|By PR Newswire||
|January 7, 2013 06:21 AM EST||
SHANGHAI, Jan. 7, 2013 /PRNewswire/ -- With 200 million households belonging to the consuming classes, China's second to fourth tier cities are arguably the most important consumer segment in the world. But they are tight-fisted. In 2011, first tier markets had a disposable income value of 1 trillion RMB, while second to fourth tier cities had a combined disposable income value of roughly 8 trillion RMB1. It is no surprise that advertising spend in Tier 2 to 3 markets was more than four times greater than Tier 1 markets, as the consuming class population is 7 times bigger2.
Ogilvy & Mather China's consumer insights and trends team Discovery revisited lower tier markets in their most recent study, "China Beyond – Change & Continuity," marking the third time in the last seven years that the team has focused on lower tier cities. Based on research over a span of nine months, the 200+ paged book is packed with data, illustrated with photos and rich in stories about the everyday lives of the people who inhabit these cities.
"'China Beyond - Change & Continuity' is sweeping in its scope, a book that leaves no nook or cranny in the lower tier landscape unexplored. From the intimate domestic spaces to the online bridge to the world, from the frenetic warren-like wholesale markets to the expansive parks where the young whizz on rollerblades in the shadow of granite statues of revolutionaries, this is a record and commentary of a China that is once again poised at the brink of change," said Scott Spirit, Chief Strategy Officer, WPP Group.
The book finds that while some constants remain, a lot of change has occurred as well. While traditional values such as family ties remain intact, a new breed of youth has emerged who do not necessarily wish to abide by their families' expectations. Spurred by job creation, the availability of high quality housing and education, and a relaxed pace of life, the first wave of reverse migration is now in full swing – particularly those who migrated to Beijing, Shanghai and Guangzhou a decade ago and have now realized that after years of hard work, they are still unable to afford homes, cars or their child's education. With these interests at heart, shoppers are embracing e-commerce with enthusiasm and snapping up deals on products that are unavailable in their local stores. Alibaba's Tmall, a hugely popular e-commerce platform for local and international brands to sell in mainland China, have rendered bigger brands as more accessible to these lower tier consumers. These lower-tier residents are hungry for new experiences and have time at their leisure, so that local businesses able to can often occupy these consumers for hours.
"China's lower-tier settings are no longer a world away," said Shenan Chuang, CEO of O&M Greater China. "The changes in the consumer landscape are driven by the expansion of the Internet and other digital innovations that have allowed Chinese consumers to be much more cognizant of the world outside their cities or towns than they once were, even if they've never migrated themselves."
Notably, the study finds that:
- Food safety, environmental pollution and the rising cost of property and healthcare are the top concerns. These fears are based on the residents' own experiences, amplified by the rapid sharing of experiences through the Internet. Some local brands are tapping into this anxiety by marketing their products as "ecologically safe" or natural – even if the consumer are skeptical of those claims.
- There is a rise in compassion and belief in community values that is leading to community action. Many young people, particularly the post 90s generation that was once labeled as being selfish and ungrateful, are coming forward to make a difference. As social media has given this generation the means to express themselves, especially in smaller cities where the youth have few other channels available for expression, they are now much more outspoken with usually very emotional responses to current events. In addition, their solutions to problems can be quite creative.
- Lower tier residents appreciate their more natural and relaxed environment. In comparison to second tier cities, many of which are currently in the midst of a construction boom, those living in Tier 3 and 4 cities believe that their towns are less polluted, offer a more relaxed lifestyle, lower living costs, smoother public transportation and higher public security. Interestingly, a majority of fourth tier residents want to be entrepreneurs, whereas those in second and third tier cities prefer stable jobs in the government or SOEs (state-owned enterprises).
