China'S Luxury Market Is Growing Fast. How Can Luxury Brands Seek New Growth?

The idea of "getting Chinese consumers to get the world" has been recognized by the big luxury magnates financial data, and when digitalization is no longer a multiple choice question, whether luxury brands can better move consumers in China with creativity will become the key to win the battle of flux.

In June 18th, Tencent advertising joined hands with Boston consulting company to publish the "2019 consumer digital behavior report on China's luxury market" at the Cannes creative advertising festival in 2019. The report analyzes 1500 Chinese consumers who have purchased luxury goods in the past 12 months to explore how luxury brands should better connect with consumers and enhance marketing efficiency in highly digitalized China.

On the same day, Nicolas De Bellefonds, partner and managing director of Boston consulting company, Fan Yijin, general manager of marketing and operation of Tencent advertising, and Rubert McPetrie, chief executive officer of MediaCom China, also discussed the related topics.

New direction of luxury brand reinventing marketing strategy in China

The report shows that in 2018, China's luxury goods market exceeded 110 billion euros, and its growth rate remained 6%, accounting for 33% of the global luxury goods market. Boston consulting company expects that the market will grow at an average annual compound growth rate of 5%-6%, and will contribute to over 40% of the global luxury market by 2025.

However, Nicolas De Bellefonds said frankly, because of the cultural and geographical differences between China and the west, the communication efficiency between luxury brands and Chinese consumers is not high. How to better touch users, better enhance customer loyalty and make better use of data assets to promote business growth has become the three major pain points of luxury brands in China's marketing.

Nicolas De Bellefonds said that this is the second year of Boston consulting company's cooperation with Tencent in releasing the luxury market report. The first report stressed the influence of the younger generation of consumers on China's luxury market. In the course of cooperation, the two sides further found that the three core trends of Chinese consumers are being younger, regionalized and socialized. Data driven, social interaction and full channel linkage will become the key direction for luxury brands to reshape their marketing strategies in China.

At the press conference, he emphasized that the trend of Chinese consumers' younger age continues. People under the age of 30 have contributed 42% of high-end luxury goods consumption. This means that changes in the shopping habits and habits of Chinese Millennial Generation and even "Z generation" luxury consumers have a high reference value for the strategic layout of luxury brands in the whole ball game.

The report found that more than 80% of consumers in China use the rational purchase method of ROPO under the online search line. They produce 4 to 5 Digital contacts with the brand before making the purchase decision.

Geographically, major cities such as North, Guangzhou and Shenzhen are still luxury goods. More than 70% of its sales come from 50 urban consumers who live in second tier cities. Among them, four cities in northern Guangzhou and Shenzhen accounted for 26%. It is worth noting that the three cities below the city also contribute 35%, but the consumption is highly dispersed in more than 2000 cities. Luxury brands need to touch on this part of consumers, and they need to innovate in the layout of channel marketing, and they need to think carefully about product strategy.

The report shows that in the highly digitalized era, 80% of Chinese consumers will be influenced by social media when making purchase decisions, of which WeChat ecosystem is the most popular social platform for consumers to discover and study, followed by micro-blog and Xiao Hong. Since 2014, the composite growth rate of China's social media sales base has reached 127%.

Obviously, Tencent has become the most popular social platform in the scene. Rubert McPetrie emphasizes that many luxury brands are rich in traditional culture and stories. How to choose the right social media to reach the corresponding consumers is a new challenge facing the luxury brands in the era of smart retailing.

How can small programs and other tools catalyze the path of luxury consumption?

What is more significant is that the survey results show that online channels account for about 12% of China's luxury goods sales last year, but there has been no significant change over the previous year. But the sales channel of the brand self operated online has been rising rapidly, which is already 1/3 of the total market. It is the fastest growing new channel in the past year.

In this regard, Fan Yijin, general manager of marketing and operation of Tencent advertising major customer, has analyzed the current commercial growth mode from the perspective of consumer path reconstruction, online and offline channel interaction, and three levels of change from content marketing to content delivery.

In her speech, she pointed out that China has been growing rapidly in the past 10 years, and the consumption path has been rebuilt. It is no longer the traditional "Awareness" Interest (Purchase) - loyalty (Loyalty). When they browse WeChat public accounts, WeChat group and friends circle, they will decide to buy at any time because of a piece of information.

