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By SMG Research Team, November 25, 2011 5:57 pm

Thanks for stopping by to join our discussion on lower tier cities.

If you have just started reading, please click the following links to get caught up with our study and to read about previous insights.

Week 0: Kick-off and study details.  Click here.
Week 1: It’s a Matter of Perspective – Click here.
Week 2: The Secrets of the Heart – Click here.
Week 3: Celebrating the Power of Family – Click here.
Week 4: Unveiling Community Dynamics – Click here.
Week 5: The World Outside My Door – Click here.

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This week we take our learnings from previous weeks – about the hearts, minds and motivations of lower tier consumers – and we apply these to the commercial world and how they view products and purchases.

When it comes to purchases and consumption, lower tier consumers differ quite significantly from their top tier counterparts.  However one thing that they do not differ in is their desire for good, safe products.

LET THE BUYER BEWARE

Lower tier consumers are aware of the scandals plaguing China’s food industry.  While their knowledge of food scandals may not be as in-depth as top tier consumers, they are still savvy and suspicious of what they serve to themselves and to their loved ones.  Thus, when they are unfamiliar with the category or brands, they will turn to external cues to lead them to making the right decision.  These cues may be big brand names that they saw on TV, or which they have heard their friends talking about.

In lower tiers, advertising is important as a means of establishing credibility.  Their thinking:  the more money you’re able to spend on advertising, the more legitimate you must be.

Says Lisa Richert, Strategy Director, North Asia

“As the saying goes, “Trust is so hard to earn, but it is also lost so easily”.  As brands, we need to lead with simplicity, not over-complicating.  People want cues to help them know the quality – reminders on where ingredients are from, where it is manufactured, who endorses it and frankly why it should be trusted.  With this, we need to leverage their known trusted sources – from media like TV to word of mouth like organizations, the government, and even to the shop keepers themselves.”

Not surprisingly, this concern is a universal truth across China.  However, the more we understand lower tier people, we see that the tactics we use to address that concern may need to vary.

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POWER OF THE VALUE EXCHANGE

With pressures like this, it is not surprising that lower tier consumers are more price sensitive.

But this goes further than you would expect – this price consciousness translates to many consumers purchasing brands that they may be completely unknowledgeable about.  Instead, they are swayed by a low price, a vaguely familiar-sounding name, or more likely, a promotion or free-gift.

One new mom we spoke to confessed that she had never tried the particular brand of baby milk powder she had just purchased before, or had even heard much about it.  She walked into the store with the intent to purchase her usual formula, but changed her mind.  What made her decide to purchase the new brand?  A free photo album with purchase.

To her, the free photo album – inside which she could store precious photos of her little girl – was worth the switch to a new, unfamiliar brand.

Without strong brand knowledge, products that have give-aways can easily sway the brand choice or convince the consumer to purchase something they normally would not want to spend extra money to buy.

Packaging cues or explicitly stated benefits also have great power to guide brand choice.

Ultimately Brands need to create their own meaning if they are going to have value. This value can be functional – clean, smooth, tasty – or emotional – caring, family-oriented, etc.  Then, they must find ways to bring that to life.  This can take the form of promotions, gifts with purchase, visual cues, content development or association, etc.

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PRACTICAL LUXURY?

The concept of luxury takes on a different meaning in lower tiers – But it does exist.  Luxury here is seen through a very practical lens.  One lady we spoke to said that she defines luxury as buying clothes that costs above 200RMB (as she usually spends only a fraction of that).

In lower tiers, luxury is not about the brand of car – it’s about owning a car… because owning a car means you can afford the petrol to fill it.

Across China, luxury is still very much tied to price and has little emphasis on brand heritage and/or product quality.

The woman pictured in the photo above is Mrs Wang.  She is 33 years old and lives in Huaiyuan county in Anhui province.  She did not know that the Louis Vuitton bag given by her husband is considered a luxury item.  Before she knew that it was an expensive luxury brand, she was using it as a grocery bag when she shopped for groceries.