- There is a seasonality in purchasing trends that goes beyond Chinese New Year. The seasonality is most marked when teenagers leave home to attend university, or – more importantly for the lower tier – join the army. Parents buy their children new mobile phones, laptop computers, sportswear and new clothes for the challenging years ahead. China has also come up with its own version of Cyber Monday deals: Singles Day on November 11, when online retailers rack up huge sales mainly from Tier 2 to 4 shoppers, many of whom have taken advantage of the discounts on winter wear at the onset of the season.
- The affinity with open spaces continues to be strong. As reported in the previous studies about lower tier cities, many engagements and interactions happen in public. However, there are now many more opportunities and spaces for people to spend time with their families and friends. New public parks have emerged, as have Chinese government-designated scenic spots near the cities. New shopping malls have large interactive and entertainment zones where brands encourage visitors to sing, dance, roller-blade, fly kites, and graffiti on walls.
- Counterfeit brands have taken their game upmarket. Three years ago, fake brands stayed in the realm of FMCG and consumer durable goods. Perhaps due to crackdowns on harmful products by local authorities, these brands were not as visible this time. Instead, copycat luxury hotels have erected, including Hiyatt (a fake Hyatt) and Marvelot (a fake Marriott) as well as counterfeit fashion brands such as Jack Walk (right next door to a real Jack Jones) and S-Squared (a fake D-Squared). As the first wave of luxury shoppers takes root in lower tier markets, the emergence of these new fake brands serve as a learning experience for them.
- The mobile Internet has taken over and online shopping requires local connectors. Across the city tiers, youth and itinerant entrepreneurs alike are using Tencent QQ rather than sending text messages, comparing prices before making a purchase decision and listening to music on a digital device. Apple enjoys universal recognition as a great brand, but few people own Apple products as they say that other brands were "good enough for their needs." As much as they appreciate the choices, deals and convenience of e-commerce, many are uncertain about the quality of their purchases and seek guidance from trusted sources within their wider social circles.
Kunal Sinha, Chief Knowledge Officer, O&M China, who has led all three editions of the agency's research in lower-tier markets, observes, "Four or five years ago, we found that people in China's small towns were fiercely protective and proud of their traditional crafts and culture. Now they remain proud, but want to embrace modernity in not only what they wear, but also in the way they're doing up their homes, in their consumption of entertainment, and even in what they're eating. The local versions of Starbucks are doing roaring business!"
Strategies and Implications for Businesses
A few examples of what these insights mean for businesses in China:
- Brands should fuse health and beauty benefits in their branding. Consumers are suspicious that beauty products might be unhealthy, toxic, and unnatural – thus seeking reassurance about ingredients. The brand messages could be about "being beautiful is good for you," or when these products are being bought as gifts, that "I care about you, as much as your health."
- Involve the local community in public sanitation drives: organize clean neighborhood contests (with brands as sponsors and support from the local government). These initiatives create corporate social responsibility opportunities as well.
- Position technology brands around the themes of empowerment, connectivity and being smart. Lower tier residents want to feel that they have the same opportunities as those in bigger cities.
- Recruit and educate online connectors to become a brand's champion. Help them master their Weibo, Weixin and other blogging skills. Keep them updated with product news, as they are vital in instilling confidence amongst those who are just beginning to shop online. Provide assurances about product delivery and return policies.
- Build the short-distance travel destination market, enabled by bus and car travel. Seed ideas in the lower tier resident's mind about local destinations and start creating a range of options for various interest groups, such as cycling, camping, hiking, fishing, fresh fruit and vegetable picking, adventure sports, local music festivals and heritage exploration, etc.
