Why Retailers in China Must Sell Experiences Over Products
This blog post has been contributed by Gary Yip, General Manager of Brandimage, China.
Brands in today’s climate cannot afford to stay still. Earning and re-earning loyalty at every micro moment in the customer journey is crucial to staying relentlessly relevant.
This is especially true in China than anywhere else. In fact, five of the top 10 and almost half of the top 50 brands in China are in the technology field — while the rest have all invested substantially in digital to better connect with consumers.
Recently, China’s popular messaging app, WeChat reached 1 billion monthly active users. From tasks ranging from the basic texting and calling, WeChat as a platform has evolved to allowing users to pay bills, book private hire cars or more recently deploy health technology through artificial intelligence. WeChat has become an integral part of the Chinese identity.
The accounts created and used by companies and brands have also increased — totaling around 3.5 million in September 2017. Similarly, brands are concurrently utilizing the social media app, Weibo to connect with consumers and deliver their brand messaging. By using this “digital empathy” approach, brands are integrating social strategy within the retail mix — using these apps to sell items ranging from sports apparel to food products.
Consumers love browsing at stores and buying online, and that trend will continue to grow globally. However, that does not mean that physical spaces are redundant as opportunities flourish for online retailers to explore and benefit.
Are pop-up shops the answer?
It is beyond just being a social China — it is right now a 'cultural' China. Some brands are really spot -on with their marketing mix and they understand what drives success. They recognize it's not about the data, or the algorithms that you create on that data. The reality is that the Chinese consumer has created their own algorithms in their life.
With advancements in technology and digital shopping abilities, brands that create seamless connectability will stand out throughout the internet of life. From colourful graffiti to edgy architectural wonders, flashing neon lights to lush-green flora, people are more likely to share selfies and photos of spaces with interesting elements.
Here are a few questions to consider when building brand experiences:
- Is this digital experience interactive and shareable?
- Will customers remember this space?
- Does this inspire awareness, purchase and loyalty?
- What does this mean for brands?
As we transition to the Experience Age, brands are not only embracing creating brand experiences within a retail space, but have also experimented with dabbling in new verticals such as Muji dabbling into the hotel industry. These experiences are crossing into both digital and physical spaces, creating a cohesive look and feel in other areas.
Korean makeup brand The Face Shop has partnered recently with soft drinks giant Coca-Cola with a new unique cosmetics range. The makeup range collaboration includes cushion compact, powder pact, five cream lip tints, five lipsticks, three gel lip tints and an eyeshadow palette – all in Coca-Cola pattern packages.
Brands that have emotionally connected with the Coca-Cola brand can now enjoy a new touch point. As quoted by Jing Daily, “As beauty becomes a more nuanced and subjective concept in China, brands must choose the kind of beauty they want to represent.”
The Experience Age can also be seen in luxury brands with the latest example Hermès. The brand has recently relaunched a mobile app called H-pitchhh. Much inspired by the traditional horseshoe tossing game that can be traced all the way back to Roman soldiers, it allows players to virtually toss a horseshoe using a swipe on iPhone, not unlike throwing a Poké Ball in Pokémon Go.
While the Hermès game is available globally, it is an especially smart strategy for China, where the average luxury consumer is significantly younger and more receptive to gaming.
How far is too far?
By expanding product lines, brands in China must also be aware of unforeseen cultural issues. In a time where consumers are expecting brands to stand up for particular movements, there must be a deep evaluation to how this might cause a ripple effect for your brand globally.
All in all, retailers must use digitally driven strategies to offer differentiated and accessible online experiences that not just spark conversation, but also enjoyed on-the-go, anytime, anywhere.
About Gary Yip: Gary has over 25 years of Advertising and Branding experience in China & APAC. He is a result-oriented professional from Singapore with a proven track record of leading clients such as Virgin Atlantic, Pernod Ricard, LVMH, Bacardi and Sands Macao Cotai. Having held leadership roles at advertising agencies: Ogilvy & Mather, Y&R and Saatchi & Saatchi since relocating to Shanghai in 2007, Gary has a solid track record of positive and long-term business partnerships. Gary’s strong interpersonal skills, cultural sensitivity and fluent Cantonese and Mandarin enable him to lead local teams to global-standard operations and is a recognized expert on brand localization and international marketing implementation.
