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Consumption Trends
    China 2012
     Jin Wu & Theresa Loo
Consumption Trends China 2012
Introduction
•   China is changing at a dizzying pace. For some marketers, these changes
    will unlock significant competitive advantages. For others, dealing with their
    impact will be a major challenge. As change accelerates across the country,
    the odds of missing a beat rise significantly. It‟s important therefore to have
    your finger on the pulse – via the consumers.

•   This is the second consumption trends forecast published by MEC China.
    Some of the trends discussed in last year‟s report have become very
    prominent this year. Others, such as Cluster-Oriented Consumption and
    Sensory Experience Consumption, have evolved into other trends in this
    new report.

•   The ability to grasp the implications of new and upward growing trends will
    give marketers an edge in tackling the market. The goal of Consumption
    Trends China 2012 is to be a springboard to inspire marketers, and assist
    them to come up with new business concepts, new products/services and
    new experiences for consumers.
Methodology
Improvements have been made to the methodology in this round of trends forecast.
Similar to last year, we gathered input from over 50 trend scouts from different parts of
China. What has been improved was that we took the most frequently mentioned trends
and asked 565 consumers from 7 cities to rank them in an online survey. We then data-
mined a number of syndicated tracking studies on Chinese consumption and media habits
to find quantitative evidence to validate the top 12 trends.


            50+ trend scouts                                  565 consumers from
          from all over China       Picked out the most        7 cities ranked the
         provided information        mentioned trends          trends in an online
               on trends                                              survey




                                       Data-mined a
                                                                 Conduced desk
                                   number of syndicated
          Write up of report                                   research for the top
                                    tracking studies for
                                                                12 ranking trends
                                         validation
Ranking of 2012 Consumption Trends
 Ranking            Trend
       #1           Me Consumption
       #2           Eco-Friendly
       #3           Hybrid Economy
       #4           Tech 360
       #5           Virtual & Physical Worlds Seeping into Each Other
       #6           Free??Free!!
       #7           Lazy Consumption
       #8           Grass Roots Decision Makers
       #9           Alternative Sensory Experience
      #10           “Com”plex Consumption
      #11           World of Gamification
      #12           Zhai
Source: MEC Trends Research 2011, 7 cities, N = 565
TREND 1 Me Consumption

    Cluster-Oriented                                Me
          2011
      Consumption                                2012
                                                Consumption


 The Chinese used to see „individualism‟ as a word with bad connotations,
 applicable to people who only cared about themselves but not others. However,
 the Chinese of today have come to see individualism as something to be pursued
 and developed. They no longer live by the principle of “the bird that shows its
 head gets shot.” Instead their unspoken slogan is “I have my own perspective”.
 They are more eager to share themselves with other people and put themselves
 in the limelight. The rise of personal media, including blogs, microblogs, and
 personal pages, are good examples of this trend. An ordinary individual can now
 have his or her own broadcasting platform. Each person is a source of
 information, becoming the hub of his or her sphere of influence.
Personal Media
  Enthusiasm for platforms like blogs and microblogs is greater in China than in
 most other countries. The Chinese, generally considered reserved and rather
 private, ‟careful in word and cautious in deed‟, have taken to the age of self-
 expression with alacrity. This is because the internet allows one to express oneself
 under a pseudonym. This sense of anonymity, and thus safety from repercussion,
 lets out a long pent up desire for self-expression.

             Blogging/Blog Browsing                       Rate of Usage of Sina Weibo
     %                                                %




Source: CC08S~CC11SU
Scope of survey: web users aged 15-40 in 30 cities
2011S = Spring 2011 data; 2011SU = Summer 2011 data
Show Thyself!
                                       You in               The Chinese have moved
                                                            from expressing
                                       Writing              themselves freely in words
                                                            on the internet to
                                                            appearing under the

          shai                                              spotlight as they really are.
                                                            This is yet another
                                                            breakthrough in self-
                                       You in               expression.
                                       Person




 For the second season of “China‟s Got Talent”, there were more than 50,000
 entrants. From the airing of the first episode, it was the most viewed programme in
 Shanghai and the second most viewed nationwide.
 Although in this respect, it was similar to the first season, viewing figures this year
 grew by more than 50% both regionally and nationwide. It is evident that China‟s
 passion for self-expression is on the increase.
Everyone                                                       Chinese do not just want self-
                                                               expression. They carry this into daily
Goes                                                           consumption too and want to be
‘Custom Made’                                                  unique in every way.

          “I try to modify products I bought from             “I am willing to spend a bit more to buy
            the shelf to make them fit my taste”                      things that I believe are
      %                                                     %       original or one of its kind”




             “I like to dress to be unique; to show that I am different from others”
  %




Source: CNRS2006~CNRS2010 Scope of Survey: 30 cities
TREND 2 Eco-Friendly

As the concept of environmental protection starts to get through to
consumers, isolated, random environmental initiatives are seen as
inadequate. Consumers now focus more and more on the concept of the
total environment. This means connecting together all the links of life into
a complete ecological chain, and deriving from this a whole environmental
way of living, rather than just a series of short-term initiatives. Green
activities are integrated into the surrounding environment to arrive at a
“complete” natural ecological system. For example, if you take the
decision to put a plant in a room, you also have to provide decent
treatment for the insects which it attracts, since the plant and the insects
together constitute an ecosphere.
58.5% of respondents stated that
   they would be willing to change their
   lifestyle to protect the environment.




    Environmental protection no longer consists only of isolated, random
    initiatives. More and more it is finding its way into every fabric of consumers‟
    lives and becoming a way of living.

Source: CNRS 2011 Scope of survey: 36 cities
No Pollution Caused by
Environmental Protection
There is an environmental product called „zero
packaging plant‟. It comes in beautiful packaging,
with a soil and a plant. The reason it is called „zero
packaging plant‟ is because the beautiful packaging
can supply nutrients to the soil. This avoids
increasing pollutants in the course of buying green
products. The outcome is truly zero pollution.




