The men’s beauty market in China looks to be more promising than in many other parts of the world, according to new research from Kantar Worldpanel.

The new study, analyzing the behavior and attitudes of 22,000 men across eight countries, finds that globally, 32% of men say that it’s important to keep up with the latest fashion. This rises to 45% among Chinese men, who are also more interested in trying to look and stay young than average.

They are less willing to spend time on themselves, with only 8% saying they do so, far behind the global average of 29%.

Ashley Kang, Beauty sector Head for Asia at Kantar, said: “Chinese men have the interest but haven’t yet developed the habit of pampering themselves nor the knowledge of how to.”

Kantar Worldpanel’s usage care panel data shows that the products used by the most consumers in China are hygiene products like shampoo (used by 99% of men), toothpaste (100%), shower gel (74%), and razors (both manual and electric) 88%.

Ashley continues: “For the average Chinese man, grooming is strongly linked to staying clean and looking at his best in his natural state. This indicates there is an opportunity for growth through education and endorsement of various products. For example, products like fragrances or pre-shave treatments which are used respectively by 26% and 38% of men globally, are all below 5% in usage in China, almost non-existent.”

However, there is a group of Chinese men who have adopted more sophisticated grooming habits. This is particularly evident in facial care, with more Chinese men using facial moisturizer than in any other country (64% compared with a 10% global average) and face wash (63% compared with 25% globally).

Chinese men are showing greater concern around uneven skin coloring and sagging skin than the global men on average,” Ashley continues. “Given this tendency, we expect to see new products coming to market which meets functional needs such as anti-aging or whitening.

Brands should start with hygienic products and focus more on facial care than hair or body to win Chinese men. Products which are more functional tend to be unisex than male-specific, indicating that there is a growing market for this more sophisticated group which has not been fully catered to”.

Promising global picture

The number of men who say they like to spend lots on beauty products has risen worldwide from 17% in 2015 to 21% today. In addition, heavily involved men – defined as the 20% most engaged users of personal care products – are 4 percentage points more likely to say that they do whatever they can to look young, 3 percentage points more likely to spend lots on beauty products and 3 percentage points more likely to buy the latest brands and products.

Ashley continues: “Globally, it’s a promising picture for beauty brands and manufacturers. Men are increasingly comfortable buying, using and enjoying grooming and care products and they’re developing a better knowledge of what’s on the shelves.

“In China, there are two distinct groups, those who are very involved and interested in pampering themselves and willing to invest their money and time and others who just are not convinced of the need for personal care products in their lives. Brands need to decide which target consumer to address. It’s not possible to meet everyone’s needs – the gap between the two is too great.”

“If you choose to go with the unconvinced group, ensure simplicity and convenience is there. Don’t make them think twice and try to build your brand into their daily habits. Should you choose to address the more sophisticated consumers, beware that the ‘macho’ aesthetic will not resonate in Asia. We’re seeing a more ‘genderless’ version of masculinity in the media and even in our everyday lives.”

Looking across the countries included in the study, the research shows Brazilian men leading the charge when it comes to grooming, being 87% more likely than the global average to experiment with facial hair, 61% more likely to buy the latest brands and products, and 36% more likely to say that their looks are important to them.

This correlates with a more self-critical approach to personal beauty, with Brazilian men reporting far higher levels of concern around conditions like acne and greasy skin than average.

The search for eternal youth

There’s a recognizable disparity in how much men around the world care about aging, with British men the least concerned. Less than a quarter (23%) say they are bothered about looking young, in comparison to 58% of Chinese men and half of the Italian men.

Ashley explains: “In China, looking young is an indicator of a balanced and healthy life. Chinese people firmly believe that beauty comes from within and that unless you have well-balanced health, it is difficult to achieve a good look on the surface.”

While German men rank among the bottom four when it comes to the importance of looks and having a youthful appearance, they are considerably more likely to be found splurging on their personal care routines – 68% say they like to spend lots on beauty products versus a global average of 21%.

And, despite being known for their cultures of personal care, American and French men are the least likely to want to splurge, with only 10% and 11% of men pointing to a high level of personal care spending – suggesting they view personal care, not as a necessary expenditure rather than a nice-to-have.

Download: Men Beauty Report China 2019

Originally published on Kantar.com

China’s effort to expand garbage sorting into more cities will have a far-reaching impact on consumers’ shopping behavior and their attitudes towards brands.

Since July 1, 2019, Shanghai has enacted its household-garbage sorting management regulation, which stipulates that all garbage must be sorted into four categories: recyclable waste, hazardous waste, household food waste and residual waste.

Any individual who mixed hazardous waste and household food waste with other garbage could be fine up to 200 yuan. To ensure everyone will follow this new rule, the city government “recommended” residential complexes to implement a “designated time and location for garbage throwing”, which ends up people being allowed to throw away trash ONLY at two two-hour time windows every day (eg. 6:30 – 8:30, 18:00 – 20:00).

These efforts have ushered in new buzzwords on Chinese social media, such as “trash-throwing freedom” (which means 996 workers (9 am till 9 pm, six days a week) don’t have time to throw away their trash during designated time), and a new greeting line for Shanghai people when they meet in front of the trash bins: “what kind of rubbish are you?”

Jokes aside, garbage sorting will not stop at megacities like Shanghai: China is expanding this practice to all big cities. By the end of 2020, 46 big cities, mostly with populations of more than 2 million people, will have established their “basic garbage sorting systems”. By 2025, all prefecture and above level cities should have done so.

For Chinese consumers, very soon when they make purchasing decisions, they will have to think about the eventual cost of throwing away the garbage. Some more environmentally sophisticated consumers will also consider whether the brand they’re buying from has minimized its impact on the environment through its production, operation, and distribution.

This trend has turned sustainability into a new growth opportunity for brands in China – it is no longer just a corporate social responsibility initiative, it is a concrete business consideration. Kantar’s researches have found that sustainability-aware brands will win more Chinese consumers as this trend gets stronger.

Do Chinese consumers care about sustainability?

Now 93% of Chinese consumers think FMCG manufacturers did not do enough to reduce plastic waste; 54% of Chinese consumers care about sustainability and have taken actions.

• Eco Actives care about sustainability, and have taken multiple actions to reduce waste;
• Eco Believers care about sustainability, and have taken one or two actions to reduce waste;
• Eco Considers care about sustainability, but have not taken actions.

Kantar Worldpanel data showed that nearly half of Eco Actives live in tier-1 or tier-2 cities, and they are more likely to be high-income family. This means that sustainability-aware consumers have stronger buying power. By better serving this segment, brands can not only contribute to protecting the Earth but also find long-term growth for themselves.

In fact, even without China’s garbage-sorting efforts, Chinese consumers’ attention on environmental protection has been growing organically.

Global Monitor, another survey by Kantar, has found that the proportion of Chinese consumers agreeing “I feel that I can make a difference to the world around me through the choices I make and the actions I take” jumped to 63% in 2019 from 51% in 2017.

Also, 71% of surveyed consumers are willing to “pay more money for products that are better for the environment”, 16 percentage points higher than the global average. Of all surveyed consumers, 84% said “it’s important to me that the brands I buy from are committed to making our society better” – 18 percentage points higher than the global average.

Success cases

In China, many brands have launched and implemented their sustainability strategies, and make them known by consumers. Kantar Worldpanel’s research has found that consumers can identify some brands that have taken efforts to reduce waste, such as KFC, McDonald’s and Starbucks.

Many frequently mentioned brands are fast-food retailers, instead of FMCG brands. This is partly because fast-food brands have been quite active in protecting the environment in the past year.

Act now

“Sustainability” is no longer an optional box to tick: it’s a compulsory question that all brands will be required to answer. This is also not a homework only for brand’s marketing department – it’s for every business unit and for every step in a brand’s operation. Kantar suggests brands to develop and implement their sustainability strategy from the following dimensions.

• Consumer understanding
  • Consumer’s need to buy sustainable brands
  • Trigger and barrier to recycling/reuse product/package
  • Motivation to purchase
  • Loyalty towards sustainable brands
• R&D
  • Ingredient innovation
  • Material selection
  • New technology
• Package innovation
  • Modulization design
  • Possibility to be reused/recycled/degraded
  • Communicate sustainable messages via package
• Communication language
  • Establish a brand mission on sustainability
  • Encourage consumers to live a green lifestyle
  • Educate consumers on how to use sustainable products/packages
• Supply chain
  • Upstream – zero waste production
  • Midstream – high efficiency distribution/logistics
  • Downstream – recycle waste & educate consumers
• Collaboration
  • Collaborate with tech companies to develop the product, upgrade production line, re-design service
  • Collaborate with sustainability organization/charity to better communicate brand image

Join third-party sustainability initiative or alliance, even working with competitors, such as the Loop initiative supported by Unilever, P&G, Colgate and many other FMCG brands in the United States.

Vlog trending in China

This article was originally published on Kantar.com

A new service will help Alibaba double the number of foreign brands on Tmall Global to 40,000 in three years.

Alibaba has taken another giant leap forward towards its ambition of becoming the world’s fifth-largest economy by 2023, becoming a truly global titan of commerce. A crucial element of realizing this is attracting more global brands, large and small, to its platform.

This has just become much easier with the new English-language portal on Tmall Global. Introduced in 2014, international brands on Tmall Global cover more than 4,000 categories and originate from 77 countries and regions. Tmall Global now plans to launch other foreign-language sites, including Spanish, Japanese and Korean.

Global eCommerce expansion ramps up with the launch of English Tmall portal

This new service will certainly help Alibaba double the number of foreign brands on Tmall Global to 40,000 in three years, with a goal of generating more than half of the company’s revenue from outside China by 2025.

New growth engines are also essential given a cooling economy in China, an ongoing trade war with the US and increasingly aggressive competitors including JD.com and Pinduoduo. Efforts are well underway in this regard, with Alibaba having made inroads into Southeast Asia through the acquisition of Lazada, but it now aims to broaden its reach even further.

Attracting more international brands across key categories will provide a strong fillip to growth. Alibaba is already increasing investments to unlock growth from China’s lower-tier cities and rural areas, which currently account for only 20% of total orders for the company. This means plenty of room to grow for the business and cements the huge opportunities to go after for international brands.

Streamlining the Gateways to China

The new portal allows English-speaking merchants to fill in details online about their products, which are then vetted by Alibaba based on category and quality. If they fit the bill, Alibaba contacts them within 72 hours to gauge if their products are a fit for the Chinese consumer and Tmall.

