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GroupM China releases full report for ‘Project Deep Dive’ 2012 wave

30 November, 2012


GroupM China’s ‘Project Deep Dive’ Maps out Tier-3/4 Consumption Behaviour

SHANGHAI — Today’s third and final release of findings from the ‘Project Deep Dive’ 2012 wave completes the full launch of GroupM China’s proprietary study, which combines both qualitative and quantitative research covering a total sample size of 10,000 consumers from 28 provinces, 69 prefecture-level cities, 148 county-level cities, and 408 counties in China –making this research one of the largest in sample size and market coverage in China.

According to conclusions from the in-depth interviews, accompanied visits and focus-group discussions newly added to the project this year, one’s consumption behaviour and relative brand choices are largely shaped by cultural values regarding Beauty, Health, Success and Happiness – often unique in China.

‘Beauty’ among women in lower-tier markets has five definitions relating to both their appearances and lifestyles: the beauty of fashion and dress, the beauty of flawless makeup, the beauty of a leisurely approach to daily life, the beauty of having intrinsic qualities like care and concern for others, and the beauty of independence as a modern female.

Approximately 70% of lower-tier women use an average of four kinds of skincare prodcts, and the same number of cosmetics. Total revenue from skincare products and cosmetics reached RMB 83.9 billion and RMB 43 billion respectively this year. Differences that exist in consumption habits and attitudes between distinctive consumer segments have fueled the huge potential in e-commerce (online shopping).

The concept of ‘Health’ in lower-tier markets has progressed from a tangible to an intangible one; from physical to psychological, in five aspects: awareness of good health, healthy diet, healthy lifestyle, healthy mentality and a general desire to stay healthy.

Specifically, lower-tier consumers prefer to self-medicate instead of seeking treatment at hospitals, so opportunities are abound for over-the-counter (OTC) drugs. Local medicine brands are preferred over foreign ones. Take cold medicine for example, the market share of local brands is 83% while foreign brands have only 29%.

The study also shows that on average, more lower-tier consumers take medicinal products than those in the upper-tiers. 63% of lower-tier consumers took cold medicine in the past year, compared to 60% in upper-tier markets; cough medicine’s percentages are 35% and 25% respectively.

In examining ‘Success’, it was found that lower-tier consumers view it an attitude that stems from internalized cultural values. It includes five factors: how one contributes to personal success; familial success; the success of friends and relatives; employees’ success; and broadly, how one contributes to the progress of society and thereby benefiting oneself. In particular, cars have become an outward representation of success by most consumers.
The study also highlights that the average amount spent on car purchases cars among lower-tier buyers in the Southwest region of China is RMB 144,000 – higher than the median of RMB 129,000 despite their lower salaries. These consumers are more likely to regard private cars as a status symbol proving their success in life rather than just a utilitarian means of transport, as revealed by qualitative research.

In lower-tier markets, purchase prices of base vehicle models have increased 13% from RMB 114,000 in 2011 to the current RMB 129,000. Meanwhile, upper-tier markets maintain the same spending level as last year, which is RMB 160,000.

More than a fifth of all lower-tier households own a vehicle (22.8%) now, a group that grew 10 percentage points from last year. A breakdown by region shows the Northeast having the highest growth rate of 18.7 percentage points, meaning more than a quarter (26.5%) of lower-tier households in that region now own cars.

In understanding ‘Happiness’, consumers in lower-tier markets generally think that the source of happiness alternates between material goods and spiritual satisfaction; from a passive to a proactive process. Happiness to them has five layers: Life security being the foundation of happiness; job stability being the anchor of happiness; a sense of belonging being the basis of happiness; devotion and hope being the catalysts for happiness; and inner happiness being the highest possible state to be achieved.

Driven by the quest for ‘Happiness’, consumers in lower-tier markets want to spend more on visible housing improvements. Average refurbishment expenditure in the lower-tiers is RMB 31,000, an increase of 5% compared to 2011. They are more willing to spend more than half (51%) of their refurbishment budgets on specialty kitchen appliances or bathroom fittings like refrigerators and water heaters. This proportion is higher than the 44% in upper-tier markets, indicating that lower-tier consumers pay more attention to external home refurbishments and decorations that are rooted in status projection and can generate positive social acknowledgment from neighbours and visitors.

“To maximize relevance and trigger loyalty, brands must recognize how Chinese cultural realities affect their consumption habits, and ensure their marketing strategies are befitting of those cultural values. Only then can long-term brand success be sustained. ‘Project Deep Dive’ leverages on anthropological methods to analyse Chinese consumers. Not only can we gain surface-level information about category maturity for instance, we burrow into the reasons behind the data and turn them into useful insights for marketers.” says Eve Lo, Chief Knowledge Officer, GroupM China.

About GroupM China
GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Maxus, MEC, MediaCom, Mindshare and Xaxis.
GroupM is the global leading media investment management group.

GroupM employs more than 1800 people in eight cities across China. With total media billings in excess of USD 5.11 billion (RECMA: 2011 Definitive), GroupM is China’s number one media communications group and the industry’s biggest investor in syndicated and proprietary media research and optimization tool development.

About GroupM Knowledge
GroupM Knowledge is GroupM’s think tank and knowledge management arm in China. This unit is responsible for industry-wide thought leadership research to benefit our agencies and client brands, exploring issues affecting the media industry in China, working with syndicated research suppliers and managing the Group’s proprietary tools, research and systems. GroupM Knowledge also manages a media consultancy, advising clients with specific media research challenges. The unit aims to be the knowledge platform, linking brands with relevant consumer and communication insights.

About ‘Project Deep Dive’
‘Project Deep Dive’ is GroupM's proprietary research study aimed at tracking the latest consumption trends in lower-tier markets. It combines both qualitative and quantitative research covering a total sample size of 10,000 consumers from 28 provinces, 69 prefecture-level cities, 148 county-level cities, and 408 counties in China, making this research one of the largest in sample size and market coverage.

The projected audience numbers to 620 million lower-tier consumers, equivalent to 46% of the entire Chinese population.

First-hand data and in-depth insights of the media habits, consumption behaviour, brand preferences and values of lower-tier consumers have been gained from four successive waves of this study in 2007, 2009, 2011 and 2012.

Qualitative elements were added in the 2012 wave, using anthropological methods that include in-depth interviews, accompanied visits and focus-group discussions for 312 consumers in eight provinces.

Media Contact:
Diana Wang  
+86 21 2307 7703

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