao’s. Although the trade magazines had a positive tone when reporting Luzhou Laojiao’s news and are supportive to its iconic brands’ high price, in most cases, National Cellar 1573’s iconic brands names occurred in articles featuring the whole industry or other competing brands. They rarely had their names in the headlines. The National Cellar 1573 needs explore ways to generate larger quantity of exclusive stories in these magazines. This is the efficient way to increase the brands’ awareness among the connoisseur drinkers and the major distributors. 46 Total Number of Articles 21 Number of Articles Featuring Luzhou Laojiao’s Iconic Brands 6 Total Pages 52 Target Readers Liquor industry practitioners (producers and distributors); other people who want to know the pioneer information of the liquor industry; liquor fans and connoisseurs. Apparent Story Sources Staff Writer and the spokesperson. Story Themes Profit increase of Luzhou Laojiao’s iconic brands’ sales; feature stories about major players in the iconic liquor business; Luzhou Laojiao’s unique liquor distillation technologies; Luzhou Laojiao’s successful bids for CCTV ad slots; Debates over the domestic iconic liquor’s high price issue. General Favorability Towards the Brands Positive Table 2: Trade Magazine Content Analysis Briefing (Jan 2010 - Jan 2011) Travel & Geography Magazines The author examined major domestic travel & geography magazines, including National Geographic, National Geographic Traveler, Cultural Geography, and World Traveler. The National Cellar 1573’s iconic brands did not have much media exposure in the travel or geography magazines. The author did not find stories about them in the in-flight 47 magazine or the first-class train magazines, either. As the readers of those magazines consist many social / business elites who are potential customers of iconic liquor, National Cellar 1573 needs to increase its exposure in those magazines. Total Number of Articles 2 Total Pages 21 Target Readers Travel fans; people who love to explore different culture; people who have abundant dispensable income and always plan for travel Apparent Story Sources Staff writer and the company spokesperson Story Themes One story explores the history of Luzhou city and mentions Luzhou Laojiao; One story has a 20-page long feature on Luzhou Laojiao’s distill history and its rich culture. Favorability Towards the Brands Positive Table 3: Travel &Geography Magazine Content Analysis Briefing (Jan 2010 - Jan 2011) Portals Websites The author uses the Baidu search engine to search news reports about the National Cellar 1573’s iconic brands. The search was limited in four major portal websites in China: Sina.com, 163.com, Sohu.com, and qq.com. 48 Similar to the newspaper reports, the major part of the new stories was focused on the debates over the iconic liquor’s high price phenomenon and the attacking counterfeit product activities. The portion of the iconic brand stories, positive events report, and new product launch was relatively small. The company needs strategies to address media and public concern on the price issue, as well as to generate more positive reports on the brand events and brand stories. Meanwhile, Wuliangye had their iconic brands mentioned in over 500 new stories in the above four portal websites, 100 of which were in the headlines. That may suggest that Luzhou Laojiao company needs to build longer and better relationships with the portal websites and host more events that have high reporting value. Total Number of Articles 160 Number of Article Featuring on Luzhou Laojiao’s Iconic Brands 20 Target Readers General public Apparent Story Sources Staff writers, company spokesperson Story Themes Observation and debate over the iconic liquor price increase issue; company’s charity events in the names of the iconic brands; company’s iconic product launch. Favorability Towards the Brands Neutral Table 4: Portable Websites Content Analysis Briefing (Jan 2010 - Jan 2011) 49 Feature Video Programs The author also used Baidu search engine to search CCTV’s (China Central Television) coverage on the company’s iconic brands and only yielded one entry. It was an interview with the company spokesperson on Luzhou Laojiao’s successful bids for CCTV ad slots, confirming that the company will use more media coverage to promote the iconic brand in 2011. Although the media purchase itself was the advertisement activity, it suggests that the company already begins to build the relationship with the country’s most powerful TV outlet. Thus, as the relationship develops further in future, the company may be able to plug in more soft public relations contents on CCTV. Media Coverage Analysis Summary Overall, in order to improve the effectiveness of its public relations, the company may want to improve on both the media channels and the contents. For the channels, the company needs to:  Build more relations with the comprehensive newspapers that have nationwide circulation, with the local influential newspapers in major cities in China, with the magazines covering different topics, portal websites, etc., 50  Utilize its new advertisement contract with CCTV to the fullest possible extent, and  Develop relationships with some media outlets that the company has not paid enough attention to before (e.g. gourmet magazines, men’s style magazines, life and culture magazines, collectors’ magazines, and free magazines distributed in flights, first- class trains, and high-end urban apartments, and liquor blogs and liquor business websites).  