The portal provides a hands-on guide to overseas merchants on how to open a store on the platform and make use of tools such as Tmall Overseas Fulfilment, which provides a low-cost way to set up their business in China before they start selling to domestic consumers. Tmall Global will also advise merchants on optimizing operations after they’ve established a strong presence on the platform.

Prior to the site, joining Tmall Global was only possible through personal introduction, or by signing up at trade fairs. With a huge emphasis on leveraging technology, namely artificial intelligence, to automate processes, a self-service portal and onboarding system makes sense. Especially if Alibaba wants to hit its ambitious target.

China is a fast moving, dynamic, highly nuanced, highly competitive, market. Understanding the drivers and influencers of growth, and how to unlock them is a scary prospect and often too daunting for smaller non-native brands.

The provision of Tmall Global’s portal will help brands understand the vast, diverse and digital-facing Chinese market – while at the same time providing Alibaba with what it strives for, operational efficiency through the efficient and effective use of data.

Removing friction and pain-points from the entire process of attracting, onboarding and helping to succeed, this new portal will certainly appeal to smaller brands. However, brands will need a good understanding of how to tailor products, messaging and marketing strategies to truly grow in China.

The need to deal with real-time data and industry benchmarks will become imperative. This will remain a challenge for smaller brands and will be essential capabilities if they’re to fully realize the opportunity in China and the potential of selling through Tmall Global.

Brands will still need to truly understand the landscape, and the ever-evolving shopper-retailer-brand relationships if they’re to establish credibility within the organization, and externally with key partners. Demonstrating the potential of Alibaba’s ecosystem and platforms in prioritizing investment for maximum ROI, is only one piece of the jigsaw.

eBook: Tmall Global Guide

This article was originally published on Kantar.com

Consensus, offer, performance and ecosystem are four hurdles towards the take-off of pure EVs. China has ticked the first two and making great progress on the third.

When I worked in China a few years ago, I was fascinated by the power, scale, and speed of the changes in China’s auto market. Since moving to a global role and back to Europe, I still travel to China frequently to keep my finger on the pulse of the Chinese market.

From my recent observations and conversations with clients in China, I have a strong impression that China has entered the “Electric Vehicle for All” era, which is not yet a reality in other markets.

Whatever needs you to have for a vehicle, you can relatively easily find an EV model for it: premium, mainstream or entry models from JV and domestic brands; sedan, SUV, mini/compact cars, you name it.

This brings us to a framework to understand the four key hurdles on the path to an EV future.

Four hurdles to overcome for EV to take off

1. Consensus

It means all or most people understand that to achieve a better environment for human beings, such as cleaner air, EV plays an important role. Conceptually in China, most people have agreed that to improve the environment, the transition towards an EV future is an important part of the solution.

2. Offer

We need enough availability of car models for the majority of car buyers/users. Because if we want to attract enough supporters of an EV future, we need to ensure a large enough size of buyers/users can find an EV version of their ideal car model.

For a French man with four kids like me, I need a large enough MPV to drive my family around. But it’s not easy to find such an EV or hybrid model. The only full EV model available now in Europe that fits my functional need is the Tesla model X, a great model but the price tag is a little beyond my budget.

3. Performance

EV brands from China and other parts of the world are making promises. But to really take off, they need to deliver and meet consumers’ expectations on many aspects, such as range, power of engine, access and convenience of charging, etc. Many brands I saw at the Shanghai Auto Show were claiming their EV can run at least 400 kilometers.

This is a decent mileage to make people seriously consider buying a pure EV car because even if you are driving a gasoline car, you’ll have to stop anyway to rest or for some model stop to fill up every 400 kilometers.

To address the burden of long hours needed to reload fully an EV battery pack, I very much like NIO’s battery swapping station approach. If such battery stations can be built along highways and, it’s big AND, it’s built to fit with every brand not just for a single brand, then people will be even more assured of their EV’s range reliability.

4. Ecosystem

It’s similar to the battery swapping station network topic. For an EV future to materialize, many stakeholders need to join forces in the same direction and align for a common future. These stakeholders include auto brands, component suppliers, IT companies, electricity and power companies, research companies and institutes, government agencies, etc.

A great example is the Movin’On Lab ecosystem that brings together many actors of mobility, to explore the trends, innovate and influence the future of mobility.

Recently, I just shared some preview snapshots of our Mobility Futures report during Movin’On Lab summit in Montreal. Surveying 20,000 people across 31 cities, the study uncovered the political, economic, ecological, technological and socio-cultural factors that are profoundly changing mobility decisions in the major cities around the world.

In addition to identifying today’s patterns of mobility behavior, the project also evaluated acceptance towards new products, services, and interventions to project a 10-year vision of the urban mobility market, including city-level forecasting and scenario planning.

Likewise in China, China Mobile has already established China 5G Autonomous Driving Alliance, which has attracted Chinese automakers, universities, and research institutes, IT companies to join forces. It will be a powerful platform to boost the development of autonomous driving.

I am also aware that China Electric Vehicle Charging Infrastructure Promotion Alliance (under the leadership of China National Energy Administration) is working as a platform to push forward the access and convenience of charging EVs around China.

Various levels of governments are playing important roles in nurturing the ecosystem. Their regulations and incentives can effectively enforce alignment to push the deployment of EV cars. Take Norway as an example, where since 1990s government and private firms facilitated the import, the sell and the use of EV. Even though Norway is a small country compared to many others, it is now the third largest market for EV sales, right after China and the US.

To summarize, I think China has passed the first major hurdles and is making significant progress on others. We can expect the ecosystem to gradually take shape and accelerate the EV development in China.

Implications for auto brands

Given the status quo of EV cars in China, I think auto brands need to focus on the No.2 and No.3 hurdles mentioned here: offer and performances.

For consumers, it is good to have so many EV offers to wait to be chosen, but for EV brands, they are in a highly competitive and increasingly congested market segment. They really need to understand what consumers are looking for in an EV so they can come up with a differentiated and unique offer to win.

Auto brands also need to evaluate experiences and pain points of current EV customers/users to develop a better performing EV which can retain and win new customers in the future.

Also read: 80% of Chinese consumers’ unplanned shopping comes from social e-commerce

Author: Guillaume Saint, Global Automotive Lead, Kantar

This article was originally published on Kantar.com

21 Fast Moving Consumer Goods (FMCG) companies reached over 100 million urban households. P&G and Yili led the race, reaching over 160 million families. Nongfu Spring, Haday, and Dali are fastest growers.

21 FMCG companies reached over 100 million urban households during the 52 weeks ending October 5, 2018, with P&G and Yili being the first to hit the 160 million milestones, according to report from Kantar Worldpanel.

The duo reported 92.4% and 90.9% penetration rates respectively, enjoying the widest consumer base in China. In terms of growth rate, Nongfu Spring, Haday, and Dali are the top three performers, reporting over 5% increase in the total number of buying families year-on-year.

Winning over millennials

Despite China’s aging population, winning the love of millennial consumers (meaning post-80s and post-90s generations in China) is critical for brands to thrive. With more disposable income and need to express their individuality, young consumers offer great opportunities to unlock future growth.

For the companies that grow penetration ahead of the market average, most of them saw noticeable advances in young families. For example, Nongfu Spring managed to grow its shopper base amongst young singles/couples by 30% in the last 12 months through its phenomenal success of Victory vitamin water, which rode on the massive popularity of reality show “Idol Producer”.

The company also launched the NFC juice brand 17.5° to cater to younger middle consumers’ aspiration for authenticity and freshness. Similarly, Coca-Cola in China grew its penetration through the smaller pack and new lines such as “Sprite Fiber Plus” to balance young consumers’ needs for both nutrition and indulgence.

Liby, an established player in the home cleaning sector, has actively used sponsorship and film stars to refresh its brand image and won 1.5 million young single/couple families.

Combination of innovation and go-to-market

Almost one new product is launched every three minutes in China in 2017, and consumers in China are facing cluttered shelves with new products trying to grab their attention. However, only 6% of the new launches managed to bring incremental buyers. Brands that succeed in China’s formidably competitive marketplace will have to stand out by offering unique innovation and having go-to-market excellence.

P&G, with its powerful house of brands line, has been leading the FMCG market in terms of penetration for five years in a row. In recent years, P&G has stepped up the innovation pipeline by launching a series of sophisticated and differentiated products, e.g. Whisper Pure Cotton, Always Infinity, Rejoice Micellar Water shampoo as well as Olay and SK II premium range.

In the latest 52-week period, P&G also grew their physical availability, particularly leveraging the strength of social and e-commerce platforms.

Dali, a well-entrenched food conglomerate, reported strong buyer gains in the latest year through its launch of Doubendou, a soy milk product riding on the concept of “natural and GMO bean free”.

Backed up by Dali’s established distribution network to ensure its wide availability and in-store presence, Doubeidou was a blockbuster success and brought 13 million new buyers to Dali Group in the first year after it was launched.

Offline penetration remains paramount

E-commerce has been a game changer in the last 10 years in China, transforming the way brands connect to consumers. In the “New Retail era”, brands will have to adopt a holistic omnichannel view to win consumers at every possible touch point.

Offline stores, especially in lower-tier cities, remain crucial to building trial and engagement through their interactions with millions of shoppers on daily basis. With the expansion in data integration and logistic capabilities, consumers are now able to choose multiple ways to shop and the boundary of online and offline channels are increasingly blurring.

Successful companies in growing shoppers are those who achieved a balanced penetration gain across both online and offline channels. Yili, as a leader in food & beverage, grew its online and offline buyers by 4 and 6 million respectively.

Offline distribution channels brought more shopper growth for companies like Mengniu, Hengan, and Dali. Even for P&G, it managed to add 2.4 million incremental buyers through brick-and-mortar stores. Consequently, the partnership with offline retailers remains essential for brands to keep up the omnichannel footprint.

Read more: Insights of China internet users in lower-tier cities

This post was originally published on Kantar.com.

What have Chinese consumers bought during Tmall Double 11, the world’s largest e-commerce shopping event? Which categories are big winners? How much have they spent? Do people regret spending too much? Nearly 70% of respondents were buying “more than last year” (35%) or “same as last year” (33%). Apparel was still the most popular one among physical goods categories. Hotel and video websites were big winners.

Alibaba’s Tmall Double 11 has entered its 10th year. Chinese young people jokingly named November 11 as “Singles Day” many years ago because all digits for this day are the lonesome “1s”. Alibaba Group saw a commercial opportunity and in 2009 launched an online sales festival to “celebrate” the Singles Day.

