China's marketing focus shifts to share

6 November 2013
BEIJING: As category growth slows in China, FMCG marketers will in future have to focus on gaining market share and increasing penetration, according to a new report from Kantar Worldpanel.

The new volume of the research company's China Shopper Report 2013 is based on a joint study with Bain & Company and analyses the behaviour of 40,000 Chinese households from 373 cities in 20 provinces and four major municipalities. This latest edition looked in particular at how competition between foreign and local brands was evolving in a rapidly changing retail environment.

It found that Chinese brands had captured approximately 70% of the market growth from 2011 to 2012 and increased their market share by 0.5%, driven largely by increased penetration in all city tiers.

In particular, the report noted their dominant share in traditional food and beverage categories along with home care. They had also made inroads into oral care, cosmetics and juice.

Foreign brands, however, were strong in those categories they had helped create, such as gum and chocolate, and were gaining share from local brands in categories such as bottled water and milk.

They were also well represented in health-related categories and those requiring trust. Infant formula was a prominent example of the latter, as safety scares led consumers to choose non-local brands.

While online sales accounted for just under 2% of total FMCG sales in 2012, the rate of growth was dramatic, at 55%. Kantar Worldpanel reported that online penetration had increased across all its 26 selected categories and was highest in baby products, skin care and colour cosmetics.

In addition, the proportion of households that purchased FMCGs online at least once a year had increased from 18% in 2011 to 25% in 2012. And while the average price per item was higher online, the frequency of purchases was lower.

The increasing penetration of e-commerce meant, the report recommended, that "marketers should continually enhance their digital capabilities to stay relevant to consumers".

That required capabilities in, for example, website design, fast-changing merchandising and pricing, managing online traffic and conversations, fulfilling orders, building partnerships with key online channel players and managing social media.

Data sourced from Kantar Worldpanel; additional content by Warc staff
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