Competitions have become highly popular in China. Even the government has turned to the lottery as a means of boosting its revenue. The need to raise disaster relief funds to cope with last year's floods has given a boost to state-controlled charity lotteries, some offering jackpots in excess of Yn1m.
While unable to compete directly with such bonanzas, promotional lucky draws run by foreign companies are also increasingly using the lure of big prizes such as foreign holidays and cars. This is despite laws capping individual prize value at Yn5,000.
Foreign enterprises are using a number of techniques to get round the Yn5,000 limit. These include car leasing or supplying part of the prize via an overseas parent company. In other cases the authorities seem willing to make an exception to the value limit on prizes where foreign travel is involved or where a `no purchase necessary' clause is built into the competition rules.
While promotional competitions have traditionally been used as short-term devices to boost sales, advertising agencies are now beginning to integrate prizes and competition design in broader brand-building strategies. Marketing departments also derive value in terms of compiling lists and building profiles about consumer segments. However the main benefits in China are to boost sales and raise brand awareness.
"We do many contests for our clients," says Mr. Marston Allen, media director in the Shanghai office of advertising agency McCann Erickson. "They are very effective here, perhaps more so than in other places."
The most common mechanism used by the firm's clients, which include Motorola, Budweiser and L'Oreal, is to link a product purchase to entry into a lucky draw.
"Sometimes we make the people study something or look at ads and then go to the store and till in an entry," he adds. "But ultimately the lucky draw mechanism is the most popular."
McCann Erickson assists its clients by integrating promotions all the way through from packaging to store counters. "Direct mail does not work here because mail is too slow and too difficult for the people to man-age, while [promoting competitions at] point-of-sale works best," says Allen.
The firm recently ran a competition on behalf of Motorola linked to the Chinese launch of the film Titanic. "We used the faces of Leonardo DiCaprio and Kate Winslett on packaging, did on-the-ground stuff galore at theatres, on buses and in news-papers," says Allen. A "very, very successful" competition connected with the promotion, offering film merchandise as prizes, involved inviting passers-by to guess the number of pagers placed in containers in the shape of ship portholes.
A different approach was taken with Maybelline. A recent promotion ran on behalf of the mascara and eyeliner cosmetic product brand owned by L'Oreal involved promotional girls approaching shoppers and asking them if they had a Maybelline product in their bag. Those that did won a prize instantly as well as a chance to enter a lucky draw. L'Oreal, which opened its first China counters in 1993, now sells products through hundreds of outlets in more than 50 Mainland cities. Maybelline products have been manufactured in a Suzhou factory since 1996.
"The limit on prizes is Yn5,000 (US$600) including tax," notes Ms Marianne Eisenmann, vice president for North Asia of Edelman Public Relations Worldwide, "but sometimes an exception is made in the case of travel. Thailand is very popular at the moment because it is so cheap."
Others, however, are more cautious. "Our understanding is that it is very difficult to make travel an exception," says Mr. Mark Bainbridge of advertising agency Ogilvy and Mather's Shanghai office.
He also points out the difficulty of getting permission for a nationwide competition. "Mostly you are dealing with regional and city licences," he says. Mr. Bernard Wong of Grey Hong Kong stresses that "the regulations with respect to prizes and lucky draws vary in different provinces and cities and there are also restrictions on certain product categories."
In some cases foreign travel prizes can be offered for less than Yn5,000. "We recently did a world travel promotion, although the value here was still below Yn5,000," says the marketing manager of a well-known international beer brand. While the destination of the foreign trip was left open, the Yn5,000 prize limit on the firm's lucky draw effectively limited travel to Southeast Asia.
"In our experience it is not wise to test the bounds of the law because you lay yourself open to the arbitrary interpretations of individual officials," he adds. Other smaller-scale prizes offered by the firm in promotional competitions have involved ‘fun items' such as T-shirts and watches worth between Yn200 and Yn300.