Many analysts were skeptical about the sales performance for Double 11 this year. Because many people were complaining there were too many e-commerce festivals now in China and the rules for discounts on Double 11, if they did exist, were too complicated to follow.

However, the sales performance held up. Chinese consumers bought goods worth of 213.5 billion yuan in 24 hours on Alibaba’s two e-commerce platforms (B2C Tmall and C2C Taobao), 27% higher than a year ago. Alibaba’s biggest competitor JD.com also sold nearly 160 billion yuan worth of goods from November 1 till 11, an annual increase of 25.7%.

Even though e-commerce retailers continued to break records, the growth rates have inevitably declined. Here are seven findings learned from consumers’ intention and actual purchasing behavior before and after Double 11.

1. Among all respondents, 8% didn’t buy anything on Double 11. The most mentioned reason is “I don’t have anything particular I want to buy” (54%). Only 26% mentioned “there is no real discount on Double 11” while 22% mentioned “too complicated discount terms and policy”.

2. Nearly 70% of respondents were buying “more than last year” (35%) or “same as last year” (33%). There were also 19% buying less than last year.

The actual spending was lower than planned. The mean budget before Double 11 was 3,048 yuan, but the actual mean spending was only 2,657 yuan – 13% lower than planned. Looking into gender differences, male consumers spent 18% less than their plans, while female spent only 8% less than plans. On average, each male consumer spent 320 yuan less than female.

3. Tmall, Taobao, and JD.com have become formidable distant leaders in the e-commerce landscape. Pinduoduo, the social shopping app which gained popularity through WeChat groups, was a fast-rising star.

During the 24 hours of Double 11, 70% of respondents bought through Tmall, followed by Taobao (58%) and JD.com (52%). In the Pre Double 11 survey, five e-commerce platforms were mentioned by between 10% to 20% respondents. But in the Post Double 11 survey, only Suning (9%), VIP.com (8%), and Pinduoduo (8%) were close to 10%. Given Pinduoduo’s short history, it has already made a lot of progress and has been among the second tier e-commerce platforms.

On average, each respondent bought from 2.52 e-commerce platforms, but they mentioned 3.62 platforms in the Pre Double 11 survey. Hence, an e-commerce platform had to edge onto a consumer’s top 3 shopping destination list on Double 11, or it would be in a very weak position.

4. Among physical goods categories, apparel was still the most popular one. 65% of respondents said they’d bought apparel, only 5 percentage points lower than in Pre Double 11 survey.

54% of respondents bought food, which was the second most bought category and the only category whose actual shopping proportion was higher than planned (3 percentage points higher).

Compared with Pre Double 11 survey, many categories had fewer shoppers than expected – big losers being shoes (planned 52% vs. actual 43%), luggage and bags (22% vs. 15%), and toys (21% vs. 12%).

5. Hotel and video websites were big winners. More virtual goods have joined Double 11 to earn a bigger share of consumers’ spending. And it worked out nicely: 21% of respondents bought virtual goods (such as game account credit, software subscription fee, mobile phone bill credit, etc.); 20% of respondents bought services (such as air tickets, hotel nights, gym membership fees, etc.).

Among those who bought virtual goods, video website’s membership was the best seller. 70% of respondents bought it, 4 percentage points higher than Pre Double 11 survey. Among those who bought services, half of them bought hotel rooms while 30% of them bought air tickets.

6. New Retail, which was first promoted by Jack Ma, Alibaba Group founder and Chairman, in 2016, meant the convergence of online, offline, and logistics to better serve consumers in the future. However, only 29% of respondents joined offline sales activities on Double 11, 5 percentage points lower than planned.

7. Generally speaking, Chinese consumers have become more sophisticated and learned how to control their spending wisely. When asked did they feel they’d spent too much on Double 11, 60% said: “I bought just right amount!” Another 15% said “I don’t really care whether it’s too much or too little”. Only 12% regretted. (Female were more likely to regret as it was female 15% vs 9% male.)

This post was originally published on Kantar.com.

The three leading smartphone brands – Huawei (excluding Honor), Xiaomi, and iPhone – kept winning more shares in urban China market as all grew their shares over a year ago, according to the Q3 data from Kantar Worldpanel ComTech. Xiaomi Mi 8 was the most popular handset model in Q3 2018. The next three models on the best-seller ranking were all from iPhone, including the runner-up iPhone X.

As more brands followed iPhone’s suit to launch premium products, the average selling price of smartphones in Q3 increased across the industry. The proportion of sales from premium models increased by 7 percentage points from a year ago.

Huawei continued to win consumers from other brands. Huawei ranked No.1 in terms of net new consumers won (=total new consumers won – total new consumers lost) in Q3, followed by iPhone.

Among all the users leaving Huawei and Honor, the proportion of people joining iPhone camp decreased from a year ago. While the proportions of OPPO/VIVO-turned-iPhone user increased.

There is a lot in common in ex-OPPO/VIVO users, such as they’re relatively young, most of them live in tier-1 and -2 cities, not happy with chips and speed, pay attention to other people’s recommendations, etc.

It’s more important, and to some extent easier, for smartphone brands to keep existing consumers compared to win over consumers. They need to invest more in raising loyalty, according to Liang Yaguang, Consumer Insight Director of Kantar Worldpanel ComTech China.

The average Net Promoter Score (NPS) among Chinese consumers dropped in Q3. Huawei (excluding Honor), VIVO, and OPPO are above the average among mainstream iPhone. The NPS for Samsung eclipsed that of Xiaomi for the first time.

As major brands keep expanding their user bases, the user profiles began to look more like each other. OPPO and VIVO both had more male users while Huawei (excluding Honor) and Xiaomi had obtained more female consumers.

In the United States, Android lost ground to iOS in Q3. Early sales of iPhone XS and iPhone XS Max models in the United States are good news for Apple.

Combined with the continued strong momentum among iPhone 8 and 8 Plus, these sales have contributed to a 5.0 percentage point increase in OS share for Apple in the US – the biggest gain seen worldwide in Q3 2018.

iPhone 8 was the top-selling model in the US over the quarter, with a 9.4% share of the handset market, according to Dominic Sunnebo, Global Director for Kantar Worldpanel ComTech.

But in the five main European markets (UK, France, Germany, Spain, and Italy), Android made significant gains against iOS. The Samsung Galaxy S9 was the top-selling model across the big five markets in September. Meanwhile, the newly released Galaxy Note 9 has made it into the top 10 most popular models for the month. Both Huawei (P20 Lite) and Xiaomi (Mi Note 5) made it to the top five handset ranking for the first time.

European consumers are holding on to their handsets more than two months longer than they were in 2016. Huawei has consolidated its position as the second best-selling brand in Europe behind Samsung from the launch of its P20 series.

Xiaomi continued to expand rapidly in Spain and, more recently, in Italy and France. The focused push that Huawei and Xiaomi are making into Europe is causing pain for their rivals across the board. However, it is Sony, LG, and Wiko who are being disproportionally impacted as a result of their historic over-reliance on the ultra-competitive low and mid-price tiers.

In Japan, Apple continued to lead handset sales under the pressure from Sharp and Huawei, both of which has increased shares of sales by 6 percentage points and 3.2 percentage points, respectively. Sharp’s flagship Aquos R2 and Huawei’s P20 Lite were among the top five best-sellers for the third quarter.

This post was originally published on Kantar.com.

There are 3.94 million babies born in 2017, more than that in the whole U.S. 60% of babies younger than 3 years are living in lower-tier cities and 49% of maternal and baby product sales are from lower-tier cities. This is a huge potential market for maternal and baby products.

In China, lower-tier cities refer to big non-provincial capital cities, county-level cities and counties. This is a huge potential market for maternal and baby products. Kantar Worldpanel China’s National Maternal and Baby Panel cover tier-1 to 5 cities across 20 provinces. From the lower-tier cities within the baby panel, there are 3.94 million babies born in 2017, more than that in the whole United States.

Within the baby panel, 60% of babies younger than 3 years are living in lower-tier cities and 49% of maternal and baby product sales are from lower-tier cities.

Per consumer spending in lower-tier cities on baby products is only two-thirds of that of upper-tier cities, but there is huge room for growth. The total sales growth for the whole FMCG market, for example, the compound annualized growth for upper-tier cities was 4.4% from 2012 to 2017 while it was 6.1% for lower-tier cities.

For leading brands in maternal and baby categories, there are lots of white spaces to be occupied. In infant milk formula, baby diaper, and baby toiletry categories, for example, leading brands still don’t command as big shares as they have achieved in upper-tier cities.

Parents in upper- and lower-tier cities have different income standards and living environment, but their willingness to invest for their kids are almost identical.

In addition to the necessary products, such as infant milk formula, baby diaper, and baby food, lower-tier city parents are as ready to buy into more sophisticated categories as their counterparts in bigger cities, such as wipes, baby dental care products, breast pump, and baby tableware utensils.

Lower-tier city parents aren’t automatically low-end brand buyers either. According to Kantar Worldpanel data, their buying price is almost the same as parents from upper-tier cities, especially in infant milk formula and baby food categories.

In the infant milk formula category, they prefer domestic high-end brands, such as the premium brand Feifan under Chinese company Feihe. The unit price for its stage one formula is 526 yuan per kilogram (price on JD.com), much higher than similar products from Wyeth (398 yuan per kilogram) and Abbott (466 yuan per kilogram).

Mothers from lower-tier cities are frequent e-commerce or even social-commerce buyers. Among the lower-tier city mothers within Kantar Worldpanel’s monitoring network, 59% of them have bought baby products online while 18% have bought through WeChat.

In baby diaper and infant milk formula categories, the penetration of WeChat shopper is higher in lower-tier cities as compared to upper-tier cities.

Chinese brands are already taking advantage of this emerging new channel. Shenzhen-based Care Daily company has achieved 62% of its lower-tier city sales from WeChat, according to Kantar Worldpanel data.

1. The pre-born stage is crucial to influence brand choice

In lower-tier cities, 71% of mothers start to learn about baby products no later than six months into the pregnancy.

2. Physical function and value for money are still critical

Among all reasons for choosing a diaper product, lower-tier mothers care more about soft material (lower-tier 37% vs upper-tier 35%), good absorption (32% vs 24%) and reasonable price (17% vs 14%).

When choosing infant milk formula, lower-tier mothers would rely more on family recommendation (32% vs 30%), special ingredient (24% vs 22%). They don’t care so much about the source of milk. (32% vs 36%).

3. They prefer the professional brand image

This is closely related to their relatively limited information sources on this subject. Compared with upper-tier mothers, those living in the lower-tier city would rely more on childcare expert and doctors to learn information and build up knowledge.

