Lux­ury seg­men­ta­tion

Lead­ing me­dia com­mu­ni­ca­tions spe­cial­ist launches new guide­book on China’s up­mar­ket con­sumers

Global Times – Metro Shanghai - - FRONT PAGE -

Chi­nese con­sumers have be­come a key driving force be­hind global lux­ury sales growth. Over 32 per­cent of all lux­ury pur­chases world­wide now come from Chi­nese shop­pers, and the pro­por­tion is ex­pected to rise to 36 per­cent in 2020, ac­cord­ing to Me­di­aCom China.

The big­gest lux­ury mar­ket in the world is also be­com­ing more di­ver­si­fied than ever be­fore. How and where can lux­ury brand mar­keters ef­fec­tively en­gage with po­ten­tial Chi­nese shop­pers?

To help mar­keters answer this rid­dle and tap into the world’s most so­phis­ti­cated lux­ury mar­ket, Me­di­aCom

China re­cently re­leased

China’s very first lux­ury seg­men­ta­tion.

To launch this guide book, Me­di­aCom China held an ex­clu­sive and im­mer­sive event at

Liang­she, one of Shang­hai’s most ex­pe­ri­en­tial restau­rants, on Novem­ber 29. Over 100 guests from dif­fer­ent lux­ury cat­e­gories gath­ered to dis­cuss and de­bate the topic.

Ru­pert McPetrie, CEO of Me­di­aCom China, said at the event that “China’s lux­ury mar­ket is the largest in the world. There­fore, it’s crit­i­cal for lux­ury brands to un­der­stand how to win over Chi­nese lux­ury con­sumers. Our live lux­ury event gives our clients a clearer pic­ture of the dif­fer­ent types of China’s lux­ury con­sumers and how to drive fur­ther growth for their lux­ury busi­nesses.”

“The Me­di­aCom Lux­ury Seg­men­ta­tion is the lat­est ex­am­ple of how we put our ex­ten­sive knowl­edge of con­sumers to work,” said Peter Peter­mann, Chief Strat­egy Of­fi­cer of Me­di­aCom China. “Based on a sam­ple size of 12,531 high-in­come in­di­vid­u­als, we cre­ated a unique anal­y­sis and tool that will help lux­ury mar­keters bet­ter iden­tify and en­gage with their au­di­ences.”

Six types of shop­pers

So what are the key find­ings and con­clu­sions of the re­port? The seg­men­ta­tion di­vided Chi­nese lux­ury buyers into six types, namely Luxe Fash­ion­ista, Time­less In­dul­ger, As­pir­ing Up­starter, Sta­tus Seeker, Ex­pe­ri­ence Devo­tee and Trend­luxe Im­mune.

Ac­cord­ing to the re­port, the largest group of lux­ury con­sumers in China is the Time­less In­dul­ger (27.5 per­cent), with an es­ti­mated pop­u­la­tion of 8.1 mil­lion. They tend to value qual­ity and tra­di­tion over flashy trends, and pre­fer well-known brands over niche brands.

The Time­less In­dul­ger are aged in their early 30s (be­tween 29 and 35); they are mostly from sec­ond-tier (51.3 per­cent) Chi­nese cities such as Hangzhou (9.3 per­cent) of East China’s Zhe­jiang Prov­ince, and first­tier (48.7 per­cent) cities such as Shang­hai (15 per­cent) and Beijing (10.8 per­cent).

The sec­ond largest group of lux­ury buyers in China is the As­pir­ing Up­starter (23.8 per­cent), with a pop­u­la­tion of around 7 mil­lion. While 52.1 per­cent are from sec­ond-tier cities such as North China’s Tian­jin Mu­nic­i­pal­ity (18.2 per­cent), 47.9 per­cent are from first-tier cities like Shen­zhen (16.4 per­cent) of South China’s Guang­dong Prov­ince and Shang­hai (7.8 per­cent).

The As­pir­ing Up­starter are the youngest group, mainly aged be­tween 23 and 28. They have just be­gun to de­velop a sense of style and are highly im­pul­sive in their shop­ping be­hav­ior.

The third largest group is the Trend-luxe Im­mune (13.4 per­cent), around 3.9 mil­lion of con­sumers in China. They gen­er­ally dislike trendy lux­ury prod­ucts and pre­fer lux­ury items with a long-term value. For them, lux­ury is more of an in­vest­ment than an in­dul­gence.

