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Chinese Consumer: Making The Sale

Joel on November 18, 2008 - 4:18 pm in Archive, Cultural Observations, Featured

Many of you have read the China Observer Blog’s Recent China News posted article from The McKinsey Quarterly entitled, “What’s new with the Chinese Consumer.”

Let’s highlight the key findings from the report:

Due to rising concerns about product quality standards, Chinese consumers are less willing to try new products.

Chinese consumers often base their purchase decisions on recommendations from friends and family members.

Television advertising is important for market entry to establish brand recognition; however, this channel is losing its effectiveness.

Print advertising is also less influential, with sponsorship and Internet promotion (especially through online gaming) on the rise.

Chinese consumers are willing to pay a premium for a branded product, but the percentage premium is significantly less than that of more developed nations (2.5% compared to 20%).

Salespeople at point of sale are highly influential over the Chinese consumer’s purchase decisions.


I have experienced shopping at Beijing’s Silk Market, Yaxiu Market as well as at a host of other Chinese markets notorious for cutthroat shopkeepers pushing their wares. However, one of my most memorable shopping experiences in China did not occur at one of these tourist markets; rather it happened at the Lotus Center supermarket by Tsinghua University in Wudaokou, Beijing.

I had a simple task: buy oatmeal for breakfast tomorrow. I went to the oatmeal aisle and started checking out my options. I had no sooner picked up a bag than a woman, dressed in a store clerk uniform, tried to convince me to buy a very expensive Australian brand. She informed me that Australian oatmeal is the best oatmeal and is safer than the Chinese brands. I personally am willing to pay a premium for any food items I consume on a daily basis in Beijing, but the price was a little outrageous. During the middle of her pitch, out of the corner of my eye I saw the Chinese characters for Australia. I walked away from her to the other side of the shelf and picked up a different brand of Australian oatmeal that was half the price. She literally placed her hand on my arm and started pulling me back to the brand that she was promoting. I wasn’t having it. I had already found what I wanted so I put the cheaper bag of oatmeal in my basket and walked away.

In my subsequent supermarket shopping experiences, I found that not all point of sale representatives are as aggressive as the one I encountered that evening at the Lotus Center. Regardless, these sales representatives have proven to be extremely influential over Chinese consumers who, according to a February 2008 Nielsen report, make 60% of their purchase decisions in store.

Point of sale representatives are not a viable cost-effective option for companies operating in more developed nations. However, as long as the cost of labor remains relatively low in China, the financial benefits a company receives from placing salespeople at the point of sale is well worth the investment.

For an additional brief summary of the McKinsey article, check out this post.

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5 Comments
  • November 19, 2008

    Great observation. Having salespeople at the point of sale is more of an annoyance in America, but here in China I see it all the time, especially at the supermarket. It must work better for Chinese than it does for foreigners.

    In my experience these people have only two jobs – to daily rearrange the shelving in their department and to help me find the only product that I didn’t pick up. I have never been told by a POS salesperson “Yup…you picked a good one!”

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  • November 23, 2008

    Interesting post. Having been hounded by these folks every time I go to the supermarket, it’s curious to read that they have such a strong effect on consumers. I’m curious where their primary influence comes from. A shop manager who is looking to increase profit margins or a brand that is willing to pay extra to have store staff suggest their products? Or a bit of both?

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  • December 3, 2008

    People assume aggressive salesmanship is ineffective, just because no one likes it. But it works, and in China, unlike most places, it makes sense economically. Great post Joel.

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  • December 17, 2008

    This is a very interesting post. I have no doubt that this is a cost effective way to up sell customers that are already looking to make a purchase on an item they will likely need again. I am curious however to know to what extent the “social proof” element is translated during the point of sale sell. It is very true that the Chinese consumer is highly affected by social proof and recommendations from people they trust but do you think this counts? Do you think a Chinese consumer finds any assurance from a salesperson that they do not know or do you think it does provide a human element to the purchasing equation?

    Reply
  • March 29, 2010

    This is a very interesting post. I have no doubt that this is a cost effective way to up sell customers that are already looking to make a purchase on an item they will likely need again. I am curious however to know to what extent the “social proof” element is translated during the point of sale sell. It is very true that the Chinese consumer is highly affected by social proof and recommendations from people they trust but do you think this counts? Do you think a Chinese consumer finds any assurance from a salesperson that they do not know or do you think it does provide a human element to the purchasing equation?
    peter1@largefree.com

    peter
    Reply
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