Meanwhile, the company may need to reinforce their media relations and pitch more articles / topics to the reporters. As for the contents, the company needs to:  Develop a variety of contents that will would fit in different types of magazines,  Dig more into the brands and company in order to create lengthy feature stories in the media, host more influential public relations events, and  Try to generate a positive media / public attitude towards the iconic liquor’s price increases. 51 4.3 Focus Group Research Overview Since the company wants to increase the iconic brands’ nationwide exposure, the author conducted a focus group study outside of Sichuan Province in Shanghai. The focus group study is aimed to pinpoint the target customers, their purchase motivation and consumption occasions for the iconic liquor, and the most efficient media outlet to reach them. According to the four generations theory mentioned in the earlier part of the research, the author organized two focus groups. The first group has ages ranging from 20 to 25, while the second group was aged between 48 and 55. Both groups contained eight participants ① . The second group members and the first group members’ parents were all Chinese business elites, whose yearly household incomes all exceeded one million dollars. Questions and Answers Both groups were asked the same questions. Below are the summary of the results from these two groups. ① The study was conducted in January 15, 2011, in Shanghai International Financial Center (IFC). The first group was conducted between 12pm-2:30pm, in IFC Isola Italian Kitchen, and the second one was conducted between 6:30pm-9:00pm, in IFC Li Yuan Hong Kong Tea Restaurant. The author recruited the first group through her own friends’ network, and the second group through her parent’s social network. 52  Please write down the types of alcoholic beverage drinks you drink most. All eight people in the younger group chose wine and whisky over Chinese liquor. In the elder group, five chose liquor while the other three chose wine.  Which types of restaurants do you prefer to go to most of the time? The younger people preferred to go to stylish, small, and boutique-like restaurants, while the elder groups preferred the Cantonese seafood restaurants, Sichuan hot pot restaurants, and Shanghai restaurants.  Which types of leisure / entertainment places do you often drop by? Younger people said they went to night clubs, Karaoke, and the pub the most. The elder people went to Karaoke, members-only clubs, sauna houses, etc.  How frequently do you drink liquor? Five people in the younger group said they drank liquor only once per month or even less frequently. However, six people in the elder group said they drank liquor more than twice a week.  For which occasion (s) do you drink liquor? Younger people said they drank liquor only when dining out with their parents or other elder people. Interestingly, they said they hated to be forced to drink liquor. 53 But most elder group participants said they drank liquor when they had a business dinner or other social activity, dined out with friends, or had some liquor during dinner at home to relax.  Why do you order liquor when you dine out? Younger people said they never ordered liquor unless someone at the table specifically asked for it. Elder people said because they thought all the other people at the table preferred to have liquor.  Why do you buy the liquor in liquor stores and supermarkets? Both younger and elder groups said they bought high-priced liquor as gifts to others. However, six people of the elder group said they also bought the iconic liquor as a collector’s item, to drink alone, or serve the guests.  Through which communication channels do you see the promotion of the iconic liquor brands? People in both groups chose TV ads. They also mentioned the billboards in city/airport/skyscraper, the recommendations by the restaurant managers, and the internet ads as the important channels. Two of the elder group participants 54 specifically mentioned that they were largely influenced by their business partners or major clients.  Please name some of the iconic liquor brands that you are familiar with and drink often. Only one person in the younger group mentioned the National Cellar 1573’s iconic brands. Three of the elder group mentioned the National Cellar 1573, but ranking them after Wuliangye, Moutai, and Jiannanchun.  Please describe how much you spend every year on luxury products and the percentage spent on liquor purchases. The younger group calculated that number to be RMB 100,000-RMB150, 000 (USD 15,000-USD 20,000). They thought they spent less than 10% on liquor purchases. The elder group calculated RMB 50,000-RMB 200,000 (USD 8,000-USD 35,000). The one who calculated RMB 50,000 said that all of the money was spent on liquor purchases. The rest of the elder people thought that liquor purchases took up 25% to 50% of their yearly luxury goods expense. 55 Conclusion The youngest generation of affluent customers (aged under 30) may not be an effective target for the iconic liquor brand promotion.  The only occasions to persuade them to drink / buy the products were when they dine out with elder people and when they prepared gifts for some specific people. However, the campaign might be very effective if targeting the elder generations. Their consumption behavior and perception of liquor are summarized below:  They drank liquor quite often, preferred liquor over other alcoholic beverages, and considered liquor as an important purchase item that’s a part of their yearly luxury goods expense.  