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B2C
B
brand to china
by totem media
6.18trillion
$consumer spending
in china to triple, to
*2010: $2.03 trillion
by 2020
The problem to be solved.
but
ecommerce
rules in china
“Bricks-and-mortar retailing is a mature business in
the US, where consumers have been shopping in
malls for decades and continue to do so,
augmenting their purchases with occasional forays
on the web. Online shopping is dessert in the US,
but in China, it is the main course.”
Jack Ma, Group founder and Chairman, Alibaba 
Scaling up China
Achieving national scale
in China is an imposing
effort if done via bricks-
and-mortar.
cities with POpulation
over 1.0 million
170
Singles Day Generated
US$5.75 billion in sales
(in just one day!)
201311 .11.
Ecommerce has already
proven itself to be
effective in China ...at
national scale.
Scaling up China
ONLINEOFFLINE
Offline vs Online
Physical retail is
costly to set up.
Far too many
locations are empty.
RMB230.00
Price at Retail
Low setup costs,
big consumer base.
But brand management
is critical.
RMB90.00Price at Retail
Product
pricing
comparison
based on
RMB36.00
base cost.
Retailer
challenges
120
China’s etail
industry posted
compound annual
growth since
2003
*US: 17%
650billion
$online
sales could reach
by 2020
The problem to be solved.
china is overtaking the
u.s. as the number one
ecommerce market
250m
500m
750m
1.00b
1.25b
200m
317m
322m
189m
1.4b
chinausa
Total Online Shoppers
1.4b317m
230billion
$
210billion
$
chinausa
Ecommerce Markets
2012 - Total Revenue
Business Week, FT,
Forbes & Statista
Ecommerce Markets
2003 2007 2011 2015
100
200
300
400
500
339
541
china
usa
2015 - Revenue (Projected)
230
210
Ecommerce Market (2012)
Annual Spend Per Buyer
which is incredible when you consider that
us per capita GDP is almost ten times
higher than in china.
1,028$1,439$
chinausa
digital
ecosystem
The problem to be solved.
china has a distinct
digital ecosystem
with sites that are
only rough
equivalents to the u.s.
buy
CONSIDER
EVALUATE
AWARENESS
ADVOCATE
ENJOY
BOND
Source: Harvard Business Review, Dec 2010
Path to Purchase: USA
buy
CONSIDER
EVALUATE
AWARENESS
ADVOCATE
ENJOY
BOND
Source: Harvard Business Review, Dec 2010
Path to Purchase: China
The problem to be solved.
and unique
characteristics for
ecommerce
70
china’s
ecommerce
market is
C2C
*US: <10%
%
Bain & Company “China’s Ecommerce Prize 2013
B2C vs C2C Ecommerce
2008 2009
25%
50%
75%
100%
C2c
B2c
2010 2011 2012 2013e 2014e 2015e 2016e
0%
B2C is catching up quickly with C2C as more
brands move onto Tmall and other platforms.
But C2C is still incredibly important in cHina.
Online Sales Channels
ecommerce sales in china are highly
concentrated into a few B2C platforms.
(namely Taobao, Jd.com)
chinausa
independent
merchants
76% 90%
marketplaces
The Two Major Forces
China’s biggest ecommerce
platforms and payment
system.
second most important social
media (weibo)
alibaba + WeiboTencent + jd.com
China’s second biggest
ecommerce platforms and
payment system.
most important social media
(Wechat & QQ)
B2C Platforms
tmall and/or jd.com are almost essential to a
comprehensive ecommerce strategy.
but, costs of audiences are becoming very high
2013 - Market Share
Tmall
JD.com
Tencent
Suning
Amazon
VIPShop
Gome
DangDang
Yihaodian
Vancl
6.3%
5.7%
57.5%
tmall
19.3%
jd.com
iResearch & Alibaba Group 2013
3
beauty &
personal
2
apparel,
fashion
1
electronics
& appliances
Most Popular Categories
most popular categories of products from overseas;
clothing, beauty, baby/infant, digital, household, health
Overall / From Overseas
B2C Platforms
Horizontal x Vertical Sites
electronics
& appliances
- Sunning
- Gome
- JD.com
$
luxury
- VIPshop
- Ihaveu
- Xiu
apparel,
fashion
- Vancl
- FClub
- OKBuy
beauty &
Cosmetics
- Jumei
- Lefeng
- Lafaso
it is important to evaluate b2c platforms based
on strength of categories.
