Welcome!

Wearables Authors: Pat Romanski, Liz McMillan, Elizabeth White, Rostyslav Demush, Yeshim Deniz

News Feed Item

New Ogilvy & Mather China Study Shows how 2nd-4th Tier Consumers Hold The Key To Not Only China's, but The World's Economy

"China Beyond - Change & Continuity" book finds that branding strategies need to be based on emergent consumer confidence, their voracious appetite for change and new forms of consumption behavior driven by digital technology and e-commerce to profit from

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

(2) Ibid.

To download the book cover: http://www.flickr.com/photos/ogilvychina_2011/8357369516/in/photostream

For photos or more information, please contact:

Wendy Fung
Corporate Communications
Ogilvy & Mather China
[email protected]
+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 Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
Coca-Cola’s Google powered digital signage system lays the groundwork for a more valuable connection between Coke and its customers. Digital signs pair software with high-resolution displays so that a message can be changed instantly based on what the operator wants to communicate or sell. In their Day 3 Keynote at 21st Cloud Expo, Greg Chambers, Global Group Director, Digital Innovation, Coca-Cola, and Vidya Nagarajan, a Senior Product Manager at Google, discussed how from store operations and ...
We are seeing a major migration of enterprises applications to the cloud. As cloud and business use of real time applications accelerate, legacy networks are no longer able to architecturally support cloud adoption and deliver the performance and security required by highly distributed enterprises. These outdated solutions have become more costly and complicated to implement, install, manage, and maintain.SD-WAN offers unlimited capabilities for accessing the benefits of the cloud and Internet. ...
Headquartered in Plainsboro, NJ, Synametrics Technologies has provided IT professionals and computer systems developers since 1997. Based on the success of their initial product offerings (WinSQL and DeltaCopy), the company continues to create and hone innovative products that help its customers get more from their computer applications, databases and infrastructure. To date, over one million users around the world have chosen Synametrics solutions to help power their accelerated business or per...
Dion Hinchcliffe is an internationally recognized digital expert, bestselling book author, frequent keynote speaker, analyst, futurist, and transformation expert based in Washington, DC. He is currently Chief Strategy Officer at the industry-leading digital strategy and online community solutions firm, 7Summits.
In an era of historic innovation fueled by unprecedented access to data and technology, the low cost and risk of entering new markets has leveled the playing field for business. Today, any ambitious innovator can easily introduce a new application or product that can reinvent business models and transform the client experience. In their Day 2 Keynote at 19th Cloud Expo, Mercer Rowe, IBM Vice President of Strategic Alliances, and Raejeanne Skillern, Intel Vice President of Data Center Group and ...
Founded in 2000, Chetu Inc. is a global provider of customized software development solutions and IT staff augmentation services for software technology providers. By providing clients with unparalleled niche technology expertise and industry experience, Chetu has become the premiere long-term, back-end software development partner for start-ups, SMBs, and Fortune 500 companies. Chetu is headquartered in Plantation, Florida, with thirteen offices throughout the U.S. and abroad.
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
More and more brands have jumped on the IoT bandwagon. We have an excess of wearables – activity trackers, smartwatches, smart glasses and sneakers, and more that track seemingly endless datapoints. However, most consumers have no idea what “IoT” means. Creating more wearables that track data shouldn't be the aim of brands; delivering meaningful, tangible relevance to their users should be. We're in a period in which the IoT pendulum is still swinging. Initially, it swung toward "smart for smart...
Bill Schmarzo, author of "Big Data: Understanding How Data Powers Big Business" and "Big Data MBA: Driving Business Strategies with Data Science," is responsible for setting the strategy and defining the Big Data service offerings and capabilities for EMC Global Services Big Data Practice. As the CTO for the Big Data Practice, he is responsible for working with organizations to help them identify where and how to start their big data journeys. He's written several white papers, is an avid blogge...