They drank liquor for several occasions: business dinners; social relationship building; dining with friends; and drinking alone.  They bought liquor also for various reasons: gifting, collecting, etc.  The best way for them to have access to the iconic liquor was at restaurants and leisure places they frequented: the Cantonese seafood restaurants, Sichuan hot pot restaurants, local food restaurants, Karaoke, members-only clubs, etc. 56  TV was the best channel to reach them. They were also heavily influenced by the word-of-mouth effect, especially when the recommendation is from partners or important clients.  They were somewhat familiar with the National Cellar 1573’s iconic brands. However, they ranked them behind those of the Wuliangye Company and Kweichou Moutai. 57 Chapter 5 Communication Goals & Campaign Objectives 5.1 Communication Goals The communication goals are based on the company’s statement of opportunity: Leverage the timing of the new brand launch to increase its iconic brands’ national awareness.  Raise the national-wide public and target customers’ awareness on the company’s iconic brands. Increasing the national awareness towards the brands is a necessary step to boosting their nationwide sales revenue.  Highlight its iconic products’ competitive advantages by emphasizing its distinctive flavor and special brand stories. Differentiating the brands could effectively help the brands stand out amongst the competitors and motivate the target customers to choose these brands.  Build stronger and more positive brand images. Building a more positive image would not only help increase the company’s national recognition and contribute to the sales revenue, but also benefit the company in the long term. 58 5.2 Campaign Objectives Based on the communication goals, the measurable campaign objectives include the following:  By the end date of the campaign, generate at least 300% more media coverage in the general media outlets.  By the end date of the campaign, generate at least 200% more positive media coverage in the general media outlets.  By the end date of the campaign, refresh target customers’ impression about Luzhou Laojiao’s iconic brands by letting them know at least three excellent features of the products. 59 Chapter 6 Key Audiences & Key Messages 6.1 Key Audiences  Target Customers by Demographics This group includes two generations of Chinese affluent customers: those aged from 50 to 65, and the group aged from 30 to 49 ① . According to the focus group study results, those two generations consume liquor more than other alcoholic beverage products. This group can be further divided into two sub-groups. One sub-group is comprised of the customers from Luzhou Laojiao’s previous main market (mostly in Sichuan province); they are already very familiar with and even receptive to Luzhou Laojiao’s iconic brands. The other sub-group is potential customers outside the company’s previous main market; they may not be very familiar with Luzhou Laojiao’s iconic brands.  Key Opinion People (KOP) and Influencers As shown in the secondary research, Chinese customers are heavily influenced by the opinions of key people around them. The focus groups’ study further supports this theory. Thus, the campaign would be more likely to be effective if it can make the KOPs and other influencers recommend Luzhou Laojiao’s iconic brands more. ① This target customer group definition already excludes the younger affluent generation as the campaign’s target audiences. If the company wants to address the younger generation, it needs to develop another strategic plan and campaign, with quite different strategies and tactics. 60  Franchisers, Other Distributors, and People in the Catering Industry To increase the products’ chances of reaching target customers, the company needs to persuade the major franchisers, distributors, and restaurant managers to stock / buy more of the product and display more of its iconic brands.  Sales Force The company needs to let the sales forces know about its new plan to promote the iconic brands and do the necessary staff training.  Media Through the content analysis, we can see the company may already have established relationships with some media. However, in order to increase its positive news exposure and awareness, the company needs to develop stronger media relations, especially with the outlets that have national influence or influence in major cities.  Although the general public as a whole would not be considered the key audience, it is still important to raise their awareness and positive perceptions about the brands. 61 6.2 Key Message The author believes that the key message can be summed up in one statement: The National Cellar 1573 iconic series is the premiere product of the “strong aroma” style of liquor and is popular among social elites. It is handcrafted by a historical liquor manufacturer, Luzhou Laojiao, a company with rich brand history as well as a strong sense of social responsibility. To be more specific, the key message contains the following information about the iconic brands and the company  The National Cellar 1573’s iconic brands have the highest quality taste in the “strong aroma” liquor style. This message will be used to attract the target customers who prefer the “strong aroma” style of liquor.  