(1) ACNielsen China: "Winning in China in 2011," 2011
To download the book cover: http://www.flickr.com/photos/ogilvychina_2011/8357369516/in/photostream
For photos or more information, please contact:
Ogilvy & Mather China
+86 (10) 8520 6223
About "China Beyond Change & Continuity"
"China Beyond" is an in-depth ethnographic and quantitative study into consumers, brands, communication and retail opportunities in China's second to four tier cities. From August 2011 to March 2012 the Ogilvy & Mather China Discovery team, in cooperation with TNS China, conducted field research in three provincial capitals (Chengdu, Changsha and Shenyang), three prefecture level cities and three county towns in Sichuan, Hunan and Liaoning provinces, covering a diverse expanse of geographic, cultural and economic regions. The study was conducted through home interviews with 48 families, 60 retailers and 15 internet cafe owners, combined with observations in shopping malls and public parks. Eighty percent of the respondent families were native to their city, 20 percent were migrants. The quantitative study, amongst 2,200 middle class families, surveyed their beliefs and attitudes towards family, life, risk, novelty, ambition and fashion. The study also aims to map out their shopping, media and entertainment habits and identify influences on purchase decisions.
About Ogilvy & Mather
Ogilvy & Mather is one of the largest marketing communications companies in the world. In 2012, O&M was named Cannes Lions Network of the Year and Most Effective Agency Network by the Effies Global Effectiveness Index. The company is comprised of industry leading units in all of the following disciplines: advertising; public relations and public affairs; branding and identity; shopper and retail marketing; healthcare communications; direct, digital, promotion and relationship marketing; consulting, research and analytics capabilities; branded content and entertainment; and specialist communications. O&M services Fortune Global 500 companies as well as local businesses through its network of more than 450 offices in 120 countries. It is a WPP company (NASDAQ: WPPGY). For more information, visit www.ogilvy.com, or follow us on Twitter at @OgilvyWW and on Facebook.com/Ogilvy.
SOURCE Ogilvy & Mather China
More and more companies are looking to microservices as an architectural pattern for breaking apart applications into more manageable pieces so that agile teams can deliver new features quicker and more effectively. What this pattern has done more than anything to date is spark organizational transformations, setting the foundation for future application development. In practice, however, there are a number of considerations to make that go beyond simply “build, ship, and run,” which changes ho...
Sep. 28, 2016 11:30 PM EDT Reads: 2,718
"My role is working with customers, helping them go through this digital transformation. I spend a lot of time talking to banks, big industries, manufacturers working through how they are integrating and transforming their IT platforms and moving them forward," explained William Morrish, General Manager Product Sales at Interoute, in this SYS-CON.tv interview at 18th Cloud Expo, held June 7-9, 2016, at the Javits Center in New York City, NY.
Sep. 28, 2016 11:30 PM EDT Reads: 3,921
Kubernetes is a new and revolutionary open-sourced system for managing containers across multiple hosts in a cluster. Ansible is a simple IT automation tool for just about any requirement for reproducible environments. In his session at @DevOpsSummit at 18th Cloud Expo, Patrick Galbraith, a principal engineer at HPE, discussed how to build a fully functional Kubernetes cluster on a number of virtual machines or bare-metal hosts. Also included will be a brief demonstration of running a Galera M...
Sep. 28, 2016 10:30 PM EDT Reads: 3,040
According to Forrester Research, every business will become either a digital predator or digital prey by 2020. To avoid demise, organizations must rapidly create new sources of value in their end-to-end customer experiences. True digital predators also must break down information and process silos and extend digital transformation initiatives to empower employees with the digital resources needed to win, serve, and retain customers.
Sep. 28, 2016 09:15 PM EDT Reads: 343
As ridesharing competitors and enhanced services increase, notable changes are occurring in the transportation model. Despite the cost-effective means and flexibility of ridesharing, both drivers and users will need to be aware of the connected environment and how it will impact the ridesharing experience. In his session at @ThingsExpo, Timothy Evavold, Executive Director Automotive at Covisint, will discuss key challenges and solutions to powering a ride sharing and/or multimodal model in the a...
Sep. 28, 2016 08:30 PM EDT Reads: 446
If you’re responsible for an application that depends on the data or functionality of various IoT endpoints – either sensors or devices – your brand reputation depends on the security, reliability, and compliance of its many integrated parts. If your application fails to deliver the expected business results, your customers and partners won't care if that failure stems from the code you developed or from a component that you integrated. What can you do to ensure that the endpoints work as expect...