4. Expand brand presence in baby stores

Baby stores are more important in contributing to sales in lower-tier cities – in the west region, it even accounted for 43% of all sales. The concentration level is still lower: the top 10 store chains accounted for 24% of all baby store sales while the highest is only 30% in the west region.

5. Omnichannel opportunities

Omnichannel shopping, the convergence of online and offline shopping, is the major trend in China. maternal and baby product, which is an “early adopter” of e-commerce, has witnessed many successful omnichannel shopping cases.

Aptamil has worked with omnichannel maternal and baby product retailer Kidswant to capture targeted audience profile and leveraged the insights to optimize its media spending on Tencent. Mead Johnson has partnered with JD.com to leverage the latter’s nationwide logistics network to help distribute its products to baby stores in lower-tier cities.

This post was originally published on Kantar.com.

More than 87 million Chinese people watched the final between France and Croatia live. The 64 games attracted 440 million TV audiences, accounting for 34.15% of all Chinese TV audiences. 

The decline of live TV watching behavior has been a long-lasting trend in China. The previous FIFA World Cup was held in Brazil in 2014 summer. During the first half of that year, on average every Chinese TV audience would watch 160 minutes of TV every day.

Fast forward four years – in the first half of 2018, the number has further lost more than half an hour to 128 minutes. The challenge brought by digital video platforms has clearly squeezed people’s time in front of TV screens.

However, the FIFA World Cup Russia 2018 was a different story. The favorable time difference – only five hours behind Beijing Time – enabled many games to be broadcast live during prime time in China, such as 8 pm, 10 pm, or 11 pm. The matches successfully regrouped big crowds in front of TV sets in early summer nights.

The final between France and Croatia kicked off at 11 pm on July 15 (Sunday) and attracted more than 87 million Chinese TV audiences to watch it live. Each viewer watched an average of 82 minutes – it means most people watched the whole game.

The national TV rating for the two China Central TV Station channels (CCTV-1 and CCTV-5) was 4.34%, with a staggeringly high share of viewing at 47.35% — it means that from 11 pm till 1 am the next day, almost one in every two TV-watching Chinese was watching this game.

If the viewership for the closing ceremony and the award ceremony were included, the audience number would jump to 90.60 million TV watchers, 2.08 times that of 2014 World Cup in Brazil.

In retrospect, the 64 live games had accumulated 440 million audiences, accounting for 34.15% of all Chinese TV audiences. The average live watching rating was 1.77%, much higher than even the most popular TV drama or entertainment shows in China.

The group stage games in total attracted 400 million TV audiences. Every World Cup watching audience spent at least one hour every day to watch live games. The Argentina vs Iceland match (June 16, 9 pm, Saturday) attracted the biggest audience during group stage as 90.91 million people watched it through CCTV channels live.

Among all groups, the competitive level of Group C was among the lowest because France and Denmark were clearly much stronger teams than Australia and Peru. However, Group C games happened to have the best kick-off times among all groups: except for France vs Peru (11 pm, June 21, Thursday) and Peru vs Denmark (12 am, June 17, Sunday), the other games all began in prime time in China (6 pm, 8 pm, 10 pm and 10 pm). This advantage handed Group C the title of “most watched group” in China – 176 million Chinese TV audiences watched the games on CCTV channels.

In the sports TV industry, we have a term of “bumper year” – apparently this Russia World Cup has perfectly explained what a “bumper year” is.

CSM has a 15-year research project CSM Sports Barometer Survey, which tracks sports watching behavior and attitude of sports audiences in 28 major Chinese cities between the age of 15 and 54. Our 2017 data showed that 63.6% of them still considered TV screen as their best choice for watch live sports programmes.

This post was originally published on Kantar.com.

For 12 weeks ending May 18, 2018, consumer spending on FMCG in China grow by 10.0% compared to the same period last year. Hypermarkets, supermarkets, and convenience stores are showing strong signs of recovery. Consumer spending grew by 10% YoY.

For 12 weeks ending May 18, 2018, consumer spending on FMCG in China grew by 10.0% compared to the same period last year, latest Kantar Worldpanel data showed. Modern trade (including hypermarkets, supermarkets, and convenience stores) is showing strong signs of recovery, with a growth of 4.1%, 1.2 points up compared to last year. In terms of regions, the East and West regions enjoyed a healthy growth at 11.0% and 11.3% respectively, whilst growth in the North remaining sluggish.

Kantar Worldpanel China continuously measures household purchases over 100 product categories including cosmetics, food and beverages, and the toiletry/household sector through its 40,000 sample families. Its national urban panel covers 20 provinces and four municipality cities (Beijing, Tianjin, Shanghai, and Chongqing).

The channels within its monitoring scope modern trade (supermarket, hypermarket, convenient stores), traditional trade (grocery, free market, wholesale), e-commerce, overseas shopping, direct sale, work unit/gifting etc. The goods under monitoring are those obtained for in-home consumptions.

Among the top retailers in modern trade, Walmart and Yonghui enjoyed the fastest growth on market share, up by 0.8 and 0.4 points respectively in the 12-week period compared to the same period last year. Both Walmart and Yonghui accelerated their progress on new retail format trial. Walmart deepened its cooperation with Tencent to optimize payment processes while Yonghui Super Species tested a drone delivery service in Guangzhou City, Guangdong Province.

The e-commerce channel grew by 32.0%, with 37.2% of households in urban China purchased FMCG online over the 12-week circle. Recently, RT-Mart together with Hema opened their first middle sized new retail store “HeXiaoMa” (盒小马) in Suzhou City, Jiangsu Province. The simplified Hema format has removed in-shop dining services.

Kantar Worldpanel’s data shows that there is a big potential to develop e-commerce business in lower-tier cities: 35.0% of households in county-level cities and 27.8% of households in counties purchased FMCG online in the latest 12 weeks, which is much lower than the 46.3% online penetration in key cities.

JD.com continued to narrow its gap with Tmall in penetration, with 6.3% of households shopping on JD in the 12 weeks. As e-commerce retailers have developed over the past few years, it’s become harder to gain a massive sales growth through purely price discounts.

Kantar Worldpanel has observed more campaigns to emphasize premiumization and joint online/offline activation during the recent mid-year “618 (June 18) Online Shopping Festival”. This will create new themes to engage consumers and stimulate consumer demands. Please watch this place for future FMCG data and reports.

This post was originally published on Kantar.com.

The Chinese government announced on May 30 that it will significantly lower import tariff on many consumer goods. Among them, the average tariff rate for detergents, cosmetics such as skin care and hair care products, and some medicine and health products will be cut from 8.4% to 2.9%.

How will this affect brands’ fate in China?

This is apparently a good news for imported cosmetics products. According to Kantar Worldpanel data in recent years, imported cosmetics products have been enjoying very healthy growth: in 2017, the sales value growth of imported cosmetics products, mostly premium ones, reached 40%. Thanks to the new tariff cut, we expect this trend will continue and this sector will be able to maintain a growth between 30% – 40% in the next couple of years. Some typical brands are Lancôme, Estee Lauder, SK II, Dior, Saint Laurent and Shiseido.

From the origin country perspective, whether the actual products are produced in or outside of China, brand owners have to remember that many Chinese consumers have very consolidated opinion about cosmetics from this country. For example, Japanese products increased their sales in 2017 because Chinese consumers believe Japanese goods are meeting their need for health and professionalism. Japanese cosmetics are widely acknowledged for addictive-free features and outstanding functions.

The growth of European and US brands came against the backdrop that increasingly sophisticated Chinese consumers are entering into previously niche categories, such as essence and eye-cream. European and US brands have accumulated many signature formulae in these categories and have won the votes of many Chinese consumers.

Their usage of social key-opinion leaders (KOLs) has also contributed to their stellar performance because color cosmetics categories are high-involvement sectors and consumers are willing to spend a lot of time to learn from KOLs. South Korean brands went through a challenging period of time in China, but they weathered it by developing lower-tier and online channels as well as launching “fast beauty” hit products.

The macro trend of China’s cosmetics market is favorable to imported products. The rebound of China’s FMCG market was supported by premiumization. Personal care sector outperforms other categories with skin care and makeup products the biggest opportunity to grow.

If we look into the details, Kantar Worldpanel’s Beauty Panel has shown that young females in their 20’s are the market leader and growth driver. They are exposed to and become fans of cosmetics products on mobile APPs, creating numerous instant purchasing occasions. They’ve also formed a habit of making small but frequent purchases, which is a stark contrast with shopping patterns of 40 and above female buyers, who prefer to hoard up products in much fewer purchases to drive down per unit cost.

The rise of vertical e-commerce sites and mobile apps has also created rooms for lesser-known foreign brands to establish themselves. Thai brands, for example, became a surprise leader in sales growth because the humid and hot weather has fostered long-wearing products with outstanding oil-control functions. These are also pain points for many young Chinese consumers.

Geographically speaking, lower-tier cities experienced a big boom of consumer spending. A, B, C and D-tier cities have all posted per person spending growth rates more than doubled that of Key cities (Beijing, Shanghai, Guangzhou).

If a brand wants to make a decision on which products to bring to China first, we can share three latest trends of Chinese consumers’ pursuits for beauty products:

1. Healthier skins

Chinese consumers’ pursuit of healthy skin condition has blurred the definition of traditional functions. For example, new “anti-age” means repairing skin barrier; new “oil control” means improving water-oil balance; new “whitening” means healthy glowing skin.

2. More professional products

As Chinese consumers increase their knowledge about skin care and makeup, they are choosing more professional products more proactively. Kantar Worldpanel Beauty Panel data has shown that the once popular easy-to-use BB cream and CC cream kept losing in penetration rates, while more professional products, such as cushion and foundation have been bought by more consumers. They have also added more pre-steps to create a flawless look.

3. More personality

More Chinese women are now showing off their personality by using fragrant products and bold makeup colors. Brighter and bolder lip colors and eyeshadows have jumped in occasion index.

*Index calculation: occasion share of the period/of 14 fall/winter *100

To summarize, lower tariff definitely will make imported cosmetics more competitive in prices. But the more fundamental factor to decide a brand’s performance in China is their access to reliable market data and their understanding of real Chinese consumer needs. Data-based consumer insight is the ultimate short-cut to win in China.

How to use live streaming for successful marketing in China in 2018

This article was originally published on Kantar.com.