                                                 The Shanghai Eco-House was a Best
                                                 Practice at the 2010 World Expo. Its design
                                                 integrated five major ecological principles
                                                 (wind, light, shadow, green and waste) in its
                                                 structure and technical installations. It is a
                                                 showcase of what a „LOHAS‟ house, which is
                                                 conducive to a lifestyle of health and
                                                 sustainability, is like.
Architecture with a life
The Shanghai Oriental Sports Center, opened in July 2011, was designed with
an eco-friendly concept in mind. A complete aquatic eco-system was built into
the man-made lake surrounding the sports center. It has put in phytoplankton,
zooplankton, shrimps, fish and decomposers etc. to make up a complete food
chain, so that the lake has the ability to self-cleaned.
TREND 3 The Hybrid Economy
•   As the economy develops and the
    internet spreads, focusing exclusively on
    one’s own development is no longer a
    safe policy for marketers. More and more
    brands and categories are breaking out of
    their own protective cocoons and
    experimenting with new forms of joint
    ventures: cars team up with luggage,
    pension schemes with daily consumption.
    There is also the development of social
    TV, combining TV with mobile devices and
    social networking sites. It’s not just a
    question of one brand partnering with
    other brands, but the different
    approaches of wholly unrelated
    categories are now being coupled to meet
    consumers’ various needs.
Vualla is an application based on the iPad which fuses the
Hybrid   characteristics of TV, mobile devices and social networking to
         create a completely new media form, referred to as „social TV‟.
Media    Users can watch TV when and where they want, and also
         share related information with friends at the same time.


                                    social
              mobile                                     social TV
  TV                              networking
              devices                                    smart TV
                                     sites




                                                     Vualla
Hybrid Economic Modes Spending Earning
Pension + consumption = ‘consumption pension’
• According to the „consumption pension‟ scheme launched by the Chongqing
  government, the people of Chongqing can collect points on a card. When
  they spend at designated shops, supermarkets, restaurants and hotels, these
  businesses will reserve a certain amount and transfer it back to the
  consumers‟ bank accounts to be paid into a pension scheme.
• So „spending‟ is not simply an outgoing transaction, it is also „earning‟ for the
  future.
Crossover
It has become quite a craze for brands in
different fields to cooperate in creating new
products. Cars join with real estates, luxury
goods with cars, and luxury goods with leisure
products. When such ventures are successful,
it‟s a win-win situation for both parties. Each
partner gains in consumer base and an
increase in awareness & preference.
TREND 4 Tech 360




Changes in lifestyles today make people more dependent on science and
technology. Individuals have around them a battery of hi-tech products, each
performing a different function. Yet there are all kinds of indications that
technology integration is becoming a major trend. The various technologies are
becoming invisibly linked, so that mobile phones can control TVs, or electric
lights can modulate audio effects. In future, consumers will not be dealing with
stand-alone high-tech devices, but will find science and technology penetrating
every facet of their lives. It will be an environment that is surrounded by
technology 360 degree.
Android@Home
By the end of 2011, Lighting Science plans to
launch its first „intelligent LED light-bulb‟.
Mobile devices which have Google Android
(mobile phones, tablet PCs, palm-tops) will be
able to control these bulbs through a new
open source Wi-Fi protocol, so users will be
able to put their Android mobile devices to
work to adjust the lighting remotely at the
touch of a button -- easy, convenient, and
energy-efficient.



                                                                  Gadgetnet
                                   As the name suggests, the “gadgetnet” is a network
                                   that links gadget to gadget. Its core and foundation is
                                   the internet, but has extended to linking up gadgets to
                                   exchange and communicate information. The
                                   individual gadgets are more strongly interlinked than
                                   ever before.
The Omnimedia Age
   Cloud computing is a major driving force towards
   integration of the media environment. Invisible
   bridges appear between all the different channels,
   and they link up with and act on each other.
   Information picked up in one medium can then be
   followed up in another medium.
   Different media can also interact in real time,
   allowing for the creation of truly collaborative
   content.

                                    Shanghai Media Group has a new entertainment
                                    program, “Date on Saturday,” which has come up
                                    with an App that allows mobile phones & tablet
                                    PCs to interact with the TV program. Viewers
                                    can sign in using QR-codes and interact with the
                                    celebrities on the show. They can also look for
                                    like-minded individuals via LBS technology. In
                                    this way, there is seamless integration of the big
                                    and small screens, providing an omnimedia
                                    experience to consumers.
TREND 5
Virtual & Physical Worlds
Seeping into Each Other
It is becoming more difficult to make a
completely clear distinction between the
virtual world and physical world, and
consumers can shuttle between them at
will. Relationships, experiences and
emotional exchanges in the virtual world
inevitably have a direct or indirect effect
on consumer behaviour and purchase
decisions in the real world. Similarly,
experiences in the real world will
determine consumers‟ opinions, attitudes
and influence in the virtual world. The
virtual and the physical worlds affect and
change each other, and the boundary
between them becomes ever more
tenuous. The growth of the O2O (Online
to Offline) mode cannot be ignored.
The Virtual                                                          The virtual world is acting more and
                                                                    more as a guide to real life, and is
„Lights Up‟ the Real                                                having an enormous effect on actual
                                                                    consumer behaviour.
         “When I need information, the first thing I
   %       think of is to search on the internet”
                                                                  “Virtual Buying Guide”
                                                                  QQ Show, which lets consumer try
                                                                  out clothing on a virtual image, also
                                                                  displays at the bottom of the page
                                                                  garments and shops on Taobao
                                                                  which match the clothes consumers
                                                                  are trying on. This makes it easier
                                                                  for consumers to buy.

  %     “Websites usually visited on the internet are
            related to information on lifestyle”




Source: CMMS2003S~CMMS2011SU    Scope of survey: 15-40y.o. in 30 cities
Consumption Offline
Offline Creates Online                                                    +
                                                                   Posting Online

  Chinese love to comment and share online. For
  more and more restaurant diners, the first thing
  is not to eat but to tweet. They instantly publish
  their reactions to the food on the internet,
  sharing them with other people.

Experience Offline + Action Online




Taobao Mall in Beijing set up the first offline experience centre for home decoration, bringing
together e-shopping and offline sampling. This is to facilitate consumers to make better choices
when they buy online. When consumers have finished looking at the products in the physical
world, they can go straight to the service terminals provided, log on to Taobao, and place orders.
Mobile phone QR-code scanning involves applying the
QR-Code    mobile’s image-recording ability to the scanning of QR-
           codes and retrieving the information stored there. This is
Shopping   followed by further steps such as going online, sending a
           text message, dialing a number, exchanging information,
           or entering text automatically.

                                   E-shopping is no longer just an
                                   online activity. It is increasingly
                                   penetrating consumers‟ real lives,
                                   becoming available at any time or
                                   place.
                                   Yihaodian, the famous online
                                   supermarket, offers QR-code
                                   shopping in every big Shanghai
                                   metro station. Each product shown
                                   in giant LED advertisements has its
                                   own QR-code, which consumers
                                   can scan with their mobile phones.
                                   The product then goes into their
                                   Yihaodian virtual trolley and
                                   consumers can proceed to check-
                                   out online.
AR Online Dress Show   Using the latest augmented reality
                       (AR) digital technology, the
                       Yishion clothing brand has
                       launched its “AR online fitting”.

