1、,Which is the largest market in China for Humvees?,Which city did The Guardian refer to as Invisible City?,What is the most common (and free!) advertising medium in small towns?,Ad for Locksmith,Ad for a Stampmaker fake it!,The Real China Revealed,Insights into the mainlands 2nd and 3rd Tier cities,
2、51% population 64% of GDP,4.5% population 4% of GDP,44.5% population 32% of GDP,Where is the money currently?,Source: Asian Demographics,Only 33.5% of all retail sales in China now come from the 24 largest cities. National Bureau of Statistics / Access Asia,7,Relative affluence of inhabitants in the
3、 main 8 cities will decline,Beijing, Guangzhou, Hangzhou, Nanjing, Ningbo, Shanghai and Shenzhen,Chongqing, Chengdu, Kumming, Qingdao, Tianjin, Shijiazhuang and Xiamen,Secondary cities in the provinces of Jiangsu, Zhejiang, Shandong and Fujian.,Compounded annual growth rate of affluent households is
4、 17.9% Number of affluent households in the 8 cities will more than double but contribution will be down to 33% by 2012 Note: currently middle class are those with Rmb 28-48K - here forecast of those earning Rmb 80K+; even with some inflation, they should enjoy good standards of living by 2012,Sourc
5、e: Asian Demographics,Defining the Tiers,First-Tier Cities Four municipalities: Beijing, Chongqing, Shanghai, Tianjin Cities with total retail sales of more than RMB30bn, annual per capita income of RMB11,000 and high per capita retail sales as proportion of income: 10 provincial capitals: Changchun
6、 (Jilin), Chengdu (Sichuan), Guangzhou (Guangdong), Hangzhou (Zhejiang), Harbin (Heilongjiang), Jinan (Shandong) Nanjing, (Jiangsu), Shenyang (Liaoning), Wuhan (Hubei), Xian (Shaanxi) Four leading cities: Dalian, Qingdao, Shenzhen, XiamenSecond-Tier Cities 17 provincial capitals: Changsha (Hunan), F
7、uzhou (Fujian), Guiyang (Guizhou), Haikou (Hainan), Hefei (Anhui), Hohhot (Inner Mongolia), Kunming (Yunnan), Lanzhou (Gansu), Lhasa (Tibet), Nanchang (Jiangxi), Nanning (Guangxi), Shijiazhuang (Hebei), Taiyuan (Shanxi), Urumqi (Xinjiang), Xining (Qinghai), Yinchuan (Ningxia), Zhengzhou (Henan) 50 p
8、refecture-level cities, including, Ningbo, Suzhou, Wuxi, Wenzhou, Nantong, Dongguan, Zhanjiang 15 more cities with populations of between 500,000 and 2mnThird-Tier Cities Approximately 200 county-level citiesFourth-Tier Cities Approximately 400 capitals of county towns,Seeking insights into the othe
9、r half,Research Objectives,Understand the consumer in low tier markets and how they are different from (or similar to) top tier cities in terms of attitudes towards life, brand consumption planned vs impulse buying,Study sample,Home interviews & photographs 3419 families Retail environment 295 hyper
10、marts, supermarkets, convenience stores, mom-n-pop stores Shopper exit interviews 530 Qualitative in-depth family & expert interviews 20,Market Coverage,North,22 cities in 10 provinces, across tier 1 to tier 3,51% population 64% of GDP,4.5% population 4% of GDP,44.5% population 32% of GDP,Source: As
11、ian Demographics,Topline findings and implications,Consumer Lifestyle - attitudes to family,Tier 1 residents feel almost guilty of giving their careers preference over family, hence justifying priorities to themselves. Many Tier 2-3 families eat together anyway.,Consumer Lifestyle - attitudes to lif
12、e,Consumers living in tier 1 cities are more satisfied than those in the Tier 2-3. Over half of those living in Tier 2-3 are not satisfied. “A big city has many more opportunities for earning and spending” Nanning respondent,Consumer attitudes - risk,The majority plays safe, yet there is a substanti
13、al number of those willing to take risks in equal measure across the tiers Nude portfolios in Nanjing “My daughter has left high school and is learning how to dance” Mr Wang, Lanzhou,Consumer attitudes - risk,The majority remains debt-averse; China continues to be a high savings nation. Change margi
14、nally greater in Tier 1 cities “I am confident that I will get a raise this year and will pay off my credit card bills” Jr. Executive in Shanghai.,Tier 1 residents are only slightly more ambitious than the lower tiers; the majority still does not consider itself very ambitious. “I want to be like Yo
15、 Yo Ma”,Consumer attitudes - ambition,Again, small differences between the tiers. Lower tier consumers have huge access to fashion & beauty, even if it is not always branded. Its also cheap. “Why should I spend 200 kuai on a pair of branded jeans when I can pick up 5 stylish pairs here?” Young woman
16、, Cenxi,Consumer attitudes - fashion,Novelty is a big draw. Consumers are looking for new ideas in every sphere of consumption. Again, across the tiers, and to a slightly greater extent in Tier 1.,Consumer attitudes - novelty,Implications - 1,The brand stories, particularly those around the themes o
