winning in china - worldwide | nielsen vip service – private tea room . 28 innovating the...
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WINNING AMID RAPID TRANSFORMATION IN CHINA & AMONGST THE CHINESE IS A PERSISTENT CHALLENGE
The NEW Chinese
Consumers
Delight & Differentiate
Through Innovation
Omni-channels for Reach & Resonance
Touch-points Optimization
CUSTOMER EXPERIENCE
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DESPITE PROGRESSING AT DIFFERENT PACE, THE JOURNEY TO LUXURY INDULGENCE IS SOMEWHAT SIMILAR AMONGST THE CHINESE
ASPIRATIONAL EXPRESSIONAL ENGAGEMENT EXPERIENTIAL
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YET ALONG THIS SAME JOURNEY, LUXURY HAS BEEN REDEFINED
Source: Bain & Company
Overseas Shopping ● Heritage ● Discount Stores ● Price ● Quality
Modernity ● Style ● Design ● E-Commerce ● Value for Money ● Mix & Match ● Cross-over ● In-store Experience ● Youthful ● Emerging Brands ● Purchase
Agency ● Premiumization
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CONSUMERS IN THE PAST: SOCIAL RECOGNITION TAKES PRECEDENCE ABOVE ALL ELSE
TRAVEL
FAMILY
WORK
SOCIAL VALUE
COMMUNICATION
FRIENDS
EDUCATION
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CONSUMERS NOW: SELF IDENTITY OF PARAMOUNT IMPORTANCE, IT’S ALL ABOUT ME.ME.ME.
EXCITEMENT
INDULGENCE
CONVENIENCE
PERSONALIZATION
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SEEK EXCITEMENT | PROACTIVELY CREATING OCCASIONS FOR CELEBRATION & REWARD
2013-1-4 Love You Forever
Newly created festivals
1 2 3 4
5 6 7 8
9 10 11 12
Valentine’s Day
4-17 Die
Together
2.7B Euros
+253%
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SELF INDULGENCE | EVOLVED PHILISOPHY IN LIFE … REWARD & ENJOY THE MOMENT, LIFE IS TOO SHORT
Source: World Tourism Organization, UN / Xinhua News Agency
International trips have increased 6 times in 12 years
Chinese Trips Abroad
Shopping Spend
Independent Tours
17%
2002 2014
107 million
17 million
50% 50%
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SELF INDULGENCE | OUTBOUND TRAVEL TREND TO PERSIST
Household Electronics
Phone/ Mobile Fees
Childrens' Education
Clothes & Shoes
Daily Consumables
Digital Devices
Utilities
Dining Out
Food & Beverage
Vacation/ Travel +8%
+2%
2014 Q4 VS 2013 Q4 Where to increase the spending?
Source: Consumer Confidence Survey Source: Nielsen Mainland Luxury Syndicated Study (2014)
is planning 3.28
trips on average for
the next 12 months
+ 9% + 10% + 8%
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SELF INDULGENCE | TOTAL EXPERIENCE GAINING POPULARITY
Reward extending to intangible experience
Source: Nielsen Mainland Luxury Syndicated Study (2014)
Shopping is still the top activity, more allocation for
sightseeing (87%), outdoor activities (31%, +10pts)
90%
39%
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PERSONAL RELEVANCE | DEMAND DRIVEN PRODUCT & SERVICES BECOMING THE NORM
Specific market segments are driving the whole market
Source: CITS, Survey of Chinese Tourists Aspirations(2013), Survey of Chinese Tourists Aspirations(2014)
• Elderly tour groups (30%-40% of total domestic tourists)
• Group excursion (over 60% tourists’ travelling radius are less than 500km)
• Korea precede Hong Kong as 1st independent travel destination
• Special visa arrangements from Thailand, Japan and U.S. attract outbound travels
INDEPENDENT TRAVEL
75% (2012) 81% (2013) • High-end customized tourism
• Culture-experience oriented
(U.S. was ranked Top 6 and Italy as Top 9)
PACKAGE TOUR LUXURY TOURISM
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PURSUIT OF CONVENIENCE | THE CHINA SPEED
Source: Survey of Chinese Tourists Aspirations(2013), Survey of Chinese Tourists Aspirations(2014)
Increasing number of tourists are purchasing their travel products via APPs due to the popularization of smart phones
Current
MORE THAN 10 TIMES
WEBSITE APP STORE
39%
86%
93%
3% 11%
17%
2012
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RE-DEFINING OUR COMPETITIVE SET FOR THE SHARE OF WALLET
Big International
Brands
Smaller International Brands
Luxury Experience (Spas & Cruises) Local
Emerging Brands
Lifestyle/ Collections
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CHINESE CONSUMERS UNDERGOING DYNAMIC PROGRESSION, INNOVATION BY BRANDS THE BASIS FOR SURVIVAL
PRODUCT
SERVICE
ENDORSEMENT
COLLABORATION
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INNOVATING THE PRODUCT | SUBTLETY WITH TASTE GOES A LONG WAY
Source: Nielsen Mainland Luxury Syndicated Study (2014)