This spanformation is inseparable from the emergence of new technologies such as mobile payment and small procedures. Fan Yijin said that in the era of social business, relying on a series of tools such as digital advertising, WeChat applet, WeChat payment and so on, luxury brands have been able to realize the combination of the original traffic data of commercial traffic, private line traffic, social traffic and other Tencent's data capabilities through content, interaction, promotion and other forms, and then through self built small program mall, or jump to the third party cooperation channel, and through digital member management and other means to achieve the sale spanformation at any time and anywhere.

With the promotion of Tencent platform capabilities, the offline retail channels in mainland China are accelerating the upgrading of digitalization. In the past, retailers have relied on DM, display, promoters, coupons and membership cards to achieve the goal of touch, interaction, promotion, spanformation and re purchase. In Tencent's ecosystem, all of these can be digitalized, so that the whole path is smoother.

It is reported that Tencent advertising, especially for luxury brands, provides the Brand.com2.0 mode, that is, using small programs as the core, helping brands establish and operate their own sales channels on WeChat's small programs, and achieve full link marketing closed loop. At the same time, WeChat provides a richer consumer experience through WeChat's social platform, so as to better retain consumers and achieve two purchases. In view of the fact that luxury consumption of Chinese consumers still takes place online, Tencent's smart marketing and smart retailing solutions provide a range of tools for luxury brands to help them convert the flow of offline stores and shopping guides into direct sales.

Fan Yijin emphasized that because of the particularity of luxury brands in marketing, it is the best way to interpret brand DNA and quality positioning through WeChat public platform and its own channels, so as to achieve deep interaction with users and precipitate loyal users. Secondly, the social flow based on brand DNA's fission activities or card coupons activities is also a luxury brand's flow pattern in the WeChat ecosystem.

The commercial traffic provided by Tencent advertising has become the loudspeaker of brand marketing activities. Through the diversified scenarios of Tencent platform, a broader user touch has been achieved. At present, many luxury brands are trying to achieve the brand expansion and growth through the four traffic solutions provided by Tencent platform.

Fan Yijin believes that luxury brands used to conduct spanactions through offline stores and send products Look Book to VIP consumers. The contact point is extremely limited, and online and offline traffic can not be spanformed in time. Now, through a series of tools such as small programs and friends circle advertising, luxury brands can organically link the online behaviors of consumers to offline scenes. By connecting with the digital platform of Tencent, we can achieve multi scene touch up to provide consumers with more convenient and personalized consumption experience, and also help brands spanform traffic into sales volume.

On the seventh day of 2016, DIOR first sold handbags to WeChat as the key time node. The fourth year's luxury brand Tanabata digital marketing is becoming mature and large-scale. According to the fashion business express, last year there were at least 15 representative luxury brands on the seventh night of the Seventh Festival, which included Tanabata limited products, including 10 brands for the Tanabata series. By the end of last year, more than 50 luxury brands had been launched in WeChat, of which 76% had sales and spanformation capabilities.

Fan Yijin emphasized that with the spanfer of luxury marketing to the online market, the contact between brands and consumers in WeChat ecosystem has increased, and footprints and data have gradually accumulated. The most direct result oriented is the traceability of marketing results.

In order to better demonstrate the process of cash flow realized through the Tencent ecosphere through luxury brands, Fan Yijin also presented the luxury jewelry brand Tiffany's activities on the 520 Festival last month as an example to show the flow of luxury brands through Tencent ecosystem.

In May 6th, Tiffany officially opened its first boutique store in WeChat, offering a special recommendation of ModernKeys, and putting it into social networking promotion. Data show that the effect of advertising is far more than that of the same industry. The rate of praise is as high as 6 times the industry average, and the rate of interactive reviews is nearly 3 times that of the industry. The Tiffany special necklace with a price of nearly 20 thousand and a limit of 200 is sold out in only 6 days in the small program boutiques. Prior to that, Tiffany has been named WeChat's favorite user circle of luxury advertising for several consecutive quarters.

In addition, luxury brands such as Louis Vuitton, Gucci and Cartire are becoming more frequent through WeChat small programs to form connections with consumers through games and limited edition products. Burberry regards WeChat small program as one of the most important "B Series" starting platforms in its spanformation strategy. It will remind consumers before 17 every month, and new products will soon be on the shelves.

Although Burberry did not disclose the specific performance data of "BSeries" in its earnings report, according to the fashion business express, the product will be sold out in less than 12 hours online. Marco Gobbetti, the chief executive of the brand, emphasizes that the core of the spanformation strategy is to increase revenue and reduce expenditure. The goal is to save 120 million pounds per year before 2020, in order to invest in the digital experience of physical stores.

