Two conflicting factors
This conflict is clear in the rhythms of daily life in China. Passion for luxury brands, over-the-top names of apartment buildings (“The Gathering of All Heroes under Heaven,” for example) and omnipresent VIP cards are expressions of the former; sky-high savings, an acute fear of germs and a fixation with feng shui — the harmonization of design with the environment to minimize risk — are expressions of the latter.
The duality can be perplexing for companies trying to earn Chinese consumers’ loyalty. So how do brands win? By resolving the projection-protection tension through three golden rules.
1. Maximize public consumption. In China, consumers will pay a premium for goods consumed — and admired — in public. Several multinational brands have embraced this insight.
- Starbucks, which operates over 2,600 outlets in China, has performed a marketing miracle by selling coffee in a land of tea drinkers. The company’s Chinese real estate strategy focuses on Grade A office buildings, while its stores are smartly positioned as gathering sites for professionals. A cup of coffee emblazoned with a Starbucks logo is 30% more expensive than in the U.S. But unbranded sandwiches are half the price.
- Häagen-Dazs does not operate ice cream parlors in Japan, but there are more than 600 in China, where a cone costs $6. Chinese millennials want to be out in public, seen eating the treats with friends.
2. Externalize the pay-off. This is a country where “early MBA” courses for 5-year-olds are popular. Brands must deliver externalized benefits that show they are a means to an end. Luxury brands, non-essential in the West, are tools of advancement in China. Johnny Walker’s Blue Label holds exclusive “whiskey appreciation summits”…