31% of TV ads feature celebrities in China, however, using a celebrity does not guarantee effective advertising. Celebrity-based campaigns can be very effective. The Snickers “You’re not you when you’re hungry” campaign won a Cannes Lion Creative Effectiveness award.

Celebrities are used in advertising around the world. The right celebrity, used in the right way, can undoubtedly be a powerful brand asset. But using a celebrity does not guarantee effective advertising; overall, there’s very little difference between the performance of ads with celebrities versus those without. However, celebrities can make campaigns more effective.

There are pitfalls to using celebrities. To gauge whether a celebrity is right for your brand, you need to establish whether they are known, whether they are liked, and what they stand for, among your target audience. Here is a data-based guide to help you understand the pros and cons of using celebrities in your campaigns.

WHERE ARE CELEBRITIES USED IN ADVERTISING?

The use of celebrities in advertising varies enormously around the world. It continues to be highest in the Asia Pacific, as this analysis of ads we have researched with our Link copy test shows.

In terms of individual countries, use is highest in Japan and Korea, where around 40% of TV ads feature celebrities; and lowest in Norway, Austria, Croatia, Kazakhstan, El Salvador and Costa Rica, where the proportion is under 3%. It is 31% in China, 23% in India, 11% in the United States, and 11% in the United Kingdom.

While celebrities are less likely to be used for medical ads, there is little other patterns of celebrity use by category, as this comparison of India, China, US, and UK data shows.

ARE THEY EFFECTIVE?

Celebrity-based campaigns can be very effective. The Snickers “You’re not you when you’re hungry” campaign won a Cannes Lion Creative Effectiveness award.

Snickers’ ad featuring Mr. Bean

However, while individual celebrity campaigns can be highly effective, there is very little difference overall between the performance on most key measures of individual ads with celebrities versus those without; as illustrated by the analysis of ad enjoyment opposite.

This includes other key measures too. Some regions, notably the US, and Central and Eastern Europe, find celebrity ads slightly more involving; but in other regions, particularly where celebrity ads are more common, this is not the case. Overall, branding levels tend to be similar.

However, our CrossMedia database suggests that campaigns with celebrities tend to be more effective than campaigns without.

Why should this be? An internal assessment of the campaigns for the 2018 AdReaction study suggested that campaigns with celebrities tend to be better integrated. It seems the presence of a celebrity can provide an instant link to other elements of the campaign, promoting synergy. But other audio and visual elements can also provide that “instant link”.

For some long running campaigns, particular celebrities have, over time, become synonymous with the brand. The following example shows the gradual build of one celebrity brand cue over 15 ads. Kantar Millward Brown recruited non-repetitive sample audiences to watch one of these ads during this period of time. In the long run, the celebrity brand cue had risen from 5% to 81%.

In Japan, however, branding scores are slightly lower for ads with celebrities — possibly due to the celebrities endorsing too many brands.

THREE KEY QUESTIONS FOR EFFECTIVE USE OF CELEBRITIES

Given that using a celebrity does not guarantee a successful campaign, what are the guidelines for getting it right? We’d suggest there are three key questions you need to answer.

Who is the celebrity?

Where the celebrity is central to the core idea, it’s important to establish how well known they are among your target audience. In the US, a lipstick brand was launched using a British model. Among those who recognized her, communication, enjoyment and purchase intent were much stronger. However, less than a quarter of the audience recognized her, severely limiting the effectiveness of the campaign.

Overall, the effect of the fame of the celebrities differs by country: for instance, in the US and UK, well-known celebrities can help slightly with Branding. However, in China (Shanghai) there is little difference in key measures whether the celebrity is well recognized or not.

Is the celebrity well liked?

While it isn’t essential for a celebrity to be liked, this can have a significant impact on the emotional response to an ad.

The effectiveness of likable celebrities is more similar across countries: enjoyment is higher when the celebrity is liked, in all countries. In the US, UK, China, and India salience are also higher. Branding is higher in India, Russia and the UK when the celebrity is liked, and understanding in the US and India. All countries tend to see higher scores across persuasive measures and overall Power Contribution when the celebrity is liked.

In particular, the likability of the celebrity needs to be assessed among the target audience. In one project for a cereal brand in the UK Millward Brown asked about celebrities who were considered positive role models. One particular male TV and radio presenter was rated highly, but this ranking was driven by the 40+ age group. When we researched an animatic version of an ad for the brand featuring him, he was dismissed by the younger target respondents as being too old and old-fashioned. In the ad he played with a younger woman’s hair; a scene which respondents found disturbing and uncomfortable. The ad was not produced.

What does the celebrity represent?

It’s important to understand how well the celebrity fits with the brand, or with where you want to take the brand. When the celebrity is perceived to be appropriate, communication can be enhanced.

The “right fit” celebrity can enhance key measures; take celebrity ads we’ve researched in Shanghai as an example:

Potential pitfalls

Unlike an animated character, celebrities are human and subject to human failings. So there are a number of ways in which a celebrity could become a liability to the brand.

Examples of celebrity activities potentially damaging a brand include: OJ Simpson, the face of Hertz, being charged with murdering his ex-wife, Nicole Brown Simpson; Whoopi Goldberg, failing to lose weight while endorsing Slim-Fast; following the media exposure of his adulterous affairs, and a public divorce from his wife, Tiger Woods lost five major endorsements. Brands are quick to distance themselves from such issues. In early 2016, when Maria Sharapova failed a drugs test, brands she had promoted such as Nike, Tag Heuer, and Porsche all distanced themselves from her within 24 hours.

In addition, there is always the risk of a celebrity becoming the hero of an ad, rather than the brand. A new campaign was developed for a tea brand in India, featuring popular movie actors. Millward Brown researched two versions of the ads in animatic forms; one with the celebrities, and one without. The research showed that, in the versions with the celebrities, the message takeout was weaker; the celebrities were ‘drowning out’ the communication. And while the celebrities were intended to help gain attention, the versions without celebrities were just as impactful. The client went ahead and filmed and aired versions without celebrities.

However, the right celebrity, used in the right way, can be a powerful brand asset; in any country, in any category.

So to summarize, before you sign a celebrity to feature in your ads, please go through this checklist and make sure you have the right answers for all of them:

• Is the celebrity well known?
• Do my targeted audience like this celebrity?
• What does this celebrity represent?
• Do I have a damage control plan if the celebrity makes some mistake?
• Will my ad make people remember my brand or the celebrity?

Check out China’s mobile advertising market or compare the two popular short-video mobile apps

This article was originally published on Kantar.com

China’s growth of FMCG sales is weaker in Q1 2018 compared with previous quarters, while new retail accelerates the online and offline integration.

Kantar Worldpanel reports that the fast-moving consumer goods (FMCG) market in the first quarter of 2018 was relatively weak with value growing by just 2.3% in the latest 12 weeks compared to the same period in 2017. China’s GDP grew by 6.8% in the first quarter of 2018, which is consistent with the last two quarters in 2017.

In the full year of 2017, FMCG growth rate reached a three-year high of 4.3%.

Modern trade (including hypermarkets, supermarkets, and convenience stores) grew by only 0.9% in the first quarter of the year in China. Across city tiers, provincial capitals, prefecture-level cities, and county level cities enjoyed faster growth, up by 2.8% collectively. Across regions, the West region has seen the strongest growth, up by 4.6%.

Leading Grocery Share of Modern Trade – National Urban China (%)

Note: Retailers in orange color are from Alibaba camp; retailers in blue are from Tencent camp.

Leading retailers taking sides either with Alibaba or Tencent

Among the top 5 retailers, Sun Art, Vanguard, and Walmart all strengthened their leading position and Yonghui surpassed Carrefour to be the No. 4 retailer in China.

As the only retailer in top 5 that enjoyed double-digit penetration growth, Yonghui’s share rose from 3.2% a year ago to 3.8% in the past 12 weeks in 2018. This performance has further been supported by the opening of 77 new stores in the first quarter of 2018. Yonghui has announced a bold plan to open 100 Yonghui Super Species and 1,000 Yonghui Life stores during 2018, with its O2O APP covering all its retail formats and 50% of overall business.

The first quarter of 2018 also witnessed the two Internet giants’ accelerated move into the offline world with various partnerships and acquisitions of key retailers.

The trend has continued into April when Vanguard Group announced its partnership with Tencent/JD. This would mean that the Tencent/JD camp would represent 21.7% share of the modern trade of FMCG. Further acquisitions are also being witnessed beyond the grocery sector, such as Alibaba’s full acquisition of Ele.me, the leading food delivery service, and investment into Easyhome, a home furnishing chain to broaden its offline reach and touch more areas of Chinese consumers’ lives.

E-commerce players trying to reinvent traditional trade

Kantar Worldpanel reported 26% growth in FMCG spends through e-commerce platforms in the first quarter of 2018. Both Tmall and JD.com are neck and neck in the B2C camp, yet YHD (acquired by JD.com in June 2016) experienced a continued loss of shoppers, with penetration falling from 1.5% last year to 0.6% in the latest quarter.

As e-commerce looks for new ways to drive traffic online, the key players are also turning to small format neighborhood stores and grocery stores.

In January, Tmall announced the opening of its first Tmall CVS in Hangzhou, transformed from a mom and pop shop. Alibaba applied big data and modern retail management system to help those traditional stores better optimize product procurement and assortment. JD.com also accelerated its pace in transforming the sector, with the ambitious plan in place to open 1,000 stores every day. Both are trying to extend their physical footprint to tap into lower-tier cities and rural areas where e-commerce penetration is still relatively low.

Check out new retail trend in China here or China’s luxury consumption trends in the new retail era.

This post was originally published on Kantar.com.

Chinese smartphone brand Xiaomi, which is making debut in Europe, earned 4.4% of sales market share in five major European markets in Q1 2018, ranking No.4, according to latest smartphone OS data from Kantar Worldpanel ComTech.

The top three brands in the big five European markets, Samsung, Apple, and Huawei, made up 71% of smartphone sales in the latest quarter, but it is still very impressive for the newcomer Xiaomi to quietly take the fourth spot. Its growth has come predominantly from just two markets, Spain and Italy. It is also worth mentioning that these were also the markets that another Chinese brand Huawei had conquered first in Europe.

According to media reports, Xiaomi is scheduled to go public in Hong Kong this July and expected to raise as much as US$10 billion in the IPO. It plans to use 30% of the proceeds to fund for its overseas expansion, said its prospectus.

Dominic Sunnebo, Global Director for Kantar Worldpanel ComTech, comments: “Despite being a household name in China and India, Xiaomi has turned its attention to Europe late, and it has quickly proven to be a worthy opponent.