                       After consumers buy a Yishion
                       product they will be invited to take
                       part in this activity digitally. With
                       a web-cam, they can try out
                       different outfits with AR-codes,
                       take photo shots and make them
                       into a video at the same time.
                       This video is then combined with
                       Han Geng into an advertisement
                       for the product, with the consumer
                       becoming the star of the ad.

                       This is not just a fusion of offline
                       with online. This mode is great for
                       promoting sales in stores.
TREND 6 Free??Free!!
In times when almost every product/service
goes into a price hike, the appeal of “free” as
a marketing concept is obvious. Nowadays,
there are opportunities for consumers to
obtain products/services without having to
pay.
More and more brands are deploying a free
strategy in their marketing campaigns. With
little or no perceived differences between
products these days, the ability to induce
consumers to try a product, albeit by a free
strategy, is already a foot in the door for
marketers.
In some cases, “free” has gone from its initial
role as a promotional tool to a long term
business model. “Free” can come in very
different formats, such as barter, consumers
participating in a promotional activity or
paying for products by performing services for
the marketer.
More and More
                                                                               Acceptance of Free Trials
  Willing to Try                                                         %

  Sayings like “the sky doesn‟t rain pie” and
  “there‟s no such thing as a free lunch”
  represent a traditional way of thinking
  which used to have enormous influence.
  However, Chinese nowadays are more
  willing to give new things, such as free
  trials, a try.

  Barter                                   Bartering goods was the way people used to trade before the
                                           invention of money, and now it‟s making a comeback. However,
  Consumption                              nowadays, barter is no longer confined to material things, but
                                           intellectual and artistic goods are also included. People exchange
                                           not just physical objects but experiences, feelings, information and
                                           skills. At emotional give-and-take parties, for example, everyone
                                           who takes part gets to hear other people‟s riveting stories, but is
                                           also expected to share his/her stories in return. The old saying is
                                           right: “The talk of money hurts (people‟s) feelings”. This new
                                           barter consumption, which is rich in interest and excitement, has
                                           become a new medium of emotional exchange and entertainment.



Source: CMMS2004S~CMMS2011SU   Scope of survey: 15-40 age group in 30 cities
Free virtual $$ for watching ads
                        Noisey was a joint event organized by
                        Dell and Intel in 2011. This event was
                        targeted at Chinese young adults, and
                        involved a “FREE” crossover platform. It
                        utilized the 17bi (a virtual coin) of
                        InGameAd Interactive.
                        It embedded Noisey video footages into a
                        number of social games, working like the
                        YouTube for gamers. When the gamers
                        watched Noisey ads, they were rewarded
                        with virtual money in the form of 17bi,
                        which they could then use in social
                        games across different platforms to
                        redeem props, or as currency.
                        This is a win-win situation: advertisers
                        get their ads watched while gamers can
                        earn virtual points.

                    Number of fans jumped from
                    118 to 9901!!
VANCL Star




     VANCL Star is a promotional activity launched by VANCL to enable consumers „to get
    fame and economic benefit from their fashion sense‟. Individuals can upload their own
    „Vancl ensemble‟ on to the internet, and other users can check them out and vote on them.

How many VANCL products are sold due to a
consumer‟s clothes matching sense will be a
criterion for whether the consumer will be
ranked as a „Star‟. The sales ranking then
puts on record how much influence each
„Star‟ has. The more influence the Star has
on VANCL sales, the greater the personal
commission that s/he is given. Getting
something back without paying anything out
is a dream investment model for consumers.
For VANCL, the influence of their „Stars‟ is
the basis on which to sell more apparels.
Comments = Money Influence = Opportunity
Being able to buy with no effort at all is
one of the ways in which the web-            This is another version
based “free” strategy currently              of the “free” strategy:
manifests itself. Consumers‟                 your influence in the
participation in promotions becomes a        virtual world determines
way to earn (virtual) money.                 your probability of
                                             success, since the more
“Follow + Comment”= $                        people you bring in the
                                             more chances you get to
“Follow + Participate”= $                    draw a prize.

“Follow + Forward”= $                        Promotion such as this
                                             “groupon for nothing”
                                             scheme organized by
                                             dianping.com involves
                                             utilizing consumer‟s
                                             influence and rewarding
                                             them for flexing that
                                             influence.
TREND 7 Lazy Consumption




 As the pace of life heats up, consumers are too busy to make a proper response
to all sorts of things, and they begin to feel that there are not enough hours in the
day. So people dream of taking on a „servant‟, someone to help them filter
information, make exact plans and put forward good recommendations. In answer
to this surging demand, all sorts of intermediary and pooling services have sprung
up, like Douban Same City: dates, places and services or activities are all set out in
a table. All the consumer has to do is to pick the one he wants from the many
excellent choices on offer.
Aggregation Websites                       Activity Managers
                                           As the intellectual and artistic life of
 Aggregation sites like qunar.com         the Chinese become richer, various
  allow consumers to get from a single     websites dedicated to arranging
  site information which they would        leisure activities have sprung up and
  otherwise have to search for in many     attracted attention. Sites like Douban
  different places.                        Same City, Gewara and Shanghai
 Specialist aggregation sites, like       Culture Information Center help
  “Frontiers of Science”, keep people up   consumers sort through what‟s on or
  to date on news and new directions in    what‟s going to be on (movies, plays,
  different fields.                        concerts etc.) in different cities and
                                           also offer special deals on tickets.
@TaobaoForTheLazy



 Has this ever happened to you? You are walking on the street or browsing online and you see
 something that takes your fancy, but you have no idea what brand it is or where to buy it.
 However, going off on a search to find out about it is going to be quite an undertaking, far too
 troublesome for the efficiency-conscious modern consumer in you..
 It is at this point that the arrival of @TaobaoForTheLazy is greeted with cheers.
                                                               @TaobaoForTheLazy, as the
                                                               name suggests, is a service
                                                               targeted at lazy people. If you
                                                               publish here a photo of the
                                                               product you are looking for, all
                                                               sorts of experts will quickly give
                                                               you the information you want,
                                                               saving you time and effort.
TREND 8
  Grass Roots Decision Makers




 There‟s an ancient Chinese saying which gets it right: “When everybody
adds fuel the flames rise high.” This is exactly how to succeed in the
internet age, by deploying the wisdom and strength of the general public to
the greatest possible extent. A single move or pronouncement from a
marketer can quickly get a massive response, and can end up making big
waves. The invitation to “tell me your ideal dessert” appeared on a
microblog, and despite its simplicity was answered by a vast number of
netizens. Since it is so easy and convenient to get involved like this,
consumers do not need to think too much. If, by lifting a finger, consumers
can change the world, why not do it?
Popular Participation                                           Have made comments on the internet
                                                            %
Is on the Rise
The proportion of Chinese who have
commented online has risen from 2.8% in
2009 to 9.4% in 2011. Things they have
commented on include community affairs,
entertainment gossip and shared items from
friends. Popular participation in China is on the
rise. Instead of just following instructions from
others, people are now becoming aware of the
role they themselves can play.