and (possibly) use specialist shops + mall
tmall
Jd.com
amazon
malls
General (All Categories)
Repeat Purchase - Top3
Highest rates of repurchase
yihaodian
59%
Food, General
Okbuy
68%
Fashion, Clothing
82%
vipshop
Fashion, Clothing
tmall has the highest percent of
consumers using only their site
49% of tmall consumers only use tmall
Device Preferences
81%
mobile
70%
desktops
44%
laptops
55% of Chinese internet users have made a payment
by mobile. in the us, only 19% have.
KPMG 2014
Mobile Devices/Person
in germany,
its only 0.8
devices/person.
shanghaiNYC/London
1-2 per person 7-8 per person
Key Points on Path to Purchase
Social Media:
Creative, brand focused content to build
awareness & WOM ...and do promotions
Ecommerce:
Branded shops on platforms to take
advantage of traffic (and intent to purchase).
Search:
Key in converting
interest to sales
most
transactions
take place on
branded shops
in Tmall.com or
Jd.com
stand-alone
ecommerce
shops for brands
are much less
productive.
Sources of Traffic
search is the most trackable, measurable
channel (as last step to hitting a site)
but brand (social) contribute to the final click
chinausa
5% Other
Social Networks
Natural Search
Paid Search
Email
Referring Domains
Direct
100% 100%
2%
45%
7%
7%
6%
28%
4%
4%
14%
39%
16%
23%
Other
Social Networks
Natural Search
Paid Search
Referring Domains
Direct
53%52% Search
Based on data provided
by “Benefit Cosmetics”
Sample composition
Path to Purchase
Key Activities/Media in China
interest
level
awareness acquisition engagement (Loyalty)
First interest
Press Releases
Social product info
Viral videos (Ads)
Weibo
Info search
Search (SEO)
Wikis
Product reviews
Category infographic
Baidu Zhidao
Shortlist
Product infographics
Product features/photos
Promotions
Search (SEM)
Baidu/Taobao
Make Purchase
Customer support
Discounts/Promo
Tmall/JD.com
Show off
Customer support
CRM / Q&A
UGC Advocacy
WeChat
case studies
Marketing that works in China
Estee Lauder Case Study
To promote the store opening they offered free shipping during
first three days and big discounts on star products.
Estee Lauder announced the launch
of its Tmall Flagship Store on May
2014
Its the only authorized E-commerce
platform except it’s official website in
China
Day One sales were RMB2.69m.
Within 5days, the sales volume
reached nearly RMB7.0m (a record
for new launch on Tmall)
Sales trend from 21~23 May from
it’s official flagship store
La Roche-Posay Case Study
European beauty brand La Roche-Posay held a campaign over six weeks in 2013 offering free samples to
new customers
After signing up and answering a few questions, customers were able to go to nearby shops to pick-up
50mL samples of La Roche-Posay products
There were 80,000 participants, and the brand saw a jump in sales of RMB1.0m
WeChat ID: larocheposay1975
WeChat ID: xiaomijiedatuan
Play games to win
further discounts
Products are available for
one day only at select
times (12:00 - 14:00 -
16:00...) with a quota at
each time
Authorized ebooks for
free download -
Between 10am - 10pm
Accessories
Xiaomi Case Study
Xiaomi (China’s Apple) have built a brand which is very price competitive AND fashionable by
employing a set of games, incentive and sales - while becoming a brand almost 100% built online
Instead of starting with higher prices and gradually lowering them (at end of sales cycle), they launch
with what would be a final sales price (utilizing flash sales and games to sellout in days, rather than
months)
Xiaomi Case Study
Xiaomi held a “snap-up” campaign inside of
QZone on March, 2014 for its new RedMi
Note (Table) & phone
With 600m MAU, QZone is a large social
medium, and also allows for precise targeting
Following a detailed (& entertaining) process,
15 million participants signed up to
participate
419,000 secured “reservations” for the “snap-
up” event
100,000 RedMi Notes were sold, 200,000
RedMi phones (a sellout)
Mar 15: Signup on QZone
Mar 19: Play for a “reservation”
Mar 26: Play to “snap-up”
SmartCar Case Study
Smart created a “snap-up” campaign in WeChat for it’s special edition “Smart BoConcept”
Between April 14 and April 21st at 8am, 6,677 customers paid a deposit of RMB999 for the car
388 cars were then sold in 3 minutes after 10am on April 21st
1. Fill in personal info, and pay for a deposit
of 999RMB from 14~21, April, 2014.
