As a marketer I've always had a strong belief that the best way to get a real world view of a customer is by coming face to face with them, experiencing the purchase process through their eyes. Most marketers are so far removed from the customer experience that they have likely lost sight of the experiences they are responsible for creating. Social media is the best channel to consistently stay connected with a customer voice. But it's only one piece of the mix and if a brand has a broken supply chain then no amount of listening and monitoring conversation fixes this dilemma.
Windows has a huge business challenge in China – piracy. This week I spend time experiencing the PC purchase process through retail stores in China. We visited a big PC mall in urban Beijing and we visited a small PC store in a Tier 4 market 2 hours outside of Beijing in a small town. Small is of course relative in China, a county could still have over 9 million people and be considered Tier 4. There are 5 tiers in the China media market and prices are set according the market tier. The biggest risk to the Windows business in China is of course piracy. But to really understand piracy and why it has become so prevalent in China you have to look deeper into China's history and how present day dynamics can both help and heed piracy.
1. Value; it's hard for a Chinese person to see the value in buying a genuine version of Windows because they can get a pirated version that is just as good as the original and it will come with all the software a person wants; Office, Adobe, Photoshop, you name it. The person buying the PC just tells the PC seller what he/she wants on it and it comes fully installed. A pirated version likely means the user will have to reinstall the system 3 –4 times a year but this is common practice and not seen as a barrier to usage. In addition it's likely the consumer looks silly to his/her friends and family if they do pay full price for genuine because then they are perceived as not getting a good value and paying for something they can get free. They would likely lose 'face' – which is very important to the Chinese culture.
2. Clarity; it's sometimes very difficult to even know if a copy of Windows is genuine or a fake. The fakes are made to look very real. We had a partner buy a copy of Windows for us that they thought was genuine because of the bar code and Microsoft asset codes but when we saw the box we knew the branding wasn't exactly right and it couldn't be real. The packaging had even fooled our partners. So even if someone wants to buy genuine it's likely they are being fooled into a fake copy.
3. The fakes are great! The pirates have gotten so good at engineering Windows they have actually made a version of XP that has instant boot up and shut down, literally no cashed. This means the computer is not safely securing content and protecting from viruses but to the unaware consumer it's just a lot faster.
4. Misconceptions; There are a lot of misconceptions in the marketplace. One of them being price. If you ask consumers what a copy of Windows 7 costs you will likely get varying answers but most of them wrong, and almost all of them being considerably higher that the real price. Another misconception is that large corporations have enough money so why should Chinese consumers add to their war chest with anymore. Many people feel Microsoft and other big brands like it are charging in China now because they can and should have been charging before. People are used to getting something for free it's too late to begin charging.
The trip was fascinating and it's only the beginning for us. There is no playbook to refer to for this business problem, no other company has taken on piracy and won in China. There are some similarities to Napster and the music business but that situation has government enforcement to help. The Chinese government is not there. Piracy is a good portion of the GDP for the country and not one the government wants to see disappear. This is a business problem for the ages and one that will be fascinating to watch unfold.