The National Cellar 1573’s iconic liquor is among the most popular liquor brands consumed by the social elites. This message will be used to create the “ripple effect”, encouraging more affluent and aspirational customers to pursue the idea of a social elite lifestyle by drinking the iconic liquor produced by Luzhou Laojiao. 62  Each bottle of National Cellar 1573’s iconic liquor is hand-crafted. The products are very limited in quantity and have a guaranteed taste quality. They can meet the most demanding liquor connoisseurs’ standards.  Luzhou Laojiao is a liquor company with a rich history and cultural heritage.  Luzhou Laojiao is company dedicated to fulfilling its corporate responsibility. It is actively involved in various social philanthropy activities and encourages responsible drinking behavior. 63 Chapter 7 Strategies & Tactics 7.1 Strategies The strategies are designed to achieve the communication goals: increase the brands’ national recognition, emphasize the product differences, and enhance the corporate image. Thus, there should be three major categories of strategies: to increase national media coverage and brand awareness, to provide brand education and maintain customer relations, and to further enhance the corporate image. Increase Media Coverage and Nationwide Brand Awareness  Buzz Building and Event Hosting First, this strategy would attract media attention and thus increase the brands’ media exposure. Secondly, if the events were held in association with charity events, they would help enhance the brands reputation. Moreover, the events would also help maintain the VIP customer / stakeholder relations by inviting them to attend exclusive events that have amazing receptions. The types of the events could vary (charity events, sports events, entertainment events, etc.). 64  More Frequent and Proactive Pitches to Media As the content analysis showed, the company needs to develop new media relations and have their stories on more different types of media. This strategy requires the company to dig deeper into its history and brands to create stories of pertinent reporting value. For example, it can create mystic stories about how this legendary brewing technique was developed initially. Or it can create the story how this old liquor was appreciated by the emperors along the history. It also requires the company to be even more proactive about pitching their content to the media. Depending on the different natures of the media, the content of the stories may include the brands’ history, culture, heritage, legends, news report on the brand’s event, etc. Brand Education and Customer Care  Conduct Brand Education to Differentiate the Brands Letting the stakeholders know about the brands’ features and advantages is necessary for increasing the brands’ reception. The company needs to deliver the iconic brands’ excellent features to several groups of people: 65  The franchisers, other distributors, and key restaurant and bar managers.  The employees, especially the sales forces.  The connoisseur customers and the rest of target customers.  Win Support from Key Opinion People (KOPs) and Other Influencers Although the KOPs and other influencers may not be direct customers of the company’s iconic liquor, they exert huge influence over the target customers’ purchase decision. These people typically include business leaders, significant persons in some specific social circles, well-known chefs, liquor appreciation experts, famous liquor / wine bloggers, etc.  Treat the Potential Customers in the Way They (think they) Deserve The potential customers of Luzhou Laojiao’s iconic brands are mostly liquor connoisseurs or affluent people. They always consider themselves the liquor experts and / or the top level people in the society. Thus, the brands should communicate with them in the way that makes them feel they’re being highly respected. 66 Enhance the Corporate Image  Partnership with Non-Profit Organizations ① This strategy is aimed to improve the brands’ images However, it can also help increase the media coverage on the company, and help the brands reach its target customers, since the social elites have many chances to attend various non-profit activities. The company can build partnerships with non-governmental organizations, hospitals, schools, museums and art galleries, etc. The cooperation could be in the forms of donation, community activity participations, event sponsorship, etc. 7.2 Tactics Each strategy relies on several tactics for realizing ② . As the company wants to promote its iconic brands as a whole package, the names and images of the iconic brands of the National Cellar 1573 will appear in the tactical execution as a whole most of the time. ① Since the iconic liquor brands emphasize more on the culture and the drinking experience than on the liquor itself, some of them even advocate for the portion control in drinking, the non-profit organizations will not resist cooperating with them. ② It is worth mentioning that the tactics for different strategies are not mutually exclusive. Some tactics may work for two or even more strategies. Meantime, as this campaign would be carried out in several cities over the country, some tactics might need minor changes in order to adjust to the local cities’ culture and situations. 