2. Participate in
Snap-up on 21, April
KPMG - China’s Connected Consumers, Feb 2014
Online Purchase Drivers
Better Deals, Less Expensive
Its Quicker Than Store
Access to Global Products
Easier to Compare
Better Range, Variety
Uniqueness
Popular, Famous Brands
Recommended By Others
High Quality, Long Durability
Comfort of Shopping at Home
10% 20% 30% 40% 60% 70% 80% 90% 100%50%
For Luxury Purchases
brand to china
Insights on market entry and success
INVESTTRIAL SALES SYSTEMS PRODUCT
CONSUMER INSIGHTS BRAND ADAPTATION
Brand Entry Framework
Regular container
shipments to China.
Investment into online
awareness building.
Enrollment of early adopters
and online influencers.
Fulfillment & logistics
systems installed.
PROMOTIONS
test invest
Trial sales
Small scale, promotional sales
Sold from overseas (HK)
Thru Woyola.com, Tmall.hk
Drop shipped
Observe existing sales
Already being sold thru Taobao (C2C)
Being sold thru global, vertical sites
Are you selling in China already?
Are you a highly social brand?
Do you have great stories/content?
- Which precede the brand entry?
Enroll early adopters as advocates?
Brand Entry Framework
consumer insights
Focus Groups, Surveys
Thru social media (WeChat)
Data/feedback from trial sales
Direct response to products already sold
Competitor evaluation (field study)
Outline of existing marketing, pricing
Consumer/competitor mix
Who are your customers?
What are they buying now?
Judging from trial sales, whats the job to
be done with your product?
brand adaptation
Find the right positioning
Fashionable vs Functional
Differentiated vs Commoditized
Premium vs Price
Market Leader vs Challenger vs Marginal
Merchandising & marketing plan
Brand, product naming
Product selection/mix
Strategy x creatives x channels
What kind of brand can/should you be in
China? Positioning, pricing?
Brand Entry Framework
systems
Fulfillment model
Home market - China - Local distribution
Customs, regulatory process
Taxes, repatriation ...
Labeling
Integrate customer service
Online service & CRM systems
Returns management
Ecommerce
Brand “own” site?
Detailed capabilities
Payment systems
products
Moving operation to scale
Larger scale shipments
Additional distribution (offline?)
Partnerships & resellers
Wider product mix
Including customized products for China
Based on user feedback
promotions
Implement marketing efforts/tactics
Social - search - display
Brand & promotional (sales)
Digital marketing assets
Create full set of local assets...
Social presence, Baidu Zhidao, Blogs
Content creation
What level of investment will you make?
- Opportunity for big share in category?
- Speed essential?
- Success with trial sales?
Decision Tree for Brands
Build - Sell - Retain
Social
Focused
Search
Focused
Does your
product satisfy a
need or a want?
Is your product
fashionable or
functional?
More of a Need
- Functional
More of a Want
- Fashionable
Price
Brand
Do you
compete on
price or brand?
Are you a
market leader,
challenger or
outside
competitor?
Own
Ecom Site
Platform
Ecommerce
(Tmall...)
awareness acquisition loyalty
Loyalty: by price
or product/
brand quality?
Can you
generate
“organic” word
of mouth?
UGC
User-get
-user
Promos
Direct
Marketing
Discounting
Rewards
Is the quality
gap between
your product
and local
significant?
Do you have
compelling,
related stories,
images to
share?