17、f risk, fashion, family, ambition can be the same across the tiers. However they need to be calibrated. Risk-aversion can be countered with confidence. Brands and communication will need to offer the new even in the lower tiers tired clichs and similar products will not work. Brands and communicatio
18、n for low tier consumers can actually make them feel good about their condition, rather than inadequate.,Attitudes towards brands & advertising,Clear role for advertising it is the source of knowledge about brands Fair numbers find value in brands; greater numbers in Tier 1 cities,Attitudes towards
19、the foreign,Openness to foreign brands significantly less in lower tier towns. Greater price sensitivity belief that foreign brands are more expensive.,Brand Preference - Top 10 Favorite Brands,Influences on purchase decision,Still a price-driven, price-sensitive market Price influences both store a
20、nd brand choice,Average,Influences on purchase decision,Influences on purchase decision,Price and brand are most important, across the tiers In Tier 1, people value their own experience; in Tier 2, others opinions matter; in Tier 3, packaging and salespersons / shopowners recommendation matters more
21、. Reflects how and where they mostly shop,Shop vs Brand - relative importance,Do you first decide which shop to buy or which brand to buy?,Shop vs Brand - relative importance,General speaking, the more expensive the product, the more important the brand!,Influence of the Little Emperors,Kids have si
22、gnificant influence on the family during shopping as sources of new information, but the proportion is lower as one moves down the tiers. They are among the first to latch on to new trends.,Influence of the Little Emperors,“We spend 40% of our income on our son, to make sure he has a good education
23、and is comfortable” couple in Linxia, MHI: Rmb 1100 “Bu jidao” their son, upon being asked who the cartoon character on his T-Shirt was (it was Mickey Mouse),Implications - 2,Role of advertising / brand communication experienced by consumers is mostly informative. Opportunity to use emotion, creatin
24、g value systems and move to imagery and storytelling. MNC brands need not emphasize country of origin. For the low tier, cultural assimilation would be a good strategy.,Implications - 2,Tier 2 need to motivate shopowners / shop assistants as well as current users Need for constant reassurance Opport
25、unity to involve kids to spur brand choice and aid shopping, even in the low tier,Some other differences between the tiers ,Food habits,Tier 1 has significantly more consumers eating at fast food restaurants (such as KFC, Yoshinoya, McDonalds ) than Tier 3; Tier 3 families remain conservative with t
26、heir eating habits.,Planned purchase consumer durables,Which ones do you plan to buy a new one next 12 month?,Planned purchase consumer durables,More consumers in tier 1 intend to buy new TV in next 12 months. Replacement market - upgrades More consumers in tier 2 plan to buy new DVD player, air con
27、ditioner and washing machine. More consumers in tier 3 are willing to buy new mobile phone, computer, digital camera and refrigerator. Both first-time purchases consumers entering category for the first time.,Shopping Frequency & Distance,Shopping Frequency,Shopping Distance,Sample: 250 245 135,Samp
28、le: 250 245 135,Shoppers in tier 1&2 markets go shopping a little more frequently than those in tier 3 markets. And there are more shops near residence zone in tier 1&2 markets than in tier 3 markets,Shopping Frequency & Distance,Impulse Shopping,Interestingly, shoppers in Tier 2&3 markets do a bit
29、more impulse shopping than those in Tier 1.,Impulse Shopping: Influences,Discounts are the most effective promotion that trigger impulse shopping. Free gifts and sampling are more attractive in tier 1 markets. Radio ads and standalone display are attractive in tier 3 markets.,Impulse Shopping: Influ
30、ences,Shopping environment,TV: Program Type Preference,Average,TV: Program Type Preference,Tier 1 likes sports, music, food, business, nature and environment programsTime to chill (but cant abandon the quest for money)Tier 2 prefers local news most Tier 3 are more skewed to national / international
31、news, education & career Looking for ways to advance, want to know whats happening in the world,Internet usage,Internet users spend half as much time surfing the Net during weekends compared with weekdays, in Tier 1 and 2 cities; the difference is relatively lower in Tier 3 cities. A reflection of m
32、any more opportunities for entertainment and socializing in the upper tiers.,Implications - 3,Significant differences in food habits Low tier remains conservative; need to stimulate demand, offer traditional cuisine in new and convenient formats Consumer durable co.s must have a multi-tier strategy Sense of direction for channel planning across the tiers Use TV to build image, focus on softer brand values; use local / in-store media to enable comparison and trigger impulse opportunity to localize,Thank you!,
