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Taking market pulse of China's youth tribes
August 31, 2011, Wednesday
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LIKE the sequel to a Hollywood blockbuster, future ad campaigns by online apparel retailer Vancl will have a lot to live up to.
Will they ever be able replicate the sensation created by its series of offline ads last year - plastering buses, subways and billboards and hitting TV screens - which swiftly went viral across China as countless "netizens" designed their own versions of the ad?
It's not an easy call - at least not among China's fickle urban youth whom Vancl's ads want to reach with their simple, down-to-earth appeal and whose list of celebrity endorsements includes that of Han Han, the country's wildly popular speed racer and writer appearing in simple jeans and a T-shirt alongside his quote listing what he loves (including food stalls at night and car racing) and what he stands for ("I represent myself. I'm like you ... I am Vancl.")
Vancl's 2010 campaign has raised the bar for youth marketers in China. "The genius of the campaign seems to be the very personal resonance with the mindset and emotions of Chinese youth," says Wharton marketing professor David Bell. "This occurs not through the use of iconic figures, but through a conversational style and an ability to ... reflect on what it means to be young and Chinese [today]."
With that, Vancl has joined a growing number of companies in China that are becoming "very good at building a community" with young consumers.
There's good reason for that quest. China's youth "will become the core driver of consumer spending in China," predicts Allison Luong, managing director of Pearl Research, a San Francisco-based firm analyzing the interactive games and entertainment industry. Pearl estimates there are more than 300 million Chinese between the ages of 16 and 30 with some US$136 billion to spend.
Purchasing power
According to Starcom China, a division of Paris-based advertising and communications firm Publicis Groupe, these consumers - most of whom have grown up as only children under China's family planning policy - directly or indirectly account for 50 percent of all household spending in China.
That gives them unprecedented purchasing power, says Angie Chan, China senior research manager at Starcom China. Although relatively new to the shopping malls and boutiques that have helped global brands in the West thrive for years, China's young consumers are already making a mark.
But winning their loyalty today requires going beyond the cash register, say corporate marketing strategists. As in other countries, China's new generation of consumers seek out brands that they feel reflect who they are, and are "a quick way to express something ... or compensate for things that aren't there," says Wharton marketing professor Keisha M. Cutright.
But arguably unlike in other countries, what's beginning to emerge now in China is that its youth are also receptive to brands that can improve - or even radically change - how they lead their lives.
Figuring out how to do that is a big conundrum for corporate marketers - both local and foreign - not least because the values and identities that China's youth say they uphold often change just as fast as a fashion season.
"The kids in China now can decide what they want," says Qiaowei Shen, a Wharton marketing professor born in Hangzhou and educated in Beijing before moving to the US. "When I was young, you would accept what your parents chose for you. We weren't rich. There wasn't a lot of money to spend."
Today, youth are more focused on their own needs, and "more than ever before want to define themselves in a different way," she says. "They want to be unique... I think there's an awakening sense of self."
That awakening has been most apparent in Beijing, Shanghai and China's other big cities, as young urban shopaholics tote Prada, Gucci, Hermes and other top-end labels, "to show their social status and wealth and to impress others," says Shaun Rein, founder and managing director of China Market Research Group (CMRG), a market intelligence firm in Shanghai, and author of a forthcoming book, "The End of Cheap China."
Zero savings
He cites CMRG research involving 5,000 consumers in 15 Chinese cities, which found that consumers under the age of 28 "had zero savings." The reason? "They are so optimistic about their futures that they are willing to spend everything they earn on clothes and consumer electronics. The survey respondents said they expected 10 percent to 20 percent annual salary increases so that they are spending completely for purposes of enjoying themselves."
A lot of that optimism, he adds, has helped drive up the number of credit cards in circulation in China, from 13.5 million in 2005 to 240 million last year. "That is why you often see Chinese secretaries making US$800 a month buying US$1,000 Gucci bags," says Rein. But those youthful high-end shoppers are only part of the picture, as companies are discovering. As they look further afield to expand their national foothold in China's smaller cities, for example, big global brand names face a tougher sell, notes Chan of Starcom.
"Youth there have less money and say that luxury brands don't matter at all, and that if they see a friend wearing a name brand ... they would be looked upon with scorn and viewed as being wasteful," while buying local, less expensive brands also shows their support for "China Inc."
For marketers, she says, that means "assuming that all Chinese youth are 'aspirational' and wish to live the life of youth in the big cities is incorrect, as is assuming that all Chinese youth wish to emulate a Western lifestyle."
