China Luxury Market
23
Communicating “The Luxury Electronic Fashion” in China Marketing Insights Sharing with *** G&G Consulting Beijing, 6 th Jan, 2012
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China's role in the global luxury market is becoming more significant year by year. China remains one of the brightest growth prospects in the midst of such a fragile world economy.Luxury companies are pursuing very different strategies according to the scale of their operations, and the scale of their ambitions. G & G relies on a strategic long-term approach to deliver results. We will help you: customize a communications plan to target high net-worth consumers and influence key constituents protect long-term brand equity by preserving the image and integrity of your product or service develop innovative strategies that tap into new market opportunities We provide a wealth of expertise in a variety of areas, including media relations and marketing communications, to name a few. And we often integrate these disciplines with our proprietary research tools to help you achieve meaningful and measurable results.
Transcript of China Luxury Market
Communicating “The Luxury Electronic Fashion” in China
Marketing Insights Sharing with ***
G&G ConsultingBeijing, 6th Jan, 2012
G&G Consulting
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
Agenda
G&G Consulting
China luxury market overview
Who are the consumers?How much did they spend on luxury goods?Where did they purchase the luxury goods?What luxury goods did they purchase?Why did they purchase them?How did the brands approach the market?
G&G Consulting
Who China’s Four Categories of Luxury Consumers
Core Luxury Buyers Affluent households that spend
between 12% and 20% of their income on luxury goods
A total of RMB 20,000-60,000 (US$ 3,000-9,000) on luxury goods
More than half of luxury consumers
G&G Consulting
New customers Existing customers Total spending
New customers Existing customers Total spending
EST
Majority of growth in 2010 came from new customers
Key Highlights
China market is supply driven; new store openings create new demand
“Our new stores in Tier 2/3 cities not only attract original consumers, but bring in many new consumers. People in these cities have strong desire for luxury goods”
PR Manager, Luxury brand
Who
G&G Consulting
Luxury consumption (2010)
Luxury consumption (2010, Euro B)
US Japan Italy France UK Germany Korea ME HK RussiaGreater China
Mainland China
Howmuch
SOURCE: Bain - China luxury market study 2011
G&G Consulting
Total luxury spend by mainland Chinese reached RMB212B in 2010; but >50% spent overseas
Overseas
378
Overseas
522HK&MC
500HK&MC
724
Mainland
China
684
Mainland
China
871
1561 2117
Growth(09-10)
36%
38%
45%
27%
Total China luxury spend (RMB B)
Where
SOURCE: Bain - China luxury market study 2011
G&G Consulting
Strong growth, increased by 27% across all luxury categories. In each luxury category, the top 5 brands account for >50% of sales
What
SOURCE: Bain - China luxury market study 2011
Other
Total = RMB 87B2010 China domestic luxury spend (RMB B)
Cosmetics, perfume & personal care
Watches Suitcases & handbags
Menswear Jewelry
ShoesWomen swear
Top 5 brands by category in alphabetical order
G&G Consulting
“Internationally well-known brand” has become one of the top buying factors with “superior craftsmanship” continuing to be the most important
Why
G&G Consulting
Motivators: Emotive factors , status-seeking and needs based factors emerged as key driversWhy
SOURCE: KPMG - Luxury experience in China
G&G Consulting
Agenda
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
G&G Consulting
5 key trends in China luxury market
Consumers expect comprehensive and differentiated servicesTier 2/3 cities continues to be the “new” battlegroundContinued importance of online platformsIncreasing brand building efforts, and more localizedIncreasing gifting, and more diversified
G&G Consulting
Chinese consumers are becoming more sophisticated, and demanding better service experience
Key Highlights
Rising awareness of brands and prices
Less flash, more understatement
More sophisticated and demanding better service experience
1
G&G Consulting
Plotting your retail footprint:Tier 2/3 cities continue to be the “new” battleground
Key Highlights
Stores by the end of Sep 2011
Tier 1 cities Tier 2 cities Tier 3 cities
Stores opening from 2008
2
Proliferation of real estate development in Tier 2/3 cities
Consumer’s attitudes in Tier 2/3 cities towards luxury and wealth similar to Tier 1
However, talent storage and rising labor costs are hurdles fro growth in Tier 2/ 3 cities
G&G Consulting
More and more brands employ social media as an ecommerce channel, inspiring customer's desire to purchase and build image
Burberry - kaixin Coach - Renren
Lancôme -iPhone apps LV - Jiepang
Bottega Veneta- Weibo Sina
“Which channels of internet do you normally get information on
luxury goods?”
Social media* News portal Video portal
Social media includes: SNS, weibo and blog
3
G&G Consulting
Internet continues to serve as an important marketing channel in China for luxury brands
Key Highlights
Internet is approaching magazines as a key information source for consumers of luxury brands
Brands invest to provide engaging consumer experience through their China website to promote brand heritage and culture
3
G&G Consulting
More localized marketing efforts in 2010, including social and non-profit activities
Brands tried to link themselves with China in marketing campaigns…
Luxury brands continue to actively organize charity events
4
G&G Consulting
Gifting remains significant; cash cards enable diversification and drive brands to increase desirability
Key Highlights
Banks launch ExpressPay Cards as gifting card:
Anonymous, different face values
Can be used domestically ad overseas in retailers that accept UnionPay
However, can’t be recharged or used in ATM
Other service companies such as shopping malls also launched anonymous shopping cards
These cards are increasingly used for gifting:
Gift receivers have more freedom to choose the brands/products that they want
“What % of the luxury goods you’ve purchased is for gifting? Own
consumption?
Gifting
Own
5
G&G Consulting
Agenda
China luxury market overview
Key trends of China luxury market
Implications for luxury brands in China
G&G Consulting
Who Where
How much
What Why
• Tier 2/3 cities, in addition to Tier 1
• Could be educated • New customers strategy
Massive market, still growing
• Educate consumers in mainland, get returns in the Greater China and overseas
• Potential in all luxury categories
• Top 5 in each category counts
• Brand, craftsmanship• Innovation design• Self-reward & individuality
as motivators provide new opportunities
G&G Consulting
Implications for luxury brands in China
Strategic approach Winning way
Position in the right category &Own the share of mind and share of voice in the specific category
• positioning• Systematic brand awareness
building• Digital strategy
Make it available • Diversified channelsIncrease consumers' loyalty • Wonderful buying journey
• CRM
G&G Consulting
Implications for luxury brands in ChinaMain challenges ahead Implications for luxury brands
BrandBuilding
Increasingly crowded market;several brands with undifferentiated
image in the eyes of Chinese consumers;
some brands are even not awarded
Increase brand equity investment and differentiationEnhance the personality of the brand through
local events & social / non-profit activities
Digital Strategy
Ecommerce of luxury goods is at the emerging stage; models of the operation vary
Identify influential bloggers and educate them about the brandWork with a social media agency to monitor
and react to online conversations Craft brand's e-commerce presence
Exceptional Service
Chinese consumers expect to experience superior service in China
Build / enhance service facilities and capabilities in China to cope with overall Chinese purchases, not just domestic
CRMMore sophisticated Chinese consumers
expect to be recognized and served equally well everywhere
Build / enhance CRM systems to manage Chinese consumer base globally
G&G Consulting
Merci Beaucoup!