                                          Grass-Roots Detectives
                                          When the Guo Meimei story was exposed, the public‟s
                                          craving for the real truth made them intensely interested.
                                          Huge numbers of netizens tried to unearth and piece
                                          together the facts.
                                          Fooling the public is becoming less and less easy, as
                                          more and more people are aware of their powers and
                                          rights. People will get together and assert their authority.


Source: CMMS2009A~CMMS2011SU    Scope of survey:30 cities
Xiaomi mobile phone – a live OS
 This year, while most people around the world are waiting for the launch of
 a new version of the iPhone, another mobile phone was enthusiastically
 awaited for by the Chinese consumers. This is the Xiaomi mobile phone.

 One of the characteristics of the Xiaomi
 mobile phone is that it uses an original
 designed operating system called MIUI. It is
 the first Chinese designed OS that allows
 zealots to participate in the improvement of
 the original design. Every zealot of Xiaomi
 can contribute to the betterment of the mobile
 phone and is a designer of the product.
 Upgrades are carried out on every Friday.
 MIUI is a live operating system, allowing
 consumers to continuously experience a
 better version of the mobile phone. Xiaomi
 was very well received and got 300,000 orders
 within the first 34 hours of its launch in
 October 2011.
Buyers Creators
The VW „People‟s Car Project‟ is an interactive creative platform which invites
consumers into a dialogue. Consumers can join the process of creation. VW stimulates
their creative imagination. In return, consumers with their innovative and creative ideas
inject new inspiration into VW‟s brand creativity.


VW is completely committed to listening to what Chinese consumers want, and „The
People‟s Car Project‟ is an extremely interactive and engaging way into consumers‟
hearts. Consumers can vote on all the original design features, and those which get
the most votes will end up being used by VW in the production of the final product.
This is surely the formula for producing a winning product which is completely in line
with what consumers want.
TREND 9
Alternative Sensory Experience

  Sensory                                              Alternative
 2011
 Experience
Consumption
                                                       2012
                                                        Sensory
                                                       Experience

  Traditional sensory experience involving a single sense, however powerful it
 may be, is becoming less and less able to grab consumers‟ attention.There is a
 better chance of their interest being aroused if they have experiences, in more
 than one of their senses, which go beyond conventional expectations.
 Sometimes this means switching to another sense, such as voice-controlled
 instead of touchscreen games, or food being played instead of simply eaten.
 Sometimes different senses are combined – for example 4D movies exploit the
 linked activation of different senses. These new-style novelty experiences act
 powerfully on consumers to persuade them to try new products and brands.
%                 Consider the product’s outlook when buying a camera
                                                                         For hi-tech products like mobile
                   Consider the product’s outlook when buying a mobile   phones and cameras, high
                   phone
                                                                         performance is not enough. For
                                                                         Chinese consumers, they are not just
                                                                         communication or imaging tools, they
                                                                         are also fashion accessories. For this
                                                                         reason, how they look visually is
                                                                         getting more and more attention, and
                                                                         can even be the deciding factor when
                                                                         a purchase is made.

                                                                          %
                                                                                Interest in touchscreen in the China
Touch-screen mobile phones are one of the                                  %            mobile phone market
great technical breakthroughs of the past few
years, and are becoming more and more
popular with consumers.
The sense of touch is now one of the things
people care about most in a mobile phone.
Just a couple of years ago, who would have
asked: “How does the phone feel?”

 Source:CC03S~CC11SU Base: 30 cities S=Spring, SU=Summer, A=Autumn, WI=Winter
        Internet Consumer Research Centre (ZDC), 2010-2011
Voice-Controlled Games
                                              Do you remember when you were
                                              young, there were „hands and feet‟
                                              games, and you twisted yourself
                                              into strange shapes to use hands
                                              and feet together? Nowadays,
                                              some games require „no hands, no
                                              feet‟. Voice-controlled games have
                                              appeared, changing all our
                                              assumptions about how games can
                                              be played. They have been greeted
                                              with astonishment and great
                                              enthusiasm.


The game Pah! for the iOS platform involves
using a voice-controlled spaceship to
eliminate obstacles. As the player‟s voice
goes up or down, the spaceship heads


                                                         Pah!
skywards or earthwards to dodge the
asteroids heading towards it. With a short,
sharp “pah” sound you can launch a missile.
Handsets Not Just for Hands
A transparent mobile that can “change faces”: the Window Phone.
With the Window Phone, when you touch the „weather report‟, information are
delivered in multi-sensory form. This completely overturns what we usually do
with our mobiles, and so has aroused a lot of interest in the market.
TREND 10 “Com”plex Consumption
  As today‟s consumers get more sophisticated and have more money in their
 pockets, they no longer consume just to fit in with other people‟s taste. They
 also no longer confine themselves to practical products and services. Buying
 for interest is becoming the consumption focus of more and more Chinese,
 and in consequence the „complexes‟ have arrived: cartoon character complex,
 travel complex, IT complex. On the things they are especially interested in,
 those who have a complex will spend their money without stint. What kind of
 „complex‟ do you have?
Bye Bye, Rationality
  The Chinese have always been thrifty, so
  they like to buy things that are functional.               “I will buy things that I do not need and
                                                               are not practical, so long as I like it”
  When you buy something the first question              %
  you get asked is: “What are you going to
  use it for?” But these days, with the
  development of the economy & society, we
  find that Chinese are more and more ready
  to act on their interests and enthusiasms.
  If they like something they may be
  prepared to buy it even if it has no practical
  use. Whether you like something or not,
  instead of its usefulness, has become the
  main criterion for buying.

                       As the Chinese craze for virtual products     Badge Fanatics
                       gathers momentum, some people are prepared
                       to spend a lot of money and time getting badges
                       from QQ or Weibo or jiepang.com, even though
                       they are of no practical use and cannot be
                       touched.




Source: CNRS2006~CNRS2010   Scope of survey: 30 cities
The Foodie
There are some people who have only one interest. They
love to taste all kinds of fine food. These are the „foodies‟,
and they have recently been on the rise. They let no
difficulty stand in their way and they overcome all
obstacles just to eat.



