The Year (and Decade) of the Tiger

Article Featured Image
With a population of 1.3 billion whose per capita income is expected to double over the next 10 years, and a consumer market that is expected to grow to $14 trillion by the year 2025, it's no wonder foreign companies are investing billions to reach today's Chinese consumer. Research reveals a growing demographic of generally younger, affluent, urban Chinese consumers who are willing to consider foreign brands. The opportunity seems simple enough. But, foreign companies, beware: Chinese consumers aren't as heavily influenced by traditional marketing channels and messages as consumers are elsewhere. While some multinational companies successfully reach the elusive Chinese consumer, others come up short because they fail to adapt their marketing approaches to incorporate factors that influence Chinese buying habits. For example, General Motors established Buick as a premium brand in China by playing up a local angle -- the nation's last emperor owned a Buick. Alternatively, a major U.S. appliance manufacturer's attempted entry into the market failed because the company applied an American mindset, business methods, and managers, with little understanding of the consumer segments to which they were trying to sell. Many challenges stem from the sheer breadth of the Chinese market. The economy there comprises a matrix of microsegments reflecting diverse and fluctuating consumer tastes. The challenges are difficult to navigate because Chinese consumers, when asked, do not reveal what truly influences their buying decisions. For example, they tend to cite trustworthiness, reliability, and quality as the product attributes they consider most important -- but when it comes to brand consideration, familiarity drives Chinese purchase decisions. Additionally, Chinese consumers devour information on brands from more sources than do consumers in other countries. They are far less influenced by print ads and direct mail. Chinese shoppers rely on recommendations from the people they know, product reviews, and endorsements. So how can global companies succeed in China? Success requires a rigorous, customized approach and the stage-by-stage measurement and management of a customer's buying cycle: from awareness and consideration to purchasing, recommending, and achieving product preference. More specifically, companies should consider the following:
  • When building awareness, explore alternative and emerging communication channels that impact the third-party and word-of-mouth communities. Research shows that friends, coworkers, and product reviews are relied on by nearly two-thirds of Chinese consumers when making purchases.
  • Understand and be prepared to mitigate any potential handicap from a brand's country and/or product category.
  • Word of mouth is a key channel. However, if a buyer is disappointed by a recommended product, both the buyer and the recommender will lose face, and customers may be lost for life.
  • Chinese consumers favor familiar products that are consistent with their personal values and beliefs. As such, they must be worked into a brand's key value proposition along with the functional, pricing, and quality benefits marketers regularly communicate.
  • Chinese consumers are ready to try foreign brands, but the challenge will be getting products in front of them. Be prepared to invest in distribution or explore local distribution partnerships to position products in front of potential consumers.
Bottom line? The best-performing companies gain an understanding of their potential customers and correctly gauge those customers' needs and values at every stage of the buying process. Woody Driggs is the global managing partner responsible for the CRM service line at Accenture. He can be reached at CRM.Woody.Driggs@accenture.com.
CRM Covers
for qualified subscribers
Subscribe Now Current Issue Past Issues