No investment
in brand =
price/promo
competition.
Brand vs Sales
Growth strategy - balance
sales brand
Price/promotional focused
Need for short-term results
Strategic imperative to capture market share
Luxury/premium product
Can take a five-year perspective
Strategic imperative to maintain brand
Consistent with global approach?
Critical to have price, brand parity across markets
BUT
The middle can be challenging
place to be in China.
The problem to be solved.
China is a difficult market to summarize. Its a
massive market ...but only pockets of it are
developed and huge sections are a work in
progress.
its a two-speed market with some of the
most advanced outcomes in the world ...and
some very early stage issues.
Its middle class is much less affluent and,
much more price sensitive than EU/US.
A two-speed market
There are pockets of incredible
advancement (where premium/
quality is prized) but the vast
majority of consumers in China
are behind (very price sensitive).
Beijing
Hangzhou
Shanghai
Shenzhen
Chengdu
T3-4 City
T3-4 City
Advanced
Behind
Sources: BCG & CASS
Advanced vs Behind
Uneven consumer landscape
beijing
28.7m
shanghai
20.5mChongQing
10.9m
shenzhen
14.2m
guangzhou
11.9m
shandong
peninsula
21.6m
xi’an
10.7m
That’s
Bigger
Than
Portugal
That’s
Bigger Than
Australia
That’s
Bigger
Than Two
Sweden’s
Mega-cities in China are quickly
growing to be bigger than whole
countries (and not just small
countries!). The opportunities
long-term are incredible!
Source: EIU 2014
City Populations by 2020
Mega-city projections
Rising Spending Power
60-80,000
40-60,000
20-40,000
10-20,000
012345678
60-80,000
40-60,000
20-40,000
10-20,000
0 1 2 4 5 6 7 8 10 11 1212345678
People Millions
RMB/mo
RMB/mo
RMB/mo
RMB/mo
Beijing
Shanghai
Chongqing
But brands must pick the right spots
2000 2011
The problem to be solved.
Rules to Branding China
There are no fixed rules, not yet.
Digital (social) media rule.
An informational approach goes a long way.
Apply a universal logic to user motivations (especially youth).
The average consumer is very, very adaptable.
“Face” does matter.
Public goods are more important than private goods.
Play the long-game (don’t rush success).
B2C
B
brand to china
by totem media
contact us
Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem
totem media
digital landscape
by totem media
Overview of Audiences x Media
45%
only
of china is online
618
That is
people
million
the whole
eu502 Million
that is
Online
Video
3elements
driving growth
Mobile
Social
Media
online
video
428
VIDEO USERS
million
Source:CNNIC, China Internet Development Report
(Jan 2014)
mobile
500
mobile internet
users
million
Source:CNNIC, China Internet Development Report
(Jan 2014)
Source:CNNIC, China Internet Development Report
(Jan 2014)
social
media
microblog
users
million
550
Source:CNNIC, China Internet Development Report
(Jan 2014)
mobile
social
wechat
users
million
500
+ 100m
Overseas
Total social media users top 550m
2007-2014 social media (monthly) unique visitors
Source: iResearch
100
200
300
400
500
2007 2008 2009 2010 2011 2012 2013
88%penetration
000,000
Us: 67%
2014
600
25
online per week
hours5%
26%
28%
9%
5%8%
18%
News
Other
Ecommerce
Games
Search
Online
Video
Social
Media
Source: iUsertracker, Mar 2012
Social Media is capturing audience attention
78% mobile
69% Desktop
47% laptop
us vs China user time
0
25
50
75
100
Email
Search
Shopping
Online Banking
Travel Booking
Recruitment
Online Payments
Friends (SNS)
Education
Selling
Forums
Blogging
Gaming
Instant Messaging
Video
News
Music
%ofUsage
Source: eMarketer 2012
tmall, jd shops
Uniqlo
Homepage of Tmall Flagship Store
Location-based flagship
store, which supports city
shifting to find your location.
Weather Forecast
Categories Go to Fitting Room
Showcase
Pre &After -
sales service
Uniqlo
List by UT Themes
List by
Banners/Campaigns
Promotions
Hot Searching Keywords
Homepage of Tmall Flagship Store
List of products
A list of all categories, like “Cute”,
“ Lady”, “Mature”, “Leisure”, etc.