Charles Araujo is an industry analyst, internationally recognized authority on the Digital Enterprise and author of The Quantum Age of IT: Why Everything You Know About IT is About to Change. As Principal Analyst with Intellyx, he writes, speaks and advises organizations on how to navigate through this time of disruption. He is also the founder of The Institute for Digital Transformation and a sought after keynote speaker. He has been a regular contributor to both InformationWeek and CIO Insight...
"IBM is really all in on blockchain. We take a look at sort of the history of blockchain ledger technologies. It started out with bitcoin, Ethereum, and IBM evaluated these particular blockchain technologies and found they were anonymous and permissionless and that many companies were looking for permissioned blockchain," stated René Bostic, Technical VP of the IBM Cloud Unit in North America, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Conventi...
Michael Maximilien, better known as max or Dr. Max, is a computer scientist with IBM. At IBM Research Triangle Park, he was a principal engineer for the worldwide industry point-of-sale standard: JavaPOS. At IBM Research, some highlights include pioneering research on semantic Web services, mashups, and cloud computing, and platform-as-a-service. He joined the IBM Cloud Labs in 2014 and works closely with Pivotal Inc., to help make the Cloud Found the best PaaS.
As data explodes in quantity, importance and from new sources, the need for managing and protecting data residing across physical, virtual, and cloud environments grow with it. Managing data includes protecting it, indexing and classifying it for true, long-term management, compliance and E-Discovery. Commvault can ensure this with a single pane of glass solution – whether in a private cloud, a Service Provider delivered public cloud or a hybrid cloud environment – across the heterogeneous enter...
Cloud-enabled transformation has evolved from cost saving measure to business innovation strategy -- one that combines the cloud with cognitive capabilities to drive market disruption. Learn how you can achieve the insight and agility you need to gain a competitive advantage. Industry-acclaimed CTO and cloud expert, Shankar Kalyana presents. Only the most exceptional IBMers are appointed with the rare distinction of IBM Fellow, the highest technical honor in the company. Shankar has also receive...
"We view the cloud not as a specific technology but as a way of doing business and that way of doing business is transforming the way software, infrastructure and services are being delivered to business," explained Matthew Rosen, CEO and Director at Fusion, in this SYS-CON.tv interview at 18th Cloud Expo (http://www.CloudComputingExpo.com), held June 7-9 at the Javits Center in New York City, NY.
The Founder of NostaLab and a member of the Google Health Advisory Board, John is a unique combination of strategic thinker, marketer and entrepreneur. His career was built on the "science of advertising" combining strategy, creativity and marketing for industry-leading results. Combined with his ability to communicate complicated scientific concepts in a way that consumers and scientists alike can appreciate, John is a sought-after speaker for conferences on the forefront of healthcare science,...
WebRTC is great technology to build your own communication tools. It will be even more exciting experience it with advanced devices, such as a 360 Camera, 360 microphone, and a depth sensor camera. In his session at @ThingsExpo, Masashi Ganeko, a manager at INFOCOM Corporation, introduced two experimental projects from his team and what they learned from them. "Shotoku Tamago" uses the robot audition software HARK to track speakers in 360 video of a remote party. "Virtual Teleport" uses a multip...
Data is the fuel that drives the machine learning algorithmic engines and ultimately provides the business value. In his session at Cloud Expo, Ed Featherston, a director and senior enterprise architect at Collaborative Consulting, discussed the key considerations around quality, volume, timeliness, and pedigree that must be dealt with in order to properly fuel that engine.
In his session at Cloud Expo, Alan Winters, U.S. Head of Business Development at MobiDev, presented a success story of an entrepreneur who has both suffered through and benefited from offshore development across multiple businesses: The smart choice, or how to select the right offshore development partner Warning signs, or how to minimize chances of making the wrong choice Collaboration, or how to establish the most effective work processes Budget control, or how to maximize project result...
"Akvelon is a software development company and we also provide consultancy services to folks who are looking to scale or accelerate their engineering roadmaps," explained Jeremiah Mothersell, Marketing Manager at Akvelon, in this SYS-CON.tv interview at 21st Cloud Expo, held Oct 31 – Nov 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA.