Exclusivity: Brand Equity Power

Mark RitsonMarch 12, 20087183 min

I have always been a working smoker. While I never touch the evil weed at home, I accept the occasional one when I am consulting, for a very simple strategic reason: you can learn more from a fellow smoker in five minutes outside headquarters than you could glean in three weeks with the chief executive.

I am currently in Shanghai, where my professional smoking routine is pushing me to the edge. Rarely does a break, meal, or drink pass here without a five-minute session of mass inhalation. True to form, my dirty habit has not been in vain. Over the past week I have learned a lot about an impressive luxury brand: Lesser Panda cigarettes.

Perhaps we have been too quick to assume that the flow of brands and branding expertise is all heading East. The Shanghai Tobacco Corporation, which produces Lesser Panda, could teach many marketers a thing or two about building brand equity.

For starters, Lesser Panda understands the importance of dynamic targeting. The real art to this is more like dominoes than archery: an initial small, influencing segment can often have more success in bringing others to a brand than a more obvious attempt to reach everyone immediately.

The Lesser Panda brand became famous as the favorite of Chinese Communist Party leader Deng Xiaoping. Rarely in his 92 years was he photographed without a cigarette in his hand and, after the brand’s establishment in 1956, it was almost always a Panda. Gradually, generals and politicians followed suit, and across China the Panda brand became synonymous with power and social standing.

The second lesson is that a marketer should never be afraid to say no to sales. Nothing kindles long-term success like initial exclusivity. Despite surging demand, production levels remained small, creating a mystique about the brand. Even in the 90s, pulling a packet of Pandas out of your suit was enough to signal to a whole room that you were a person of influence in China.

Clever distribution was also vital in developing the Lesser Panda brand. Until 2004, its distribution network was a mystery, and it was impossible to buy the cigarettes in any regular retail setting. In the past four years, the brand has expanded, but has avoided traditional retail and is only occasionally available in exclusive hotels and restaurants.

With regard to retail, Lesser Panda is not afraid to break the rules of the category. In fact, its success suggests that if you have big ambitions it is best to break as many as possible. Too many marketers forget their positioning statement and end up simply replicating their competitors’ approaches. But Lesser Panda really is unique. Take its design: about one-third of the cigarette consists of a filter that is designed to temper the harsh taste that is a result of its ludicrously high nicotine content.

Then there is the price. Lesser Panda’s marketers have succeeded in the ultimate branding challenge – to protect and leverage big-brand equity with a premium price. Each pack of 20 Pandas will set you back 85 Yuan – the equivalent of about £6. This is roughly 50 times the price of a regular pack of local Chinese cigarettes, and five times that of foreign prestige brands such as Marlboro.

At the end of my meal on Friday, I looked quizzically at my Chinese colleague who, for the first time that week, had not finished his meal with a smoke. He gestured to his empty Lesser Panda box, gave a shrug and said something in Mandarin. I’m guessing he was bemoaning the fact that he did not have the money, knowledge or time to find another packet that night. So perhaps Panda’s fabled exclusivity will also eventually help to address China’s smoking addiction, too.


– 350m Chinese people smoke a total of 1.6tr cigarettes every year. If placed end to end, these cigarettes would reach to the moon and back, 150 times over.

– The popularity and scarcity of Panda cigarettes has resulted in a black market springing up around the brand. The Shanghai Tobacco Corporation has repeatedly warned consumers about copycat versions and each Panda packet contains six anti-counterfeiting measures.

– Many of the people who purchase Panda cigarettes are not smokers, but buy them simply to offer to officials.

– After China’s most famous athlete Liu Xiang won a Gold Medal at the Athens Olympics in 2004, he infamously became a spokesperson for a cigarette brand.

– The Chinese Government has promised a smoke-free Beijing Olympics, with cigarettes banned from venues and public transport.

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