How does brand behavior, and loyalty, vary among Chinese demographic groups?

Research Project Name

Consumer Multiplicity in China

What We Did

We conducted an online, panel-based survey of 1,000 adult Chinese consumers to identify patterns in consumer behavior among various demographic groups in China. We analyzed the data according to location, gender, and brand type to better understand how consumer values correspond with brand values for specific demographic groups. To inform our location analysis, we categorized China’s major population centers into first-, second-, and third-tier cities according to criteria such as economic development, GDP, transportation systems, urban infrastructure, and historical and cultural significance. Across demographic categories, we then measured the frequency and intensity with which consumers connect to and engage with brands, and the brands particular consumer groups identify with most.

The Context

As China continues to undergo rapid economic development, its consumer class is increasing in both scale and sophistication. The number of products and services available to Chinese consumers continues to grow, and they are concurrently becoming more and more discerning in their purchasing decisions. The behaviors and brand affinities of various consumer groups also show distinct characteristics, offering opportunities for brands to better target consumer groups.

The Results

Connection drives consumer behavior. The top three components that contribute to brand significance for respondents in our sample are a genuine connection with the consumer, alignment with personal values and style, and the ability to make the consumer feel good. Staff friendliness and helpfulness are also key factors in determining positive brand experiences, indicating that even in the digital age of online shopping, customer service is still essential. Additionally, 93 percent of respondents said they are likely to recommend their preferred brands to family or friends, proving word of mouth is still one of the most effective ways for brands to spread their message.

Men consider themselves as brand savvy as women. In fact, among Chinese consumers between the ages of 18 and 34, men actually report themselves as being slightly more brand savvy than women. The diversity and availability of products targeted at men don’t currently reflect this—products that build greater connection with men have an opportunity to compete in a less crowded but equally valuable consumer space.

International brands struggle outside first-tier cities. Consumers in first-tier cities are highly engaged with their favorite brands, and feel these brands express their personal values. Their favorite brands are often international or global entities, reflecting a consistency among global consumers in major cities. Consumers in second- and third-tier cities are different—they are more loyal to local brands, and overall see less connection with brand values; their decisions focus more on economic value than brand identity.

Retail banking is a particular opportunity area. The majority of the trends and relationships identified in our data apply across various industries with only slight variation. The retail banking industry appears to have particular opportunity for improvement—consumers indicate that they often remain loyal to banking brands simply because they don’t have better options from which to choose.

What This Means

Expansion beyond 1st tier cities requires a different approach. International brands have been successful connecting to savvy consumers in major, global cities in Asia – beyond these, they still face challenges engaging local consumers. To expand more deeply into the Asian market, they must tailor their values to meet the needs of consumers with a more local mindset, and understand that competition is more price-driven in these markets than in others.

Grow local brands by aligning values. Local brands face the opposite challenge to their international competitors—scaling their values and personal connection with consumers to maintain their foothold in 2nd and 3rd tier cities, and gain traction in 1st tier cities where competition and alignment with international brands is already strong.

Don’t forget the men. Men in Asia report being as, if not more, brand-savvy as women. Brands should explore the possibilities of additional goods and services intended specifically for men. The food and beverage industry, in particular, showed a high prevalence of male consumers expressing connection to brands.

What’s Next?

We are segmenting the data to address five industries of interest: Fashion Retail; Retail Banking; Food and Beverage; Technology; and Automotive. 3 of the 5 industries show similar patterns in the US and China. The two anomalies are Food and Beverage and Financial. We want to better understand why this is true.

We plan to build on the findings of this project, and parallel surveys conducted in the US and China, by conducting a global comparative analysis to understand similarities and differences between consumers in each country. The findings of this analysis will deliver additional insights to inform our global retail strategy and design work.

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Team

Deanna Siller, Amy Bixler, Virginia Sertich, Richard Chang, Andreas Andreou, Rebecca Que, Lance Smith, Vickie Wang

Year Completed

2016