5 Key Drivers of Luxury Consumption in China

on August 18 2010 | in Retail Trends | by | with No Comments

China is considered one of the leading markets keeping the luxury industry buoyant.

What drives Chinese customers to stores to buy luxury products?

Last year Albatross and Ruder Finn, leading companies in market research and pr, conducted a survey of more than 1,000 high-profile consumers with an average annual income of RMB 243,000, from 21 cities including Beijing, Shanghai, Guangzhou, Hong Kong and 17 tier-2 cities. They identified the following to be the five top motivations driving luxury purchases:

1. Brand Reputation (73%)

It is the most important factor both among a mature market like Hong Kong as well as the emerging ones like tier-2 cities.

2. Product Quality (70%)

A leading factor influencing consumers to go into a store and make a purchase, especially in the more mature markets like Hong Kong. In fact, in some tier-1 cities like Beijing and Shanghai, product quality ranked on par with brand reputation.

3. Unique Product Design (63%)

Along with product quality, design is another factor drawing consumers to stores. Consumers in the mature markets pay a lot of attention to unique design.

4. Brand Heritage (38%)

An important tool to bring customers into the stores especially in tier-1 and tier-2 cities, but not as important for Hong Kong luxury consumers. Generally, when a consumer is unsure about the quality of a brand or its value, heritage (what is communicated about the brand’s history and tradition) would drive consumers to the store.

5. Customer Service (33%)

The reputation of a luxury brand’s customer service plays an important role even before a consumer steps into a store. Once in a store, the quality of the sales staff, its attitude and professional advice, is are important to consumers. In tier-2 cities, sales attitude is highly regarded and their ability to create a relationship with customers is especially important.

Interestingly, advertising (20%), friend’s recommendation (15%) and celebrity endorsement (6%) ranked far below.


photo credit: rakuten and cartier

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