UNDERSTANDING YOUR BRAND STRATEGY FOR CHINA
Dr Matthew McDougall explains China’s unique consumer consciousness and how your brand can find cut-through in an increasingly complex market.
Dr Matthew McDougall explains China’s unique consumer consciousness and how your brand can cut through.
Few markets are as appealing to global brand marketers as the consumerdriven, 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 uppermiddle-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