China is already the second largest luxury market in the world, and with more than two million millionaires today, is on its way to becoming the world’s largest luxury market by 2020.
With more than half of Chinese consumers’ luxury purchases being transacted abroad, engaging Chinese travelers wherever they travel has become an operational imperative for global prestige brands.
China Luxury Advisors Co-Founder Sage Brennan commented, “Brands need to stop thinking about China as a geographic market, and start thinking about Chinese consumers as a global demographic interacting with your brand in Shanghai and Wuhan, San Francisco and Paris. Once you understand Chinese consumers in this perspective, and recognize that branding and marketing to Chinese consumers is not a “market entry” issue, but a strategic global challenge, it completely changes the way you approach this emerging consumer.”
Brennan continued, “Luxury brands need to understand the consumer and their unique profiles, preferences and tastes before optimizing global strategies in operations, marketing, merchandising and other critical functions. There is more than one type of Chinese luxury consumer, and brands are typically surprised at the profiles of their best Chinese consumers globally. For example, brands typically underestimate the purchasing power of the “second-generation wealthy” Chinese consumers who often live, study and work in the US or Europe. Many brands count Chinese consumers in their 20s among their best customers.”
“To fully serve this demographic effectively, brand managers need to spend as much time thinking like twentysomethings from Chengdu as they do fiftysomethings from Boston.”
Research conducted for the report included qualitative and quantitative consumer research with more than 100 high net worth Chinese consumers traveling in the United States, a comprehensive brand audit of more than 150 global luxury fashion brands to assess their presence in the Global Chinese Demographic, as well as interviews with Mandarin-speaking sales associates and boutique managers in luxury retailers around the world.
Key Findings from the report include:
• Most (62%) of the large luxury fashion brands audited already operate a physical China retail presence and are rapidly expanding into second and third tier cities, as well as online. 38% of the150 brands audited have more than 5 retail locations in China.
• Brand awareness is the number one driver of purchase decisions.
• Celebrity is the most talked about association for global fashion brands in China. The top mentioned celebrity in connection with global luxury fashion brands in China was Faye Wong, and three of the top five mentions were Gossip Girl, Blake Lively and Leighton Meester.
• Special offers or gift-with-purchase were the top ranked sales incentives, followed by Mandarin-speaking associates, Chinese credit card acceptance and unique experiences.
Recommendations for brand professionals:
• Know your product availability and pricing in China and other key markets around the world – global pricing variance is a key purchase influence.
• Engage Chinese celebrities and influencers with your brand – they typically resonate with China’s consumers to a far greater degree than their Western counterparts.
• Understand typical color, style and sizing preferences in the Global Chinese Demographic and tailor your merchandising and service accordingly.
• Create compelling reasons to drive customer loyalty – Chinese consumers guard their privacy closely.
For a brand professional trying to improve performance within the critical Global Chinese Demographic, this report provides specific ammunition to inform strategic guidance, as well as best practices and key tactical recommendations to better attract, convert and build loyalty among Chinese consumers.
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To download an excerpt from the report, please click http://tinyurl.com/6ucmvfm