As China’s economy continues to decelerate, strategies that once worked so well for “one of the biggest forces in global luxury spending: Chinese consumers,” as identified in a 2017 McKinsey & Company report, may have run their course. In this new and subdued climate, luxury goods brands must consider shifting strategies.
Jing Daily caught up with a trio of marketing experts: Ashley Galina Dudarenok (AGD), an author of the Amazon bestseller “Digital China: Working with Bloggers, Influencers and KOLs,” Mark Tanner (MT), Managing Director of China Skinny, a Shanghai-based marketing firm and Michael Zakkour (MZ), VP, China/APAC Strategy & Global Digital at Tompkins International. These gurus shared advice on how to market in the 2019 Chinese market.
Jing Daily: What new strategies do you advise luxury brands take if they want to keep selling in China?
“I don’t think it is as straightforward as throwing more money at store openings, social media and KOLs, etc. It is really more about understanding target markets and being smarter, connecting and engaging with them. Luxury consumers want to feel special, loved, and there are increasing tools available for brands to assist with this.
One example is facial recognition, which is starting to take off in China, allowing brands to develop individual profiles on customers to provide a truly personalized level of service that is authentic and thoughtful. This should be incorporated into new store openings, KOL campaigns, social and e-commerce.” — Mark Tanner
“What we are already advising on, and implementing, for our luxury clients, is to embrace the ‘New Retail.’ China is no longer a ‘channel’ and ‘e-commerce’ market as much as it’s an ‘ecosystem’ and ‘habitat’ market. Luxury brands need to fully integrate online, offline, technology, and logistics to deliver the 4 C’s: consumer centricity, convenience, customization and consumer contribution.
This can be accomplished by working closely with Alibaba, JD/Tencent and Little Red Book to be present in all of their habitats (marketplaces, brick & mortar footprints, social commerce apps, cross border). Luxury companies must also embrace the ideas that ‘retail-tainment’ experience, and customization need to be core pillars of the value proposition.” — Michael Zakkour
“Luxury items will still be bought and sought-after, but more and more for special occasions and as a ‘love gifts.’ Put emphasis on seasonal holiday campaigns. Consider, too, launching a special ‘affordable luxury line’ like iPhone’s RED.” — Ashley Galina Duderenok
Jing Daily: What’s one thing luxury brands still misunderstand about China?
“Many brands would be wise to alter the way they view China. Some brands are profiling consumers by generic ‘tribes’ across China based on behavior, but I think this can be enriched with overlaying it over city/regional differences. Virtually every piece of research China Skinny does finds quite different behavior, lifestyles and preferences for consumers between Shanghai and Beijing, even between Guangzhou and Shenzhen, and obviously between lower-tier cities too.” — MT
“Do not over-cater to fashion trends. For example, last year the social media channel Douyin was very popular in China. Then, in July, the Chanel brand advertised on Douyin but expectations fell short. As it turns out, most of the Douyin users cannot afford luxury goods. In other words, be informed, do try new things, but be smart. And if your brand uses Douyin, employ a ‘bloggers only’ presence instead of advertising on it.” — AGD
“Luxury brands should stop thinking that their key customers are wealthy 50-year- olds. That is an important cohort, but luxury companies must embrace the reality that their biggest potential is with the ‘Young Gens:’ millennials, Gen Y, Gen Z. — MZ
Jing Daily: What is the one thing luxury brands should NOT do now?
“Everything that Dolce & Gabbana has done.” — MT
“Do not make ‘political’ mistakes on social media. Keep your CEOs well-trained and aware.” — AGD
“They should stop bypassing deep study on Chinese language, history, culture and philosophy before going to market with products and marketing campaigns. Condescending to, and insulting, customers through ill-conceived campaigns can undo years of progress and success.” — MZ