                                                                              Apple hairstyle



                              The Apple Fan
                              As Apple becomes more popular
                              in the Chinese market, a group
                              known as „Apple fans‟ has come
                              into existence. They are
                              passionately loyal Apple
                              enthusiasts who own every kind
                              of Apple products and would like   “Apple Family Portrait” from an Apple fan
                              their lives to become all Apple.
                              This is one of the reasons why
                              last year one eighth of Apple‟s
Eat hotpot while on IV drip
                              profits came from China.
The Media “Com”plex
With the growing importance of the various media in consumers‟ lives, the media
have joined products and brands as a target of “com”plex consumption. These
consumers use all kinds of media many times a day, and they cannot stop
themselves. Phrases like „microblog complex‟, „Xiaonei complex‟, and „TV complex‟
are on everybody‟s lips these days.
TREND 11 World of Gamification
                                               „Be serious!‟ is a phrase which has echoed across many
                                               generations, giving voice to the respect Chinese have for
                                               sobriety. However, playfulness is an ancient
                                               characteristic that is written into the human genes, and it
                                               will never be completely stamped out. „Amusing yourself
                                               to death‟ is back on the scene, but this time consumers
                                               are not simply after the entertainment or amusement, but
                                               have developed an interest in some basic game
                                               mechanics inherent in game-playing, such as fun,
                                               competition, rewards and levels. One example is game-
                                               based teaching known as „edutainment‟. Nowadays,
                                               more and more game mechanics are being applied to
                                               commercial practice, attracting consumers to participate
                                               and rewarding them as they move to ever higher levels.
                                                                   %
As far as the Chinese are concerned, the days of belt-
tightening poverty have faded from view, and enjoying
the present moment is the new theme. For this very
reason, game mechanics are welcomed by consumers.
It is like the line which crops up often in martial arts
fiction: “Time is something I‟m not short of; so there‟s no
reason not to have a bit of fun.”
 Source: CMMS2003S~CMMS2011SU Scope of survey: 30 cities
Comparison of What Chinese & Americans Do Online

instant messaging                                      As has been shown in
                                                       many research, Chinese
on-line music
                                                       are keener on games
news-reading                                           than other people. Many
on-line video                                          people in China have
search engines                                         been deeply influenced
                                                       by these games, not
on-line games
                                               China   least the new generation
email
                                               USA     of young people, who
blogs                                                  have been immersed in
social networking
                                                       them throughout their
                                                       upbringing. The game
e-commerce                                             mechanics on which
on-line banking                                        games are built play an
discussion forums                                      important role in making
job-seeking                                            the games addictive.


Source: China‟s Digital Generations 2.0, BCG
Games for Adults
Against the claim that games are the special
preserve of kids, the success of Angry Birds and
Fruit Ninja in the adult world reminds us that
perhaps adults need games even more. Adults
are under lots of pressure in their daily lives, but
they cannot let off steam the way children do.
Games have become one of the ways in which
they relax and let off steam. This provides the
basis for gamification, in which marketers employ
game mechanics to attract consumers.
“Class” Society
If somebody introduces himself by saying
“Hi, I‟m the Laird of the Oriental Pearl
Tower”, do not think he is crazy, because
that is who he really is. Or rather, that is
who he is in

         the virtual world
Badges, titles, certification…… the virtual
position and status conferred by these
virtual objects encourage active
                                               Laird
participation. The reason is that every one
wants to prove that s/he is “a person of
status!”
A Sense of Competition
With the rise of social network sites such as
Renren and Weibo, statistics such as the
number of „fans‟ (like Twitter „followers‟) and the
number of times a person‟s Weibo post has
been forwarded or commented on, have
become a measure of personal influence.
When the need for emulation kicks in, the
Chinese tend to pit themselves against others
in the virtual world. There is actually a market
for selling „fans‟.
                                  Nike+ uses „community‟ concepts to appeal to consumers‟
                                 natural competitiveness, setting up head to head
                                 competitions in sporting activities and thus encouraging
                                 people to do sport. In the Nike+ online community, users
                                 can issue all kinds of challenges, daring their friends &
                                 colleagues to trials of strength. Let‟s see who‟s the better
                                 sportsman?!
They Can Play Together
There is an often heard sentence, “They can
play together,” which brings out the social
function of gaming.
Famous sports brands like Nike, Puma and Li
Ning have all taken to promoting „night
running‟, which, as the name suggests, is
going running after dark.
As people run, others begin to tag along, and
the group gradually swells in number. Through
sport you get to know other people with the
same interest, and your social needs are met.
TREND 12 Zhai
The „cocooning‟ man or woman is not a novelty. Faith Popcorn, the
famous US trend forecaster, first proposed „Cocooning‟ as a trend in
1992. In recent years, this trend has gained critical mass and is
becoming more prominent in China. Cocooners are called Zhais in
Chinese. The proliferation of the Zhai lifestyle brings with it an entire
Zhai economy, such as home delivery service, E-shopping, increased
need for communication and technology products etc. Furthermore,
Zhais come in different varieties. They are no longer just the stay-at-
home type. With the maturity of mobile technologies, many Zhais go
out and get around. However, they morph into IT Zhais. Despite
being and hanging around with people, their main focus is their mobile
device instead of people.
From 2004 to 2010 saw a general upward trend in the proportion of
          consumers whose lifestyle fitted the definition of Zhais

     %




Source: CMMS05S~CMMS11S   Scope of survey: 30 cities
76% of respondents agreed with the statement:
“The Zhaithe future. likely to be adopted by more and more
          lifestyle is
people in
                      ”




 81.2% of respondents agreed that:
“E-shopping is replacing traditional shopping, becoming my main
 means of consumption.
                        ”
 Source: The Zhai Lifestyle, MEC proprietary research, 2011
The Rise of                                         A wall covered with take-out menus and a
                                                    Favorites folder crammed full of various e-
the Zhai Economy                                    shopping web-sites have become an
                                                    indispensable part of life for more and more
                                                    consumers. These forms of economic activities
                                                    are part and parcel of the Zhai lifestyle. As the
                                                    Zhai community grows bigger, such services are
                                                    more in demand.