In Asia, Xiaomi’s business model has been focused online and while this remains an important factor in its European model, it is local partnerships with key players like Media Markt, Media World and Carrefour that has allowed it to accelerate sales so quickly.”

On Xiaomi’s home turf of China, it is also the best performing brand in Q1: in urban China, its market share grew 7 percentage points from a year ago to reach 17.9%.

Kantar Worldpanel ComTech carries out monthly panel surveys among Chinese urban mobile phone users to monitor the market share changes of various brands. In China, the panel size is 22,000.

Panelists were recruited from tier-1 to 5 cities and each year more than 260,000 surveys were conducted. The nature of the research methodology means it can cover the influence of smartphones sold in other countries ended up in China and avoid the confusion caused by unsold phones stocked at warehouses of distributors.

In Q1, urban Chinese consumers’ loyalty towards smartphone brands continued to decline: it had slid to 26.6 in the three months from 28.3 a year ago. People are considering more features of a phone when buying a new one – it reached a record high of 4.5 per person, compared with only 3 in the same period of 2015. Among them, “reliability” has overtaken “screen size” and “quality of camera” to become the highest priority for Chinese consumers.

In fact, this trend will be music to Apple’s ears, because our survey has shown that Apple enjoys the highest satisfaction rating among Chinese consumers for “reliability”. For Android brands, Huawei is the highest in this aspect.

This could partly explain why iPhone X is not only Apple’s best-selling model in China but also the best-selling model among all smartphone models in Q1 2018.  This has fuelled iPhone’s market share to 22.1%.

Back to Europe, with Huawei’s entry to the US market effectively blocked by the government, the business has increased the focus and resources it is aiming at Europe. Despite the well-reviewed Huawei P20 flagship not being released until April, the results are already showing.

Huawei has managed to significantly increase its presence across the big five European markets and it now holds almost a fifth of sales in the three months to March 2018 – 19.0%, up from 14.4% a year earlier.

“Most encouraging for Huawei are the signs that progress is finally being made in Great Britain, with share rising to 5.9% – it needs to conquer this market if it’s going to realize its ambition of becoming a premium choice for consumers,” Dominic said.

In the United States, Apple and Samsung have managed to eke out year-on-year share gains, up 0.1 of one percentage point and 1.4 percentage points respectively. Google has achieved its highest ever quarterly sales share of 3.4%, up from 1.7% a year earlier, thanks to the success of its Pixel line. ZTE, also under pressure from the US government, saw its sales share fall to 2.5% in the latest quarter.

In the US and the European top five markets, iPhone 8 sold in marginally higher numbers than the flagship iPhone X, indicating that as early iPhone X demand is fulfilled, the price difference between the two devices is playing a notable role in consumers’ choices.

Find out here what Xiaomi reveals in its IPO filing.

This post was originally published on Kantar.com.

New energy vehicle is the hottest theme of this year’s Beijing Auto Show. Kantar TNS Auto expert summarizes major trends in this sector.

China is the world’s largest auto market. Its annual auto show, which is held in Shanghai and Beijing in turns, has become one of the most important events for the world’s auto industry. This year’s show is being held in Beijing’s China International Exhibition Centre, New Venue from April 25 till May 4.

Given that new energy vehicle is increasingly becoming mainstream in China, I noticed some major trends in this sector during my trip to the mega exhibition.

Many traditional automakers launched new plug-in hybrid electric vehicle (PHEV) models for today’s China market. Apparently, PHEV has become the main route towards the next phase of the new energy revolution in China.

Ford, for example, launched its first new energy vehicle for the Chinese market: Plug-in hybrid version New Mondeo. Chinese car maker Geely also unveiled plug-in hybrid sedan Borui GE, which is due to hit the market within this year. Compared with previous hybrid cars using gasoline engines to recharge batteries or to power the electric drive motors, plug-in hybrid vehicle represents a step towards a pure electricity driven car era.

Compared with plug-in hybrid electric vehicles, pure electric vehicles have made more noteworthy progress in designing. Previously, automakers have kept the external designs of new energy vehicles similar to gasoline versions – in some cases even exactly the same.

Now, pure electric vehicles, regardless from traditional car makers or disruptive newcomers, have more distinct exterior designs compared with fossil fuel-based vehicles.

The body design and interior styling of electric cars distinctively emphasize on simplicity, streamlining and futuristic design, as well as fully loaded technology features, such as intelligent user-interface, connectivity, and self-driving features. Car makers wish to impress car buyers to provide them with easier, simpler, smarter but at the same time more customized services.

BYTON, one of the high-profile disruptive car makers and founded by a team led by former BMW senior executives, unveiled its CONCEPT car and became one of the most attractive new launches during the show.

In fact, traditional car makers are also rolling out sexy concept cars, such as ICON from Geely:

Pure electric vehicles have become more personalized: automakers are not rolling out just one or two models, but various models designed for very specific car buyer segments. BAIC, for example, displayed its two-seat pure electric LITE in 12 colors for 12 zodiac signs. It will also roll out models with different driving ranges to cater for the needs of different buyers, such as single buyers, the family of two or family with a small child.

Many businesses in China are expanding outside of their “native” industry, automakers are no exception. I have seen many automakers promoting their vehicles’ connectivity with “smart home” devices, as showcasing the benefits of automobiles connected with Internet of Things.

Dongfeng Motor displayed their vehicles’ ability to turn on air conditioners and water heaters at home within a certain pre-set distance. Geely displayed apps that could be installed on their in-car operating system and control devices at home and other locations. The examples demonstrated these automakers’ vision as how a connected car-home ecosystem can enhance life quality.

Many companies also displayed their solutions to tackle the biggest bottleneck preventing electric cars from taking off in China: power charging.

BAIC displayed a model “battery station” solution which can swap a used battery pack for a fully charged one within 2’30”. This echoes the direction of start-up Chinese pure electric maker NIO is taking. According to this model, electric car buyers won’t be buying battery packs. Instead, they pay for the usage of these batteries or rent it. It is possible that people will be charged at “battery stations” based on how much power they’ve used or distance they’ve driven on the battery packs being taken down.

For the pure electric vehicle, the latest models now can be charged up to 80% within 30 to 40 minutes in quick charging mode and fully charged to 100% within 6 – 8 hours in slow charging mode. Both modes are considerably shorter, especially quick charging mode, which used to take 1 to 2 hours. At the same time, most newly launched pure electric vehicles will have at least 500 kilometers of driving range.

At every major auto show in China, we can see many cool and sexy concept cars. But after quite a few “PPT auto start-up” busts here, which refers to start-ups trying to win investment and early buyers with nothing other than a nice presentation deck, we need to be more cautious. Let’s take a step back and think twice before being carried away.

It is true that China has gone a long way in new energy vehicle development, with traditional and disruptive automakers launching new concepts, new ecosystems or new theories one after another. But we also need to check how many of these fancy models eventually hit the streets.

A newcomer announced a pure electric SUV for 300,000 yuan. Another one promises to start to sell a pure electric racing car at 600,000 yuan to 1 million yuan range this June. We have to be patient and scrutinize which ones of these big promises are in the end delivered.

It doesn’t matter whether this automaker is new or long-existing, what matters is if this company can produce safe and efficient new energy cars that brings value to Chinese consumers. They are the true “new energy” to bring Chinese auto market forward.

This post was originally published on Kantar.com.

GroupM China publishes its Spring 2018 edition of This Year, Next Year: China Media Industry Forecast report, estimating that ad spending in China this year will grow 5.2% to reach 585.8 billion yuan.

GroupM China on April 25 published its Spring 2018 edition of This Year, Next Year: China Media Industry Forecast report. It forecasts that total ad spending in the Chinese market will reach 585.8 billion yuan in 2018, with growth rate rebounding to 5.2%.

This is partly due to stable upward trends in terms of macroeconomics and consumer confidence, combined with anticipated improvements in the structure of China’s economy and a rebound in the global economy, all of which will support continued growth in overall ad spending. Another key factor is that 2018 is a big year for sports marketing, drawing significant amounts of attention to TV screens and strongly guiding a flow back towards traditional live broadcasting.

The report also estimated a 4.3% growth in total ad spending in 2017 in China. While the rate of growth in Internet ad spending had slowed down, the sector remained the main driver of growth in total.

This Year, Next Year: China Media Industry Forecast is part of GroupM’s media and marketing forecast research and uses data mainly sourced from its parent company, WPP, across various sectors including advertising, public relations, market research and communications. The report features in-depth analysis of changes in market share and placement trends for different types of media.

GroupM is Kantar’s sister company within WPP.

Traditional TV commercials will see a continued fall in overall spending, with expenditure shifting further toward content marketing and digital marketing and an increase in brand placement in variety shows and dramas. In 2018, the Olympic Winter Games in PyeongChang, FIFA World Cup in Russia and Asian Games in Jakarta will provide a shot in the arm for TV media, while the development of e-sports will create new growth points for traditional sports.

OTT (Over The Top) TV, such as smart TV sets or Internet-based TV set-top boxes, is currently attracting the attention of even more consumers and advertisers and becoming a new area of opportunity in the big-screen market.

Compared with previous years, Internet advertising spending is forecast to grow at a slightly slower rate of 13.5% in 2018, with advertising on e-commerce platforms accounting for a bigger share than any of other Internet ad formats in this category. In 2017, Internet advertising further developed in the directions of product placement, native advertising, and intelligent marketing.

Laws and regulations to deal with the burgeoning information network industry have been issued in quick succession, while news feed ads and “self-media” may also face more strict government scrutinies. As a result, advertising and marketing campaigns will need to continue to discard outdated methods and pursue innovations while complying with the relevant laws, rules, and regulations.

The out-of-home advertising market remains buoyant thanks to its advantages, such as viewability, reach, consumer proximity and low interference, and ad spending growth for this sector is forecast to remain high at 9.2%.

Backed by further developments in big data, new technology and the Internet of Things (IoT), OOH marketing can now be integrated into a variety of “things”, which could evolve into another point of entry to the IoT era, maximizing the value of integrated marketing and cross-screen linkages, which will aid the further development of programmatic buying for outdoor advertising.

Radio media stabilized after experiencing a wave of growth driven by the popularity of mobile radio and private car ownership. Developments in AI and the Internet of Vehicles (IoV) are creating opportunities for innovation in radio media. Newspapers and magazines are currently tapping their core assets, exploring new business growth points, and moving into the knowledge economy market.

