How social media is reshaping the Chinese brand experience
You are a wine brand owner. You realise that China is your company’s number one growth opportunity for the next decade, despite the recent economic ups and downs. Your brand has certain values, some of them empirical (a certain taste, a distinctive look, a consistent price point) and some intangible (a fit with certain occasions, the feeling of indulgence when a consumer is about to open the bottle). You might be quite pleased with your work in this area, and feel confident that these brand values are effective in setting you apart in the raucous and chaotic atmosphere of an emerging wine market such as China.
Now have a peek at how your brand is being talked about in WeChat. Why? Because whatever you think your brand values are, the 600 million WeChat users in China will be deciding for themselves what you brand really stands for, if they have even heard of it. More to the point, the Chinese consumer is tending to use WeChat as their pre-purchase showroom: what their peers think will tend to have a direct and immediate impact on their purchase, which will happen seconds later with a few touches of their smartphone.
I was drawn recently to the story of Coach, a mid-market American handbag brand which has had success in its domestic market for many years, but needed to expand overseas as its home market growth tailed off. Its China strategy started off badly: it struggled to get its distribution right with a local partner, and eventually bought back the distribution rights in 2009. CEO Lew Frankfort (who stepped down last year after 19 years at the helm) set some ambitious growth targets for the brand: 250% increase in China territory sales from a base of US$100 million in 2010. He also became obsessed with how social media was influencing Chinese consumers, hiring someone to translate posts about his brand (and those of key handbag competitors) on Weibo, and then WeChat.
Frankfort quickly realised how influential these social media platforms were becoming, and re-oriented Coach’s marketing strategy: yes, it would continue to build out its retail network, with high profile stores where consumers could see these iconic, but reasonably priced, New York designer handbags; but the company also launched its own e-commerce platform using WeChat (in 2012), becoming one of the first major luxury goods firms to invest heavily in this route to market.
Since then the brand has carefully managed its WeChat brand equity, running specific WeChat campaigns, and also unashamedly positioning itself as the smarter choice for women who understand quality and value as well as style. Since 2010 Coach’s sales have grown sixfold to over US$600 million, and perhaps more impressively have carried on growing (albeit at a slowing pace) throughout the period of the government crackdown on extravagant gifting and more recent worries about the economy.
The lesson for the wine category: We are entering a world where the success of your branding efforts depend on the trend in the WeChat conversation, because it’s how Chinese consumers plan, consider and purchase an increasing proportion of their worldly goods – possibly over US$ 1 trillion by 2018, according to a recent forecast from eMarketer, a specialist research agency. If your brand is weak, or worse, non-existent, this channel will be effectively closed to your business.
For more information on Wine Intelligence’s social listening and online communities research platforms in China, please contact Richard.