Chinese Consumer: Making The Sale
Many of you have read the China Observer Blog’s Recent China News posted article from The McKinsey Quarterly entitled, â€œWhatâ€™s new with the Chinese Consumer.â€
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.