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By SMG Research Team, April 25, 2010 12:00 am

Enigmas, these China lower tier cities.
And we’re not talking about only tier 2s and 3s.
It is also important to consider even lower tier levels like 4s, 5s…

So what do marketers currently know about lower tiers?  The majority have focused on top tier cities, as the distribution infrastructure is better there, the consumers have greater spending power, and they are seen as being more knowledgeable, with sophisticated product tastes.

Gradually, as these markets become saturated with products and consumer awareness of brands are high, the only logical thing to do is to branch out. When developing messaging for the different tier groups, there is a common train of thought amongst marketers that top tier cities will buy products due to their aspirational qualities, appealing to their higher emotional needs, versus lower city tiers, who are still in the product learning phase and where communication about the product needs to be simpler, focusing on explaining base product benefits.

However, just how true is this?  Especially when looking at youth in lower tiers, are they really that much less knowledgeable and less sophisticated versus their top tier neighbours?  I suspect that while there is truth in this, it is not the full story, as:

1. Given the power and reach of the internet, digitally savvy youth in every tier have access to everything that top tier youth have access to. They see how others are dressing, what their interests are; they follow the same celebrities, and view the same clips on Youku.  So while they are not clueless about products and trends, product education may still be important.
2. In a rapidly growing country like China, people see China’s success and want to mirror that in themselves also. Youth especially, in every tier, are optimistic and hopeful about their future.  Many lower city youth aspire to make it big, for example as an entrepreneur in their home town, or setting their sights to top city tier advancement.  Thus, the aspirational messaging that strikes a chord with top city tier consumers may in fact work on lower city tiers also.

However, the income gap between lower and top tiers is a fact and this is a large reason for the slow movement into lower tiers.  Instead of the knockoff luxury brands found in top city tiers, lower city tiers will also find knockoff FMCG brands for sale. So instead of Pringles, they are buying ‘Prangle’ chips and this is where it gets tricky for our FMCG friends.  Why would lower city tier consumers want to pay more for the actual product, when there is a similar one on the shelves, with a similar look and feel?

What does this mean for us as marketers?

1. It is crucial to research and understand our lower tier neighbours, and just what their existing knowledge of your product is.
2. They are more price sensitive, so appeal to them via promotions and in-store displays.  Their pace of life is not as hectic as upper tier consumers, so they may pause for more detailed conversations with in-store salespeople and try sampling.  This would be an important space to engage them, especially for FMCGs.
3. View them as aspirational beings (because they are!), but also understand their limitations.  It may be monetary, or education, or training, etc.  See how you can help them by sponsoring community classes, or online training courses.  Help them to achieve their dreams and overcome their obstacles.  This leads me to my next point…
4. Become a part of their community.  Their communities are smaller and many families may have been there for generations, leading to a very relationship-oriented culture (unlike the overpopulated top tiers).  Trust will be an essential part of their life.  Earn their trust and build relationships by showing you care about them, as people, and are willing to give back to their community.

These are just a few thought-starters about lower tier consumers.  This is an incredibly interesting topic and I’ll be sure to revisit it regularly.

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By SMG Research Team, April 20, 2010 3:19 pm

Following up on my article about China’s Ant Tribes (click here for a refresher), groups of Chinese youth have become so fed up by the rat race and broken dreams found in Beijing and Shanghai that they are leaving and settling for smaller towns, where they being are offered a cushy start.

While the top tier cities have lured youth with projections of lucrative paychecks, career opportunities and a fast paced lifestyle, many youth are quickly discovering that the reality is nothing like what they had imagined.

Earlier this year, I conducted an in-home interview with a 25-year-old in Shanghai who moved there from his tier 3 city hometown.  Living with his girlfriend in a single room containing only a double bed (that filled 90% of the room) and a computer, their possessions were meager.  Studying in Shanghai was his dream – his first step to becoming a successful graphic designer.  In order to pay rent (and to keep his computer up-to-date) he works at a restaurant every night, including weekends.  “It’s really hard and not what I thought it would be,” he told me, “but I am staying because I have hope that it will get better.”

Youth living & working in Shanghai. Copyright - Starcom 2010

A May 2010 United Nations report stated that from 1980 to 2010, China’s urban population had more than doubled, expanding from 19% of China’s total population to 47%… and growing.

