think outside the box 2

Think outside the “City Tiers Classification” Box in China

City Tiers No Longer Tell the Whole Story for Social Media Marketers

For marketing purposes, companies have tended to look at China’s vast population in terms of City Tiers. Types of city have different characteristics and can affect the way many brands, especially in the West, approach them, both on social media and via other digital marketing methods.

Here are a few common views on which Chinese cities fall in which tier, often pointing to population, development of services and infrastructure, and the cosmopolitan nature of the city.” from New Zealand Trade Association

The problem is that for social media marketing there are few ‘official’ rules relating to what demographic constitutes the members of a particular area. Tier 1 cities include Shanghai and Beijing and are seen as the big players. For this reason there are few of these cities but they are thought to contain the affluent rich who are more interested in luxury products.

Guiyang

That doesn’t mean the population of these cities are all cut from the same cloth and, as with any city, there are substantial variations, but it gives marketers a starting point in an often overwhelming and fragmented country.

Pinning down the demographic of lower tier cities proves even more difficult though and can often be dangerous if you are hoping to market your brand successfully.

There have been attempts in the past to make sense of the tier conundrum. Back in 2010, marketing company Deloitte conducted a survey across the 5 city tiers and came up with some surprising results, not least that lower tier inhabitants were just as likely to want luxury goods as their higher tiered friends. The report concluded:

Brands can be marketed across all tier cities, even the ones that supposedly have a lower income. That means luxury brands for instance shouldn’t be solely concentrating on high tier cities to market their brands on social media.

Across all city tiers, it seems men are more influenced by brand identity than women though the difference becomes a lot more pronounced as you head down through tier 1 to 5.

Whilst value for money was also a factor across all tiers, it was less of an influence in lower tier cities where netizens were more likely to purchase simply on the basis of brand image – in other words the status value of the luxury item over rode the value for money.

Consumers who were surveyed in Tier 2 and 3 cities were proportionately more likely to experiment with different brands than their higher or lower compatriots.

Brand recognition is not as clear cut as many Western companies believe and Deloitte suggested that more work needs to be done if you want your well-known brand in the West equally recognised in China.

This was particularly true of some sports brands like Nike and Adidas which were often thought to be local.

The brands that have succeeded more than the rest in China are the ones who have started in the Tier 1 cities, conquered them and then moved down into the lower tier cities.

The truth is that focusing on which city tier a potential customer belongs to can often lead to confusion. It’s something that has been helpful for many luxury brands such as Burberry and Jaguar because they can more clearly define where the majority of their fans and followers come from, namely tier 1 and 2 cities where most of the affluent live. And they can, up to now, afford to ignore the rest.

The problem is that marketers prefer exact parameters and it could be that the tier system is not as useful as brands once thought, especially when it comes to reaching people through social media. Things in China are starting to change rapidly.

“Changing demographics, rapid urbanization, social change, rising per capita GDP and a myriad of other factors have started to redirect the attentions of consumer marketers towards China’s lower tiered cities, which are set to account for a growing proportion of new consumer expenditure over the next few years.” DeepSee Research

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Will love to hear your view on the definition of Tier 1, Tier 2 & Tier 3…. and the impact to the brand owners and marketers. Feel free to get in touch via WeChat or Twitter at @YeppyMedia

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