67 Tactics for Increase Media Coverage and Nationwide Brand Awareness  Buzz Building and Event Hosting As the liquor brands promotion needs to keep a relatively low profile to avoid protests from anti-alcoholic organizations ① , the company should sponsor more events rather than solely hosting ones.  Sponsor sports events. The best sports events that would ideally match the image of the iconic liquor and allow for exposure to its target customers are: the 2011 ATP World Tour Masters in Shanghai and China Open in Beijing, the 2011 Formula One Grand Prix Shanghai Circuit, and Beijing 2011 Crown-Golf Tournament. This tactic would help attract media, increase public awareness on the brands, and help ensure that the brands reach their potential customers.  Sponsor the national Olympics team. As the 2012 London Olympics approaches, China is beginning to prepare its national team. Becoming a major sponsor would allow the company’s names and images to be placed on the billboards when the national teams hold press ① As anti-alcoholic organizations typically protest more against the mass market liquor, they are not the key protestors that the iconic liquor campaign needs to address. However, the company may still want to avoid provoking their dissatisfaction. 68 conferences. This tactic would help enhance the company’s image as well as increase the media exposure.  Sponsor the business elite social activity. The company can sponsor the 2011 CBN Business Elite Golf Tournament, the popular monthly TV program on the economic and financial channel of Shanghai TV. The company can also provide free drinks for the annual parties of the top Chinese companies. This tactic would increase the brands’ chances of directly reaching the KOPs and potential customers.  Sponsor the musical gala held during the holiday season. The company may want to choose 2011 Mid-Autumn Day, 2011 National Day, 2012 New Year’s Eve, and 2012 Lunar New Year, to sponsor musical galas in Beijing, Shanghai, Guangzhou, and Chengdu for those holidays. The company could also sponsor some of the China Center Television concerts for the holidays. This tactic would help increase the public awareness of the brands. And letting more public know about those brands will increase the consumption satisfaction among those brands’ actual consumers.  Sponsor Luzhou’s tourism promotions. The company’s headquarter city Luzhou hosts the national level Annual Tourism Summit every year and promotes its long history and rich tourism 69 resources. The company could sponsor the summit. By doing this, the company may be able to associate the iconic brands with the city’s long history and add cultural value to the brands. Moreover, tying the brand image with the local tourism would reinforce the products’ exclusive and representative geographic features.  Be present at high-end restaurant and bar openings in major cities. The company can give free samples to the guests during the restaurant and bar grand openings in Beijing, Shanghai, Guangzhou, and Chengdu. The connection with restaurants and bars would increase the brands’ chance to reach the potential customers. The company may also be able to develop new customers through this way.  Be present in luxury goods exhibitions / shows. Aligning the brands themselves with other luxury goods would reinforce the products’ luxury feature. The company could buy billboards in 2011 Beijing Auto Show and 2011 Shanghai Auto Show. It is also a good way to reach the potential customers.  Host a liquor appreciation competition and festival in the city of Luzhou. The company could host a liquor taste competition. The competition would not be aimed at encouraging people to drink more; it would be aimed at 70 encouraging people to appreciate the taste of the liquor. The winner would be the person who could be able to tell the subtle differences among various brands of Chinese liquor. He or she would win the most expensive liquor produced by Luzhou Laojiao. The liquor festival could be co-hosted with the local musical gala, with invitations to perform extended to popular singers in the country. This event would help demonstrate the cultural value associated with iconic liquor. Through the liquor competition and festival, the company can showcase its rich culture, increase nationwide public awareness, educate the drinking / liquor knowledge, and show its credo of “portion control.”  Cooperate with travel and culture magazines (e.g. National Geographic China, Travel & Leisure) to host the “Journey of Finding the Bottle of Excellence” Competition. This event would call on travel fans to design trips for finding the finest liquor in the country. The winner would be awarded a round-trip flight to Sichuan province, a one-week stay at a five-star hotel, and other complimentary services. This is a way to create buzz-building and increase media exposure in magazines. 71  Pitch to Media More Frequently Dig deeper into the company’s history lore, anecdotes, production techniques, and all other storytelling resources. Develop them into different themed stories. Similarly to the US system, when creating magazine stories or feature newspaper articles, Chinese reporters always decides the topic theme first, and then they begin to seek the suitable contents. Thus the company needs s to regularly check with the media to see if they are working on the related topics. The company could also pitch those stories when they invite the media to the above company-sponsored events.  