But not everyone is willing to stay and many have given up their big city dreams, seeking their fortunes elsewhere.  One of those places is Ningbo, a port city in eastern Zhejiang province (and home to the handsome beggar!), which will give housing subsidies ranging from 500,000 to 1.5 million yuan to qualified professionals.  Other growing cities like Tianjin, Dalian and Qingdao also offer flexible residency permit policies, which enable access to health care, home purchasing and education.

One reason why young and educated graduates would even consider these cities is because many companies have also discovered their appeal.  For many companies, big cities equal higher operating costs and competition, whereas smaller cities with a developed infrastructure may be just the answer.  For example, Microsoft and Boeing have both set up outsourcing delivery centres in Wuxi, Jiangsu province (a tier 2 city).

Young Chinese professionals

What this means for marketers

With the growth (and expected continued growth) of lower city tier economies – due to the modernization of city infrastructure, their appeal to major companies, and their poaching of professionals and new grads – it is absolutely crucial for marketers to place considerable resources into researching and studying lower city tiers.  We must start looking beyond tier two and three cities and venture into tier four (e.g Quan Zhou 泉州) and even tier five cities (e.g. Shan Tou 汕头).

Also, an influx of sophisticated consumers into lower city tiers may require marketers to re-evaluate their consumer messaging and campaigns, and to consider the dynamics of dual messaging within a single market.

Lower city tiers are an exciting frontier for marketers for its large and untapped consumer base, rising incomes, and consumer aspirations.  Understanding this group – their thoughts and motivations – is the challenge.

Come visit Starcom China Blog again on Thursday, where I will continue our lower city tier discussion and dig deeper into what we have learned about these consumers!

Tier 3 little one and grandfather

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By SMG Research Team, April 15, 2010 8:52 pm

上海世博会的目标，就是给两类人群带来震撼

1. 世界其他地区的人群
2. 中国大陆人群

好吧，我知道，这两类人群加起来，就是全世界。很显然，中国近年来正在向全世界展示这个国家的实力和政治影响力。

然而，举办世博的另外一个目的，也是向中国人民展示国家的富强和逐渐改善的生活水平。

据估计，世博会期间将接待7000万游客，而其中的95%将会是中国本国游客。游客数量非常可观。

那么，我们先来迅速回顾一下北京奥运会对市民带来了那些影响。Starcom在2008年奥运会结束后，立刻进行了一项针对奥运会的调查。我们看到，奥运会的成功使得中国消费者（尤其是年轻人）对中国的看待更加积极，并且为国家感到自豪。

在一线城市18-24岁的年轻人中，有88%认为“作为中国人很自豪”，在二、三线城市比例则达到95%。在所有18岁以上的成年人中，有86%认为“中国与过去相比更强大了”

中国中小城市的居民采用一切可能的方式来观看奥运会

以上的数据清晰的显示奥运会对中国消费者在认识国家和民族自豪感方面起到的令人称奇的作用。我可以想象，上海世博会只会延续这种趋势。

届时，全国各地的游客会蜂拥而至，那些不能亲自前来参观世博会的人们会通过铺天盖地的新闻、报道、照片等来了解世博实况。世博会会令人们打开眼界——尤其是中小城市的人群——他们没有机会生活在北京、上海、广州这样的大都市——如果没有世博会，他们就没有机会了解到中国今日发展的速度。

既然中国这样希望展示自己的国力，那么中国游客到达上海的时候，会看到那些呢？

首先，世博园的规模巨大，是2008年西班牙萨拉戈萨世博园面积的20倍。

中国馆本身就是一个必看的景点。中国馆气势恢宏，高度达69米，主体采用中国传统中代表喜庆的红色，每天可接待5万名游客。中国馆的造价是2亿美元（相当于14亿人民币）——哇噢。

本届世博会的主体是“城市，让生活更美好”，这也是中国在清晰的向人们传递这个国家会走向更加积极的未来的信息。上海将着眼于未来，着重向人们展示中国在商业、科技等方面持续的发展。

随着奥运会期间大量的信息传递和许多企业采用新的方式来吸引本地消费者，中国一跃而进入了一个新的传媒时代。我们期待着上海世博会对此的延续，并且为中国人民带来奇迹和自豪。

世博见！

P.S.说到我最喜欢的展馆，那就是贵州馆，融入了贵州特有的喀斯特地貌和中国最大的瀑布黄果树瀑布。贵州馆的主题就是“醉·美贵州避暑天堂”。

P.P.S. 点此了解世博最新进展 ;)

.

