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:
- 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.
- 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?
- It is crucial to research and understand our lower tier neighbours, and just what their existing knowledge of your product is.
- 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.
- 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…
- 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.