At the heart of many western companies is a relentless and unending focus on understanding the consumer. All business strategies are seen through the lens of consumer interest and opinion in order to develop product lines that can attract consumer interest for the long term. Some of the most successful of these types of company are the packaged goods companies, Proctor & Gamble, Nestle and Unilever. In addition to their dozens of highly successful brands they each have a high number of billion dollar brands (annual sales of over $1 billion): P&G has 23, Nestle has 29 and Unilever has 13.
Back in the 1930’s these companies pioneered this consumer centric approach as a method to deliver growth at a time when some sectors of western economies began to mature and competition intensified. They have reaped the rewards of this approach ever since: maintaining the growth and profitability of brands that are 50, 80 even 100 years old. As well as ensuring the longevity of their most famous brands it has helped these companies continually introduce new brands as consumers and international markets have changed. In fact, these companies wrote the rules of marketing, creating an approach that has provided a marketing template for businesses from airlines to bicycles; from furniture to banks.
As the Chinese consumer economy has existed for a much shorter period than western consumer economies, and has grown at unprecedented speed, it shouldn’t be a surprise that the approach of many Chinese companies is different. For many Chinese companies the focus has not been on long-term sustainability of product lines or service offerings, rather the primary goal has been sales and delivering the highest possible profit in the shortest amount of time. Understand the consumer, but only enough to create promotional campaigns and stimulate consumer interest in company products.
This kind of approach can work in a company’s home market where it can accumulate enough experience to have some idea of who are their customers and what are their buying behaviours. But when entering foreign markets where companies don’t have the experience or innate cultural understanding this type of anecdotal approach to customers can slow growth and limit profitability.
Without a true understanding of who are a company’s customers and which are the most profitable segments, a business often lacks the focus needed to allocate and spend its precious human and capital resources efficiently. Furthermore, a lack of best current customer segment understanding can cause diffused go-to-market and product development strategies, and reduce a company’s ability to market effectively to consumers.
To maximise growth and profitability a company needs to develop a deep understanding of its customers so that it can unearth actionable insights. i.e. new ways of understanding the customer that allow the business to improve the way it markets its products. For example:
- Find more new customers
- Find new customers more quickly
- Increase the rate at which they buy
- Make them more loyal
- Reduce dependence on promotions
- Charge a higher price
- Improve profitability over the long term.
To achieve these results a business must be able to answer the following three questions.
- Who are its customers?
- What’s their relationship with the product category in which your company sells?
- What do they think about your brand?
Seems simple? However, there are many aspects that should be considered in detail if the business is to use this information to improve its performance.
**1. Who are they? **
a) The basic demographics:
This is foundation knowledge, includes factors such as age, gender, education, income, occupation, and area of residence.
b) Their lifestyle: – How do your customers spend their time? – What type of lifestyle do they have? – What are their hobbies? – What do they do all day, and in the evening and at weekends? Understanding their interests will enable your marketing to resonate with them by speaking about things that please or entertain them.
c) Values and aspirations – What values and aspirations do consumer have regarding their lifestyle? – Do they have values and aspirations that are not currently addressed, either by you or your competitors? – Do these values and aspirations offer the possibility of a differentiated communications platform or product / service concept? For example, the more a company knows about its consumers values and lifestyle the easier it can add content to its website that encourages repeat visits.
d) Media consumption: – What do they read, watch, listen to in their spare time? – How often do they see these media? – Which social media do they use, what websites do they consult on a regular basis? – What types of information are they looking for?
**2. What’s their relationship with the category? **
a) Why do they buy? – What motivates the consumer to consider, buy and use their category and brand choice? What’s their need-state? – Do they buy only on promotion or regularly? – How much does price influence them? – Do they have regular buying habits? – Do they do research before buying or repurchasing? – Do they compare and if so how, where, why? – Is your product is bought or used with products from adjacent categories too? (for example powdered milk with instant coffee)
b) What do they buy? – You need to know what are your customers are using today? – Which are the brands that are competitors to your brand? – Do your customers typically buy from a range of competitors, or is there one in particular? – How frequently and what quantity do they buy?
c) Where do they buy it? – Do your target consumers have certain places or times they buy? – Are there certain outlet types they use more regularly, or only very rarely? – Is it an habitual or impulse purchase? – Is it seasonal or impacted by other purchases or occasions?
d) Where do they use it? – Is the category consumed in the home, in work, on vacation? – Is it used on the go, inside or outside? – With friends, with their partner, their children, or with colleagues? – Are there certain surroundings more conducive to consumption than others? What makes it so?
**3. What do consumers know about your brand? **
a) Awareness and associations – Have consumers heard about your brand? – What’s the first thing that comes to their mind when they hear your brand name? – What do they think are the positives and negative associations? – Can they remember seeing any communications from your brand? – Would they recommend it based on their own experience? – Is there a barrier to consumers purchasing your brand?
b) Touchpoints – From where do they get information your products and brands? – From your communications, or friends, family, colleagues? – Do they access it online, in print, on radio or TV, at home or on the road? – How often do they visit your website, which pages are most often visited, what is the average dwell time?
As we said above, in its home market a company can probably answer many of these questions from experience even if it has never undertaken research. But in a foreign market there are big risks and costs from assuming the types of consumer and their behaviour will be similar to the home market. After all, there is a long list of western companies that made this mistake and assumed their knowledge of western consumers would transfer to China.
For an in-depth understanding of European consumers and how to communicate your products to the right audience contact us.
Wesconnex is a unique marketing agency, established to help emerging Chinese brands grow faster and more efficiently in the UK. We provide localised Marketing Strategy & Planning, Ad Optimisation and Creation, and Content Marketing.