China Study Program Proposal

Client:

PROPOSAL CHINA MARKETING RESEARCH

by Mitchell Alexander, Hongsheng Zhang, Vu Diem Hang Le

Marketing Research

June 2014

The Objective Think Global is pleased to submit this proposal for research to support Community Services Group Australia (CSGroup) in achieving its goals for business expansion into China. CSGroup is an Australian company that provides aged care, disability, foster care and family support services.

The purpose of Think Global’s proposed research is to identify, articulate and critique best-practice and actual approaches to service marketing in China. The research approach will focus largely on services marketing as it relates to health care (and specifically aged care) in China, but will draw links with other service industries as appropriate. It is our key contention that healthcare organisations aiming for success in China should have a thorough and robust focus on overall service quality.

The Opportunity Services Marketing The growth of the service sector has been phenomenal around the globe (see figure 1 below). It is a challenge for service marketers today to provide value to customers in a way that achieves a sustainable competitive advantage (Lovelock, 2011). Marketing researchers have shown that services behave quite differently in the marketplace compared to goods (Palmer & Kavanagh, 1998).

Kotler (2001) contests that services are “any act or performance (experience) that one party can offer to another that is essentially intangible and does not result in the ownership of anything�.

Most definitions make reference to the four distinct characteristics of services: intangibility, inseparability, variability and perishability.

Hong Kong (92%) USA (78%) Japan (72%) Taiwan and Australia (71%) Singapore (67%) South Korea (58%) Philippines and India (54%)

Figure 1 - Estimated size of the service sector as percentage of GDP (Source: Lovelock, 2011) Page 2

Malaysia and Thailand (44%) Indonesia and China (40%)

Services Marketing and Healthcare Extending the customer-oriented service experience to healthcare, Myron, Ford, Roberts, Ford & Spears (2000) reminds marketers that one of the most important principles is to provide the service that customers expect. The physical environment – as part of the ‘servicescape’ (Wakefield & Blodgett, 1996) – is one of the strongest indicators of service performance, and can be strongly linked to customer perception of safety and security. Quantitative research conducted

by Moliner (2009) found that perceived functional value of healthcare services exercises a significant influence over consumer satisfaction and trust. Moliner suggests that healthcare organisations should focus on the concept of perceived value, overcoming strategies excessively focused on quality.

Services Marketing in China The Chinese concept of guanxi is cited by Wong and Chan (1999) as an important concept in the marketing of services in China. A relationship marketing orientation (RMO) is shown by Sin, Alan, Yau, Lee, J and Chow (2002) to be positively associated with business performance. Using the well-known SERVQUAL assessment method on China’s banking section, Wang, Lo and Hui (2003) found that perceived service quality and product quality both had strong influences on an organisation’s reputation. Deng, Lu, Wei and Zhang (2010) found that trust, perceived service quality and perceived customer value - including both functional value and emotional value - contribute positively to generating customer satisfaction.

Healthcare Service in China The healthcare sector is one of many public services in China that has struggled to keep up with the country’s rapid development, (Akin, Dow and Lance, 2004). Based on studies in 12 aged-care facilities and survey interviews with 265 residents, Zhan, Liu, Guan & Bai (2006) found that institutional care for aging parents is likely to become one of the major options for parent care in China. With five percent of the Chinese population (or 16.8 million people) expected to be aged 60 and over, requiring aged-care facility-level care by 2030 (Flaherty, Liu, Ding, Dong, Ding, Li, and Xiao, 2007), there exists an opportunity to better understand this growing market.

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The Solution Think Global’s solution will be achieved through the following activities: • Review of latest thinking: Think Global will undertake an extensive desktop review that of the latest thinking on service marketing within China. This information will be reviewed and analysed for its applicability within the aged care environment.

• Understanding of business needs: A short qualitative research survey will be prepared to pinpoint the research and information needs of CSGroup.

• Review of current practice: Think Global will interact with marketing and business experts in China to develop a distinct understanding of current marketing practices within China.

• Information synthesis: A distillation of current and emerging marketing theory and application will be prepared, outlining the most relevant factors for service marketing and aged-care services in China.

• Report development and delivery: Findings from the research project will be collated and developed into a range of outputs to suit organisational requirements.

This approach was chosen for its strategic blending of current and emerging practical and theoretical views on service marketing in China. Think Global will utilize a range of research approaches and sources to reduce reliance on a single experience or theoretical viewpoint.

1 2 3 Page 4

Review of latest thinking - Share vocabulary - Field research design - Literature critique

Review of business need - Survey & analysis

4

Information synthesis - Draft report - Solution development

5

Report finalisation & delivery

Review of current practice

- Field research - Network development

Figure 2 - Think Global solution process map

Project Deliverables Following is a complete list of all project deliverables:

Deliverable

Description

Research proposal

Brief proposal for market research that outlines research goals, objectives, methodology, key project parameters (for example timeframes) and expected outcomes.

Research report

In-detail reporting of research activity, collecting relevant academic and practical research, and providing a series of recommendations for CSGroup.

Research findings presentation

Summary of research activity and key findings, with recommended steps for future business activity.

Market entry toolkit

Brief practical tool for CSGroup to evaluate feasibility of entering into China/international market.

