Why I think consumer marketing is getting tougher in China

Yesterday two reporters from CBN Weekly came and interviewed me on a consumer marketing story they are creating. When I said I think the outlook for consumer market in China is pretty pessimistic for 2011 and 2012, they were surprised. It's true that on the surface people are not so worried about the economics here at all but there are signs that make me believe consumer spending in branded goods is going down.

Look at the macro level, the inflation rate and CPI in China is sky high, while people are not getting that much of a raise in their salary. The price increase is so obvious in almost every category from food to clothes, that you often hear people complain about the life costs in China now.

On the other hand, the biggest movement within consumer market 2011 is probably e-commerce. Loads of cash rich e-tailer sites and group buying sites came into the market in 2011, and they are essentially competing for not the purchase but simply the users. Many of them would cut price so low that they give away all of their profits to users. Discounts, flash buy, group buy, coupons, all sorts of price competition are going on everywhere. With that influence, consumers' mindset are set to price comparison and deal seeking as a constant status. How does that influence your brand? For example, I would feel stupid to pay for full priced meal while everyone else in that restaurant is using group buy coupons, hence making me not wanna go to that restaurant at all. 

The biggest winner so far is probably taobao, capitalizing on the huge seller and buyer base they have been building since 2003. Their effort in pushing TMall to be the more legit B2C platform has been pretty successful so far, as we saw more and more big name brands, even international ones, start to operating on the platform. Nevertheless, the value proposition for TMall still seems to linger around the heavy discounts and seasonal promotions. Plus for brands, it is a tough situation to be competing with a ton of your own distributors on the same platform.

Back to the consumer marketing topic, we already know that media costs are super high in China and the ROI is a bit fuzzy. So now almost everyone has started to play with new marketing gimmicks: new media, viral video, social media, real-time marketing, KOLs etc etc. Brands have to innovate because you don't want consumers to consider you as just another seller. Obviously these are not where the big budgets are going yet, but some of the good campaigns coming out of these less expected media became the most memorable ones. This year we have seen the viral video for air conditioner cleaner, the Touch Media Centrum taxi workout, and the very popular Durex weibo account. These crazy creatives have left the whole web talking about them and the amount of attention and awareness is just something that can't be bought.

It's indeed the best time and worst time if you are a marketer in China. Everything old is being shaken, and everything new is still being built. It takes wisdom to see what's ahead and a tough heart to be ready for the challenge. 

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