MARKETING STRATEGY OF JACK MA
The strategy that I'm about to teach you today is a strategy that turned an ordinary English professor into a legendary businessman who today, is known as one of the greatest business icons of his generation. The story that I'm about to tell you today is the story of a man who got rejected by KFC. And out of the 24 people who gave the interview, he was the only one who got rejected. But 10 years down the line, today this man runs a company that is way bigger than KFC itself. This is a story of a man who does not even know how to code a computer but today is the founder of one of the biggest Internet companies in the world. So, the question is How the hell is it even possible for a man to do something this remarkable without actually having the skillsets which are usually required to do something like this. As it turns out, people that's where the business strategy that I'm about to tell you comes into play. Now, this is a story that dates back to the year 2004 when China was just opening up to e-commerce. Now, back then people, China was a very closed nation and as soon as China opened it's gates to e-commerce several multi-national corporates which were highly successful in the US had their eyes on China. Why? because China is quarter of the world. So, if a company has established itself in China by default that company would become the most dominant company in their industry. Now, out of these many multi-national corporates, one of the most successful and the most powerful company was eBay. And eBay was one of the most magnificent companies of that time because eBay had captured 16 countries in UK and US in terms of e-commerce. And as soon as eBay declared a statement to come and conquer the Chinese market every single expert in the business domain stated that eBay is going to very easily conquer the Chinese market. But while the world was obsessively talking about how eBay is going to change the Chinese market there was a struggling entrepreneur who decided to wage a war against this billion dollar tech giant. To put that straight, eBay was a $30 billion company which had the perfect market recipe for success to come and conquer China. They had all the money in the world, they had the most amazing talent in their team and most importantly, because of their experience in e-commerce they knew exactly how the market functioned. On the other hand, if you look at this struggling entrepreneur he is none other than the legendary businessman and the founder of Alibaba.com Jack Ma Today many of you might know Jack Ma as a successful business tycoon but back then nobody even knew that Jack Ma existed in the first place. Jack Ma was struggling with his own company, that is, Alibaba.com wherein he was not able to handle his own company's revenue. So the question is- In this situation, what did Jack Ma think which gave him the confidence to defeat eBay in China? And the reporters asked the same question to Jack Ma in a very insulting manner wherein they asked, that you do not even know how to deal with the finances of your own company how the hell are you going to wage a war against a company that is a 100 times bigger than you. And that's when Jack Ma stated one sentence, people and today that sentence goes down as one of the most iconic sentences in the history of the Chinese business. You know what he said? He said “eBay might be the shark in the ocean but I am the crocodile in the Yangtze river. If we fight in the ocean we will loose but if we fight in the river, we will win” So the question is- What is so special about this one sentence that it goes down as one of the most iconic sentences in the history of business. Well that's because in the next 3 years something magical happened and eBay went from having 90% market share in China to completely quitting the Chinese market to never ever come back again. And Jack Ma won the battle against eBay. The question is What exactly was the game changing factor? And what was Jack Ma's strategy? As it turns out one of the most important factors based on which any e-commerce company's success is determined is the website. Now Jack Ma and eBay, both decided to make a website to sell the e-commerce goods. But the way they designed their website played a crucial role in this business war. Now, you know what eBay did ? eBay said that it's going to go and do market research and it's going to find out the most pressing problems that the Chinese people are facing. So, when eBay officials actually went on to see how the Chinese market functions they observed 3 things. The first observation they made was they understood that people bargain a lot in Chinese market. So much so that time spent on shopping is lesser than that spent on bargaining. So you know what they said we are going to build a beautiful site wherein we are going to eliminate the pain of bargaining altogether. The second thing that they observed was that the Chinese market was filled with cheap goods with no guarantee or warranty, which we all know. So, they decided to make a site which would sell high quality products. And third and most importantly they observed that whatever small websites are present in China, they are so clustered and clumsy that it's hard to find out what will happen when you click something. And that is the reason why they decided that they are going to build an absolutely clean site which is going to have only a few buttons so that Customers have an extraordinary experience. Whereas when Jack Ma was asked how exactly is he going to design the website. He asked his team, specifically to design a complete opposite of what eBay designed. Jack Ma specifically asked his team members to put in a lot of pop-ups in the site to make the site look messy. And secondly Jack Ma said that our website is not going to sell high quality good at all we will sell only cheap goods we will only sell goods which do not have any guarantee or warranty whatsoever. And third and most importantly he said that bargaining should be mandatory for every customer. No customer should ever shop without bargaining. So, they designed a small window where customers would specifically have to bargain with a shopkeeper to get the right price. Now people, on the outside if I ask you guys which one of these two sites would you prefer? Option 1, a clean site that sells high quality products and gives you guarantee and warranty along with those products. Or a website which sells ultra cheap products with no quality whatsoever. And if I force you to bargain even on those cheap products then, which site would you choose? Of course we will choose eBay, right? Well guess what? That's exactly what the eBay employees thought And that's exactly the reason why they got defeated in the Chinese market. So the question is why would anybody not like a clean site and why would anybody prefer a clumsy site which is going to force you to bargain. Well, that's where the business strategy comes into play. People, while eBay was looking at things from the American perspective and all the officials of eBay looked at the Chinese market as an external entity. Jack Ma viewed the Chinese market as a local resident of China. And he understood the mindset of the Chinese people more than anybody else. The reason why he designed a clumsy website is because he understood that Chinese people are used to clumsy and dirty markets. So if there is no bustle in the Chinese market and if no one is shouting in the Chinese market from all directions then something is wrong with that market. So the reason why it is important to show a clumsy market to a Chinese citizen is because he/she has seen the market in that way only. And secondly, the reason he decided to sell only cheap goods in the website is because he understood that the very purpose that the Chinese people went to the market is to buy cheap goods, right? As far as i understand each one of us will know a market like this where you get cheap, durable products and where we never expect quality. And most importantly, we won't go there to buy premium products. And last and most importantly, when it comes to bargaining, people you must have realized and you must have faced this with your grandmother that every time your grandmother asked you to go and buy, say, fruits from a fruit vendor. Suppose you bought 1 kg apple for $20. So when you brought those apples home your grandmother would have asked you the price at which you bought the apples. You'd say $20. The second question that she will ask you Is how much did the vendor ask you to pay? And by any chance if the price at which you bought was the same as the price he asked then you are going to have a terrible time at house and you are going to get scolded because she is going to tell you that you have been looted by the shopkeeper. In fact, if you shop without bargaining, they are going to assume that you have been looted. And that is exactly how the Chinese people viewed eBay. Because there was no scope of bargaining and by default, they felt like that site (eBay) was looting them. And that's the reason why Chinese people did not go to eBay and they came to Taobo.com because it abided by their culture and by their norms. So from this story, each one of you guys have 3 very important lessons to learn. The first lesson is that the opposite company might be a billion dollar company and every time you face something like this, always remember that that company might be the shark in the ocean but you will always be at an advantage because you are the crocodile in the Yangtze river. And the mere knowledge of the consumer behavior gives you an unfair advantage over any big multi-national corporate. So always believe in yourself and your strategy of empathizing with your consumers. Number two, tomorrow when you go on to become a million dollar company or a billion dollar company, always remember this time you might be the shark in the ocean and you have to be extremely careful about the crocodile in the Yangtze river that you might be facing. And third and most importantly people, always remember that empathy and compassion are two of those qualities that can turn a commoner into a king. And no amount of name, fame or money can ever stop him from becoming one. So be kind and practice empathy. Thank you.