Source: Numbers of Users in the Chinese Online Market , iResearch Consulting 2010
New Pleasures for the Zhai Lifestyle                              October 09, 2011



Shortly before the Mid-Autumn Festival, Baidu Encyclopaedia made a change to its
entry under the word „Moon‟. The site visitor‟s IP address and server time were
used to establish which city they were in, and the web page showed a real time
image of the moon as it appeared where the user was. In this way, even people
who were lounging about indoors and had no intention of going out were able to
follow and enjoy the changes of the beautiful mid-autumn moon.
As Zhais grow in number, they will look with greater favour on brands or products
which let them enjoy indoors the beauties of the outside world without having to
physically go out.
The „IT Zhais‟
The development of mobile technology enables Zhais
to go outdoors.
Even when they actually go out, more and more people
remain in their own small world. They do not
communicate much with the outside world, or rather
they do not communicate face to face. It is in the virtual
world that they have built for themselves that they
socialize and interact with others. Two people sitting
side by side, not saying a word to each other, but
absorb in surfing on their mobiles – this has become a
common scene. These are the IT Zhais.
Implications and Recommendations
Implications & recommendations - 1
• With the continuous integration of technology and media (T3: Hybrid Economy
  and T4: Tech 360), brands should have a core idea that can be expanded and
  content that is liquid enough to flow from one channel to another. Conversely,
  each channel can carry different pieces of information about the brand, inviting
  consumers to participate in piecing together the brand content or using the bits
  and pieces of information to create their own UGC (user generated content).
• With the development of T1: Me Consumption and T8: Grass Roots Decision
  Makers, how to leverage the power of grass roots decision makers is the next
  Mount Everest that marketers have to climb. Marketers do not just have to
  invite consumers into their brand communications, but also to tap into their
  creativity and innovativeness by letting them participate in the development of
  products and services.
Implications & recommendations - 2
• The boundaries of „new media‟ will continue to broaden. With the development
  of T1: Me Consumption and T8: Grass Roots Decision Makers, every
  consumer can potentially be a new channel for a brand to communicate
  through. At the same time, with T6: Free??Free!!, the “free strategy” is an
  effective means to enroll consumers to communicate the brand message in
  exchange for goods and services.
• In order to ride on the continuously growing trend of T12: Zhai, there are three
  things that a brand can do:
  •   1) Become a friend of the consumer in the digital world, and help them to lead a
      healthy and exciting Zhai lifestyle;
  •   2) Build a positive, forward looking brand personality and host events that entice
      Zhais to leave their homes and go into the physical world to socialize with others;
  •   3) Act as a bridge to assist Zhais to traverse the virtual and physical worlds
      seamlessly.
Implications & recommendations - 3
• Given its huge gamer base, China will probably progress from gaming to T11:
  World of Gamification faster than most other countries. Gamification is a
  wildcard and lends fun and excitement to anything that it is associated with:
   •   1) Deploying games in brand communication, or building game mechanics into the
       purchasing process to move consumers along the purchase funnel, are great ways for
       brands to engage with consumers.
   •   2) Gamification can also breath new life into loyalty programs. Accumulation of loyalty
       points for a consumer can be made more competitive and more social by tying the
       consumer‟s progress to others for competition. If both the participants and their
       friends/competitors can see the results in real time, the process create an immediate
       feedback loop and can drive a sense of urgency to accumulate more loyalty points.
• Applying T6: Free??Free!! to T11: World of Gamification, games can be
  designed in such a way that gamers get free gifts, points or virtual coins when
  they get their friends to sign up, complete tasks with their friends‟ help and post
  their accomplishments on social media websites. This gets more people to
  participate, creating an endless loop of cooperative play.
Implications & recommendations - 4
• T4: Tech 360 is changing consumers‟ usage and preference for products. A
  brand needs to incorporate new technology into its products and services, so
  that the product and technology become one and the same in consumers‟ minds.
  When consumers think of the new technology, they think of the brand.
  Technology is also at the heart of enabling creativity and delivery of T9:
  Alternative Sensory Experience and T5: Virtual & Physical Worlds Seeping into
  Each Other.
• With the acceleration of pace of life, increasing pressure, and T7: Lazy
  Consumption, consumer demands begin to polarize. On the one end, products,
  services and technology that are simple and intuitive are welcomed. On the
  other end of the scale, packaged solutions that bundles complicated steps into a
  one-stop solution will also be well-received, as they cut down on the time and
  resources that consumers have to put in.
For more information, please contact:

Theresa Loo
National Director – Strategic Planning, Analytics & Insight
MEC China
29/F, The Center
989 Changle Road
Shanghai China 200031
Direct line: +86 21 2307 7790
Switchboard: +86 21 2307 7800
theresa.loo@mecglobal.com




Project Manager & Editor: Wu Jin (Mandy)
Project Consultant: Amanda Song
Trends Researcher: Liu Jie (Jane) , Stephanie Chai, Anita Wang, Cai Jing

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Consumption Trends China 2012

