Nuanced model key in China

10 May 2012

BEIJING: Brands must adjust their tactics in China to meet the long-standing desire for well-known, trustworthy products as well as reflecting a new interest in specialist offerings, McKinsey has argued.

Writing in the Harvard Business Review, Max Magni, head of McKinsey's consumer practice in Greater China, and Yuval Atsmon, from its Shanghai office, stated shopper habits could be "changing yet again."

"Until now, research has shown that the Chinese usually trust better-known brands, primarily because the latter help assuage concerns over product quality and safety," they argued.

In evidence of this, McKinsey found 35% of Chinese consumers thought firms selling goods in a variety of categories were "more trustworthy" than their rivals only active in one or two areas.

By contrast, just 18% of American shoppers questioned on this matter took the same view, a figure falling still further, to 13%, among respondents from the United Kingdom.

Master Kong provides one example of how indigenous companies have responded to such a trend, selling instant noodles, drinks and cookies under the same umbrella.

"Multinational giants like Kraft, P&G, Unilever, and Coca-Cola use a variation of the same tactic: They emphasize the corporate brand more in China than in other markets," Atsmon and Magni added.

In a related trend, however, "self-expression" seems to be gaining ground, as 19% of China's consumers now believe "emotional benefits" are important when buying products from chocolate to mobile phones, up from 1% in 2009.

Such a development is also observable in low involvement segments like detergents, where 7% of buyers desire lines that both work and help them "feel special", versus 2% in 2009.

"As the Chinese become more knowledgeable about products and more affluent, and safety standards become tighter and better enforced, they'll feel safer trying out lesser-known brands," Magni and Atsmon said.

Friso, an infant formula brand from the Netherlands, has thus differentiated itself from rivals that solely focusing on safety by seeking to build emotional bonds via the tagline of being "mom's best friend".

It has also created a specialist website offering hints and tips for expectant mothers, which received 50,000 unique visitors in two months, building its connection with this audience.

Data sourced from Harvard Business Review; additional content by Warc