Uniqlo
Online Fitting Room
Float window where you can
change model. shoes, T-shirts,
colour…You can share it to other
social networks as well.
An online fitting room where you can match & mix from all kinds of
clothes, and share it to your social networks.
l’oREAL
Homepage of JD Flagship Store
All Products/Categories
QR code
Quick Navigation
Banner/Promotion
Campaign is On
l’oREAL
Product Page
Other Similar Brands
Detailed Display & Description
Store Info
Product Combination
contact us
Chris Baker, Managing Director
Email: chris@totemmedia.net
Twitter/WeChat: Talktototem
totem media

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China Ecommerce Overview

  • 2. 6.18trillion $consumer spending in china to triple, to *2010: $2.03 trillion by 2020
  • 3. The problem to be solved. but ecommerce rules in china
  • 4. “Bricks-and-mortar retailing is a mature business in the US, where consumers have been shopping in malls for decades and continue to do so, augmenting their purchases with occasional forays on the web. Online shopping is dessert in the US, but in China, it is the main course.” Jack Ma, Group founder and Chairman, Alibaba 
  • 5. Scaling up China Achieving national scale in China is an imposing effort if done via bricks- and-mortar. cities with POpulation over 1.0 million 170
  • 6. Singles Day Generated US$5.75 billion in sales (in just one day!) 201311 .11. Ecommerce has already proven itself to be effective in China ...at national scale. Scaling up China
  • 7. ONLINEOFFLINE Offline vs Online Physical retail is costly to set up. Far too many locations are empty. RMB230.00 Price at Retail Low setup costs, big consumer base. But brand management is critical. RMB90.00Price at Retail Product pricing comparison based on RMB36.00 base cost. Retailer challenges
  • 8. 120 China’s etail industry posted compound annual growth since 2003 *US: 17%
  • 10. The problem to be solved. china is overtaking the u.s. as the number one ecommerce market
  • 13. Business Week, FT, Forbes & Statista Ecommerce Markets 2003 2007 2011 2015 100 200 300 400 500 339 541 china usa 2015 - Revenue (Projected) 230 210
  • 14. Ecommerce Market (2012) Annual Spend Per Buyer which is incredible when you consider that us per capita GDP is almost ten times higher than in china. 1,028$1,439$ chinausa
  • 16. The problem to be solved. china has a distinct digital ecosystem with sites that are only rough equivalents to the u.s.
  • 19. The problem to be solved. and unique characteristics for ecommerce
  • 21. Bain & Company “China’s Ecommerce Prize 2013 B2C vs C2C Ecommerce 2008 2009 25% 50% 75% 100% C2c B2c 2010 2011 2012 2013e 2014e 2015e 2016e 0% B2C is catching up quickly with C2C as more brands move onto Tmall and other platforms. But C2C is still incredibly important in cHina.
  • 22. Online Sales Channels ecommerce sales in china are highly concentrated into a few B2C platforms. (namely Taobao, Jd.com) chinausa independent merchants 76% 90% marketplaces
  • 23. The Two Major Forces China’s biggest ecommerce platforms and payment system. second most important social media (weibo) alibaba + WeiboTencent + jd.com China’s second biggest ecommerce platforms and payment system. most important social media (Wechat & QQ)
  • 24. B2C Platforms tmall and/or jd.com are almost essential to a comprehensive ecommerce strategy. but, costs of audiences are becoming very high 2013 - Market Share Tmall JD.com Tencent Suning Amazon VIPShop Gome DangDang Yihaodian Vancl 6.3% 5.7% 57.5% tmall 19.3% jd.com iResearch & Alibaba Group 2013
  • 25. 3 beauty & personal 2 apparel, fashion 1 electronics & appliances Most Popular Categories most popular categories of products from overseas; clothing, beauty, baby/infant, digital, household, health Overall / From Overseas
  • 26. B2C Platforms Horizontal x Vertical Sites electronics & appliances - Sunning - Gome - JD.com $ luxury - VIPshop - Ihaveu - Xiu apparel, fashion - Vancl - FClub - OKBuy beauty & Cosmetics - Jumei - Lefeng - Lafaso it is important to evaluate b2c platforms based on strength of categories. and (possibly) use specialist shops + mall tmall Jd.com amazon malls General (All Categories)
  • 27. Repeat Purchase - Top3 Highest rates of repurchase yihaodian 59% Food, General Okbuy 68% Fashion, Clothing 82% vipshop Fashion, Clothing tmall has the highest percent of consumers using only their site 49% of tmall consumers only use tmall
  • 28. Device Preferences 81% mobile 70% desktops 44% laptops 55% of Chinese internet users have made a payment by mobile. in the us, only 19% have.