Says Jeffrey Tan, National Research & Insights Director:

“We need to make our Brand Stories meaningful beyond price and just image.  We want these consumers to be more conscious of the brands they choose versus just purchasing products.  They need to understand how the brand fits into their lives and the value placed behind each brand – be it to satisfy emotion or practical needs.”

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By SMG Research Team, November 18, 2011 3:40 pm

This week we continue our discussion of the Starcom MediaVest Yangtze Study and lower tier consumers by taking a step back and adopting a wider perspective of how they view the world around them: The world outside my door.

If you have just started reading, please click the following links to get caught up with our study and to read about previous week’s insights.

Week 0: Kick-off and study details.  Click here.
Week 1: It’s a Matter of Perspective – Click here.
Week 2: The Secrets of the Heart – Click here.
Week 3: Celebrating the Power of Family – Click here.
Week 4: Unveiling Community Dynamics – Click here.

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The power of community is evident as well in not just how individuals see themselves in it but also in the expectations they hold for their community.

… But this is not limited to only their community, but they hold high expectations of China as a whole.

This post is dedicated to giving our Chinese consumers a voice.  Most don’t feel like they are able to freely speak their feelings.  And while the words in this post are not edgy or controversial, it is a start to learning the concerns Chinese consumers have today.

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DO NOT FORGET THE BACKS OF THE NATION

This is Mr Li, 23 years from Heyun Town in Guangdong province.

He showed great courage in writing what he did here, lamenting at how the state government has forgotten about the basic needs of people in the lower tiers, especially in his small town.

This sums up the feelings of many in lower tiers who often feel that the remote distance from the central government also means that they are often the last to enjoy the prosperity of the nation.

Immediately after writing this, he was reprimanded by his mother severely for being so brazen with his words.  We were lucky to have captured this one photo of his thoughts.

It seems that the younger generation is becoming increasingly bolder in sharing their opinions. Take blogger Han Han for example (read about him here).  He embodies the thoughts of today’s Chinese youth and is seen as a strong, positive role model for them.  He is not shy about sharing his thoughts, which are often very controversial.

How can we, as brands, empower youth who wish to share what’s on their mind, but are unsure how to?  This is a fine line to tread and the trick is in balancing an authentic image and appealing to China’s youth, but also not alienating the older generation. For a youth-centered brand, perhaps stirring up some controversy is the way to get noticed by them? – especially amongst lower tier youth who often feel even more overlooked than their top tier neighbours.

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环保: STOP THE POLLUTION!

During our lower tier journey, one of the key topics we often heard people talk about was the environment.

No different from more developed cities, the environment affects everyone.  This concern is pressing especially to lower tier consumers, and they see this as part of the price they pay for China’s rapid development.

The changes occurring in China feels like everything is on speed-dial.  Farming towns yesterday have been turned into dust and rubble and new buildings today, skyscrapers tomorrow.

Many lower tier consumers are concerned because it does not just affect them directly but also future generations.

Here their expectations are on brands as much as the government.  Brands have the opportunity to be a part of communities through the good they can do. “Selfless” acts of helping not just with disasters but on improving the everyday – recycling waste to create something new for their communities, clean water efforts, etc. – is something that will resonate very strongly with them and something brands can help with that will make a significant impact on the lives of lower tier consumers.

All consumers, regardless of tiers, are concerned about environmental issues.

Here we start to see where upper and lower tier consumers agree – on the need to have the environment around them improved.  While probably for different reasons, their savviness on this issue is equal – they want to see something done now.

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By SMG Research Team, November 9, 2011 1:12 pm

This week, we continue our deep-dive into China’s lower tiers with two more insights about our lower tier consumers: Unveiling the dynamics of lower tier communities.

If you have just started reading, please click the following links to get caught up with our study and to read about previous week’s insights.

