Luxury Consumers in China, A Unique Insight
Andrew CollinsOctober 31, 2010
With the sheer size of China’s booming luxury market, one can easily be fooled into thinking your product will produce a certain success. As we’re learning more and more the type of luxury buyer you are in fact selling too are far different between one another than you think. More so, if you are not familiar with whom you are selling to within this luxury buying group; it’s simply bad business.
Analyzing the typology of the luxury consumer in China is difficult at the best of times. It’s very easy to become lazy and swallow simple analytical theory which states ‘All Chinese want luxury brands’ when in fact this simply isn’t so. I’d agree they want Luxury goods, however the term ‘luxury brands’ is questionable.
Read below and discover how the Mailman Group’s unique insight and ability to connect to COC’s (Chinese Online Communities) breaks down the luxury customer groups in China .
The Four Types of Luxury Consumers in China
1. Luxury Lovers (15% of total luxury buyers) – OK these are the ones you hear most talked about. They know exactly what they want and the status that accompanies the purchase. The majority in this group are women , representing 60% within the 2 key age groups of 26-30 and 31-55 years of age. Surprisingly the biggest market for this type of luxury buyer is in Guangzhou, followed by Beijing, Shanghai and Chengdu. They are not impulsive buyers, rather conspicuous educated buyers.
SELLING TO THESE PEOPLE: You need a big budget. Focus on the design story (how it came about) and a brand story (that connects emotionally) of the product – that’s what they’re looking for. The brand must feature in high end fashion magazines and associated press. Celebrities will help pull attraction, yet the fashion press will ultimately decide. Throw in a flashy logo and you have what is called ‘A desired luxury good’
2. Luxury Followers (22% of total luxury buyers) – This biggest difference between this group and the last is ‘Impulsiveness’ although both groups share traits to follow trends, mass media and fashion press the ‘luxury follower’ is greatly influenced by public opinion. Three key factors influence this category: collectivist, conspicuous and impulsive. A greater majority of women again at 72%; although a younger age group of 21-25 and 36-40 year brackets. Chengdu captures over 33% of this market, followed with Guangzhou, Shanghai and Beijing.
SELLING TO THESE PEOPLE: Traditional marketing will tell you ‘Buy up mass media in print and outdoor’ yet I find it hard to swallow. So consider how you can connect with them on a mass level using non traditional thinking (viral, online). Sell popular design and worry less about brand history and story. Purchases are made to show off, so big logos are encouraged.
3. Luxury Intellectuals (35% of total luxury buyers) – Have their own idea of luxury, less influenced by media and trends and prefer discrete, classical models of luxury. They are more about individualistic and personal taste over conspicuous collective purchase. Buying is rational and functional. Friends and family do play a role, yet only a minor role in shaping purchase decisions. A very balanced gender spread, yet women still hold a 55% share of this group. Age groups are typically in the 21-25 and 31-35yr groups. Beijing accounts for 42% with the most intellectuals, followed by Shanghai, Guangzhou and a distant Chengdu.
SELLING TO THESE PEOPLE: It’s important they see it in their daily lives. Get mass appeal, yet focus on social and niche categories as financial. Certainly consider using more unconventional methods (value led- online strategy) which can create deeper relationships through this type of luxury buyer. The brand must bring value and supported by great design. Authenticity and quality is also a requirement.
4. Luxury Laggards (27% of total luxury buyers) – The most audacious of them all. Although they can afford luxury products, they don’t care about luxury brands and experience little effect from advertising (media buyers take note). The ‘laggards’ are assorted with regard to individualistic taste – they look for functional requirements over emotional buying. Price is important to the purchase, yet if a opportunity is there to be taken impulsiveness creeps in. Women almost dominate this category at 84%. Age distribution is similar to the ‘luxury lovers’ typology at 21-25 and 31-35. Chengdu has the most ‘laggards’, with Beijing, Shanghai and Guangzhou closely followed.
SELLING TO THESE PEOPLE: Focus on the function, quality and usefulness. What value does the product bring this person? Mass marketing is encouraged, yet not a necessity if you create more tactical methods of connecting with this audience. If you can create opportunity, this will invite greater interest – consider how you can manage this.
The studies conducted in this research drew 2 major correlations: individualism and impulsiveness, conspicuous and innovativeness. Whilst each group share certain buying behavior and psychology, each require a concerted communication message and delivery. Consider whom you are selling to? Where are the messages delivered? Where are your customers most heavily concentrated?
For more information on this unique insight contact Mailman.
Research conducted to support this insight was produced here.
Written by our CEO Andrew Collins. Contact [email protected]