  • 1. Consumption Trends China 2012 Jin Wu & Theresa Loo
  • 3. Introduction • China is changing at a dizzying pace. For some marketers, these changes will unlock significant competitive advantages. For others, dealing with their impact will be a major challenge. As change accelerates across the country, the odds of missing a beat rise significantly. It‟s important therefore to have your finger on the pulse – via the consumers. • This is the second consumption trends forecast published by MEC China. Some of the trends discussed in last year‟s report have become very prominent this year. Others, such as Cluster-Oriented Consumption and Sensory Experience Consumption, have evolved into other trends in this new report. • The ability to grasp the implications of new and upward growing trends will give marketers an edge in tackling the market. The goal of Consumption Trends China 2012 is to be a springboard to inspire marketers, and assist them to come up with new business concepts, new products/services and new experiences for consumers.
  • 4. Methodology Improvements have been made to the methodology in this round of trends forecast. Similar to last year, we gathered input from over 50 trend scouts from different parts of China. What has been improved was that we took the most frequently mentioned trends and asked 565 consumers from 7 cities to rank them in an online survey. We then data- mined a number of syndicated tracking studies on Chinese consumption and media habits to find quantitative evidence to validate the top 12 trends. 50+ trend scouts 565 consumers from from all over China Picked out the most 7 cities ranked the provided information mentioned trends trends in an online on trends survey Data-mined a Conduced desk number of syndicated Write up of report research for the top tracking studies for 12 ranking trends validation
  • 5. Ranking of 2012 Consumption Trends Ranking Trend #1 Me Consumption #2 Eco-Friendly #3 Hybrid Economy #4 Tech 360 #5 Virtual & Physical Worlds Seeping into Each Other #6 Free??Free!! #7 Lazy Consumption #8 Grass Roots Decision Makers #9 Alternative Sensory Experience #10 “Com”plex Consumption #11 World of Gamification #12 Zhai Source: MEC Trends Research 2011, 7 cities, N = 565
  • 6. TREND 1 Me Consumption Cluster-Oriented Me 2011 Consumption 2012 Consumption The Chinese used to see „individualism‟ as a word with bad connotations, applicable to people who only cared about themselves but not others. However, the Chinese of today have come to see individualism as something to be pursued and developed. They no longer live by the principle of “the bird that shows its head gets shot.” Instead their unspoken slogan is “I have my own perspective”. They are more eager to share themselves with other people and put themselves in the limelight. The rise of personal media, including blogs, microblogs, and personal pages, are good examples of this trend. An ordinary individual can now have his or her own broadcasting platform. Each person is a source of information, becoming the hub of his or her sphere of influence.
  • 7. Personal Media Enthusiasm for platforms like blogs and microblogs is greater in China than in most other countries. The Chinese, generally considered reserved and rather private, ‟careful in word and cautious in deed‟, have taken to the age of self- expression with alacrity. This is because the internet allows one to express oneself under a pseudonym. This sense of anonymity, and thus safety from repercussion, lets out a long pent up desire for self-expression. Blogging/Blog Browsing Rate of Usage of Sina Weibo % % Source: CC08S~CC11SU Scope of survey: web users aged 15-40 in 30 cities 2011S = Spring 2011 data; 2011SU = Summer 2011 data
  • 8. Show Thyself! You in The Chinese have moved from expressing Writing themselves freely in words on the internet to appearing under the shai spotlight as they really are. This is yet another breakthrough in self- You in expression. Person For the second season of “China‟s Got Talent”, there were more than 50,000 entrants. From the airing of the first episode, it was the most viewed programme in Shanghai and the second most viewed nationwide. Although in this respect, it was similar to the first season, viewing figures this year grew by more than 50% both regionally and nationwide. It is evident that China‟s passion for self-expression is on the increase.
  • 9. Everyone Chinese do not just want self- expression. They carry this into daily Goes consumption too and want to be ‘Custom Made’ unique in every way. “I try to modify products I bought from “I am willing to spend a bit more to buy the shelf to make them fit my taste” things that I believe are % % original or one of its kind” “I like to dress to be unique; to show that I am different from others” % Source: CNRS2006~CNRS2010 Scope of Survey: 30 cities
  • 10. TREND 2 Eco-Friendly As the concept of environmental protection starts to get through to consumers, isolated, random environmental initiatives are seen as inadequate. Consumers now focus more and more on the concept of the total environment. This means connecting together all the links of life into a complete ecological chain, and deriving from this a whole environmental way of living, rather than just a series of short-term initiatives. Green activities are integrated into the surrounding environment to arrive at a “complete” natural ecological system. For example, if you take the decision to put a plant in a room, you also have to provide decent treatment for the insects which it attracts, since the plant and the insects together constitute an ecosphere.
  • 11. 58.5% of respondents stated that they would be willing to change their lifestyle to protect the environment. Environmental protection no longer consists only of isolated, random initiatives. More and more it is finding its way into every fabric of consumers‟ lives and becoming a way of living. Source: CNRS 2011 Scope of survey: 36 cities
  • 12. No Pollution Caused by Environmental Protection There is an environmental product called „zero packaging plant‟. It comes in beautiful packaging, with a soil and a plant. The reason it is called „zero packaging plant‟ is because the beautiful packaging can supply nutrients to the soil. This avoids increasing pollutants in the course of buying green products. The outcome is truly zero pollution. The Shanghai Eco-House was a Best Practice at the 2010 World Expo. Its design integrated five major ecological principles (wind, light, shadow, green and waste) in its structure and technical installations. It is a showcase of what a „LOHAS‟ house, which is conducive to a lifestyle of health and sustainability, is like.
  • 13. Architecture with a life The Shanghai Oriental Sports Center, opened in July 2011, was designed with an eco-friendly concept in mind. A complete aquatic eco-system was built into the man-made lake surrounding the sports center. It has put in phytoplankton, zooplankton, shrimps, fish and decomposers etc. to make up a complete food chain, so that the lake has the ability to self-cleaned.
  • 14. TREND 3 The Hybrid Economy • As the economy develops and the internet spreads, focusing exclusively on one’s own development is no longer a safe policy for marketers. More and more brands and categories are breaking out of their own protective cocoons and experimenting with new forms of joint ventures: cars team up with luggage, pension schemes with daily consumption. There is also the development of social TV, combining TV with mobile devices and social networking sites. It’s not just a question of one brand partnering with other brands, but the different approaches of wholly unrelated categories are now being coupled to meet consumers’ various needs.
  • 15. Vualla is an application based on the iPad which fuses the Hybrid characteristics of TV, mobile devices and social networking to create a completely new media form, referred to as „social TV‟. Media Users can watch TV when and where they want, and also share related information with friends at the same time. social mobile social TV TV networking devices smart TV sites Vualla
  • 16. Hybrid Economic Modes Spending Earning Pension + consumption = ‘consumption pension’ • According to the „consumption pension‟ scheme launched by the Chongqing government, the people of Chongqing can collect points on a card. When they spend at designated shops, supermarkets, restaurants and hotels, these businesses will reserve a certain amount and transfer it back to the consumers‟ bank accounts to be paid into a pension scheme. • So „spending‟ is not simply an outgoing transaction, it is also „earning‟ for the future.
  • 17. Crossover It has become quite a craze for brands in different fields to cooperate in creating new products. Cars join with real estates, luxury goods with cars, and luxury goods with leisure products. When such ventures are successful, it‟s a win-win situation for both parties. Each partner gains in consumer base and an increase in awareness & preference.
  • 18. TREND 4 Tech 360 Changes in lifestyles today make people more dependent on science and technology. Individuals have around them a battery of hi-tech products, each performing a different function. Yet there are all kinds of indications that technology integration is becoming a major trend. The various technologies are becoming invisibly linked, so that mobile phones can control TVs, or electric lights can modulate audio effects. In future, consumers will not be dealing with stand-alone high-tech devices, but will find science and technology penetrating every facet of their lives. It will be an environment that is surrounded by technology 360 degree.
