Luxury brands are just starting to figure out that the brand positioning popularized in the West aren’t what the Chinese consumer needs – or even wants. Tom Doctoroff of J. Walter Thompson China shares three indispensable rules to win Chinese shoppers:
1. Products Consumed in Public Command Huge Price Premium Versus Those Used In Private.
The Chinese consumer, it turns out, is more apt to make a hefty purchase if the item will be seen publicly. But for day-to-day items or private furnishings, they are less likely to spend big sums. “According to a study by the U.K.-based retailer B&Q, the average middle-class Chinese spends only $15,000 to fit out a completely bare 1,000-square-foot apartment,” Doctoroff says.
Public display is an important consideration for global brands who want to reposition themselves to attract Chinese consumers. “Despite China’s tea culture, Starbucks successfully established itself as a public venue in which professional tribes gather to proclaim their affiliation with the new-generation elite. Both Pizza Hut and Häagen Dazs have built mega-franchises in China rooted in out-of-home consumption. (The $5 carton of vanilla to be eaten at home is a tough sell in China.)”
2. Products Should Have External Payoffs or Practical Payoffs.
Compared to Western consumers, the Chinese aren’t as interested in achieving 100% personal (internal) satisfaction. Products need to feed the Chinese consumers’ desire for betterment, upward mobility, or simply, it must do something.
Even dealing with matters of the heart, there has to be practical benefits. The brand that should win the prize for figuring this out is De Beers. They have slanted their famous slogan, “A Diamond is Forever,” to make it more palatable to the Chinese consumer. The message is no longer all about a fairy tale jewelry piece promising eternal love, but about a formal obligation between families that is “as rock solid” as the diamond.
3. Products Need to Stand Out But Also Fit In.
Individuality is not China’s biggest selling point, nor is conformity – it’s something of a delicate balance. As Doctoroff puts it, “Luxury buyers want to demonstrate mastery of the system while remaining understated, hence the appeal of Mont Blanc’s six-point logo or Bottega Veneta’s signature cross weave—both conspicuously discreet.” This is also why more understated luxury cars, like Audi and BMW, sell better than flashy sports cars.
The Chinese are very taken by the American dream —”wealth that culminates in freedom.” However, there is a big underlying difference between the Americans and the Chinese. “Americans dream of ‘independence’ and Chinese crave ‘control’ of their own destiny and command over the vagaries of daily life. Material similarities between Chinese and Americans mask fundamentally different emotional impulses,” according to Doctoroff.