Sep. 28, 2016 08:30 PM EDT Reads: 1,712
In this strange new world where more and more power is drawn from business technology, companies are effectively straddling two paths on the road to innovation and transformation into digital enterprises. The first path is the heritage trail – with “legacy” technology forming the background. Here, extant technologies are transformed by core IT teams to provide more API-driven approaches. Legacy systems can restrict companies that are transitioning into digital enterprises. To truly become a lea...
Sep. 28, 2016 08:15 PM EDT Reads: 335
IoT is fundamentally transforming the auto industry, turning the vehicle into a hub for connected services, including safety, infotainment and usage-based insurance. Auto manufacturers – and businesses across all verticals – have built an entire ecosystem around the Connected Car, creating new customer touch points and revenue streams. In his session at @ThingsExpo, Macario Namie, Head of IoT Strategy at Cisco Jasper, will share real-world examples of how IoT transforms the car from a static p...
Sep. 28, 2016 07:00 PM EDT Reads: 1,626
Cloud computing is being adopted in one form or another by 94% of enterprises today. Tens of billions of new devices are being connected to The Internet of Things. And Big Data is driving this bus. An exponential increase is expected in the amount of information being processed, managed, analyzed, and acted upon by enterprise IT. This amazing is not part of some distant future - it is happening today. One report shows a 650% increase in enterprise data by 2020. Other estimates are even higher....
Sep. 28, 2016 06:45 PM EDT Reads: 4,150
From wearable activity trackers to fantasy e-sports, data and technology are transforming the way athletes train for the game and fans engage with their teams. In his session at @ThingsExpo, will present key data findings from leading sports organizations San Francisco 49ers, Orlando Magic NBA team. By utilizing data analytics these sports orgs have recognized new revenue streams, doubled its fan base and streamlined costs at its stadiums. John Paul is the CEO and Founder of VenueNext. Prior ...
Sep. 28, 2016 06:30 PM EDT Reads: 3,116
One of biggest questions about Big Data is “How do we harness all that information for business use quickly and effectively?” Geographic Information Systems (GIS) or spatial technology is about more than making maps, but adding critical context and meaning to data of all types, coming from all different channels – even sensors. In his session at @ThingsExpo, William (Bill) Meehan, director of utility solutions for Esri, will take a closer look at the current state of spatial technology and ar...
Sep. 28, 2016 06:15 PM EDT Reads: 295
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, will discuss the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports. The session will include a working demo and a technical d...
Sep. 28, 2016 06:00 PM EDT Reads: 1,775
What happens when the different parts of a vehicle become smarter than the vehicle itself? As we move toward the era of smart everything, hundreds of entities in a vehicle that communicate with each other, the vehicle and external systems create a need for identity orchestration so that all entities work as a conglomerate. Much like an orchestra without a conductor, without the ability to secure, control, and connect the link between a vehicle’s head unit, devices, and systems and to manage the ...
Sep. 28, 2016 05:15 PM EDT Reads: 254
Businesses are struggling to manage the information flow and interactions between all of these new devices and things jumping on their network, and the apps and IT systems they control. The data businesses gather is only helpful if they can do something with it. In his session at @ThingsExpo, Chris Witeck, Principal Technology Strategist at Citrix, will discuss how different the impact of IoT will be for large businesses, expanding how IoT will allow large organizations to make their legacy ap...
Sep. 28, 2016 05:15 PM EDT Reads: 256
The many IoT deployments around the world are busy integrating smart devices and sensors into their enterprise IT infrastructures. Yet all of this technology – and there are an amazing number of choices – is of no use without the software to gather, communicate, and analyze the new data flows. Without software, there is no IT. In this power panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will look at the protocols that communicate data and the emerging data analy...
Sep. 28, 2016 05:00 PM EDT Reads: 1,725