The Rise of Domestic Brands and Its Impact on Consumption Behavior Sophie Shen GM of Media & Consumption Behavior

Transcription

1 The Rise of Domestic Brands and Its Impact on Consumption Behavior Sophie Shen GM of Media & Consumption Behavior

2 2 It all began with the story of the rice cooker VS

3 It Bears a Remarkable Resemblance to What Happened in South Korea 3 30 years ago 30 years hence Koreans were crazy about Japanese rice cookers Korean domestic rice cooker brands dominate elephant Cuckoo

4 4 Number of Coffee Shops in South Korea Prior to 2010, Starbucks was the clear market leader Starbucks Caffe Bene Angelinus '04 '05 '06 '07 '08 '09 '10 '11 '12 '13

5 Korean Cleaning & Family Care Products Market Share Change (%) AMORE PACIFIC P&G LG Household&Health Care Source : Nielson Korea and each company 5

6 Correlations Between the Rise of Domestic Brands and GDP per Capita GDP per capita China total Tier 1 cities South Korea South Korea s per capita GDP reached around US$20,000 in when its domestic FMCG brands began to take off will be remembered as the year that ushers in the golden decade for China s domestic brands. $19504 $18962 $20000 $11057 $ Year Data source: State Bureau of Statistics 6

7 China National Residents Survey (CNRS-TGI) and its extended line of products targeting various sub-segments of the population keep track of the development of domestic brands. Values, lifestyles, attitudes Media habits Purchase behavior Attitudes towards life / consumption / products / wealth management / media 7 media types: TV / Radio / Newspaper / Magazine / Internet / OOH 220+ product categories, 6,000+ brands 7

8 Three Echelons in the Rise of Domestic Brands Data source: CNRS (60 cities) 8 On the rise Having risen to the top AC TV Washing machine Frig Microwave oven Mobile phone PC Car Soda Skincare product Top 5 brands 1 Domestic<3 Baby milk powder Digital Camera Next in line to rise Star Hotel Wrist watch Luxury goods

9 9 Having Risen to the Top Mass & Family Rigid Demand Product Categories Represented by Household Electrical Appliances Top echelon

10 Domestic Brands Dominate the Household Electrical Appliance Industry Penetration of domestic household electrical appliance brands (%) Penetration of domestic household electrical appliance brands by age(%) 60%+ 60%+ In 60 major cities across China In all age groups Data source: CNRS (60 cities) 10

11 Domestic Brands Go Global Drivers of overseas growth 2014 H1 overseas sales growth 2014 overseas sales growth Smart Technologies 8% 16.5% Innovations Energy Efficiency Data source: corporate financial report 11

12 12 On the Rise Personal Consumption Product Categories Targeting Younger Generations Represented by Mobile Phones, Cars and Skincare Products Second echelon

13 Low Pricing and Low-tier Markets Are the Main Propellents for Their Rise Data source: CNRS (60 cities) 13 Price of mobile phone brand most recently purchased (Yuan) 4233 yuan 2491 yuan Tier 1 cities Market Penetration(%) Foreign brands 65% 1594 yuan Tier 4 cities Domestic brands 57%

14 Positioning of Top 4 Mobile Phone Brands Mid to low income Family Centric Females Data source: CNRS (60 cities) 14 High income Fashion Chasers Early adopters Middle income Entrepreneurial dreams Otaku

15 Data source: CNRS (60 cities) 15 Mid-life & older mature parents Middle-aged & elderly Mid to low income Positioning of Top 5 Cosmetics Brands High income Post-70s Pursuing quality of life Post-80s/90s Mid income Active learner Career minded

16 Pathways to Success #1: Capture the Heart of Young Consumers I prefer cosmetics made with natural ingredients % Post-80s (Index) Post-90s (Index) % % Base: Female skincare product users Data source: (60 cities) (60 cities) 16

17 Pathways to Success #2: Move Up-market Huawei launches high-end smartphone Ascend Mate 7 Huawei Unveiled Its Smartwatch in Barcelona In 2014, Huawei s smartphone sales in five major European markets increased by 123%. Huawei also released smart bracelet TalkBand B2 and smart headset TalkBand N1, altogether three smart wearable devices. 17