Rycan Di, Chief Investment Officer at GroupM China, explained: “The media outlook is continually changing and coalescing, consumer behavior is constantly changing, and marketing campaigns are also transforming to different models and exploring methods such as content marketing and intelligent marketing in search of better audience experiences and greater effectiveness.

Patrick Xu, CEO of GroupM China and WPP China, commented: “Consumption upgrades are coming into play in many sectors in China, and as consumers place increasing emphasis on quality of life and brand experience, improving the quality and personalisation of brand marketing is also increasingly important and will be a strong driver of growth in the advertising ecosystem. However, the trend towards active development across the whole ecosystem is inextricably linked to the creation of uniform standards, improvements in measurement, and further increases in industry integrity, as well as to the combined efforts of all industry players.”

China mobile app user insights 2018

This post was originally published on Kartar.com.

By the end of 2018, the global media investment industry is set to be worth over US$550 billion, according to GroupM. With this number growing and fast-moving consumer goods (FMCG) brands making up a quarter of that spend, understanding the impact of advertising is crucial.

Media investment vs sales

Kantar Worldpanel’s recent report Changing Media Success Measures showed that the short-term impact of any successful media campaign should be an uplift in sales. From our studies concentrating on the impact of media investment, we can see that, during a campaign, the average impact of advertising campaigns is 4.5% of the total sales of the FMCG brand during this period of time.

Or in other words, without the influence of the campaign, the sales of the brand during this period would have been 4.5% lower. (All effects are controlled by the presence of promotions, as well as the underlying equity or loyalty associated with each brand analyzed.)

Globally, only 8% of our researched ad campaigns had contributed more than 7.5% of total sales of their brands during campaigns.

How about the benchmarks in China? Kantar Worldpanel’s Consumer Mix Modelling has found that from 2016 till 2017, campaigns of FMCG brands have contributed an average of 4.0% of sales for their brands, lower than the global average. In 2017, the ratio was only 3.8%.

Category matters

The contribution to sales provides key benchmarks—particularly at the sector level, where we see the biggest differences. With an average uplift 20% higher than the global benchmark, beauty, and personal care, and homecare brand campaigns are the most responsive to advertising. Food and drink brands, on the other hand, see an average uplift of 3.8%—14% lower than the global figure.

When looking at media campaigns, considering your sector benchmark is key.

New vs existing shoppers

Advertising’s effectiveness should be measured not just by financials, but on how many new shoppers it has brought into the brand.

Two campaigns that generate the same level of sales might appear identical, but when we look through the shopper lens we can understand its true success. By knowing how many new shoppers a brand campaign has attracted, we can see advertising’s long-term impact.

From the shoppers who have been influenced by a campaign, more than one in three (37%) are new*. New shoppers attracted to the brand because of its advertising are likely to be lighter buyers initially. They may be testing the brand against a competitor they usually buy or entering a category for the first time. Therefore, the long-term gain comes in the opportunity to keep them in the brand.

Alongside attracting the all-important new shoppers, media spending also benefits a brands penetration through stopping existing ones from leaving. We see on average over a quarter of shoppers not leaving a brand due to the ad campaign that person has seen.

This means that in total 64% of shoppers are having a positive impact on brand penetration when we combine the new with those not leaving.

The third element we capture is existing shoppers increasing their spend, with 36% of people during a campaign behaving this way.

In China, new shoppers’ proportion is higher than the global average (42% vs 37%), while not-leaving consumers (25% vs 27%) and buying-more consumers (33% vs 36%) are both lower than global benchmark. It means that keep recruiting new shoppers are especially important in China.

The mix of new versus retained shoppers is particularly important when we look at the differences between big and small brands, which have an almost identical sales uplift coming from media. Our data shows that big brands tend to get a much higher proportion of their media sales from existing shoppers buying more, whilst smaller brands benefit more from attracting new shoppers.

When benchmarking the success of a campaign, as well as considering the sector you play in, it’s important to think about the size of your brand.

Find out top-selling Taobao brands in 2017 here.

This post was originally published on Kantar.com.

On April 17, the Chinese government announced that it will scrap all foreign ownership limits for companies producing automobiles in China over the next five years. To be more precise, it will lift foreign ownership stake limit in manufacturers of special purpose vehicles and new energy vehicles in 2018; in makers of commercial vehicles in 2020 and in makers of passenger vehicles in 2022.

To summarize, all foreign ownership caps for China’s automobile industry will be completely removed within five years.

Initially, when foreign auto brands entered the Chinese market, they had to find a local Chinese auto company to set up a joint venture to build cars in China. They were not allowed to own more than 50% of these joint ventures.

They couldn’t form more than two joint-ventures with as many Chinese partners in the same automobile category either. (For example, Volkswagen, which formed passenger vehicle joint ventures with FAW (First Automotive Works) and SAIC (Shanghai Automotive Industry Corp), was not allowed to partner with a third Chinese partner to produce passenger cars.

How will this gradual but thorough open-up policy affect the Chinese market, which is the world’s largest? To be more precise, where will Chinese brands be five years from now?

First of all, the better ones of private Chinese auto brands are already strong enough to compete against foreign auto brands. In the recent five years, Chinese auto brands have significantly increased their market share in China. As a result, South Korean and French auto brands have been yielding market shares to them.

Now that these private brands have established a solid foothold in the lower-end market sector, they’re foraying into middle or even high-end sectors. For example, Great Wall has launched its WEY premium SUV brand and Geely partnered with Volvo to set up a joint venture LYCO & Co. to pilot a new shared smart car business model.

Secondly, we have to admit that Chinese partners have made meaningful contributions to the successes of foreign brands in China. Not all globally successful brands are automatically success in China. For example, Toyota is a global leader, but in China, it is lagging behind Volkswagen.

Apart from the ups and downs in diplomatic relationships between China and Japan, VW owes much of its success in China to its excellent domestic partners – SAIC and FAW. It is a similar story for Nissan and GM in China. To win the Chinese market, you need more than technology and manufacturing. Chinese partners can help make a big difference, especially in sales network and marketing.

Thirdly, for state-owned Chinese auto companies, they have also made big progress on developing their self-owned brands, such as FAW, SAIC, Changan, and Dong Feng. Their brands have already moved up in the best-selling model ranking in recent years and laid a solid foundation for branding and manufacturing.

Last but not least, let’s fast-forward to five years in the future. What will the Chinese market of 2022 look like? Given the trajectory, it’s safe to say that the power of Chinese auto brands and the quality of their cars will continue to rise.

At the same time, new energy vehicles will become more mainstream in China, which is a totally different realm compared with the fossil-based auto market. The Chinese government supports Chinese auto brands can boost their strength through becoming leaders in the new energy sector. As a matter of fact, some Chinese brands have already accumulated sizable advantage in this area, such as CATL and BYD’s leading position in the auto battery.

The recent five to 10 years is the story of the growth of Chinese auto brands. They have narrowed gaps with foreign brands in many areas, from product quality to branding to sales channels. In some areas, they’re even doing a better job than foreign competitors now. This is one of the main reasons for slow-down of foreign auto brands’ growth in China. For French brands, they have even reported declines in sales.

In the near future, this trend will continue, but more important game-changers will come from new-energy cars, connectivity, and AI. Chinese auto brands have a good foundation to compete with foreign brands in these areas. For example, the leading Chinese Internet companies, Baidu, Alibaba, and Tencent, are all entering this area with their mighty technology power and huge data resources. In theory, they should feel easier to work with Chinese auto brands.

To summarize, in the five-year transitional period, Chinese auto brands have a good chance to weather the challenges brought by full open-up of the industry. We can expect a smooth and gradual change of the market competitive landscape in China.

China mobile app user insights 2018

The article was originally published on Kantar.com

By doing three things right, GQ’s China WeChat account has undergone a successful social media transformation.

On March 1, GQ magazine China’s official WeChat account GQ Lab published the article “That night, he hurt him”. It was a series of comic strips in a black-humor cynical tone. It turned out to be a huge success: the article received more than 10,000 likes and created high social exposure for MINI, the advertiser.

Over the past year, the WeChat account of GQ has successfully transformed itself from a social outlet of a traditional print media to a hot and influential social KOL account by its own merit, with impressive performances for its editorial and advertorial contents. Based on the comments the account had approved to be shown, netizens praised their advertorial as creative and attractive, and as one netizen replied “OMG, I finally figured out it was an advertisement until I finished reading it!”

In the era of information overload, many people’ s attention can last only 7 seconds, so a serious magazine has to strike the balance between being funny and offering solid content. GQ lab has become a good example for the industry.

GQ performance surges

Kantar Media CIC analyzed the 1,140 articles GQ had published through its official WeChat account from January 1, 2017 and April 8, 2018. The data showed that follower’s engagement was continuously increasing over the past year, especially since 2018.

* Average likes per month = total likes received through this month/total number of articles published in this month; excluding likes for comments.

Between January 1, 2017 and April 8, 2018, the monthly compound growth rate of likes on GQ WeChat account was 16%. In March 2018, the number of likes it received was 260% higher than a year ago.

GQ also has managed to generate 100,000+ reads (note 1) for articles more frequently. In 2017, GQ was able to publish an article with 100,000+ reads every 8–9 days. But entering 2018, the performance has been largely improved to one 100,000+ article every 4-5 days.

On the one hand, GQ has arranged its article publishing time very carefully to drive better engagement. It usually pushes during morning commuting time (9am-10am) and lunch break (12pm-1pm) during weekdays. To respect its users’ preference of getting up later during weekends, GQ changes its pushing time to mostly 10 am – 12 pm during weekends.

On the other hand, GQ believes “less is more.”

While other media-type WeChat accounts are keen to publish as many WeChat articles in one push as a full magazine can carry, GQ has cut down its article quantity but stresses on content quality to drive readers’ attention as well as engagement energy to fewer but better-curated articles.

GQ focused mostly on medium-length articles, which took about 10 minutes to read. The most popular articles, according to engagement level, are a mix of funny long comic strips and long insightful exclusive interviews or reports.

Article content analysis shows that the content profile of GQ is “a yuppie with a sense of humor & rich contents” rather than “just another fashion media chasing hot topics”.

GQ’s most popular articles were discussions of social phenomenon and challenges in everyday life, often in the form of sarcastic comic strips. On the surface, GQ was cynical, critical, and more likely negative. But readers can feel it has got a good purpose underneath these “shells”, like a yuppie with good taste and a good heart, though with a wild appearance.

Keyword Cloud for Top 5% Articles in Engagement

Kantar Media CIC Viewpoint

What has WeChat GQ lab done right in its transformation?

