Over the next 15 years, the global addressable market for luxury goods is expected to grow by 600 million consumers, provoking growth forecasts of 2.2 times GDP. Much of this growth is projected to come from one market: China. In 2000, the Chinese market accounted for a fraction of luxury sales globally, however torrid growth means in 2015, China will likely overtake Japan as the world’s largest luxury market.
McKinsey reports (PDF download) that 73 percent of Chinese luxury consumers are under the age of 45, and upwards of 45 percent are under the age of 35, suggesting that the majority of prestige purchasers are digitally native. In the U.S., the average female prestige consumer registers household income of $150,000 and spends $3,000 annually on handbags. In contrast, the average female prestige consumer in China makes $18,300 and spends $2,000 annually on handbags. Often these purchases occur after two to three months of research and consideration, most of it done online.
None of global internet leaders is taking the lead in China and we have tens of popular local social networks, hundreds of BBSs with significant traffic, fast-growing Weibo and other digital channels, which makes marketing in China digital space a real challenge for foreign brands. Which brands are doing good in China, what we can learn from them and what are the key factors of doing digital marketing in China, etc. These are the often-asked questions when we discuss the social marketing strategy for brands.
L2 Think Tank‘s latest research, the Prestige 100®: China IQ (download), ranks the digital footprint of 100 prestige brands (of which 91 compete globally, and 9 are of Chinese/Hong Kong origin) on over 300 data points across four dimensions: Site, Digital Marketing, Social Media, and Mobile. This study attempts to quantify the digital competence in China of these iconic brands and the aim is to provide a robust tool to diagnose digital strengths and weaknesses and help managers achieve greater return on incremental investment.
Audi, Burberry, BMW, Volvo, Benefit Cosmetics, Cadillac (tied), Estée Lauder (tied), Land Rover (tied), Mercedes-Benz (tied), Porsche are the top 10 brands doing the best in China’s digital, according to the research.
It also comes with some key points such as:
- Selling Is Knowing: The percentage of e-commerce enabled brands has doubled since 2010. Those prestige brands with online selling capabilities boast an average IQ 16 points higher than those without online sales. Beauty & Cosmetics has the highest e-commerce penetration of any category with 11 out of 15 brands selling online.
- Digital Disparity: Over 50 percent of Chinese luxury purchases are made abroad, yet only 58 percent of brands provide U.S. and European store locators – missing an opportunity to expand global reach.
- Wild About Weibo: In the highly fragmented Chinese social landscape, Sina Weibo, the Chinese microblogging site, is the platform of choice. Fifty-seven percent of prestige brands maintain a presence on this platform.
- Buried on Baidu: Local search engine Baidu possesses 76 percent of the Chinese search market. However, visibility on this search engine is on the decline with 42 percent of prestige brand sites appearing outside of the top three search results. This suggests that brands are optimizing for global platforms versus Chinese specific platforms.
- Mobile Incompatibility: Two-thirds of China’s 485 million Internet users access the web via their mobile phones, yet only 25 percent of brands maintain a mobile optimized site.
The full report can be downloaded via the link here. Hope you also find it intriguing and any comment is surely welcome.