18 Pathways to Success #3: Form Sino-Foreign Joint Venture as a Shortcut to Move Brand Upmarket 21% Intend to purchase domestic auto brands 43% Intend to purchase jointventure auto brands 21% Intend to purchase imported foreign brands Base: Automobile intenders Data source: CNRS (60 cities) 18

19 Next in Line to Rise Categories reflecting the quality and service of highend consumer goods 19 Third echelon

20 Consumers Pick Imported Milk Powder Over Safety Concerns Milk powder place of origin in 2014 (%) Reasons for selecting foreign milk powder brands(%) Domestic Brands 37% Foreign Brands 79% Natural & Safe 42% Place of Origin 31% Base:Families with baby aged 0-3 who drinks milk powder Data source: MOM PLUS(2014) 20

21 Foreign Brands Still Monopolize the High-end Hotels Top 5 four-star / five-star hotels ever stayed at in P1Y (%) Data source: CNRS (60 cities) 21

22 Large International Luxury Conglomerates Are in Firm Control of the Luxury Markets Top 3 luxury brands in major categories owned by top ladies Data source: CTLS

23 23 The Rise of Domestic Brands Relies on Two Key Consumer Groups Young consumers Upscale consumers

24 Young People Lead the Pack of Whole Media Users Percent of whole media users under 35 (%) 30% +18% 48% Whole media users = Daily reach of newspaper + magazine + radio + TV + Internet and weekly reach of OOH Data source: CNRS (36 cities), (36 cities) 24

25 Young People Are More Adept at Social Media Communication WOM on top I would share findings if discovering new products I like Index % Total Daily reach of social media (%) 49% Post-80s & Post-90s Data source: CNRS (60 cities) 25

26 Young People's Outdoor Activities Are more Colorful NO.1 leisure & entertainment activity for the young Go Shopping OOH LCD OOH media daily reach (%) Total Post-80s/90s 54% VS 58% OOH LED 51% VS 56% Transportation 59% VS 66% Data source: CNRS (60 cities) 26

27 TV Shows Signs of a Comeback amongst the Young Total TV audience Types of TV programs young people are attracted to Young TV audience Dating & match making Music & dance talent Celebrity & parenting Hallyu 数据来源 :CNRS-TGI (60 城市 ) 27

28 E-magazine Readership Increases Rapidly Print magazine readership E-magazine readership 37% Post-80s/90s 61% 38% % E-magazine is still an important channel of fashion news and trends for the young 数据来源 :CNRS-TGI (36 城市 ) 28

29 29 The Rise of Domestic Brands Relies on Two Key Consumer Groups Young Consumers Upscale Consumers

30 OOH Has Integrated into the Daily Life Situations of Upscale Consumers Growth trend of OOH media business executives exposed to from 2013 to 2014 by locations (%) Taxi Beauty Solon +1% Bank +2% +1% In Life Situations Cinema +3% Airplane +1% Gym +3% Data source: CBES

31 Radio Accompanies Upscale Consumers Life on the Move Percent of business executives who listened to the radio yesterday % 2014 VS % Percent of business executives who listened to the radio on mobile device % 2014 VS % Data source: CBES Data source: CBES

32 Mobile Media Offers Package Solutions to the Needs of Upscale Consumers Q:Things business executives like to do on mobile internet Online purchase Payment Q:Daily reach of mobile internet +88% +86% % % Video Wechat +72% +36% Data source: CBES

33 The Two Groups of Consumers Demonstrate Clear Internet+ Behaviors Internet propensity(internet daily reach index) Young consumers Index 126 Upscale consumers Index 135 Data source: CNRS (60 cities) CBES

34 34 The Rise of China s Domestic Brands ( 3 Echelons ) ( ) ( ) 2 Groups 1 Platform

35 How many Chinese 150 firms will turn up on the fortune global 500 list ten years from now? 35

36 Thank you Sophie Shen