Foreign Biological Reagent Enterprises in China: Marketing Concepts and Practices

BAI Jian, DAI Juan, LI Ye



Foreign Biological Reagent Enterprises in China: Marketing Concepts and Practices

BAI Jian1, DAI Juan2, LI Ye1

Objective To analyze the reasons why foreign biological reagent enterprises became successful in China. Methods The reasons for success of foreign biological reagent enterprises were explored from four aspects: product research and development, brand value, technical support and promotion approaches. Results and Conclusion Foreign biological reagent enterprises win recognition in China from four aspects: high-quality products, higher brand value, professionally technical support and perfect marketing strategies.

marketing strategy; marketing model; biological reagent; brand value

With the increasing investment in scientific research year by year, market for biological reagents in China has expanded greatly. The big demand arouses greatly the enthusiasm of the domestic biological reagent enterprises. Meanwhile, many foreign companies also entered Chinese biological reagent market through direct investment, joint venture and other ways. Recently, a survey showed that the imported biological reagent sales occupied more than 80% of the total amount of domestic sales in China. However, this proportion reached 95% in the high-end reagent sales. Currently, the technology of domestic biological reagents is relatively undeveloped compared with foreign technology, and most of the products are generic from the imported products. Besides, marketing channels are complicated. The electronic commerce with the third party logistics has not been effectively applied by domestic companies[1]. Compared with domestic companies, foreign biological reagent companies have developed for a long period, accumulated rich experience, and formed excellent development strategies. Their sales strategies are completely different from the domestic enterprises. For instance, they do not build relationship marketing[2], but domestic enterprises are willing to do it. Some unique marketing strategies are worth being studied by related enterprises in China.

1 Concentrating on products research and development, and dominating market with technological advantages

Many famous international biological reagent enterprises pay attention to products’ research and development[3], and this feature is mainly embodied in the research and development of products and sales. Almost all world famous biological reagent enterprises have more than one kind of the patented products in relative field as their backups. However, compared with the leading companies in the field, companies in China have not hold the key technology to produce the related or similar goods with high quality. This situation brings world famous companies huge profits, but it is based on the investment as the forerunner. Take Sigma-Aldrich Company for example, funds of research and development takes up nearly 15% - 20% of its annual income. In 2010, 2011 and 2012, funds put into research and development were $660 million, $760 million and $690 million respectively, which almost took up 10%‑­12% of its gross margins. In addition, with the fast development of modern biological science and technology, only by constantly updating and upgrading products can companies make a long-term growth and obtain a big market share. Take famous biological reagent enterprises, Thermo-Fisher Scientific Co., Ltd. for example, the company cooperated with more than 40 research institutes and universities situated in the United States, France, Japan, China and other countries. Because of the good external alliance, Thermo-Fisher Scientific Co., Ltd. has a potential to acquire the best technology and it is leading in the related research field.

2 Focusing on the product’s brand value

Brand embodies the unique cultures of enterprises, reflecting the quality of products, the recognition and specificity, and it is the key to distinguish other brands. In the market economy system, the products’ brand value should abide by the law of value, and it can directly affect the price of products and market share. Any biological reagent products must have their own prices that can meet the demands of their value, especially for those international biological reagent enterprises with good reputation, high quality service and consumer’s favor. Those enterprises take brand value as intangible assets, and develop brand value through a series of means as follows: Firstly, they pay attention to products quality, and insist that they will never allow their customers to suffer any loss, even they will face some losses in business so as to guarantee consumers’ interests and establish the good image of company in the market. Secondly, they invest in products’ development, and enhance the brand value of production-study-research cooperation mechanism. Thirdly, enterprises regard strategic management of “comprehensive customer experience” or “customer brand experience” as the method to enhance enterprises’ competition and competitive power. Lastly, enterprises train sales representatives by improving their image, language, professional knowledge to give the customers a sense of trust. By doing so, international biological reagent enterprises implement the brand strategies to make profits instead of vicious price competition.

3 The establishment of professional and strong technical support team

Biological reagent products are different from necessities in terms of sales groups or buying groups. All groups need to have good knowledge about products, so product technical support teams play a vital role in sales. The target groups of biological reagent are those who work at universities, research institutions, hospitals, and various types of biotechnology companies. People working at these places have high academic degrees and related professional background. Even the employees who operate the instruments need to be trained for a long period. As for the technicians engaged in product technical support, they not only introduce the instruction of the reagents, but also set up a ‘bridge’ between producers and users. For those foreign biological reagent companies, staffs engaging in technical support must have a good professional background and sales skills, which means that a qualified staff must master many skills to guarantee the effectiveness of the work. Therefore, all staffs are often supervised in headquarters after recruitment. Training contents include product performance, enterprise cultures, sales strategy, customer service, etc. This approach makes the product technical support staffs acquire professional knowledge as well as become good experts with sales skills, which have played a vital role in product sales.

4 Taking academic promotion as marketing model

In the mid-1980s, the pharmaceutical industry in China experienced transitional period. Biological reagent production enterprises were no exception: the amount of foreign investment enterprises and private enterprises participated in biological reagent sales. This trend showed that biological reagent market in China was also the transition from planned economy to market economy. By the middle 1990s, biological reagent sales market has entered the phase of free competition. Because of the limitations of the management idea, capital condition, research and development, talents, resources and social environment, sales of domestic enterprises adopted to relationship marketing strategy mostly. Compared with domestic sales strategies, foreign biological reagent enterprises do not use “kickbacks” as the main means of sales, but academic promotion[4]. It is the integration of marketing mode, and it has a complete set of marketing management system. This strategy does not rely on the individual behavior of the salesman, but the brand value, the enterprise strength, the advanced abilities of the research and development, teamwork, marketing strategy and the combination of blue print. The reasons that foreign enterprises use academic promotion are as follows: followed by frontier science and technology, the information of products with innovations should be conveyed to the customers timely; technical support teams help customers to solve problems; feedbacks can be given to the factory timely, and the manufacturers can adjust effectively to adapt to the demand of market. The main modes of academic promotion are the academic conference promotion and promotion in professional magazines. Professional conferences can be targeted for specific customers to understand the latest progress of biological reagent products and developments in technology. Besides, some large foreign companies also set up the scientific committee whose members are celebrities, authorities and experts in medical industry. The form of interactive discussion can not only improve companies’ brand image, but also bring great benefits to the enterprises[5].

In addition, professional journals are also an effective means of promoting companies’ products. Professional journal promotion includes directly printed advertisement and dissemination by invisible product placement in papers. Foreign reagent production enterprises not only encourage the scientific researchers to use their free products and cooperate to publish scientific research papers, but also set up prize to encourage relevant researchers. In that case, companies can form the basis of academic reports. Meanwhile, they can also improve the academic image of enterprises and academic status of the products. To select academic promotion actively is based on foreign companies’ strategies in Chinese market, and it is determined by many aspects including the management ideas, enterprises’ research and development, talents, resources and products.

To sum up, the foreign biological reagent enterprises win market recognition through high quality of products, professional technical support and perfect marketing strategy in China. These multinationals not only sell products to China, they also bring us the advanced management methods and ideas. Objectively, they promote the development of the biological reagent industry in China, and provide beneficial references for related Chinese enterprises.

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Author’s information: BAI Jian, Lecturer. Major research area: Social pharmacy. Tel: 024-31207435, E-mail: baijian988@hotmail.com