May 2009
A multi-city study by Publicis reveals that although consumers across Greater China are
searching for more value in reaction to the global financial crisis, 70% of those surveyed
refuse to move to cheaper brands.
According to the study, only between 5% and 10% of Greater China respondents intend to cut
stays at 4- to 5-star hotels, dining at formal restaurants and purchases of high-end clothing
and accessories over the next 12 months. Instead, people intend to cut back on the basics,
with 20-25% saying they will do without regular discretionary day-to-day purchases like
informal eating out, in-home entertainment, and personal care items.
“The most prominent finding that emerged in all markets is the intense desire to keep up with
the Good Life–now and in the future–and not to cut back on favourite brands,” said Laurie Kwong, CEO, Publicis Greater China.
“Brand loyalty is more than a financial decision. Consumers in Greater China are not eager to define for themselves a ‘cheaper me’.”
Conducted in Mainland China, Taiwan and Hong Kong between December 2008 and March
2009 with a sample size of more than 1,500 consumers, the study looks into how consumers
react to the current economic challenge as well as the long-term ramifications. The broad-based study has tracked in depth information in relation to over 20 product categories ranging
from luxury to day-to-day discretionary, beauty to consumer electronics, in-home
entertainment to travel, and more.
Clearly, not all consumers are behaving alike. Analysis of survey data further identifies four
shopper types across Greater China for each of the 20 categories covered.
“Business as Usual High-Enders”
(37% of consumers in Greater China; Mainland China: 37%, Hong Kong: 39%, Taiwan: 32%)
Characterised by an optimistic, positive outlook, their purchase intentions for the future
remain mostly unchanged, and if anything, they intend to spend more on high-end
categories.
“Cautious Regulars”
(37% of consumers in Greater China; Mainland China: 38%, Hong Kong: 34%, Taiwan: 32%)
This group is in a wait-and-see limbo, characterised by a desire to protect their everyday
standards. Their purchase intentions for premium day-to-day categories remain constant,
but they are very hesitant about buying more big-ticket items.
“Ultimate Cutters”
(15% of consumers in Greater China; Mainland China: 15%, Hong Kong: 13%, Taiwan: 20%)
Characterised by emotively driven drastic behaviours, this group intends to cut back
significantly across nearly all categories, particularly day-to-day categories, in favour of
long lasting durables. Interestingly, one-half of this group behaved as High-Enders in
2008.
“Ultimate Indulgers”
(11% of consumers in Greater China; Mainland China: 9%, Hong Kong: 14%, Taiwan: 17%)
Characterised by emotively driven opportunistic behaviours, they are cutting low
involvement categories in favour of those high-end gratification purchases. Surprisingly,
75% behaved as Basics or Regulars in 2008.
It is evident from the intended behaviours tracked in all four shopper types that consumers in
Greater China need experiences as much as they need value through difficult times.
The Publicis study also finds that personal financial confidence is not directly correlated with
personal financial assets or economic indicators.
Personal financial confidence–defined as how consumers view the stability of their
household income, employment and standard of living–was highest in mainland China (75%)
but with Hong Kong not far behind (62%). Only in Taiwan, where the export-driven economy
is amongst the worst hit in Asia, did only half of the respondents (50%) think they will be
financially alright in 2009.
“For marketers, it is not only about weathering the storm in a downturn. Equally important is
the power to steer brands, products and services forward with a thorough understanding of
the ‘hot buttons’ that trigger consumption choices now as well as in the longer run,” noted
Kwong.
According to the study, the unique characteristics of the current economic crisis, such as its
origins, concerns about inadequate regulations, speed of collapse, domino effects on the
global financial system and the role China is expected to play in reshaping the global
economy, have taught several lessons that will not soon be forgotten by consumers in
Greater China.
The study states that while the desire to keep living the Good Life is still an aspiration, it is
grounded with a reaffirmation of Chinese cultural values. These values – including financial
prudence, family and community, and a modest approach to consumption – are now seen as
more relevant in providing Good Grounds for the financial security consumers need and the
Good Life they desire.
“Brands and companies need to embrace the renewed relevance of these values today to
better the chance to drive a category leading conversation in Greater China tomorrow,”
said Kwong.
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