No purchase necessary
McCann Erickson's Allen confirms the value limit on prizes to be Yn5,000. "But there are ways to get around that, such as with a car, you can lease it to [prize-winners] for 10 years," he believes. Last year Budweiser sent winners to the World Cup in France and Allen said the group got round the value limit by saying that the tickets were provided by US Budweiser, thus all that they were providing was air travel and hotels.
Another way of circumventing the Yn5,000 prize limit is to launch a competition where no purchase is necessary. "There is no value limit [on prizes] if it is not related to sales," says Mr. Vincent Lim, marketing communications manager of Philips Electronics China.
The Dutch multinational ran a `predict the champion team' competition in connection with the Chinese FA Cup last autumn. "We can give away prizes worth over Yn10,000 to the winner … of the champion team for the FA Cup '98 because we didn't require participants to purchase our products to qualify for entering the game," he says.
The competition, which was promoted through print advertisements, press releases, leaflets and advertorials, offered branded Philips audio visual products and FA Cup merchandise as prizes. The promotion targeted at football fans was aimed primarily at image building.
Coca-Cola was also involved last year in a World Cup-related promotion with a miniature World Cup trophy as well as stereos, footballs and apparel included among the prizes. The firm's six-month ‘watch, cheer, drink' competition, which began last March, was advertised on television, radio, newspapers, point-of-purchase displays, leaflets, temporary kiosks as well as on packaging.
The competition was an ‘under-the- crown' promotion, where consumers could find out instantly whether they had won by opening a can or bottle, explains Coca-Cola spokesperson Parker Robinson. "If they didn't win anything, they could send in the liner or tab for a second-phase lucky draw," he says. A similar bottle-cap prize promotion was launched by Tsingtao beer this April, reported Xing Min Evening News.
Promotional competitions can also be used for location-specific marketing. The Hong Kong branch of advertising agency Asatsu has recently been involved in promoting the Beijing New World Shopping Arcade. Shoppers received one lucky draw coupon for each
Yn300 spent in the arcade between October 1998 and January 1999. A photo competition was also arranged, associated with a car show taking place within the arcade.
Competitions with an educational bias are also popular. For example, Luxury Swiss watchmaker Rado has sought to raise the prominence of its brand among affluent Chinese youngsters by sponsoring academic competitions.
Likewise, Singapore-based Eastern Life Assurance recently sponsored a six-month series of competitions aimed at raising the profile of the actuarial profession as a career choice among Chinese students. The finals of its ‘small actuary' competition, in which 20,000 middle school students took part, was held in the Oriental Children's Palace in Shanghai's Pudong district. "Basic actuarial knowledge is very helpful to children's future life," said Ng Sin Keh, head of the insurance firm's Shanghai office.
One factor common to all prize competitions is the need to obtain a permit from a branch of the Administration of Industry and Commerce (AIC). Applications need to be made in writing and should include details such as the period, the mechanism and prizes involved in the promotion, says Philips' Lim.
While applications to local AICs are the simplest to handle, a continuing headache for marketers is the need to get multiple permits if the competition is to be run in more than just one area. Permits are also usually required for promotional materials and advertising associated with the competition. "Apart from getting a licence for the promotion, all point-of-sale marketing design needs to be censored as well," notes Grey Hong Kong's Wong.
"Censorship is unreal," complains McCann Erickson's Allen. "What passes in Beijing may not pass in Shanghai or vice versa. Television commercials have to clear censorship on every station you run them on. Smaller markets may say ‘oh Beijing approved, we do too,’ but you still have to do the process."
In most cases promotional competitions in China are used to boost short-term sales but consumer goods firms are aware that competition themes and prizes also have a longer-term impact on the image of brands.
Coca-Cola's Robinson says that sales of Coca-Cola did increase during the firm's World Cup promotion. However, he also notes that "our competitions and promotions are great ways to remain fresh and relevant in the eyes of our consumers and customers."
Linking into the growing popularity of football in China is a high priority for many fast-moving consumer product firms. Coca-Cola recently lost out in a high profile battle with its rival PepsiCo for title sponsorship of the Chinese football league.