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By SMG Research Team, April 13, 2010 7:41 pm

I need to write about how excited I am about the Shanghai World Expo!  It is expected to be the largest World Expo in history.

May 1st is the opening day and as it draws near, countries are racing against one another to build the most exotic, crowd-pleasing pavilions.  The theme of the 2010 Expo is “Better City, Better Life” and each country will be showing off their architectural, design and sustainability excellence.

Just a few numbers:
-          200 national and corporate participants
-          More than 20,000 performances
-          800,000 visitors a day anticipated
-          70 million visitors in total

As evidenced by the Beijing Olympics, China hosts events of epic scale and there is no doubt that this Expo, which has cost more than the Beijing Olympics, will not disappoint.

Money has also been poured into Shanghai, giving it a facelift and upgrading its infrastructure and public transportation system.

With so many visitors flocking to the Expo, some companies have been forward-thinking enough to build their own pavilions.  One of the best examples of this is Coca-Cola.  Upon entering the Chinese market, Coca-Cola has faced many challenges, such as stimulating the taste buds of the traditionally hot-beverage and tea-drinking Chinese.  But their presence at this monumental event is sure to leave a lasting impression amongst local consumers.

A little Expo history: Did you know…

In1904, the World’s Fair in St. Louis in gave the world x-rays and ice cream cones.
In 1939, the New York World’s fair unveiled television broadcasts, the tape recorder and nylon stockings.

————————————————————————–

More Shanghai Expo news to come on Thursday, including my favourite pavilions (so far).  In the meantime, here are a few pictures of some nearly completed national pavilions:

China Pavilion - up close

The 20-meter-high Seed Cathedral (part of the UK pavilion) will be covered by 60,000 slim, transparent acrylic rods, which will quiver in the breeze

Sunny Valley (a structure to harness solar energy) and the Chinese Pavilion lit up

"Joy Street", part of the Dutch Pavilion

Photos courtesy of REUTERS

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By SMG Research Team, April 1, 2010 5:48 pm

Thought I’d post a Brother Sharp aftermath story about whatever happened to that ‘handsome beggar’, as the original post (click here if you missed it) generated so much interest!

As it turns out, the true identity of Brother Sharp has been revealed.  After an enormous amount of press and publicity (the story even went to far as to be published in Britain’s ‘The Independent’ – see below),

"The Independent" published a photo of him, and described him as "a starkly handsome Chinese man walking with a model's measured gait, and wearing a rag-tag but well co-ordinated overcoat on top of a leather jacket. His eyes peer into the middle distance, in what one fan described as 'a deep and penetrating way', and he strides confidently forward."

a woman came forward claiming that she saw Brother Sharp in a newspaper and that he is her long lost son.  Brother Sharp, who has now been put into a psychiatric hospital was asked to write his name and it matched the one the woman said was her son’s name – Cheng Guorong.

The real story behind Brother Sharp is this: his name is Cheng Guorong and he was born in Poyang County, Jiangxi Province in 1976.  He had left home more than 10 years ago for work, but his family had not heard of him since.  Brother Sharp has two children – one who is 11 and the other is 10.  His family has been searching for him all these years and tragically, his wife and father died in a car accident last year when following a lead on Brother Sharp’s whereabouts.

His mother, sister and brother appear overcome to have him back in their lives.  They insist that he does not have a mental illness, but is merely extremely introverted.

However, this story does not have a happy ending for all, for many once-enamoured netizens are disappointed with the new Brother Sharp.  Clean-shaven and sporting a hat, he no longer resembles the cool, chic Brother Sharp they once knew and loved.

You can be the judge:

Before ... and after.

Now, just for fun – here are some of my favourite Photoshop images of Brother Sharp (and believe me, there are TONS of peer-generated images online).

Wishing him a great life (-_-)