Anthem Launches UK’s First Interactive Point-of-Sale Campaign
Anthem, a global creative agency that actively connects brands with consumers by amplifying desirability from package design to brand campaign to drive brand performance has launched the first interactive POS (point-of-sale) campaign in the UK, helping to usher in a new chapter in point-of-sale advertising.
See how Nestlé and ASDA reported achieving a 41% increase in sales through the creative application of this innovative technology.
Digital Brands Going Brick-and-Mortar (Things Get Real, Real Fast)
The omnichannel buzz is all about broadcasting your brand across digital, mobile and traditional marketing channels in a consistent and compelling way. But what about your brand’s physical presence? What about its brick-and-mortar execution?
Historically, brand inspiration has flowed from the physical to the digital. Today, it’s instructive to look at the reverse flow – how brands that have been built in a digital world are taking their message to physical locations. Read this new case study from IDL Worldwide, a new member of the SGK family, and learn what two iconic screen-based brands are doing to make it real.
For this and four more articles on improving brand performance from concept to consumer, read the complete Patterns report, Innovation Everywhere. Download Patterns, Issue 1, 2015.
IDL's 2015 GlobalShop Highlights
8 Tactics For Navigating The Retail Terrain Of Emerging Markets
For most multinationals, the centre of gravity is shifting. There’s no question of the growing importance of emerging economies. And, in most markets, there’s no question of the significance of the traditional retail trade. Yet, this integral space between brand owners and shoppers is often misunderstood and neglected.
Drawing from 30 years of experience building brands in emerging markets, Spencer ball, Creative Director at Anthem, Singapore and Kathryn Sloane, Director of Growth at SGK, Singapore share eight key building blocks for creating an impactful, profitable brand experience in the retail terrain of emerging markets.
1. GET LOCAL BUY-IN FROM THE START
It pays to do your homework and speak to people in local markets to understand the factors that have led them to where they are. From the onset, take time to learn how and why local brand managers have reacted to market forces. Even if those reasons seem bizarre, quirky or off-brand, there are often a practical lessons you can learn from them.
2. ENGAGE RETAILERS AS ADVOCATES
For general trade markets, the in-store phase of the shoppers’ journey tends to be longer and more critical. General trade retailers are often the sole proprietors. They understand the strategy behind purchasing decisions and can negotiate product placement and promotional opportunities directly with the store owners.
3. INTEGRATE ON- AND OFF-LINE
Mobile phones are the device of choice for connectivity in most emerging markets. However, digitally integrated marketing is often focused in the modern trade. Consider mobile as the new currency to engage with shoppers and promote customer loyalty programs.
4. MERCHANDISE FOR REALITY VS ADDING TO THE CLUTTER
General trade is all about simplicity and being able to stand out. Confident, single-minded messaging and the creation of a unique space around the brand works best in these markets. For instance, a shop window where retailers need to climb a ladder to fetch your brand requires different messaging and design than a sari store where you’re invited to browse the sachet-laden fixtures.
5. CONSISTENCY ACROSS CHANNELS
People who shop in general trade stores still visit the modern trade, in fact general trade shoppers are prepared to visit multiple stores multiple times to glean as much information as they can about their purchase, especially when considering high involvement items. Families also commonly window shop in modern trade stores as a day out.
6. DEAL WITH INDIRECT DELIVERY
Protect the integrity of your brand all the way to the shelf by rethinking shelf-ready packaging and merchandising as a kit of parts, or “pass the parcel.” Recognise that the final stop between your brand and the shopper isn’t necessarily a retail environment. For example, tray-laden entrepreneurs now cater to people who are stuck in traffic.
7. MIND YOUR MESSAGING
Success in this market hinges on understanding the penetration of your brand and adjusting the messaging accordingly. Don’t be guilty of ‘dumbing down’ your messaging.
