Nov 15, 2016

Post-95s: China’s fledgling consumers

The nuance of segmenting China’s consumer groups becomes more apparent with the release of a new study highlighting Tier-3 and Tier-4 cities and the spending habits of the under-20s.

Wallet share: China’s younger consumers in Tier-3 and Tier-4 cities have carefree spending habits.
Wallet share: China’s younger consumers in Tier-3 and Tier-4 cities have carefree spending habits.

The post-95 consumer group in China’s cities are a marketer’s dream consumer, according to the findings of GroupM’s highly anticipated 2016 edition of its Shan Hai Jin report.

Marked by “impulsive consumption” habits, the post-95 generation in Tier-1 and Tier-2 cities are more capricious and willing to spend money for their own happiness. Respondents from Tier-2 cities were also more likely to spend money without considering whether the purchase is necessary. The post-95 generation in Tier-3 and Tier-4 cities are optimistic that their household income will be significantly improved within three years. Perhaps, most seismic for brands, this group favours domestic brands over foreign ones, if the products are comparable.

People born between 1995 and 1999 make up about 5.9 percent of China’s total population according to the Sixth Census. This huge group — born in latter half of the 1990s — of 78.5 million people represents the power of young consumers.

Now onto its ninth edition, the report is one of the most extensive in the market to consistently track and examine consumer behaviour across 278 Tier-1 to Tier-4 Chinese cities. As China’s growth opportunities shift from the established strongholds of Shanghai and Beijing to the lesser-known, and as-yet untapped, Tier-3 and Tier-4 cities, such as Nantong and Zigui, GroupM’s study of over 20,000 people, serves to develop deeper understanding of the behavioural patterns towards media, lifestyle, consumption habits, choice of goods, and brand attitudes.

Attitudes towards advertisements were largely positive — with 50 percent of post-95 respondents believing “brands which have presented on more media channels are more trustworthy”. Advertisements also had a strong impact on brand decisions — 48 percent of respondents from Tier-2, Tier-3 and Tier-4 cities also stated that they only trusted products which advertised.

In Tier-3 and Tier-4 cities, online shopping done on mobile devices was 39 points higher than that on PC,
while in Tier-1 cities they were almost the same with only a 6 percent difference.

This was more pronounced when compared to the larger study group — where 42 percent of Tier-3 and Tier-4 respondents across all age groups agreed with the same statement.

The sentiment towards pure online advertising strategies seemed to be shifting. Only half of all respondents thought “TV commercials leave a much deeper impression on me than advertisements in online videos”. When asked if they would not fully trust a product that only advertised online, respondents in the post-95s group in Tier-3 and Tier-4 cities polled lower — only 38 percent, compared to 43 percent across all respondents.

Post-95s also spent a staggering 155 minutes on the internet everyday — with nearly 80 minutes on TV and online video platforms — 10 minutes more than the study’s average across all age groups.

The usage, frequency and time spent on each media are similar across first and second-tier cities and also in Tier-3 and Tier-4 cities. While the post-95s generation reported less interest in watching foreign-produced films and dramas when compared to locally produced entertainment.

The annual GroupM study provides an in-depth analysis of 20 most representative daily consumption categories, including baby formula, cars, skincare products, luxury goods and mobile phones, offering market guidance and advice regarding communication opportunities, channels and content.

While the study raised new understanding to the consumer, it confirmed one well-known speculation in the industry: WeChat dominates mobile communication — 82 percent of the post-95s use WeChat on a regular basis, 18 percent higher than the average. Even in the upper age bracket of respondents aged 60 years and above, usage of WeChat has jumped 408 percent from just a year ago — now almost 73 percent use WeChat.

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