  • 29. KPMG 2014 Mobile Devices/Person in germany, its only 0.8 devices/person. shanghaiNYC/London 1-2 per person 7-8 per person
  • 30. Key Points on Path to Purchase Social Media: Creative, brand focused content to build awareness & WOM ...and do promotions Ecommerce: Branded shops on platforms to take advantage of traffic (and intent to purchase). Search: Key in converting interest to sales most transactions take place on branded shops in Tmall.com or Jd.com stand-alone ecommerce shops for brands are much less productive.
  • 31. Sources of Traffic search is the most trackable, measurable channel (as last step to hitting a site) but brand (social) contribute to the final click chinausa 5% Other Social Networks Natural Search Paid Search Email Referring Domains Direct 100% 100% 2% 45% 7% 7% 6% 28% 4% 4% 14% 39% 16% 23% Other Social Networks Natural Search Paid Search Referring Domains Direct 53%52% Search Based on data provided by “Benefit Cosmetics” Sample composition
  • 32. Path to Purchase Key Activities/Media in China interest level awareness acquisition engagement (Loyalty) First interest Press Releases Social product info Viral videos (Ads) Weibo Info search Search (SEO) Wikis Product reviews Category infographic Baidu Zhidao Shortlist Product infographics Product features/photos Promotions Search (SEM) Baidu/Taobao Make Purchase Customer support Discounts/Promo Tmall/JD.com Show off Customer support CRM / Q&A UGC Advocacy WeChat
  • 33. case studies Marketing that works in China
  • 34. Estee Lauder Case Study To promote the store opening they offered free shipping during first three days and big discounts on star products. Estee Lauder announced the launch of its Tmall Flagship Store on May 2014 Its the only authorized E-commerce platform except it’s official website in China Day One sales were RMB2.69m. Within 5days, the sales volume reached nearly RMB7.0m (a record for new launch on Tmall) Sales trend from 21~23 May from it’s official flagship store
  • 35. La Roche-Posay Case Study European beauty brand La Roche-Posay held a campaign over six weeks in 2013 offering free samples to new customers After signing up and answering a few questions, customers were able to go to nearby shops to pick-up 50mL samples of La Roche-Posay products There were 80,000 participants, and the brand saw a jump in sales of RMB1.0m WeChat ID: larocheposay1975
  • 36. WeChat ID: xiaomijiedatuan Play games to win further discounts Products are available for one day only at select times (12:00 - 14:00 - 16:00...) with a quota at each time Authorized ebooks for free download - Between 10am - 10pm Accessories Xiaomi Case Study Xiaomi (China’s Apple) have built a brand which is very price competitive AND fashionable by employing a set of games, incentive and sales - while becoming a brand almost 100% built online Instead of starting with higher prices and gradually lowering them (at end of sales cycle), they launch with what would be a final sales price (utilizing flash sales and games to sellout in days, rather than months)
  • 37. Xiaomi Case Study Xiaomi held a “snap-up” campaign inside of QZone on March, 2014 for its new RedMi Note (Table) & phone With 600m MAU, QZone is a large social medium, and also allows for precise targeting Following a detailed (& entertaining) process, 15 million participants signed up to participate 419,000 secured “reservations” for the “snap- up” event 100,000 RedMi Notes were sold, 200,000 RedMi phones (a sellout) Mar 15: Signup on QZone Mar 19: Play for a “reservation” Mar 26: Play to “snap-up”
  • 38. SmartCar Case Study Smart created a “snap-up” campaign in WeChat for it’s special edition “Smart BoConcept” Between April 14 and April 21st at 8am, 6,677 customers paid a deposit of RMB999 for the car 388 cars were then sold in 3 minutes after 10am on April 21st 1. Fill in personal info, and pay for a deposit of 999RMB from 14~21, April, 2014. 2. Participate in Snap-up on 21, April
