The continued explosion of smartphones throughout China will provide marketing teams with major challenges over the next few years. The country is opening up and it’s not just people in Tier 1 and Tier 2 cities, where the affluent few live, that brands will be able to reach out to.
Tier 1 and 2 cities have long been seen as areas where luxury brands from Rolex to Yves St Laurent have been successful. Even specialist food products are beginning to get a foot hold in these places, fulfilling the need for luxury items that set individual consumers apart from their compatriots.
“Online groceries are developing quickly in Tier 1 and Tier 2 cities,” says Yougang Chen, a McKinsey partner in China. “China’s urban consumers enjoy niche food products, and many kinds of products are not easily available in supermarkets.” (http://www.businessweek.com/articles/2014-02-13/how-to-reach-china-s-avid-online-shoppers)
So who are these new customers hitherto beyond the reach of social media marketers in the West? Around 54% of China’s people live in cities and that figure is growing as more office jobs are created attracting people from the rural areas looking for a better and more prosperous life. China’s cities are divided into tiers from 1-6 depending on population and economic value.
Tier 1 cities such as Beijing and Shanghai represent highly developed markets for Western brands and are home to consumers who are considered affluent. Tier 2 cities such as Nanchang and Zhuhai have been attracting increasing attention from brands because of their growing wealth and greater propensity for consumerism.
Below Tier 1 and 2, the classification, originally introduced by the Chinese government, becomes a little less easy to understand. But the truth of the matter is that smartphones are opening up these areas to greater consumerism and Western brands will have to get to with it.
Brands like Proctor and Gamble have been making contact with the less affluent members of Chinese society for years, even before the advent of social media and internet marketing. And Proctor and Gamble, the maker of household and personal-care products, has three of the top five brands in China: Colgate, Pampers and Crest.
Following some mistakes in the late 80s and early 90s, they realised that a one size fits all strategy wasn’t going to work in China and they had to get to know their consumers better. The way they did this was to send out 1000s of their employees to stay with and observe families around China, using that information to develop the right products for those people and the right marketing approach.
What brands need to understand, if they are going to sell to new markets which are being brought closer by the expansion in smartphone usage, is that they are not a uniform body of people. In other words, they are not the affluent rich.
“The city-tiered approach that Chinese marketers mastered well in traditional and digital marketing won’t work for mobile. Why? Because consumers of all levels of mobile sophistication can be found in all types of cities — and even in rural areas — and engaging them will require a nuanced understanding of a marketer’s particular audience.” Xiaofeng Wang (http://blogs.forrester.com/xiaofeng_wang/14-02-13-how_to_reach_your_unique_mobile_audience_in_china)