Brand power exaggerated in China

29 June 2012

BEIJING: Brands play a less important role in shaping Chinese purchase habits than is widely assumed, with shoppers regularly switching between products in most categories, new analysis has found.

Bain & Company, the consultancy, and Kantar Worldpanel, the research firm, assessed the activity of 40,000 urban households to determine if prior survey data in which 60% of adults stated brands were the main driver of their decisions was accurate.

They discovered that in most of the 26 sectors tracked, covering over 80% of fast-moving consumer goods sales, "heavy shoppers", or the top 20% of frequent category customers, typically bought several brands.

Even for the leading brand in each field, more than 30% of buyers only opted for this offering once during the course of a year, the study revealed.

Jason Yu, general manager of Kantar Worldpanel China, said: "The Chinese consumers are pampered with [an] abundance of brand choices hence it is increasingly difficult for major brands to stand out from the clutter."

As an example, "heavy shoppers" bought biscuits 30 times a year, but picked up approximately ten brands in this period. This can be measured against 15 purchases and six brands for all shoppers.

The most regular buyers for fabric care and facial tissues completed more than a dozen purchases per year, but chose at least five different brands in the process. Over the entire panel, consumers made roughly half the number of purchases and acquired four brands.

Similarly, the most promising target audience for juice brands, those who purchased the products more than 20 times a year, switched between five different lines, whereas the average shopper making ten purchases and choosing three to four offerings.

One segment which stood out compared with the overall results, possibly due to safety concerns, was milk, as the most valuable customers opted for three brands on 35 or so shopping trips, standing at broadly two competing products and 15 visits.

Elsewhere, when selecting beers, the most regular buyers, notching up more than 20 purchase occasions per year, acquired around three brands, with the typical drinker choosing two.

Heavy consumers of shampoo also generally pick competing five brands, switching to a new with every two shopping trips, a trend that was applicable more broadly in this sector.

"With the exceptions of infant formula, baby diaper, milk, beer, carbonated soft drinks, and chewing gum ... brands increase market share by reaching a higher penetration in their category," the study said.

Data sourced from Kantar Worldpanel; additional content by Warc staff