To be continued. Adapted from China Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. To read the original article, please visit: http://bit.ly/pY1heY
Will they ever be able replicate the sensation created by its series of offline ads last year - plastering buses, subways and billboards and hitting TV screens - which swiftly went viral across China as countless "netizens" designed their own versions of the ad?
It's not an easy call - at least not among China's fickle urban youth whom Vancl's ads want to reach with their simple, down-to-earth appeal and whose list of celebrity endorsements includes that of Han Han, the country's wildly popular speed racer and writer appearing in simple jeans and a T-shirt alongside his quote listing what he loves (including food stalls at night and car racing) and what he stands for ("I represent myself. I'm like you ... I am Vancl.")
Vancl's 2010 campaign has raised the bar for youth marketers in China. "The genius of the campaign seems to be the very personal resonance with the mindset and emotions of Chinese youth," says Wharton marketing professor David Bell. "This occurs not through the use of iconic figures, but through a conversational style and an ability to ... reflect on what it means to be young and Chinese [today]."
With that, Vancl has joined a growing number of companies in China that are becoming "very good at building a community" with young consumers.
There's good reason for that quest. China's youth "will become the core driver of consumer spending in China," predicts Allison Luong, managing director of Pearl Research, a San Francisco-based firm analyzing the interactive games and entertainment industry. Pearl estimates there are more than 300 million Chinese between the ages of 16 and 30 with some US$136 billion to spend.
Purchasing power
According to Starcom China, a division of Paris-based advertising and communications firm Publicis Groupe, these consumers - most of whom have grown up as only children under China's family planning policy - directly or indirectly account for 50 percent of all household spending in China.
That gives them unprecedented purchasing power, says Angie Chan, China senior research manager at Starcom China. Although relatively new to the shopping malls and boutiques that have helped global brands in the West thrive for years, China's young consumers are already making a mark.
But winning their loyalty today requires going beyond the cash register, say corporate marketing strategists. As in other countries, China's new generation of consumers seek out brands that they feel reflect who they are, and are "a quick way to express something ... or compensate for things that aren't there," says Wharton marketing professor Keisha M. Cutright.
But arguably unlike in other countries, what's beginning to emerge now in China is that its youth are also receptive to brands that can improve - or even radically change - how they lead their lives.
Figuring out how to do that is a big conundrum for corporate marketers - both local and foreign - not least because the values and identities that China's youth say they uphold often change just as fast as a fashion season.
"The kids in China now can decide what they want," says Qiaowei Shen, a Wharton marketing professor born in Hangzhou and educated in Beijing before moving to the US. "When I was young, you would accept what your parents chose for you. We weren't rich. There wasn't a lot of money to spend."
Today, youth are more focused on their own needs, and "more than ever before want to define themselves in a different way," she says. "They want to be unique... I think there's an awakening sense of self."
That awakening has been most apparent in Beijing, Shanghai and China's other big cities, as young urban shopaholics tote Prada, Gucci, Hermes and other top-end labels, "to show their social status and wealth and to impress others," says Shaun Rein, founder and managing director of China Market Research Group (CMRG), a market intelligence firm in Shanghai, and author of a forthcoming book, "The End of Cheap China."
Zero savings
He cites CMRG research involving 5,000 consumers in 15 Chinese cities, which found that consumers under the age of 28 "had zero savings." The reason? "They are so optimistic about their futures that they are willing to spend everything they earn on clothes and consumer electronics. The survey respondents said they expected 10 percent to 20 percent annual salary increases so that they are spending completely for purposes of enjoying themselves."
A lot of that optimism, he adds, has helped drive up the number of credit cards in circulation in China, from 13.5 million in 2005 to 240 million last year. "That is why you often see Chinese secretaries making US$800 a month buying US$1,000 Gucci bags," says Rein. But those youthful high-end shoppers are only part of the picture, as companies are discovering. As they look further afield to expand their national foothold in China's smaller cities, for example, big global brand names face a tougher sell, notes Chan of Starcom.
"Youth there have less money and say that luxury brands don't matter at all, and that if they see a friend wearing a name brand ... they would be looked upon with scorn and viewed as being wasteful," while buying local, less expensive brands also shows their support for "China Inc."
For marketers, she says, that means "assuming that all Chinese youth are 'aspirational' and wish to live the life of youth in the big cities is incorrect, as is assuming that all Chinese youth wish to emulate a Western lifestyle."
To be continued. Adapted from China Knowledge@Wharton, http://www.knowledgeatwharton.com.cn. To read the original article, please visit: http://bit.ly/pY1heY
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