Link with core values
In some cases competition prizes link directly into boosting sales. Last June, for instance, Philips ran a premium give-away directed at boosting sales of large screen televisions. The prizes for this competition, promoted through print advertisements and point-of sale displays, were television cabinets a marketing campaign which Philips' Lim describes as "very effective."
Running a competition may also be a direct response to the marketing efforts of competitors. This was the case with Philips' October 1998 premium give-away of videocompact disc movies and microphones – a competition which the firm ran concurrently with a DVD movie promotion. "Sometimes it is imperative for us to do sales promotion because our competitors are doing them and we are going to lose market share if we lay back and watch," says Lim.
The beer brand marketing manager says competitions should not be conceived in isolation. "The market in China is very competitive in terms of competing for short-term volume gains. While competitions may result in a short-term gain in sales volume, they cannot be used on their own as it does not impact so much on brand loyalty," he says. "Offering international travel as a prize rather than air conditioners or bicycles offers us tactical promotional support as it helps to identify us an international brand."
Allen from McCann Erickson agrees with this analysis. "The promos are really about sales, but more and more we are trying to at least link with some core values and brand at the same time," he says. The Titanic promotion was an example of this, he comments, associating the waterproof qualities of Motorola with a movie about a sinking ship.
A flood of lotteries
Marketers can rarely compete with the sedan cars and Yn1m-plus prizes offered by some publicly organised charity lotteries. Last year's floods in particular have prompted an expansion of welfare lotteries, with Yn1.5bn (US$181m) being raised from the sale of Yn5bn-worth of lottery cards. Some Yn67m-worth of disaster-relief lottery scratch cards were sold in just three days during the Chinese New Year, according to He Yi of the China Welfare Lottery Issuing Centre (CWLIC) under the Ministry of Civil Affairs.
Overall, welfare lottery issues between October 1998 and June 1999 are expected to total Yn11bn, reported China Daily in February. Sales are assisted by the introduction of computerised ticketing which has been permitted in developed cities and provinces on an experimental basis. Some 23 Shanghainese became yuan millionaires last year as a result of city lotteries. These lotteries, which involved the issue of Yn300m-worth of tickets, raised Yn90m for charitable causes, such as the building of orphanages.
Charity lotteries have been running in China since 1987 and are used to collect funds for social welfare and community services across the country. Permits for specialised lotteries targeted at raising funds for sporting events and facilities have been issued since 1993, following successful trials in the period leading up to Beijing's hosting of the 10th Asian Games.
After a virtual free-for-all in 1993-94 when local governments, enterprises and even individuals started their own lotteries, the government introduced a strict quota system in 1995. There has also been a crackdown on poorly organised or corrupt lotteries with shoddy prizes. Some enterprise-run lotteries have survived the crackdown. Hainan Airlines, for instance, is one of several state carriers to run lotteries on board flights – the prize frequently being an airline ticket on the same route.
However, CWLIC secretary general Chen Qunlin suggested earlier this year that the quota system should be scrapped in favour of moving towards introducing unified state welfare and sports lotteries. At the same time he suggested restrictions on types of lucky draws permitted should be relaxed – allowing, for instance, punters to select their own ticket numbers. Other officials have also recently suggested that problems with poor quality prizes could be eliminated by limiting prizes to cash handouts.
Television quizzes are another route to enhancing brand exposure. Japanese electronics firm Toshiba has been title-sponsoring a prime-time animal quiz programme since 1991. Toshiba Animal Land involves a guest panel of personalities answering questions based on video clips. All guests have their own support group in the studio audience, members of whom receive a small prize if their guest wins.
The programme has "the explicit aim of increasing our corporate awareness and has consistently generated high ratings – as high as 20 percent in some regions," says Toshiba spokesman Deane Sadler. In addition, the sponsorship gives the firm a platform to advertise during commercial breaks. "The advantage of investing in such a presence is evident in the steady increase of sales for our Dalian-produced colour TVs." he adds.