1. Less is more

When attention is getting increasingly scarce, everyone is a goldfish (with only 7 seconds of memory). Brands need to seize the tiniest window of opportunity to capture their interest with the best possible quality content.

2. Choose publish timing when the targeted audience is socially active

Open, read and engagement are more likely to happen when users are available and ready to be “disturbed”.

3. Spice up dry content with humor or sarcasm

Brands may find it difficult to produce “in-depth” contents for promotional purposes, however, comic-strips and sarcasm style could equally powerful tool to impress audiences. The more open-minded brands are, the readier they are to embrace Internet linguistics, the more popular they will be on social media.

This article was originally published on Kantar.com

When China’s FMCG growth returns, it doesn’t automatically happen to every brand. Here are six key factors.

Kantar Worldpanel has reported that spending in fast moving consumer goods (FMCG) grew by 4.3% in 2017 from a year ago, which is 0.7 percentage point higher than that in 2016 and the fastest in three years. This signals the end of the FMCG slowdown China has experienced over the recent years. However, the recovery won’t automatically happen to every brand in the market. The key to sales growth is attracting more buyers to your brand—deepening penetration, getting more households in a particular market to buy. Kantar Worldpanel has validated this fact by looking at the correlation between sale changes and different consumer measures for more than 8,000 brands in 19 markets, including China.

To attract buyers to your brand, start by gaining insight into consumer desires and behavior and launch related products. For example, in China today, brands would benefit from introducing premium products that fit with long-term trends that value health, quality, and me-time.

In addition, brands looking to attract buyers should be talking to a wide range of consumers as often as possible in various ways, including: creative media advertising and marketing; presence in physical stores with as many products on shelf as possible; and promotions to get better exposure in store and expand consumption (without discounting too heavily).

But even for brands that do most things right, attracting buyers is a never-ending task, as within any given year at least half of the consumers you won last year will leave and most of all your buyers will only buy one time.

To help brands meet this challenge, we reviewed our extensive brand data, across categories and countries, and identified six key factors that together influence a brand’s ability to grow its buyer base: availability, innovation, price, assortment, promotion, and equity. Here are the details:

1. AVAILABILITY

Globally, the biggest differentiator between a growing brand and a declining brand is distribution. This is also true in China. E-commerce has enabled many brands to reach audiences beyond key cities, but for most brands, it does not replace the benefits derived from expanding presence in physical stores. Food and beverage is still overwhelming bought offline and has strong impulse element in brand and often category choice.

China is a huge country with the fastest growth happening in the western and central regions, meaning many areas that might have been considered too difficult to reach or not profitable now offer potential to widen a brand’s shopper base.

2. INNOVATION

Brands constantly launch new variants in order to try and attract new shoppers. In practice, though, we do not see a strong correlation overall between the percent of sales gained from new products and whether the brand is growing or not.

This makes sense when we dive deeper into the data. In China’s fast-moving consumer goods (FMCG) market over the last three years, 43% of the new SKUs launched from the top brands came from either a new pack size or pack type. Small changes to the current line-up do not result in significant incremental growth, as they do not offer anything new enough to enter into the consideration set of more buyers.

The most reliable way to innovate and gain incremental sales is through offering a more premium product. This is especially true in the snacking and beauty categories, as shown when shoppers are willing to pay more for imported brands and better quality ingredients.

Dairy is also a category with a lot of incremental innovation as a result of trading up consumers through offering new products promising greater health benefits and exciting flavors. These include organic lines, such as ChangQing yogurt from Yili and Mengniu’s TLS yogurt, which operates at a price premium and won fans with its durian fruit flavor.

3. PRICE

Chinese consumers are trading up their products across most categories in FMCG. In China, brands losing penetration tend to be 20% cheaper than average, showing that success is driven by tapping into the premiumization trend. Brands offering products that feed into wider macro trends in the Chinese middle class are more able to command a price premium.

One megatrend is health and wellness, and it is expressed in the fast growth of organic and imported food, but also in related habits, such as gym membership and use of fitness apps. Another theme is the desire for small indulgences, where shoppers are looking for high-quality treats.

4. ASSORTMENT

Having more products on the shelf is a strong way of predicting whether a brand is growing or not. For example, 22% of the fastest growing brands in China increased their range size, while only 3% of the worst performing did. Although innovation of new flavors and pack sizes does not necessarily lead to brand growth, they can help if you are able to use these offerings to expand the space you have on the shelf.

Growing brands are launching SKUs that are more attractive to retailers, to consumers, or to both. While sales share for these innovations is not any greater, these sales are incremental to the brand portfolio, rather than simply substitute sales in the existing range.

5. PROMOTION

Applying price discounts or providing extra volume does not lead to long-term brand growth; however, they are an unavoidable part of managing an FMCG brand. Everyone buys on promotion and 46% of all FMCG volume in China is sold on the deal. The key to getting the best out of promotions is to seek to make them incremental to your brand and also the category. One way to do that is through larger packs and bundles, as these load up shoppers and have the effect of increasing their consumption rates. All categories have some expandability; however, big winners are snacks, ambient dairy, and soft drinks.

One caution for designing your promotional plan: Avoid very large discounts (ideally those over 30%) as these can have a negative impact on category sales value, and also can be detrimental for the retailer when going above 45% off the average price.

6. EQUITY

Mental availability—awareness and consideration—still correlate well with brand growth. Increasingly, e-commerce is shortening the path-to-purchase, as the wealth of product information that can be accessed online enables consumers to go from being unaware to being ready to purchase, sometimes in a single sitting. This does not mean that old ways of advertising are obsolete, as many FMCG categories are still purchased offline. And while there is a higher chance of switching to more premium and imported brands, the larger offline players still have strong online sales share.

Continue to read: How does Tencent’s QQ influence the young?

This post was originally published on Kantar.com

Chinese New Year is the most important festival in China. Shopping is an integral part of Chinese people’s celebration, and naturally, e-retailers were engaged in fierce battles to compete for attention, and hence preferences, of consumers in the days leading up to Chinese New Year (February 15 in 2018).

JD.com (partly owned by Tencent) and Tmall (B2C platform wholly owned by Alibaba) launched their promotional videos since mid-January. The “battlefield” spanned from main platform Weibo to WeChat, BBS, mobile video pages, video websites and news apps.

In this case, JD.com and Tmall both launched family themed videos on Weibo and WeChat. They also embedded information on Chinese New Year online sales events into these videos to maximize the impact.

Who has a bigger share of voice? More importantly, who has earned more positive sentiment from consumers? Kantar Media CIC did a data analysis based on user-generated contents.

Tmall ‘overbuzzes’ JD.com on Weibo

Both Tmall and JD.com generated significant volumes of buzz on WeChat from their Spring Festival sales campaigns. By cooperating with popular WeChat accounts and taking advantage of unlimited content space as well as rich formats available on WeChat, Tmall and JD.com ensured that WeChat users can be fully informed of their offers during the holiday season.

Tmall vs JD.com on WeChat buzz volume

Their voices were also well heard on news platforms, especially the news channel of Sohu.com and news aggregator app Toutiao. Combined together, the two contributed more than half of total buzz volumes Tmall and JD.com generated in all news platforms. (57.8% for Tmall and 59.4% for JD.com).

However, Weibo is the make-or-break place for the campaign war. JD.com’s share of voice was overwhelmingly defeated by Tmall, which leveraged its partnership with celebrity accounts on Weibo, such as Chinese actress Tian’ai Zhang (张天爱), Chinese actor Honglei Sun (孙红雷), as well as influencer account Hui Yi Zhuan Yong Xiao Ma Jia (回忆专用小马甲). These accounts retweeted or mentioned Tmall videos and managed to help them go viral. Weibo users posted organic comments underneath these clips. Tmall also launched several rounds of retweet lucky draw campaigns to encourage Weibo users to retweet their posts. This tactic also expanded its impression.

By contrast, JD.com just published its video on its official Weibo account and through Weibo accounts of its partner brands, creating much lower volume of buzz.

Tmall vs JD.com on Weibo buzz

Tmall launched a series of family-reunion themed short videos. Many of them told stories of younger generations returning home from big cities for the Spring Festival break and ran into “lifestyle shocks” with their parents. Many of the videos finished with a heart-warming ending, together with the Chinese New Year sales event promotion from Tmall. These impressive videos were retweeted by tens of thousands of times and viewed by more than 23 million times. Weibo users left mostly positive comments under these posts.

JD.com launched one video clip for their Chinese New Year sales campaign, telling three stories of an elderly father, a left-behind child in rural China and a daughter in a Chinese city missing their son/parents/father far away. The slogan was “Don’t let the ones love you wait too long”. However, that’s all video contents from JD.com on Weibo for the Chinese New Year campaign.

In the following days, the focus of JD.com Weibo posts moved to its partnership with other brands, mostly putting its JD.com dog logo as the central visual element for sales campaign posters. It did attract some attention among younger users, but overall their impression was very limited.

In this year’s Chinese New Year sales campaign, Tmall and JD.com both chose “home-coming” and “family reunion” as their themes. However, JD.com only scratched the surface, and then moved onto direct sales promotion, albeit using its JD.com dog logo to soften it a little bit. Tmall, on the contrary, spent much more efforts to create longer and better-scripted videos on this topic, which had moved many users. According to our analysis of Weibo comments around Tmall and JD.com campaigns, Tmall related comments were more family oriented. So apparently people were more emotionally impacted by the Tmall campaign.

Kantar Media CIC Viewpoint

In 2018 Chinese New Year e-commerce promotion campaign competition, Tmall toned down its promotional video clips to keep them away from direct and hard sales pitches. Instead of focusing on the level of discounts available during the holiday season, they emphasized the “homecoming” and “family reunion” atmosphere of these special days. This paid off well, according to our analysis of social media user responses.

In the comments underneath Tmall videos, there were lots of mentions of family, parent, reunion themed words. It is true that Spring Festival is not as special as before in terms of food/gift/shopping options only available during its time, still, Chinese people celebrate it more as a unique season of reuniting with family. This is why Tmall’s videos have triggered so many strong positive feedbacks from consumers.

JD.com also launched its video campaign based on “home-coming” theme. But it didn’t leverage the contents and quickly moved onto poster-based sales promotion campaigns partnered with brands. The buzz volume and sentiments coming out from this tactic were not as high as those of Tmall’s.

During a season as special as Chinese New Year, brands have to dig deeper to understand what this holiday truly means for consumers, and then influence them emotionally. Only through this approach, can brands become more emotionally relevant to consumers.

The Impact of Taobao Villages 2017

This article was originally published on kantar.com