Selling To The Chinese: Digital & Social Media Marketing

 

Observations Suggest Brands That Court Younger Customers Digitally Might Come Out Ahead

New department stores like Lane Crawford in Beijing have increased the number of luxury brands available to potential buyers in Beijing

New department stores like Lane Crawford in Beijing have increased the number of luxury brands available to potential buyers in Beijing

While many luxury brands are counting on ostensibly luxury- and brand-mad Chinese consumers to bring in steady profits for the foreseeable future, industry insiders — or research groups — with feet on the ground know that Chinese consumers are far from a uniform group. As luxury expert Patricia Pao, of the Pao Principle in New York, recently wrote, contrary to the beliefs of many brand managers, there is no “one” China. As major luxury brands like LVMH venture outward from Beijing and Shanghai and work to develop a stronger presence in second- and third-tier cities like Xi’an, Nanjing, Hangzhou and Changsha, it’s critical for them to take geographical, cultural, (in some cases) linguistic, and demographic differences into account:

Market leaders such as Louis Vuitton have saturated first-tier cites and are aggressively moving into second- and third-tier markets. Take Xi’an as an example. Louis Vuitton is leveraging its experience and economies of scale to expand in the capital of the Shaanxi province. The French company is bullish about Xi’an because it is the transport hub that connects western and eastern China, and it’s a major beneficiary of government investment. But Louis Vuitton is adjusting its marketing and promotional strategies to reflect the fact that Xi’an and other cities in northwest China have the largest urban-rural gap in China, and have been hit hard by the financial crisis.

As major luxury brands venture westward, and try to court the gradually emerging middle class in China’s vast interior, it appears that, in addition to keeping in mind the huge diversity in consumer behavior (and increasingly crowded retail market) that exists in that country today, brand marketers need to start thinking digitally. A new Forbes article by market researcher Shaun Rein (Twitter) suggests that one of the most important Chinese consumer trends we can expect to see pick up steam in 2010 is that of digital and social media marketing. According to Rein, Chinese consumers are increasingly being influenced by digital media, and companies need to invest more heavily in these forms of outreach at risk of missing out on a potentially lucrative (and relatively low-cost) method of reaching and creating new customers.

From the article:

In China, most multinationals only spend 2% to 3% of their marketing budgets on digital initiatives; 8% to 12% is typical in the U.S. This makes no sense, for Chinese spend relatively more time online than with other media like TV or print, compared with American consumers. Logically, brand managers should spend much more online.

Why don’t they already? Part of the blame lies with their advisers. Most advertising agencies have limited digital marketing capabilities and relegate their online campaigns to junior people. They also prefer to work with television and sporting events, where there is more money and more personal visibility for them. Moreover, media buyers in China prefer to spend your money where it benefits preexisting relationships of theirs, or where they can get preferential treatment such as rebates.

Brand managers need to push their media buyers to embrace digital marketing more strongly. They also need to work with marketing agencies that have strong in-house digital capabilities.

Chinese consumers are buying more, but they are also getting more sophisticated and building higher expectations. Companies need to keep up with both their problems and their needs. Multinationals need to build on consumer trust in their international brands, and they need to look for ways to expand their sales through the right channels and connect with consumers through the right marketing plans. This will often mean creating an e-commerce platform and emphasizing social media and digital marketing as primary rather than secondary ways of connecting with customers.

Consumer spending in China is increasing, but, just as important, it is also evolving. Every company selling products there needs to evolve, too.

Rein’s concluding point is the key, here. China’s consumer class has emerged onto the scene and evolved at a breakneck pace. This is particularly noticeable in places like Beijing, where the more sophisticated (or relatively long-time) luxury demographic has, over the course of the last 10 years or so, gone from worshipping the biggest names, like Louis Vuitton and Gucci, to branching out into less monolithic, more exclusive brands like Goyard and Azzedine Alaïa (though it must be said that part of this comes down to greater choice in places like Beijing now, since major department stores — which carry more hard-to-find brands — like Lane Crawford have opened in China’s capital in recent years).

As luxury buyers (at least in the more cosmopolitan cities) become less brand loyal, it’s becoming more important for luxury brands to recognize that they might risk alienating long-time customers by becoming more ubiquitous. Digital and social media marketing is a good way to do this. By tailoring messages to target demographics and to a given medium or platform — e.g., white-collar social media sites like Kaixin — brands like Tiffany & Co. have, over the last year, been able to give potential customers the feeling of exclusivity that traditional marketing simply can’t instill.

As we wrote last fall (“Tiffany, Other Luxury Retailers Push Digital Outreach In China Market“), the success of Tiffany’s digital campaign for their “Keys” line attests to the efficacy of digital outreach in China, and offers lessons for other luxury brands:

Perhaps to combat customer fickleness in China, several high-end brands have entered the digital realm, starting online-only advertising and marketing campaigns designed to directly target key audiences. This year alone, both Cartier and Coach began large-scale Chinese-language online campaigns, and now Tiffany & Co. has joined its rivals in launching a digital campaign to promote its Tiffany Keys collection in Mainland China. To localize this campaign for the China market, Tiffany has incorporated many of the online “characteristics” that appeal to young (primarily female) Chinese netizens: BBS, blogging, and social media.

As more brands look to the digital space to target specific potential buyers in China, it would make sense that exclusive marketing and branding initiatives, carried out through social media, microblogging and BBS could become the rule, rather than the exception. Instead of diluting a brand’s equity in the Chinese market, large-scale online campaigns would probably create brand equity and loyalty in China among a younger group of potential buyers.

Google google google google google Google google google google google Google google google google google Google google google google google Google google google google google Google google google google google Google google google google google

Categories

Fashion