  • 39. KPMG - China’s Connected Consumers, Feb 2014 Online Purchase Drivers Better Deals, Less Expensive Its Quicker Than Store Access to Global Products Easier to Compare Better Range, Variety Uniqueness Popular, Famous Brands Recommended By Others High Quality, Long Durability Comfort of Shopping at Home 10% 20% 30% 40% 60% 70% 80% 90% 100%50% For Luxury Purchases
  • 40. brand to china Insights on market entry and success
  • 41. INVESTTRIAL SALES SYSTEMS PRODUCT CONSUMER INSIGHTS BRAND ADAPTATION Brand Entry Framework Regular container shipments to China. Investment into online awareness building. Enrollment of early adopters and online influencers. Fulfillment & logistics systems installed. PROMOTIONS test invest
  • 42. Trial sales Small scale, promotional sales Sold from overseas (HK) Thru Woyola.com, Tmall.hk Drop shipped Observe existing sales Already being sold thru Taobao (C2C) Being sold thru global, vertical sites Are you selling in China already? Are you a highly social brand? Do you have great stories/content? - Which precede the brand entry? Enroll early adopters as advocates? Brand Entry Framework consumer insights Focus Groups, Surveys Thru social media (WeChat) Data/feedback from trial sales Direct response to products already sold Competitor evaluation (field study) Outline of existing marketing, pricing Consumer/competitor mix Who are your customers? What are they buying now? Judging from trial sales, whats the job to be done with your product? brand adaptation Find the right positioning Fashionable vs Functional Differentiated vs Commoditized Premium vs Price Market Leader vs Challenger vs Marginal Merchandising & marketing plan Brand, product naming Product selection/mix Strategy x creatives x channels What kind of brand can/should you be in China? Positioning, pricing?
  • 43. Brand Entry Framework systems Fulfillment model Home market - China - Local distribution Customs, regulatory process Taxes, repatriation ... Labeling Integrate customer service Online service & CRM systems Returns management Ecommerce Brand “own” site? Detailed capabilities Payment systems products Moving operation to scale Larger scale shipments Additional distribution (offline?) Partnerships & resellers Wider product mix Including customized products for China Based on user feedback promotions Implement marketing efforts/tactics Social - search - display Brand & promotional (sales) Digital marketing assets Create full set of local assets... Social presence, Baidu Zhidao, Blogs Content creation What level of investment will you make? - Opportunity for big share in category? - Speed essential? - Success with trial sales?
  • 44. Decision Tree for Brands Build - Sell - Retain Social Focused Search Focused Does your product satisfy a need or a want? Is your product fashionable or functional? More of a Need - Functional More of a Want - Fashionable Price Brand Do you compete on price or brand? Are you a market leader, challenger or outside competitor? Own Ecom Site Platform Ecommerce (Tmall...) awareness acquisition loyalty Loyalty: by price or product/ brand quality? Can you generate “organic” word of mouth? UGC User-get -user Promos Direct Marketing Discounting Rewards Is the quality gap between your product and local significant? Do you have compelling, related stories, images to share? No investment in brand = price/promo competition.
  • 45. Brand vs Sales Growth strategy - balance sales brand Price/promotional focused Need for short-term results Strategic imperative to capture market share Luxury/premium product Can take a five-year perspective Strategic imperative to maintain brand Consistent with global approach? Critical to have price, brand parity across markets BUT The middle can be challenging place to be in China.