Show­ing off suc­cess

Notably, Trend-luxe Im­mune are most likely to be males in their late 40s. Around 55.7 per­cent of them are from sec­ond-tier cities, such as Quanzhou in East China’s Fu­jian Prov­ince and Dalian in North­east China’s Liaon­ing Prov­ince.

Mean­while, the fourth largest group are the Luxe Fash­ion­ista (12.7 per­cent), around 3.7 mil­lion of peo­ple in China. They tend to pur­sue the lat­est lux­ury items and have a global mind­set. The Luxe Fash­ion­ista are aged be­tween 29 and 35, and mainly come from first-tier Chi­nese cities (65.1 per­cent) such as Beijing and Shang­hai.

The fifth largest group is the Sta­tus Seeker (11.6 per­cent), with an es­ti­mated pop­u­la­tion of 3.4 mil­lion. They are be­tween 29 and 35 years of age, and are de­ter­mined to show off their suc­cess with brands they pur­chase. Sta­tus Seek­ers pre­fer wellac­cepted sta­tus brands, as this gives them more “face” with their peers. Most Sta­tus Seek­ers are from sec­ond-tier Chi­nese cities (67.2 per­cent), with more males (55.6 per­cent) than fe­males.

The sixth largest group, how­ever, is the so-called Ex­pe­ri­ence Devo­tee (11.1 per­cent), who seek to ex­pe­ri­ence dif­fer­ent lux­ury life­styles (such as ex­hi­bi­tions and travel) with their friends rather than just make pur­chases. Their ages are be­tween 36 and 50 and they mostly live in Shang­hai (22.3 per­cent) or Beijing (9.2 per­cent).

Key tar­get cus­tomers

From the re­port, we can de­ter­mine that most po­ten­tial lux­ury con­sumers are from first-tier and sec­ond-tier Chi­nese cities. Their ages range from the early 20s to the late 40s. The pro­por­tion of male and fe­male buyers gen­er­ally is equal in all groups, with male spenders slightly higher in the Sta­tus Seeker (55.6 per­cent) and Trend-luxe Im­mune (52.9 per­cent) seg­ments.

The re­port also re­vealed some in­sight­ful trends in China’s lux­ury con­sump­tion mar­ket. For ex­am­ple, one sig­nif­i­cant new trend is that younger lux­ury con­sumers are emerg­ing fast in China.

Ac­cord­ing to Hugues de Vautibault, Vice Gen­eral Man­ager of Hearst Cor­po­rate, 67.7 per­cent of Chi­nese lux­ury spenders are un­der 35, with 49 per­cent com­posed of mil­len­nial buyers and Gen Z buyers at 17.8 per­cent. He pointed out that Chi­nese young­sters are the key tar­get cus­tomers of lux­ury brands, and it is there­fore im­por­tant for brands to “stay young.”

Younger lux­ury spenders are more in­clined to be in­flu­enced by so­cial me­dia, dig­i­tal con­tent and opin­ions from KOLs (key opin­ion lead­ers). En­gage­ment is a new key word in the mar­ket­ing of lux­ury brands. The re­port con­cluded that “it is no longer about own­ing the next shiny thing, but about grow­ing through per­sonal ex­pe­ri­ence.”

China’s ex­pe­ri­en­tial mar­ket trend there­fore re­quires global and do­mes­tic lux­ury brands to re­think their com­mu­ni­ca­tion strat­egy and to cre­ate more “money-can’tbuy brand ex­pe­ri­ence” to po­ten­tial buyers.

“This re­port gives us a bet­ter per­spec­tive of who the real lux­ury shop­pers are in China. It gives us a bet­ter vi­sion of how we can broaden our mar­ket­ing ef­forts, be more rel­e­vant in our com­mu­ni­ca­tion strate­gies for lux­ury brands,” said Iris Chin, Gen­eral Man­ager of Lux­ury Brands.

Wine cel­lar dis­play refers to the Trend-luxe Im­mune seg­ment.

Night­club dis­play refers to the As­pir­ing Up­starter seg­ment.

Ru­pert McPetrie, CEO of Me­di­aCom China, de­liv­ers a speech at the event.

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