45%
42%
39%
35%
32%
27%
18%
17%
To buy products made of high quality materials
To express my taste and feel different
To reward myself
To feel more confident
To feel more attractive
To indulge myself
To keep it a long time like an investment
To show people that I can afford high quality and style
Transition from “To Impress” to “To Express”
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INNOVATING THE PRODUCT | STATUS SYMBOL BECOMING LESS OF A PRIORITY FOR SELF IDENTITY
Understated merchandise becoming the mainstream
I PREFER LUXURY ITEMS THAT ARE LOW KEY AND UNDERSTATED
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INNOVATING THE PRODUCT | MACRO ENVIRONMENT REINFORCES THE LOW-KEY PROPOSITION
Local policies impacted on what (brands have) to offer
84% Aware of Anti-
Corruption Law
61% Will Continue to Buy Luxury
Goods
26% Will be More
Subtle
Source: Nielsen Mainland Luxury Syndicated Study (2014)
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INNOVATING THE PRODUCT | MACRO ENVIRONMENT REINFORCES THE LOW-KEY PROPOSITION
Chinese government officials penalized for corruption, investigation triggered by flaunting of luxury goods possession
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INNOVATING THE PRODUCT | NEW CREATIONS OR LIMITED EDITIONS FULFILL NEED FOR INDIVIDUALISM
With consumers seeking more personalized products, opportunities for cross over branding continues to grow
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INNOVATING THE PRODUCT | EXPAND BEYOND CORE CATEGORY TO EMBRACE THE NEW LIFESTYLES
During this year’s Spring Festival tourists from the People’s Republic spent six billion yuan – about $959 million – on luxury toilets seats manufactured by Japanese
Chinese consumers are shying away from flashy logos but flaunting their wealth under their clothes
Migration from outward to inward
Chinese people have money now and giving expensive gifts gives them “face”
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INNOVATING THE PRODUCT | PRECISION DRIVEN BY VOICE OF CONSUMERS
Listen. Consumers nowadays decide what to offer
400,000 COMMUNITY MEMBERS
http://www.quirky.com/
326 PRODUCTS DEVELOPED
118 RETAIL PARTNERS
SUBMIT IDEA VOTE BY COMMUNITY
IDEA FINE-TUNED
PRODUCTION & LAUNCH
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INNOVATING THE SERVICE | “CUSTOMIZED FOR ME” ADDS FUN & UNIQUENESS TO THE EXPERIENCE
CUSTOMIZATION IS ENGAGING THE CUSTOMER, IN ADDITION TO PERSONALIZING PRODUCT OFFERING
TAILOR-MADE ORDER ENHANCES RELEVANCE – THE PRODUCT IS
CUSTOMIZED FOR MY SKIN/ COLOR TONE
Huge flexibility of customization instead of importing designs & products from HQ
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INNOVATING THE SERVICE | BEYOND THE BRAND, BECOME A LIFESTYLE
VIP treatment to the super affluent went beyond the in-store servicing, which is becoming hygiene factor
PRIVATE FASHION SHOWS
TICKETS TO WORLD FAMOUS SPORTING EVENTS
COMPLIMENTARY FLIGHTS TO SHOPPING DESTINATIONS
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INNOVATING THE COLLABORATION | EMBRACING THE NON-ZERO SUM GAME
Source: China Luxury Report (2013)
Fierce competitions not just amongst foreign brands but up & coming local emerging luxury brands
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INNOVATING THE COLLABORATION
Case study from Hermes – Shang Xia
ADDING A LOCAL TOUCH TO PRODUCT OFFERINGS
VARIETY OF PRODUCTS BEYOND FASHION & ACCESSORIES
UNIQUE VIP SERVICE – PRIVATE TEA ROOM
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INNOVATING THE ENDORSEMENT | RIGHT MESSAGE BALANCED ON MEMORY AND EMOTIONS
Memory and emotion must work together, as a neural network, to change behavior – emotion alone is not enough
ACTION INTENT
EMOTIONAL ENGAGEMENT
MEMORY ACTIVATION
A great luxury mix will seamlessly and
consistently link it's artistry to the brand
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INNOVATING THE ENDORSEMENT | LEVERAGE ON THE POWER OF BRAND AMBASSADORS
Celebrity endorsement still aspirational … understanding the cultural impact enhances effectiveness & drives loyalty
Source: Nielsen Korean Beauty Syndicated Study (2014)
TV Shows
36% Celebrity
22% 48% Purchase Intent
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INNOVATING THE ENDORSEMENT | LEVERAGE ON THE POWER OF BRAND AMBASSADORS
Usage by popular figures can (and will) also set off a trend
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INTENSITY OF ONLINE PENETRATION BREAKING BARRIERS IN DEMOGRAPHICS & GEOGRAPHY