Study the styles of the different media and invite the appropriate media to the above events. For the sports and Olympics events, the company should invite sports media (e.g. Sports Weekly, Golf, Tennis), portal websites (e.g. Sina, 163, QQ, Tom), and local influential newspapers (e.g. Jiefang Daily and Xinmin Evening News in Shanghai, Beijing Evening News in Beijing). For the business elite activities and luxury goods exhibitions, the company could invite the business newspapers and magazines (e.g. 21 Century Business Herald, China Times, Forbes China, New Finance & Economics), men’s style magazines (e.g. GQ, Vogue Men, and Bazaar Men). 72 For the musical galas, the company could invite the local influential newspaper, entertainment TV channels in the local cities, portal websites, lifestyle magazines (e.g. Vogue, Bazaar, Cosmopolitan), food and drink magazines (e.g. Food & Wine, Wine World). For the City Tourism Summit Sponsorship and Liquor Festival and Competition, the company should invite the portal websites, the food & drink magazines, the lifestyle magazines, the travel and culture magazines, and even the entertainment newspapers.  Invite influential liquor bloggers (in Sina and Sohu blogs) and famous connoisseurs to the events. Maintain active communication with them about the topics that they are going to write.  Promote the “Journey of Finding the Bottle of Excellence” Competition on the portal websites, the online tourism forums, inside the cooperating magazines, and other interactive social networks in China (e.g. Renren, Kaixin 001, and Douban). 73 Tactics for Brand Education and Customer Care  Brand Education  For the franchisers and the distributors, develop a brochure to introduce the excellent taste features and collectible values of those brands. By demonstrating the considerable profits that may be generated by the iconic liquor, the company may be able to persuade more franchisers and distributors to buy in the iconic products.  For the restaurant and bar managers, give out the same brochure as the one given to the franchisers and the distributors. The company can send the sales forces to show them the best way to enjoy the iconic liquor (how to match with dinner, how to mix with other drinks, etc.).  For the sales forces, develop the newsletters to introduce the products features, new skills required for selling the iconic brands, and other information regarding the company’s new brand strategy.  For the connoisseur customers and general customers, develop another version of the brochure (similar to that for the franchisers and distributors), which will include an introduction of the products’ distinguishable taste features, its rich history and cultural background, and the liquor drinking knowledge and courtesy, the collectible value of the products, etc. 74  Host the liquor tour and invite the customers and franchisers to the company headquarters to attend.  Regularly host free tastings in major cities’ bar / night club areas.  Win Support from the Key Opinion People (KOPs) and Other Influencers  Invite those people to attend the company’s sponsored or hosted events, give excellent receptions, and send them iconic liquor as a gift.  The company can also invite them on the liquor tour and treat them to the best food and drinks.  Treat the Potential Customers in the Way They (think they) Deserve  The design of the customer brochure should be elegant, and the messages in the brochure should echo with the readers’ honored social status.  When they attend the company’s liquor tour, treat them with the best reception.  Establish the “Luzhou Laojiao Excellence Club,” invite all the regular customers to join in, and organize members-only events regularly. Regularly send the members the holiday greeting cards and updated customer brochure. 75 Tactics for Partnership with Non-Profit Organizations  Throughout May 2011 to August 2011, sponsor three popular and image-matching museums or galleries in Shanghai (e.g. 1933 Art Studios, Creek Art Gallery), and Beijing (e.g. 798 Art Zone, Beijing Olympics Museum), two in Guangzhou and Chengdu. Further, try to persuade them to host some Chinese liquor tradition exhibitions. Give the VIP guest the special iconic liquor as the on-show gifts.  Keep supporting the present beneficiaries. The company is now sponsoring several elementary schools in Sichuan Province and the largest city hospital in Luzhou.  Research other non-profit organizations in China and find three influential ones to support (e.g. China Women Development Foundation, Compassion for Migrant Children, One Foundation). Host press conferences for the donation ceremonies and be present at the organization events.  The company can even cooperate with one anti-alcoholic organization and sponsor their community activities.  Support projects at the universities. The company can support the culture research projects (e.g. 30 Degree son North Altitude Project at Fudan University), and some chemistry or agriculture study projects.  Donate the top products and sponsor the famous charity auctions in China (e.g. Bazaar Night of Charity). 