The Challenge for Luxury Brands Online in China

Resetting plans for digital in China

July 10th, 2015

Luxury brands are at an inflection point – having over-invested in awareness, retail development – and are now seeing a plateau where existing efforts are not likely to generate any immediate, new growth. They need to start measuring brand performance in a different way – one more designed around quality, depth of engagement and success of brand attributes.

Growth stalling in China for luxury brands

The other big issue facing luxury brands in China is around segmentation and targeting. Initially, most went heavily aspirational, but brand stories were quite shallow. They also invested very heavily in retail development – again scale over quality – including staff and communications efforts lacking brand/product knowledge. This may have worked and been appropriate when they were mainly selling to corrupt officials and their mistresses. However, now that this market has disappeared, they really need to rethink the game plan.

Getting the audiences right

For brands that are used to marketing themselves to mature customers in their late-40s and 50s, there are fundamental questions at play about whether digital (social) media should be part of the marketing plan. Dominated by younger users, digital media efforts sometimes seem misdirected. In more mature markets like Europe and the US, this could be a very valid concern.

But, in China there might not be any other option for luxury brands than to market to younger, more social audiences online. Since the government efforts to clean up “gifting” across the country in the last few years, China’s luxury market has become much more discerning. And, younger audiences are becoming critically important for driving growth.

For luxury brands questioning growth in China, they must look to younger audiences and start creating plans to engage them – plans that must include digital/social media.

The luxury, online dilemma

Many of the qualities that luxury brands are built on, such as tight quality control and immersive

shopping experiences, may seem to be at odds with social media and digital. Luxury brands are tactile, tangible and emotional and so its often hard to see how to deliver an appropriate experience online. Brands looking narrowly at the key channels online in China (Weibo, WeChat, Tmall…) will sense a real disconnect in quality and feel between the high-touch elements of their brand and the cold, mechanical nature of the digital tools on offer.

Print media still benefit from this dilemma. Print magazines are tactile, well designed and have a curated community of other luxury brands. By contrast, online and social media looks like a swamp of bad design and low standards. But, in China, the audiences for print magazines are long-gone (probably never were there actually) and so, luxury brands still advertising in print are there more for vanity’s sake. There is almost zero audience (awareness) benefit for them being in print.

China is a digital-first market. Unlike the US, where traditional media are slowly being replaced by digital media, China’s traditional media never really got “off the ground.” Newspapers, magazines and TV in China all started applying global (commercial) standards at the same time as online was growing. Audiences, given the choice in China with no “legacy effect” in place, have largely put digital as first priority. If, in the US, digital is slowly winning over traditional in a long fight …in China, the fight was over in the first round.

Brands who have focused on print (and events) in China have largely keep themselves separated from where audiences are spending their time …and thats online. For luxury its time to stop protecting brands and start building brands.

China first digital efforts

The irony for luxury brands who have been protecting themselves in China, is that, their efforts on digital have mostly been really low quality.

The best digital case studies for luxury are still coming out of Europe and the US. The brands who are based in the US and EU still reserve the best marketing efforts for home and then adapt for other markets, including a version for China. Why is it that in a digital first market, which also happens to be its most important, luxury brands are not developing “China first” digital efforts.

Brands who have gotten used to hand-over-fist growth in China by superficial means, now need to think about how to build depth around their efforts. In blunt terms, they need to invest a lot more on quality now.

Brands that spend millions on creative, innovative marketing for the US often are left scraping together a piecemeal effort for China. Its shocking how much more most brands spend on creative/content marketing in the US.

When luxury brands do end up spending money on creative/content for China, there is usually too much emphasis on celebrities …and too little effort on emotional, relevant stories.

So, what do luxury brands do online in China

Luxury brands in China first have to come to grips with who they are marketing to in China. They have to start looking at younger audiences and play a longer-term, high-quality game of romancing these younger audiences.

Next, brands have to look at digital in broader terms and think about ways that the brand can be communicated. It could be that mainstream social media like Weibo and WeChat are the focus of efforts. But it could be that doing something else is more appropriate, more brand relevant. The right online effort should be one that reflects the traditional experience of the brand – what the brand stands for “offline”. Whatever the brand chooses to do, there must be the same strict focus on quality online as would be there offline (like in a shop, or with a product itself).

And, they must find ways to bring more emotion, charm and intrigue to the work of connecting online in China. For most audiences in China, the experiences of luxury brands are cold copies of the brand’s global efforts. Luxury brands should be looking to share romance, secrets and fun with audiences in ways that resonate uniquely with Chinese. What needs, values and dreams can be addressed through your brand? How can you best bring those dreams to life through stories online? How can you tickle your audiences in a way that cuts through the clutter?

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Access vs Exclusive

Luxury works best when access and exclusivity are balanced correctly. Too accessible and the brand looses a bit of its allure. Too exclusive and nobody knows about the brand, and owners of the brand cannot rely on others knowing the value of their purchase.

In China, brands have balanced these issues by creating broad awareness offline with innumerable retail shops, using price as the marker of exclusivity. In the shift to online and cultivation of younger audiences, brands must employ new strategies to find the right balance.

In China, Burberry has been recognised as one of the best online in balancing awareness and exclusivity. Their strategy is built around creating unique events catering to a selected few, and then amplifying those events online to many. They are giving mass audiences a peak behind the luxury curtain while retaining an air of mystery. WeChat has been Burberry’s tool of choice for digital in China.

For broad awareness, luxury brands should invest in more original video content (speaking to unique Chinese audiences) and then using video sites and Weibo to spread brand stories.

But for on-going social engagement – balancing access and exclusivity – WeChat is likely the best tool for luxury marketers. To start with, WeChat is not fully open. Audiences must find the brand account and then subscribe to receive content from the brand. Its takes a bit of work to join the brand, so its not the “free for all” that Weibo is. At the same time, there are two other key elements which make WeChat effective for luxury:

  1. Form and frequency of content
  2. Service functions and applications

The net advantage of WeChat is that content and user interface are better. Most accounts in WeChat are limited to one content-push per day, so brands must be more discerning with what they publish. The user interface for content is also more simple and less polluted by ads, features and spurious functions. Therefore the stories inside of WeChat are longer, more well designed and audiences spend more time viewing them.

Posted in China Marketing