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