Chinese consumers are well-known for adoring luxury brands, they use these products to show their status to others. During the last decade the digital revolution China (and the world) went through has considerably changed consumption habits.
What Place for Digital Goods?
In its latest report, OMD China asked a panel of 2500 Chinese all over China the following question:
« What Products Matters to Show Social Status? »
Only 14% listed “fashionable digital products” such as phones, tablets and smart watches as relevant. What is then the deal with digital products. Do they really matter when it comes to social status? The answer is still: Yes, very much so.
When looking closely at the market segmentation it becomes clear that the under 30, technology-savvy generation consider digital devices as one of the most important factors for their lifestyle and status.
The way to showing success is evolving in China, and with it so should marketing strategies.
Apple: An Example to Follow?
Apple is one of the actors profiting the most from this trend. Before technological and luxury products were really in distinct categories. In China today, the line between the two is more and more blurry.
The Apple Watch has only had moderate success in the western world (in comparison to its lead products such as the iPhone or the iPad). That wasn’t the case in China where millions were sold in a very short time. It should come as no surprise, Apple being overly popular in this country. To give you a scale of how important China had become to Apple: 35% of all iPhones are sold there, against 29% in the United states.
So what is the connection with the Luxury Market?
The Apple Watch offer is divided into several price ranges. For instance, the golden model retail price is over $10,000. Quite an investment for a product bound to be obsolete two years from now. But it so far it seems to be a winning strategy as confirmed by the sales, the partnership with Hermès paid off in China.
This ambition from the company to brand its products as luxury items is not new. Remember in 2004, when the late Steve Jobs was asked about the meager market share of MacBook in the laptops market. His reply was on point with what we do today: “Apple’s market share is bigger than BMW’s or Mercedes’s or Porsche’s in the automotive market. What’s wrong with being BMW or Mercedes?”
But to have a digital device is only half of the journey. It is a hub allowing you to share experiences (travels, parties, etc.) on the social network. And it is where opportunities from branding lie.
What Is There to Learn for Brands?
Let’s be clear, digital devices will not overthrow the car or the house from the top spot anytime soon when it comes to showing off. However, they are shoulder to shoulder with jewelry (14% against 20%).
The unique buying experience is something Chinese consumers are actively looking for. Several Brands (especially in traveling and Luxury markets) have understood this absolute need to provide their customers with a sense of exclusivity that they can share on social media, adding social value to products or services they provide.
Here are two successful campaigns taking advantage of this “Social Currency”:
Louis Vuitton is creating exclusivity to his high-spending customers by holding private sales for them. Giving them what they call a “VIP experience” that they can share.
BMW and Coca Cola were the first two companies able to advertise on WeChat. The principle was simple: if you spend a lot on the platform, The BMW ad would be displayed. Targeting was made based on spending. It was a wild success for the car manufacturer. Chinese receiving the ad were happy to be considered “worthy” of the brand and many shared screenshots of it in their social networks, further increasing the reach of the campaign.
The bottom line is: Offer your customers a unique and exclusive buying experience alongside your products. Not only will you benefit from free advertising on social media, but you have a greater chance of making them evangelists of your brand.