Fan Yijin revealed that Tencent recently launched a beta product called "good thing circle" in WeChat, that is, when consumers search for "Montblanc" in WeChat, besides the official account of the brand, there will be the core or classic product of the brand. Users can choose to click to share the "good thing circle", so as to realize the recommendation of peer to peer among friends.

Data, social business and all channels

The greater significance of digitalization lies in helping luxury brands achieve better communication and spanforming "traffic" into "sales volume". But with the uncertainty of Global Luxury Retailing promoting marketing to be more result oriented, readers and luxury brands are becoming more sophisticated, and the pursuit of novelty is constantly improving, and more and more people prefer personalized social circles. How to use content to better impress consumers has become a new proposition.

Fashion business bulletin has also reported earlier that in many luxury marketing ways, content is being placed at the core of brand businesses. Mr. KOL, a fashion blogger, believes that the content of the production of "grass" for consumers is rooted in the precise grasp of readers' consumption needs. It should be considered in terms of product quality, usage experience, celebrity endorsement and popular trend. Another analysis pointed out that WeChat's influence has a great explosive force, giving the brand opportunities to meet more consumers, and also testing the brand's ability to convey influence.

Fan Yijin summed up the content marketing mode for three times, namely, the 1 separate era, that is, the marketing department chose IP to advertise, the sales department to sell goods, and there was no correlation between them. Secondly, the 2 era with content as the core, namely content centered, cooperation IP could carry out all-round cooperation in content, production, interaction, e-commerce, social networking and retail. Now it is the 3 era that the content is closely integrated with the brand and products. Through social assistant and technical assistant, it realizes the integrated marketing from product design to TVC shooting, small program social interaction, small program selling, offline flash shop and smart retail experience shop.

In Fan Yijin's view, different from traditional "products" and "stores", luxury brands now pay more attention to user assets with digitalization as the core. At the beginning of this month, the WeChat friends circle advertising launched the star oriented new content mode for the first time, and created more "two stars" by creating a phenomenon of "stars appearing in my circle of friends". In addition, the creation of idols and immersive virtual experience is also gradually rising, Tiffany this year, especially sponsored by the Chinese idol development program "creative camp", has received positive market response.

Fan Yijin said that in the future, Tencent will actively invest in smart retailing. With WeChat's efforts to commercialize small programs, the online potential of luxury brands will have more room for imagination. After all, the essence of luxury consumption is social interaction.

To be sure, after nearly two years of trial and contact, luxury brands have begun to understand and adapt to China's rapid development and advanced digital ecological environment, and constantly increase investment in digital marketing in China, so as to enhance direct interaction with consumers, and even expand online consumption channels.

After opening the online and offline channels across the channel, luxury brand's marketing and creative space has also been expanded. From content to form, it has become richer and more visualized. Luxury brand is more willing to reach consumers through offline flash stores and PR activities than to open new stores. The emphasis on vertical business and e-commerce platform's search and purchase function is increasing.

In addition, Tencent advertising analyzes the characteristics and needs of luxury brand target consumer groups based on big data, and then drives business decisions through business insights. According to Fan Yijin, the first step is to build up a luxury brand and get through the consumer interaction between the online and offline cross channels and cross channels, and make overall management of the process of consumer groups (from discovery, purchase to sale), and integrate the consumption data of Chinese luxury consumers abroad and home to better manage CRM.

The second step is real-time advertising monitoring. For example, when conducting marketing campaigns, we will use material testing to adjust the marketing strategies of different channels in real time and optimize the allocation of resources. Finally, we quantify the effect, optimize and adjust the marketing budget allocation of different consumer contacts according to real-time delivery, so as to achieve efficient social impact.

At the end of the meeting, Fan Yijin concluded that data, social business and all channels have become the three key words for the development of luxury brands in China. If the luxury brands want to digitalize their spanformation in China, they must first understand Chinese consumers. Therefore, Tencent has never positioned itself as a single channel of e-commerce, but rather let luxury brands realize the providers and solvers of localized marketing in China, and build a complete sustainable development ecosystem by occupying every contact.

Facing the era of young consumers and highly social media, Tencent will not stop at the moment. With the coming of the 5G era, after the luxury brand has been introduced into the digital ecosystem, the giant is also trying to become the "conductor" of this symphony, passing the front and rear ends of the luxury brand management, thus helping the brand to better live and flow, and break through in the fierce competition. Author: Zhou Huining