8. FIND COMMON THREADS ACROSS MARKETS
Build for cities, not entire countries. Brands are likely to find better results and more effective design solutions when looking at commonalities between different channels or cities within the market, instead of addressing one market at a time.
For retail success in emerging markets you must understand the context in which your brands will be seen. Start from the toughest environment and work out from there. Build a modular toolkit that works across a variety of retail contexts. And above all, don’t patronise your emerging market consumers. They’re worth a fortune.
5 Myths About Emerging Market Consumers Debunked
With experts projecting the growth of the middle class in emerging markets to rise from $1.8 billion to $3.2 billion by 2020, it’s more important than ever for brands to find their right point of connection.
Our Kathryn Sloane, Director of Growth, APAC, and Spencer Ball, Creative Director at Anthem (part of our brand development group), dispel five pervasive myths about emerging consumers. Global brands, take note!
Myth 1: Emerging market consumers don’t spend very much.
Although these consumers aren’t as wealthy as those in other markets, proportionally they spend more of their income (50-75%) on consumer goods than those in wealthier markets (35%). All of these incremental sales add up to big baskets.
Myth 2: They don’t buy premium.
We often over-simplify traditional trade in emerging economies while over-complicating the modern. This has led to the view that modern trade shoppers are brand-savvy while general trade shoppers are easily led. However, regardless of the channel, the in-store purchase of a shopper journey tends to be longer and more important in emerging markets than in developed ones.
Myth 3: Emerging market consumers focus wholly on price.
Emerging market consumers take into account many factors other than price. They benchmark, are very restrained as shoppers and prefer not to use credit. In this market, shoppers factor in travel costs in their shopping basket, so geographic location is key. They also may not have the space at home to buy in bulk.
Myth 4: They don’t shop in modern retail stores, but would if they could.
Emerging consumers do browse in modern retail stores for entertainment and ideas, but prefer to buy in general trade stores. Why? They like the noise, informality and personal service. They also trust the salespeople. Moreover, many consumers shop in both – they buy groceries in general trade and then head to Gucci!
Myth 5 – General trade retailers are not savvy.
Nothing could be further from the truth. General trade retailers often have greater visibility into shopper behavior than modern trade retailers do. They intimately understand their shoppers: How, why and when they buy. They adjust their mix accordingly based on their knowledge of real shoppers in real time.
For more insight how to create an impactful, profitable brand experience in emerging markets, watch The Retail Imbalance in Emerging Markets, a BrandSquare Live Session hosted by Spencer Ball and Kathryn Sloane.
Five Behaviors that Define the New Exchange Between Brands & Shoppers
The purchase funnel has been a useful tool for marketers for over 100 years. But the fragmentation of media, abundance of retail channels, and rise of shoppers with unprecedented information access have weakened this model’s relevance, says Jim Lucas, EVP, Global Insights and Strategy at SGK.
Shoppers are no longer constrained by the purchase funnel. Today’s shoppers are keenly aware of the value of their behavior—so much so that they treat their behavior as a medium of exchange. Consumers trade personal information for better functionality (Google, Yahoo, etc.), for more relevant deals from a loyalty program (American Express’s Link, Like, Love), or for the ability to participate in something larger (Pepsi’s Refresh Program).
Looking at this new exchange between shoppers and brands, we’ve focused on the 5 transactions that are most common and best allow us to accommodate shoppers’ personalized paths to purchase, as well as the possible benefit to shoppers of each type of transaction.
- Attention is how we connect to the world; it shapes and defines our experience. Attention is the mechanism that underlies our awareness of the external world and regulates our thoughts and feelings; a way to reframe a situation, category, etc.
- Engagement helps the shopper achieve selective attention: focus on a task at hand, find a relevant solution, and devote attention to eagerly processing.
- Purchase is about making it easier for shoppers to buy the right product for themselves, reaffirming choice.
- Loyalty is a reminder of the value shoppers received from last use; reinforcement of how smart their decisions were.
- Advocacy is about allowing the shopper to share her experience/solution with others—a way to pay-it-forward—and serves to help guide new shoppers.
