Longliqi Group: A Localized Daily Chemical Enterprise       

Jiangsu Longliqi Group Co., Ltd. (Longliqi Group) is located in Changsu of Jiangsu
province. The company has involved in the health-care products market since 1992 and achieved huge successes. In the late 1990s the company learned experiences from Sanzhu Group in rural market development and sales network and successfully used them in the operation of daily chemicals. Starting from 1998, Longliqi Group has been using the local resources to form many subsidiaries for the sales of cosmetics. The business scope today includes health-care products, cosmetics and household detergents, totaling over 1 000 varieties in 6 categories. It currently owns 251 sales companies. The operating revenue of the company reached RMB6.968 billion in 2007.

Marketing mode   

(1) Take low-end markets as the target   

The business goal of the company is "let 95% of Chinese people be able to buy its products". It has two meanings: one is that 95% of Chinese people can afford to buy its products; the other is that 95% of Chinese people can find places to buy its products. Rural economy in China changed greatly in the past decade, but is still lagging behind urban areas. The purchasing power of rural consumers for high-price famous-brand products is still limited. With the popularization of communication, public transport and wire television, the consumption gas between urban and rural areas is being narrowed. The consumption of famous-brand products in rural market is developing and villagers need low-price famous-brand products. Longliqi Group is greatly interested in this low-end consumption market and has resolutely given up the high-profit strategy in the daily chemical sector. The company has produced famous-brand products with high quality and low price to cater to rural customers. "One RMB one bag of ointment" accepted and spread by rural consumers has become the best medium for products of the company. The company's sampling tests in over 20 rural areas show that in villages with a population from 100 to 1 000, half of sales shops sell products of the company such as ointments.

(2) Learn from successful experiences   

After its entry into the cosmetic sector, Longliqi Group took experiences gained by Dabao as reference and started localization of brands. In product sale extension, Dabao links the concept of products with the interest of consumers to open up market, enables consumers to prefer the unique concept of products and finally wins the market. Longliqi Group adopts the experience and adapts it to its own conditions. It also learns from advertising tactics of foreign-funded enterprises and highlights advertisement in CCTV to spread brand of its products. By the end of 2006 Longliqi Group already held a leading position in China in skin-care products, shampoos and household detergents.

(3) Change marketing channels   

    (i) Products marketing   

Because of scattered rural areas and low-end markets, in the initial period of market promotion Longliqi Group used networks of distributors to achieve rapid sales of products and quick recovery of capital. The company has avoided the hardly-controllable long marketing channel composed of distributors, wholesalers and end salesmen and directly faced terminal vendors.
   The marketing mode of the company has developed from sales agents to direct sales subsidiaries and further to its own sales companies. The marketing of health-care products was basically through sales agents in early days. The number of direct sales subsidiaries has increased to over 200 today. Marketing channels have become flattened, sales networks spread all over China. Since its involvement in cosmetics, the company has employed the marketing channels and terminal sales promotion methods for health-care products in the sales of cosmetics.

    (ii) Scientific and technological innovation   

Longliqi Group has taken the concept of "small products but high quality, high technical content and high effect" and developed a series of daily chemicals. The company has conducted active cooperation with many domestic and foreign universities and companies to develop new products, and established several research centers such as Longliqi Spillmann International Beautification Research Center and Jiangnan University Longliqi Daily Chemical Joint Research Center. It is also planning to expand its business and get access to the international market at a optimal time.
   The varietal products, the face-to-face communication with consumers, the flexible rural market tactics, the upgraded automation management, the optimized operation process and the sustained development of famous-brand products have combined to contribute to the sound development of the company. Nevertheless, it also should be aware that such marketing mode may cause unduly extension of products and the one-sided pursuit after sales amount may bring the overdeveloped market, stagnant system and sentimental decision-making and so on.