Chinese consumers have long been known as the world’s most promiscuous consumers. For years foreign brands have hoped to win their loyalty employing initiatives that worked in western markets, but had little effect halting Chinese shoppers’ infidelity. One of the best known case studies is Tesco, which announced its successful Clubcard from the UK would be its “secret weapon” in conquering the China market. Instead, it turned out to be another valuable lesson about the need for foreign brands to understand and localise for Chinese consumers.
China’s retail sphere has vastly evolved since Tesco retreated from China in 2013, but some characteristics remain. Until recently, China had very few brands or marketing. As a result, consumers haven’t grown up with the inherent brand loyalty that we often see in the West, such as having our parents or grandparents faithful to the same washing powder or cars when plenty of competition persists.
The limited historic attachment to brands is amplified by the hundreds of new products launching in China every day, all trying to yell the loudest and offer the most to lure consumers. In many ways, the overwhelming number of launches and resulting competition fuels Chinese consumer’s lack of trust in products. This can provide a platform for brands to build loyalty based on trust and other factors.
There are brands who have successfully cultivated loyalty among Chinese consumers. The largest scale example is Alibaba who has enticed hundreds of millions of shoppers to religiously log into their shopping and payment apps daily. The company has a natural advantage as Chinese are more loyal to shopping platforms than individual brands themselves – the result of most online shopping happening on platforms that allow consumers to easily compare brands and prices, and the experience is consistent and relatively transparent.
Alibaba employs numerous tactics to increase loyalty, from events such as beach parties, to better customer service, to their just-launched paid-loyalty program. Yes paid, when other brands can’t even get consumers to use their free loyalty programs. Alibaba’s program is centred around discounts valued at nearly ¥2,000 ($291) a year across Tmall Supermarket, Tmall Global, Youku, Ele.me, Xiami Music, and film ticket service Taopiaopiao for members in a strategic move that will likely see them shopping around a little less.
Deals and discounts still resonate with Chinese consumers at all levels, yet all is not lost for brands who want to focus on other ways to win and keep the hearts of their target markets. Chinese consumers are exhibiting increasingly mature traits, particularly younger ones, and are much more likely to be loyal to brands that connect with them and push their buttons. It’s just a case of understanding what those buttons are. Contact China Skinny to assist you with that!. Go to Page 2 to see this week’s China news and highlights.