For more insight read Jim Lucas’s full article, The Purchase Funnel Is Dead; Long Live Shelf-Out in Checkout, Vol. 1 Issue 2.
Retail Practice: Checkout, Issue 3, 2013 - Innovation
Retailers and marketers have always had a keen interest in innovation to sustain competitive advantage. But today’s shopper – more purposeful, more information-savvy and more influential – now demands innovation. This issue of Checkout from SGK's Retail Practice highlights innovation in multiple ways, including Leveraging Media, Embracing Showrooming, Rethinking Physical Presence, Reimagining the Shopping Trip and the Evolution of Brand. Articles include:
- Digital: Enhancing the Shopping Experience
- International: Discovering Brands – As Asia’s New Luxury
- Offline: A Return to Brick and Mortar
- International: Innovations in Asian Shopper Technology
- Offline: From Big-Box to Small-Box … to Micro-Box?
- Branding: Innovation and Own Brand
Like all SGK thought leadership, Checkout is timely, informative and free.
China Will Soon Be the World’s Largest Online Marketplace: Here’s Why
The current issue of SGK Patterns: Emerging Markets, Converging Opportunities includes an in-depth article on China’s fast-growing e-commerce space. Here are some of the highlights from “E-Commerce in China: Social Media Is the Fuel,” provided by Anh-Huan Tan, Director of Brand Strategy/Asia Pacific for Brandimage, part of the Schawk, Inc. brand development practice.
From Cluster-Oriented Consumption to Me-Consumption
The Chinese used to shun "individualism." Not so today: the rise of personal media is proof. Each individual, and thus each consumer, is now a source of information and is becoming the hub of his/her sphere of influence. The power is moving from brands to consumers, and consumers online are embracing unique kinds of self-expression.
The Virtual World Lighting Up the Real World
Here are some Chinese examples.
- Show.QQ.com lets consumers to try out clothing and shoes virtually. Each selection is displayed on the bottom of the page with a link back to Taobao for final purchase.
- Taobao Mall in Beijing offers an “experience center” for home decoration, bringing together e-shopping and offline sampling to help the consumer make better choices when shopping online.
- Yihaodian, the famous online supermarket, offers QR-code shopping in every big Shanghai metro station, facilitated by giant LEDs and the shopper’s mobile phone
- The Yishion clothing brand has launched an online fitting activity. After purchase, consumers are invited to use augmented reality online to try out new outfits. Their sessions are recorded and advertised live in-store.
Consumption Guide Planners
- The Qunar.com aggregation site allows shoppers to compile information on products and services from multiple sources.
- Taobao experts will respond to user-published photos of products they’re looking for, providing information on other relevant products.
In Volkswagen’s People’s Car project, consumers can vote on potential design features and strongly influencing the final design of a new model.
For the full article and five more on emerging markets, categories and brand management technologies worldwide, download SGK Patterns: Emerging Markets, Converging Opportunities now. It’s free.
Where Is Russia on the Timeline to a Thriving Private Label Industry?
A few key things have to happen for private label or store-brand packaged goods to become viable in a country or region.
- The private brand – or the retailer itself – has to develop enough cachet to get over the “trust barrier.” In the U.S., Target is a great example of a retailer whose brand has been curated into something greater – trusted and aspirational. This took many years and a sophisticated marketing effort, because Americans traditionally have bonded with national brands that unite the huge geographical sweep of that country; the retailer’s job was to offer a wide variety of these brands. In the smaller, more traditional U.K., by contrast, shoppers have always bonded with the local retailer itself – on the basis of its smart selection; this made “own brands” an easier extension.
- The retailer has to become adept at brand development for actual products, and at brand deployment, such as sourcing merchandise, coordinating supply chain logistics and managing artwork and packaging. These aren’t easy.
Against this backdrop, an article in CreativeMatch.com by Hans Muysson, a Schawk, Inc. Vice President of Product Development, is intriguing. In “Is Russia Ripe For Private Label Revolution?” he explains exactly where Russia stands on the timeline toward widespread private label. It’s an excellent “case study” for any marketer who's interested Russia, private label and brand development.