76 Chapter 8 Timeline & Budget 8.1 Timeline The campaign will last for about one year, starting in March 2011 and ending by January 2012, when the 2012 lunar New Year holiday season ends. Because the campaign tactics contain lots of sponsorship for the events, timelines for tactical execution are largely determined by the dates of those events. As these events are hosted year round, the campaign does not have a traditional pre-campaign stage. However, the most important period of the campaign will be from September 2011 to January 2012, when the events are hosted frequently during a series of holidays. The campaign will also situate more activities in March 2011 to create a strong start. The non-event-sponsorship tactics would be executed in the months with few or no other events, in order to maintain the brands’ media exposure. A brief timeline of the proposed campaign is drawn below (see Figure 11) 77 Fig. 11: Campaign Timeline (March 2011-January 2012) 78 8.2 Budget ① The company reported RMB 1.6 billion profit in 2009. Since its profit have continued to increase in the past eight years, it is reasonable to believe that the company will report more than 1.6 billion (USD 2.5 billion) in profits in 2010. Meantime, the company signed the contract with China Central Television, committing RMB 400 million (USD 65 million) to its ad slots in 2011 (Reporter). Thus, the author assumes that the campaign is sufficiently resourced and on that basis the company would be willing to generously invest in the advertisements / public relations. Therefore, the budget calculated below considers all of the recommended tactics. However, it can become more flexible by eliminating some of the tactics listed, if the company wants to lower its public relations investment. The total budget for the one-year campaign is RMB 30,195,000. It consists of the following parts:  Publication Design, Reprinting, and Distribution: Subtotal RMB 485,000  Brochures for Customers: Design 5,000*3 Issues=15,000 Reprinting 100,000 ② *3Issues=300,000  Brochures for Franchisers: Design 5,000*3 Issues=15,000 Reprinting 10,000 ① *3 Issues=30,000 ① The budget does not count in the cost for doing additional research and conducting the evaluation. ② One million customer brochures for each issue, RMB 0.1 for each copy. 79  Sales Force Newsletter: Design 10,000 ② Use electronic copies.  Holiday Greeting Cards: Design 5,000 Reprinting 10,000 ③  Distribution & Delivery: 100,000  Event Sponsorship / Hosting: Subtotal RMB 17,110,000  2011 ATP World Tour Masters in Shanghai: 1,000,000  2011 ATP China Open in Beijing: 1,000,000  2011 Crown-Golf Tournament: 500,000  National Olympics Team: 5,000,000  CBN Business Elite Golf: 500,000  Company Annual Party: 500,000  Total 16 Musical Galas for Four Holidays in Four Cities: 1,600,000  Luzhou City Tourism Summit: 100,000  2011 Shanghai and Beijing Auto Show: 1,000,000  Liquor Festival: 5,000,000 ① One hundred thousand franchiser brochures for each issue, RMB 0.1 for each copy. ② The initial design cost around RMB 8,000, then the next issues will cost 2,000 together. ③ Ten thousand copies needed, RMB 1 for each copy. 80  Liquor Club Events: 1,000,000  Donation & Support of Non-Profit Organizations: Subtotal RMB 6,600,000  Total 13 Museums and Galleries in Four Cities: 2,600,000  Total Three Non-Profit Organizations: 1,500,000  University Research Project Support: 2,000,000  Bazaar Night of Charity: 500,000  Reception, Transportation, Accommodation, Gift-Giving for Media, KOPs, and Customers during the Events and Liquor Tour: Estimated Subtotal RMB 5,000,000  Competition Awards: Estimated RMB 300,000  Free Tastings in Restaurants and Bars: Estimated RMB 200,000  Miscellaneous (competition promotion on social networks, communication staff business trip expenses, etc.): RMB 500,000 81 Chapter 9 Evaluation Instead of merely conducting the evaluation after the whole campaign, the company should monitor the campaign continuously and adjust the tactics if necessary. The following instruments would be developed to evaluate the campaign:  Monitor the news reports before and after each campaign. For each of the major events (musical, sports events, etc), it is expected to generate at least ten original newspaper reports. By the end of the campaign, it is expected to generate 300% more news reports on the iconic brands than the same period the prior year ① . Then we can expect a 20% awareness increase among the public and 30% increase among the target customers (as stated in the objectives). It is recommended to use www.meihua.info to conduct media monitoring here and below. In terms of measuring the public awareness towards the brands, the author recommends conducting surveys thereafter.  In the middle of the campaign (in August 2011), clip all the media reports and conduct content analysis. The company should expect 200% more positive news about the brands. The positive news may include, but not only limited in, the feature articles about company history and product special features, the new reports on the ① This expected result is based on that there is no further adjustment on the tactics. If the tactics change after the mid- campaign evaluation, this expected result may also change accordingly. 82 company’s sponsorship with the events, the news reports on the company’s corporate philanthropy activities, etc. If not, consider adjusting the tactics. By the end of the campaign, the company should expect 300% more positive news about the brands.  In the middle of the campaign, conduct a focus group study or interviews among the target customers. This is to find out how much more they know about the brands and whether they have new and better impressions about the brands. Based on the mid- campaign study results, the company could see the effectiveness of the tactics. 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Abstract (if available)

