Dr Matthew McDougall explains China’s unique consumer consciousness and how your brand can find cut-through in an increasingly complex market.
Few markets are as appealing to global brand marketers as the consumer-driven, brand-obsessed China. This market of 1.32 billion people, coupled with the meteoric rise of both the size and spending power of its middle class, holds enormous potential for New Zealand exporters.
But, clearly, the dynamics of China are unlike anything Western marketers have ever seen before, and it presents challenges as serious as its market is large.
The key areas ushering in the Chinese transformation are the rise of upper-middle-class and affluent households as the drivers of consumption growth, a new generation of freer-spending, health conscious consumers, and the increasingly powerful role of e-commerce.
To that end, many brands around the world have flocked to China to exploit these dynamics. Some brands have enjoyed success while many have not. It is worth reflecting on why some brands make it and some do not and in most cases this comes down to Western marketing managers not really understanding the market, consumer and/or Chinese culture.
It is important to note that brand positions can vary greatly between the various Chinese consumer segments; from pre-80s, to post-80s and the 90s generations. For example, brands can have quite different positioning; a good example of this includes Starbucks, Apple, Hugo Boss, Nike and BMW, which are all associated with ‘prestige’ and ‘elitism’ by the affluent pre/post-80s urban consumer. While in the millennium group some of these brands may be considered high-quality but functional brands.
Different consumer consciousness
Why is the Chinese consumer’s perception of Western brands so often associated with prestige and exclusivity when the very same branded product or service in the West is merely a value-for-money means to an end? To understand this further, it is necessary to move away from the traditional view of brand positioning, in which consumer brand perception starts with the branded product itself and remains fixed regardless of the experiences during which the brand is consumed. For the Chinese consumer, brand image starts with the experience that the consumer envisages during brand consumption. Chinese consumer culture, despite economic development, remains rooted in group orientation and the acceptance of societal hierarchy. Economic development has simply led to the immediate and extended family being replaced as the most influential groups by close friends, colleagues and peer groups. Achievement of societal position or ranking has also been replaced by conspicuous brand consumption rather than occupational prestige where ‘elite’ occupations usually included senior Party positions or elevated positions in education.
In China, ‘face’ or ‘gaining face’ has historically driven brand consumption, where conspicuous consumption of an expensive brand acts as a powerful status symbol. However, in recent years, there’s been a slight shift away from the big expensive brands, at least in some tier-one cities. Some Chinese consumers, especially in the luxury category, have started to look at brands that are less ‘showy’ and more ‘local’.
In response, international brands have started collaborating with domestic companies – such as the partnership between Hermes and modern Chinese design company, Shang Xia – to rethink their product offering (such as rolling out products with less ostentatious positioning of logos).
Despite the shift, conspicuous consumption and societal status will still be the primary motivation dominating the Chinese consumer psyche.
Finding effective cut-through
How, then, will New Zealand’s brands find their way through the Chinese demographic and marketing wilderness to the promised land of market share and brand loyalty?
The World Economic Forum estimates that to reach 80 percent of the upper-middle-class and affluent households in 2020, brands will need to establish their presence in at least 430 cities. This will take many brands away from their tier-one and south-eastern coastal provinces strategy. Consumers in these regions have found themselves in a position to enjoy Western luxuries and consequently, Chinese consumers with lower purchasing power in more regional, rural areas are turning to these relatively new, glamorous Western brands, such as clothes and cars, in order to combat any feelings of inferiority.
Apart from geographic strategies, brands must also understand the Chinese consumer’s need to form deeper emotional attachments to their favored brands. This is partly due to the need to be ‘seen with the right brands’ and this recognition allows for a higher societal and peer status within their social circles. Chinese consumers, especially the post-90s generation (millenniums) are therefore bursting with enthusiasm for ‘new’, ‘cool’ and ‘fun’ branded products. They associate such brand values very firmly with the West.
Celebrity endorsements, especially on television and social media, as well as product placements contribute considerably to the Chinese consumers’ emotional brand attachment. Western consumers react with indifference or even skepticism when confronted with a celebrity pushing a particular product or position, even if there is a clear product fit.
Chinese consumers, on the other hand, expect to see a celebrity heavily involved in the advertising and promotion of branded products. On Chinese TV or in Chinese social media you rarely see an advertisement that does not contain a well-known public figure. Given this dynamic, it has been standard social media practice by the marketing agencies to leverage Key Opinion Leaders (known as KOL’s) to promote and amplify messages on WeChat and Weibo.
Product placement, the use of well-known branded products as part of a TV show, has been well used in China. For example, films like Color Me Love and Go Lala Go! were aimed at the country’s white-collar post-80s consumer. In those films, brands like Lipton, Apple and BMW are given ample screen-time in highly emotional scenes. In addition to international giants, home-grown Chinese brands have invested in reaching China’s ‘emo-sumer’ via television or film placements, with the likes of Hong Kong’s Giordano looking to take advantage of rising post-80s nostalgia – releasing products like T-shirts imprinted with characters from Chinese textbooks.
A Chinese audience is far more likely to associate with a brand that appears during a TV show or film, whereas Western consumers will pay little attention to the brand on display and simply concentrate on the show itself.
Where to next?
It’s only a matter of time before the typical urban Chinese post-80s consumer reaches a level of brand cynicism and also feels a desire for change, at which point their brand choice will switch from an emotional, status-driven decision to a far more rational, analytical and even rebellious selection.
Therefore, the message to all New Zealand brand marketers targeting China is, in the short term, continue with a more emotional position and focus more on the consumer’s brand experience, and not just brand image.
But be conscious of a possible backlash against well-known products, where conspicuous consumption and opulence may be negatively positioned by the Chinese Government or wider Chinese society.