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China's consumers look beyond price

News, 27 February 2015

SHANGHAI: Price has often been regarded as a key factor in the purchasing decisions of Chinese consumers, but a study has shown that quality is now a major factor for many.

Marketing company Epsilon surveyed 1,000 people, exploring Chinese consumers' definitions of brand loyalty and their loyalty motivations. It found that good quality products/services were the top loyalty motivator, cited by 36%, just ahead of value for money on 35%.

Quality was seen as being particularly important in financial services (40%) and ecommerce (40%), even more so than in luxury (39%).

Good customer services/support were valued by 30% of respondents while brand popularity was an influence for 26%. And despite the boom in ecommerce, a convenient location remained a factor for 24%.

The traditional trappings of loyalty programs were not especially important – things like member-only privileges and rewards for repeat purchase were cited by only 24% and 22% respectively.

In China, said the study, the return on loyalty investment is high: loyalists across sectors were 19% more likely to visit their preferred brands more often and spend more on their favourite brands.

They were also more generous with their private information and more likely to refer products and services to friends.

Among the brands achieving the highest levels of loyalty were Apple and Samsung. The former was highlighted as an example of a brand being adept at integrating online and offline touch points to deliver a seamless customer service experience.

Vivien Deng, China country leader at Epsilon, told Campaign Asia-Pacific, that consumers were especially impressed with the Apple Genius Bar, where in-store employees with extensive product knowledge can offer face-to-face technical support and troubleshoot hardware problems.

They experienced, she said, a level of respect and must-do service attitude that continued to elude retail staff in other sectors.

Separately, Alexander Jutkowitz, chief global strategist at Hill & Knowlton Strategies, has argued that the Apple example signals the decline of the chief marketing officer and the rise of the chief loyalty officer.

Customers return to brands like Apple, he said because "being a loyal fan of the brand reassures them that they are succeeding in being a certain kind of person".

Building loyalty, he added, is hard work that requires brands not just to value their customers but to like them enough to have a conversation every day.

Data sourced from Campaign Asia-Pacific, China Money Network, BRW; additional content by Warc staff