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  • 11.01.10

Selling to China’s Luxury Market 101

Connecting with a Chinese luxury consumer is more challenging than you think. Take a snap shot look into what makes up the key differences between the booming Chinese luxury market.

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.

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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. Research completed by Pierre Xiao Lu in his book Elite China
provides great insight into the psychology of luxury purchase and it’s
subsequent customer groups. The following can be used as a guide to
consider how you wish to tackle this market.

The Four Types of Luxury Consumers in China

1. Luxury Lovers (15% of total luxury buyers)–OK
these are the ones every one talks 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.

TO SELL 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.

TO SELL 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 traditioanl thinking (viral,
online). Sell popular design and worry less about brand history and
story. Purchases a 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.

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TO SELL TO THESE PEOPLE:
It’s importnatthey 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.

TO SELL 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 particular study purchase the book.

Written by Andrew Collins for the Mailman Group.

About the author

Andrew Collins, the Founder & CEO of a multi-award winning social media and technology group Mailman. Based in Shanghai, Mailman has pioneered a dozen online initiatives including a Hollywood entertainment portal for China, Chinese social media management platforms, online sports networks, applications and more.

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