Abstract This paper is for the purpose of designing a public relations campaign for the iconic liquor brands of one of China’s largest liquor companies, Luzhou Laojiao .

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Creator Gao, Xiaohan (author)

Core Title The bottle of excellence: Designing the public relations campaign for Luzhou Laiojiao's iconic liquor brands

School Annenberg School for Communication

Degree Master of Arts

Degree Program Strategic Public Relations

Publication Date 05/02/2011

Defense Date 03/30/2011

Publisher University of Southern California (original), University of Southern California. Libraries (digital)

Tag Iconic Liquor,Luzhou Laojiao,National Cellar 1573,OAI-PMH Harvest,Public Relations Campaign

Place Name China (countries)

Language English

Contributor Electronically uploaded by the author (provenance)

Advisor Wang, Jay (Jian) (committee chair), Jackson, Laura Min (committee member), Thorson, Kjerstin (committee member)

Creator Email lotuspippo@gmail.com,xiaohang@usc.edu

Permanent Link (DOI) https://doi.org/10.25549/usctheses-m3836

Unique identifier UC1173828

Identifier etd-Gao-4443 (filename),usctheses-m40 (legacy collection record id),usctheses-c127-457847 (legacy record id),usctheses-m3836 (legacy record id)

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Dmrecord 457847

Document Type Thesis

Rights Gao, Xiaohan

Type texts

Source University of Southern California (contributing entity), University of Southern California Dissertations and Theses (collection)

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