Week 0: Kick-off and study details.  Click here.
Week 1: It’s a Matter of Perspective – Click here.
Week 2: The Secrets of the Heart – Click here.
Week 3: Celebrating the Power of Family – Click here.

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As we know, it’s the people who make up a community.  But within one, there are different players with different agendas.  No two are alike and China lower tier communities are different from China top tier communities, which are also different from ones in other parts of the world.

I’ve said “community” enough times now.  So where am I trying to go with this?

This post is dedicated to understanding the dynamic of lower tier communities, fueled by the people within it.

Unlike top tier youth who don’t want to grow up and wish to remain young (or at least young-at-heart) for as long as possible, lower tier youth are…

RACING TO GROW UP

Lower tier youth appear to be in more of a rush to grow up and look to their older peers for inspiration.

While Tier 1 youth take their trend cues from other same-aged youth and even dress younger than they are, lower tier youth are happy to “grow up” and view themselves as adults.

One lower tier 22 year old male told me that he learns a lot from his boss and would go out with him – even socially, like to KTV, just so he could learn more about how to act like a successful adult.

Another young girl, 17 years old from Anhui, told us how she wants to be independent and to be treated as an adult.  This influences the way she acts and dresses.

Why do they so badly wish to be seen as adults?

It’s because they want to be helpful to their families. They see the way their parents live and, for many families, the hardships they go through.  Chinese youth – and perhaps even more so in lower tiers – have a strong filial duty toward their family and parents.  They feel that the faster they “grow up”, the quicker they will be able to contribute back to their family and help to relieve their parent’s burdens.

Many lower tier youth may not have had the opportunity to go elsewhere for further education. So without being immersed in an environment of youthfulness (like a university, which may seem to delay the onset of adulthood and responsibility), their next step is becoming an adult.

Says Jeffrey Tan, National Research & Insights Director:

“Conversation becomes the key to being useful from a brand side.  Provide youth with a place to talk and share about the things they care about.  This also means being mindful of the tone you use with lower tier youth.  They want to grow up and are more capable in many ways than their upper tier cousins.  While keeping the content simple and straightforward is key, respecting their different kinds of experiences means something too.”

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Starcom tip:

Think about ways that we, as brands, can help aid the transition for these lower tier youth – from youth to adults. They are starting earlier than upper tier youth and in some cases, may not be as well-educated… but they still are full of ambition and desires for success (though their definition of success may be different than top tier youth).  In order to start a conversation, consider what type of platforms we can create to aid them in their lives – be it job searches, or work tips, starting a family, or general life and growing-up issues.

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The second lower tier insight we will discuss today is the “fly on the wall” aspect of lower tier communities, where everyone is aware of everyone else’s business.  Talk and gossip spread quickly.

FLY ON THE WALL

What is a fly on the wall?  It’s like being able to be in a room and listen to and observe the going-ons without being noticed.  That’s what lower tier communities feel like – your business, is my business, is everyone’s business.

There are pros and cons of being in a small community and having grown up with the same people around you for years and decades.  The pros are that it becomes like a giant family, and being surrounded by friends, family and familiar faces is quite a nice feeling.  However, smaller communities mean that everyone knows everything that’s going on.

By its nature, building a personal identity (one that moves away from your family’s) means doing something or having something that is uniquely your own.  Unfortunately here, that may not ultimately be desirable… or possible.

One young man said something very telling when he was describing why he and his friends don’t buy a more costly international brand:

“I like that brand, but don’t buy it because of the price.  If my friend bought it, I would think he’s wasting money and look down on him for that.  Or I wouldn’t even think it’s real, because I know how much money he makes and that he probably can’t afford it.  Everyone knows how much everyone can afford.”

As brands, we need to understand these community dynamics and conversations.  IM and QQ are important youth touch-points.  Listening more will help us better understand where our opportunity is to fit their needs and desires and to learn how these needs and desires change across cities and tiers.

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