  • 46. The problem to be solved. China is a difficult market to summarize. Its a massive market ...but only pockets of it are developed and huge sections are a work in progress. its a two-speed market with some of the most advanced outcomes in the world ...and some very early stage issues. Its middle class is much less affluent and, much more price sensitive than EU/US. A two-speed market
  • 47. There are pockets of incredible advancement (where premium/ quality is prized) but the vast majority of consumers in China are behind (very price sensitive). Beijing Hangzhou Shanghai Shenzhen Chengdu T3-4 City T3-4 City Advanced Behind Sources: BCG & CASS Advanced vs Behind Uneven consumer landscape
  • 48. beijing 28.7m shanghai 20.5mChongQing 10.9m shenzhen 14.2m guangzhou 11.9m shandong peninsula 21.6m xi’an 10.7m That’s Bigger Than Portugal That’s Bigger Than Australia That’s Bigger Than Two Sweden’s Mega-cities in China are quickly growing to be bigger than whole countries (and not just small countries!). The opportunities long-term are incredible! Source: EIU 2014 City Populations by 2020 Mega-city projections
  • 49. Rising Spending Power 60-80,000 40-60,000 20-40,000 10-20,000 012345678 60-80,000 40-60,000 20-40,000 10-20,000 0 1 2 4 5 6 7 8 10 11 1212345678 People Millions RMB/mo RMB/mo RMB/mo RMB/mo Beijing Shanghai Chongqing But brands must pick the right spots 2000 2011
  • 50. The problem to be solved. Rules to Branding China There are no fixed rules, not yet. Digital (social) media rule. An informational approach goes a long way. Apply a universal logic to user motivations (especially youth). The average consumer is very, very adaptable. “Face” does matter. Public goods are more important than private goods. Play the long-game (don’t rush success).
  • 51. B2C B brand to china by totem media
  • 52. contact us Chris Baker, Managing Director Email: chris@totemmedia.net Twitter/WeChat: Talktototem totem media
  • 53. digital landscape by totem media Overview of Audiences x Media
  • 54. 45% only of china is online 618 That is people million
  • 57. online video 428 VIDEO USERS million Source:CNNIC, China Internet Development Report (Jan 2014)
  • 58. mobile 500 mobile internet users million Source:CNNIC, China Internet Development Report (Jan 2014)
  • 59. Source:CNNIC, China Internet Development Report (Jan 2014) social media microblog users million 550
  • 60. Source:CNNIC, China Internet Development Report (Jan 2014) mobile social wechat users million 500 + 100m Overseas
  • 61. Total social media users top 550m 2007-2014 social media (monthly) unique visitors Source: iResearch 100 200 300 400 500 2007 2008 2009 2010 2011 2012 2013 88%penetration 000,000 Us: 67% 2014 600
  • 62. 25 online per week hours5% 26% 28% 9% 5%8% 18% News Other Ecommerce Games Search Online Video Social Media Source: iUsertracker, Mar 2012 Social Media is capturing audience attention 78% mobile 69% Desktop 47% laptop
  • 63. us vs China user time 0 25 50 75 100 Email Search Shopping Online Banking Travel Booking Recruitment Online Payments Friends (SNS) Education Selling Forums Blogging Gaming Instant Messaging Video News Music %ofUsage Source: eMarketer 2012
  • 65. Uniqlo Homepage of Tmall Flagship Store Location-based flagship store, which supports city shifting to find your location. Weather Forecast Categories Go to Fitting Room Showcase Pre &After - sales service
  • 66. Uniqlo List by UT Themes List by Banners/Campaigns Promotions Hot Searching Keywords Homepage of Tmall Flagship Store List of products
  • 67. A list of all categories, like “Cute”, “ Lady”, “Mature”, “Leisure”, etc. Uniqlo Online Fitting Room Float window where you can change model. shoes, T-shirts, colour…You can share it to other social networks as well. An online fitting room where you can match & mix from all kinds of clothes, and share it to your social networks.
  • 68. l’oREAL Homepage of JD Flagship Store All Products/Categories QR code Quick Navigation Banner/Promotion Campaign is On
  • 69. l’oREAL Product Page Other Similar Brands Detailed Display & Description Store Info Product Combination
  • 70. contact us Chris Baker, Managing Director Email: chris@totemmedia.net Twitter/WeChat: Talktototem totem media