Timeline for Execution Description

Start Date

End Date

Duration

Project commencement

16 May

N/A

N/A

Research proposal delivery

16 May

2 June

10 days

Research proposal sign-off

12 June

N/A

10 days

Review of business management consultant insight/latest thinking reports

2 June

12 July

35 days

Business survey

18 June

25 June

5 days

Field research

28 June

12 July

15 days

Information synthesis

11 July

8 August

20 days

Report presentation

8 August

8 August

1 day

Delivery of final report

8 August

8 August

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Evaluation The research activity will be measured against Think Global's ability to deliver the project deliverables within the agreed upon parameters.

Expected Outcomes The research proposed by Think Global is highly relevant to the future objectives of CSGroup, as it acknowledges and aims to understand the unique characteristics of the Chinese market, and how an aged-care organisation such as CSGroup can enter that market. It will contribute to a unique understanding of service marketing in China. The Chinese ageing population provides opportunities for an organisation such as CSG to meet a growing demand in the market, and provide valuable and professional healthcare services for the Chinese community. These findings are of specific value for CSGroup, but may also prove useful for other SMEs and service market organisations looking to expand into China. The research outputs will provide CSGroup with practical tools and a robust evidence base to assist their decision making for future business development.

Pricing Services

Price

Desktop research

$6,000

Field research

$8,750

Information synthesis

$4,000

Final package development

$4,750

Total Cost

$22,500

We look forward to working with CSGroup and supporting your efforts to expand your focus into China. Thank you for your consideration.

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Research Consultant

Mitchell Alexander

Research consultant mitchalexander@gmail.com

Hongsheng Zhang

Research consultant hszhang1990@gmail.com

Vu Diem Hang Le

Research consultant vdle4@student.monash.edu

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Glossary Aged care: The fulfillment of the special needs and requirements that are unique to senior citizens. This broad term encompasses such services as assisted living, adult day care, long term care, nursing homes, hospice care, and home care.

Services: “Services are economic activities offered by one party to another. Often timebased, performances bring about desired results to recipients, objects or other assets for which purchasers have responsibility. In exchange for money, time, and effort, service customers expect value from access to goods, labour, professional skills, facilities, networks, and systems: but they do not normally take ownership of any of the physical elements involved.� (Lovelock & Wirtz, 2011).

Relationship marketing: A form of marketing developed from direct response marketing campaigns which emphasizes customer retention and satisfaction, rather than a dominant focus on sales transactions.

Small and Medium-sized Enterprise (SME): Within Australia, an SME is defined as an organisation with annual turnover of less than $100 million or fewer than 100 FTE employees.

References Flaherty, J. H., Liu, M. L., Ding, L., Dong, B., Ding, Q., Li, X., & Xiao, S. (2007). China: the aging giant. Journal of the American Geriatrics Society, 55(8), 1295-1300.

Lovelock, C. H. (1992). Cultivating the flower of service: new ways of looking at core and supplementary services. Marketing, Operations and Human Resources: insights into Services, 296-316.

Akin, J. S., Dow, W. H., & Lance, P. M. (2004). Did the distribution of health insurance in China continue to grow less equitable in the nineties? Results from a longitudinal survey. Social Science & Medicine, 58(2), 293-304.

Zhan, H. J., Liu, G., Guan, X., & Bai, H. G. (2006). Recent developments in institutional elder care in China: Changing concepts and attitudes. Journal of aging & social policy, 18(2), 85-108.

Wang, D. (2006). China's urban and rural old age security system: Challenges and options. China & World Economy, 14(1), 102-116.

Sin, L. Y., Alan, C. B., Yau, O. H., Lee, J. S., & Chow, R. (2002). The effect of relationship marketing orientation on business performance in a service-oriented economy. Journal of Services Marketing, 16(7), 656-676.

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Deng, Z., Lu, Y., Wei, K. K., & Zhang, J. (2010). Understanding customer satisfaction and loyalty: An empirical study of mobile instant messages in China. International Journal of Information Management, 30(4), 289-300.

Wong, Y. H., & Chan, R. Y. K. (1999). Relationship marketing in China: Guanxi, favouritism and adaptation. Journal of Business Ethics, 22(2), 107-118.

Wang, Y., Lo, H. P., & Hui, Y. V. (2003). The antecedents of service quality and product quality and their influences on bank reputation: evidence from the banking industry in China. Managing service quality, 13(1), 72-83.

Palmer, A., & Kavanagh, M. (1998). Principles of services marketing. New York: McGraw-Hill.

Lovelock, C. (2011). Services Marketing, 7/e. Pearson Education India.

Kotler, P., & Keller, K. (2011). Marketing Management 14th Edition. Prentice Hall.

Wakefield, K. L., & Blodgett, J. G. (1996). The effect of the servicescape on customers’ behavioral intentions in leisure service settings. Journal of Services Marketing, 10(6), 45-61.

Corbin, C. L., Kelley, S. W., & Schwartz, R. W. (2001). Concepts in service marketing for healthcare professionals. The American Journal of Surgery,181(1), 1-7.

Fottler, M. D., Ford, R. C., Roberts, V., Ford, E. W., & Spears Jr, J. D. (2000). Creating a healing environment: the importance of the service setting in the new consumeroriented healthcare system. Journal of Healthcare Management, 45, 91-107.

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