Source: i-Consumer China 2015
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E-COMMERCE IS CHANGING THE RETAIL SCENE & SHOPPING BEHAVIOR OF THE CHINESE
632 million online population
29,303 online retail enterprises
1.85 trillion of online
transaction amount
Increase by 59.87 million (24.7%)
302 million online
shoppers
Source: China Internet Network Information Center
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SATURATION IN ONLINE PENETRATION, CONSUMERS ARE BECOMING MORE WELL INFORMED
Percentage of time spent online Penetration of online activity %
Source: Nielsen Home Scan Research
50%
53%
91%
PENETRATION OF ONLINE SHOPPING IN TIER 1
2014
2013
TIME SPENT ONLINE
+3%
+12%
More time spent online with online shopping penetration deepening as well
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MOBILE SHOPPING OVERCAME BARRIERS OF TIME & GEOGRAPHY, AND GAINING POPULARITY
43%
Mobile Shopping
48% US 33%
Mobile Video
44% US 32%
Social Networking
63% US 65%
Web Browsing
71% US 71% X4.6
VS. 2013
(Mobile Commerce Sales Importance at 2014.11.11)
(Chinese Consumers Online Activities; Base: Consumers aged 16-64, Smartphone users)
Source: Nielsen Smartphone Insights & Alibaba released figure
Chinese shoppers becoming more sophisticated in their online activities
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E-COMMERCE DELIVERS PROPOSITIONS (VARIETY, SPEED, PRICE, 24-7…) THAT ENHANCES TRIAL
Source: Nielsen Mainland Luxury Syndicated Study (2014)
Do not
consider
luxury
shopping
online
Have made/
will consider
luxury
purchase
online
Planning to Buy Luxury Products Online in
Next 12 Months?
64% of all
respondents N=717 % Resp.
E-commerce for luxury shopping is widely accepted and adopted
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VARIETY OF SITES A WIN FOR CONSUMERS, POSSIBLE THREAT TO BRANDS
Source: Nielsen Mainland Luxury Syndicated Study (2014)
Do you know any
websites selling
luxury goods?
YES : 77%
Growing awareness of luxury shopping sites
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E-COMMERCE BREEDS SUCCESSFUL START-UP OF LOCAL EMERGING BRANDS
Case study from local designer – Min Liu
MIN LIU’S PRESENCE AT THE HIGH PROFILE MET GALA EVENT HIGHLIGHTED THE GROWING ROLE OF CHINESE DESIGNERS, NOT JUST IN CHINA, BUT AT THE WORLD’S TOP FASHION EVENTS.
MIN STARTED HER COLLECTION FROM HOME IN XIAMEN ON E-COMMERCE SITE TAOBAO AND WILL ENTER LUXURY RETAILER LANE CRAWFORD
COMBINATION OF MODERNITY WITH
CLASSICISM
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BEYOND E-COMMERCE, SOCIAL MEDIA IS FUELING THE ADOPTION OF LOCAL EMERGING BRANDS
Case study from local designer – Exception
IN HER RECENT TRIP TO RUSSIA, THE FIRST LADY OF
CHINA WAS SEEN CLAD IN CUSTOMIZED FASHION &
ACCESSORIES – NOT FROM HERMES NOR TODS, BUT FROM LOCAL DESIGNER
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INTERNATIONAL BRANDS STILL POSSESS COMPETITIVE EDGE … LEVERAGE ON HERITAGE
While growth by local brands is fierce, international brands still outperform in gifting and recommendation
PURCHASE RECOMMEND
Local Brands
International Brands
Local Brands
International Brands
46%
53%
Source: Nielsen Korean Beauty Syndicated Study (2014)
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OMNI-CHANNEL, OVERARCHING STRATEGY BEYOND JUST E-COMMERCE, IS INEVITABLE TO WIN THE NEW CHINESE CONSUMERS
A NEW EXPERIENCE THAT EMPOWERS THE CONSUMERS, MAKING THEM WELL-
INFORMED & IN CONTROL
AT THE SAME TIME INTERACTIVE TO ENGAGE
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AND DIGITAL PAYMENT IS MOVING IN TO BECOME THE NEW CASH, ONCE SECURITY ISSUES RESOLVED
SMILE TO PAY: TAKING A SELFIE FOR DIGITAL PAYMENT BY ALIBABA
BEGINNING THIS YEAR, CONSUMERS ARE ABLE TO PAY VIA LINE WHEN TRAVELING ON LINE TAXI IN JAPAN
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WINNING THE CHINESE, WINNING IN CHINA
Leverage the positive consumer confidence, test market with the Tier 1 & 2 cities, learn from history
01
Deliver the value proposition, empower them to be the smart consumers
02
Offer demand-driven products & services, incorporate the voice of customers in innovation
03
Innovate beyond just product & service but throughout the different touch-points
04
Enhance engagement through digital platform to provide seamless customer experience
05
Embrace the non zero sum game and win together 06
Go beyond product to provide a total brand experience, infuse brand into lifestyle
07