GroupM China's PDD provides a unique view of consumer behaviour and segmentation in lower tier markets, home to the majority of Chinese consumers.
The report divides consumers in lower tier markets into five different groups based on buying habits - conventional homemakers, newgen progressives, pragmatic & practical, emerging trendsetters, and responsible achievers.
Key findings from the report include:
- Low tier markets offer tremendous opportunities for lots of marketers: for leading brands in upper tier cities that are ready for geographical penetration; for brands who fail to make it big in upper tier cities; for local or regional brands looking for expansion opportunities.
- Consumers in low tier markets are different and marketers need to learn to speak to them in their own language. Product functionality and quality are paramount and the product-value ratio has to be well balanced.
- TV remains the most dominant medium and is the best means to build brand awareness in low tier markets. In the short term, it has no competition. However, teens and young adults are moving away from TV screens towards online. Fragmentation of media consumption is also prevalent in low tier markets.
- The fast growth of internet reach in lower tier markets makes communicating with consumers online an attractive option. The fact that consumers of low tier markets access the internet via internet cafés also offers marketers an alternative venue in which events, road shows and sponsorship activities can be deployed.
- The growing importance of online shopping opens up a new retail channel for marketers. It is a channel that is worthy of close monitoring and marketers can start looking into online sales models.
- WOM is an important marketing tool for brands with ambitions in lower tier markets. Marrying this understanding with the increasing use of the internet points to the fact that social networking might be an effective way to spread product message and build brand affinity. A successful WOM campaign online will significantly drive costs down, as it is earned media.