  • 19. Android@Home By the end of 2011, Lighting Science plans to launch its first „intelligent LED light-bulb‟. Mobile devices which have Google Android (mobile phones, tablet PCs, palm-tops) will be able to control these bulbs through a new open source Wi-Fi protocol, so users will be able to put their Android mobile devices to work to adjust the lighting remotely at the touch of a button -- easy, convenient, and energy-efficient. Gadgetnet As the name suggests, the “gadgetnet” is a network that links gadget to gadget. Its core and foundation is the internet, but has extended to linking up gadgets to exchange and communicate information. The individual gadgets are more strongly interlinked than ever before.
  • 20. The Omnimedia Age Cloud computing is a major driving force towards integration of the media environment. Invisible bridges appear between all the different channels, and they link up with and act on each other. Information picked up in one medium can then be followed up in another medium. Different media can also interact in real time, allowing for the creation of truly collaborative content. Shanghai Media Group has a new entertainment program, “Date on Saturday,” which has come up with an App that allows mobile phones & tablet PCs to interact with the TV program. Viewers can sign in using QR-codes and interact with the celebrities on the show. They can also look for like-minded individuals via LBS technology. In this way, there is seamless integration of the big and small screens, providing an omnimedia experience to consumers.
  • 21. TREND 5 Virtual & Physical Worlds Seeping into Each Other It is becoming more difficult to make a completely clear distinction between the virtual world and physical world, and consumers can shuttle between them at will. Relationships, experiences and emotional exchanges in the virtual world inevitably have a direct or indirect effect on consumer behaviour and purchase decisions in the real world. Similarly, experiences in the real world will determine consumers‟ opinions, attitudes and influence in the virtual world. The virtual and the physical worlds affect and change each other, and the boundary between them becomes ever more tenuous. The growth of the O2O (Online to Offline) mode cannot be ignored.
  • 22. The Virtual The virtual world is acting more and more as a guide to real life, and is „Lights Up‟ the Real having an enormous effect on actual consumer behaviour. “When I need information, the first thing I % think of is to search on the internet” “Virtual Buying Guide” QQ Show, which lets consumer try out clothing on a virtual image, also displays at the bottom of the page garments and shops on Taobao which match the clothes consumers are trying on. This makes it easier for consumers to buy. % “Websites usually visited on the internet are related to information on lifestyle” Source: CMMS2003S~CMMS2011SU Scope of survey: 15-40y.o. in 30 cities
  • 23. Consumption Offline Offline Creates Online + Posting Online Chinese love to comment and share online. For more and more restaurant diners, the first thing is not to eat but to tweet. They instantly publish their reactions to the food on the internet, sharing them with other people. Experience Offline + Action Online Taobao Mall in Beijing set up the first offline experience centre for home decoration, bringing together e-shopping and offline sampling. This is to facilitate consumers to make better choices when they buy online. When consumers have finished looking at the products in the physical world, they can go straight to the service terminals provided, log on to Taobao, and place orders.
  • 24. Mobile phone QR-code scanning involves applying the QR-Code mobile’s image-recording ability to the scanning of QR- codes and retrieving the information stored there. This is Shopping followed by further steps such as going online, sending a text message, dialing a number, exchanging information, or entering text automatically. E-shopping is no longer just an online activity. It is increasingly penetrating consumers‟ real lives, becoming available at any time or place. Yihaodian, the famous online supermarket, offers QR-code shopping in every big Shanghai metro station. Each product shown in giant LED advertisements has its own QR-code, which consumers can scan with their mobile phones. The product then goes into their Yihaodian virtual trolley and consumers can proceed to check- out online.
  • 25. AR Online Dress Show Using the latest augmented reality (AR) digital technology, the Yishion clothing brand has launched its “AR online fitting”. After consumers buy a Yishion product they will be invited to take part in this activity digitally. With a web-cam, they can try out different outfits with AR-codes, take photo shots and make them into a video at the same time. This video is then combined with Han Geng into an advertisement for the product, with the consumer becoming the star of the ad. This is not just a fusion of offline with online. This mode is great for promoting sales in stores.
  • 26. TREND 6 Free??Free!! In times when almost every product/service goes into a price hike, the appeal of “free” as a marketing concept is obvious. Nowadays, there are opportunities for consumers to obtain products/services without having to pay. More and more brands are deploying a free strategy in their marketing campaigns. With little or no perceived differences between products these days, the ability to induce consumers to try a product, albeit by a free strategy, is already a foot in the door for marketers. In some cases, “free” has gone from its initial role as a promotional tool to a long term business model. “Free” can come in very different formats, such as barter, consumers participating in a promotional activity or paying for products by performing services for the marketer.
  • 27. More and More Acceptance of Free Trials Willing to Try % Sayings like “the sky doesn‟t rain pie” and “there‟s no such thing as a free lunch” represent a traditional way of thinking which used to have enormous influence. However, Chinese nowadays are more willing to give new things, such as free trials, a try. Barter Bartering goods was the way people used to trade before the invention of money, and now it‟s making a comeback. However, Consumption nowadays, barter is no longer confined to material things, but intellectual and artistic goods are also included. People exchange not just physical objects but experiences, feelings, information and skills. At emotional give-and-take parties, for example, everyone who takes part gets to hear other people‟s riveting stories, but is also expected to share his/her stories in return. The old saying is right: “The talk of money hurts (people‟s) feelings”. This new barter consumption, which is rich in interest and excitement, has become a new medium of emotional exchange and entertainment. Source: CMMS2004S~CMMS2011SU Scope of survey: 15-40 age group in 30 cities
  • 28. Free virtual $$ for watching ads Noisey was a joint event organized by Dell and Intel in 2011. This event was targeted at Chinese young adults, and involved a “FREE” crossover platform. It utilized the 17bi (a virtual coin) of InGameAd Interactive. It embedded Noisey video footages into a number of social games, working like the YouTube for gamers. When the gamers watched Noisey ads, they were rewarded with virtual money in the form of 17bi, which they could then use in social games across different platforms to redeem props, or as currency. This is a win-win situation: advertisers get their ads watched while gamers can earn virtual points. Number of fans jumped from 118 to 9901!!
  • 29. VANCL Star VANCL Star is a promotional activity launched by VANCL to enable consumers „to get fame and economic benefit from their fashion sense‟. Individuals can upload their own „Vancl ensemble‟ on to the internet, and other users can check them out and vote on them. How many VANCL products are sold due to a consumer‟s clothes matching sense will be a criterion for whether the consumer will be ranked as a „Star‟. The sales ranking then puts on record how much influence each „Star‟ has. The more influence the Star has on VANCL sales, the greater the personal commission that s/he is given. Getting something back without paying anything out is a dream investment model for consumers. For VANCL, the influence of their „Stars‟ is the basis on which to sell more apparels.
  • 30. Comments = Money Influence = Opportunity Being able to buy with no effort at all is one of the ways in which the web- This is another version based “free” strategy currently of the “free” strategy: manifests itself. Consumers‟ your influence in the participation in promotions becomes a virtual world determines way to earn (virtual) money. your probability of success, since the more “Follow + Comment”= $ people you bring in the more chances you get to “Follow + Participate”= $ draw a prize. “Follow + Forward”= $ Promotion such as this “groupon for nothing” scheme organized by dianping.com involves utilizing consumer‟s influence and rewarding them for flexing that influence.
  • 31. TREND 7 Lazy Consumption As the pace of life heats up, consumers are too busy to make a proper response to all sorts of things, and they begin to feel that there are not enough hours in the day. So people dream of taking on a „servant‟, someone to help them filter information, make exact plans and put forward good recommendations. In answer to this surging demand, all sorts of intermediary and pooling services have sprung up, like Douban Same City: dates, places and services or activities are all set out in a table. All the consumer has to do is to pick the one he wants from the many excellent choices on offer.
  • 32. Aggregation Websites Activity Managers As the intellectual and artistic life of  Aggregation sites like qunar.com the Chinese become richer, various allow consumers to get from a single websites dedicated to arranging site information which they would leisure activities have sprung up and otherwise have to search for in many attracted attention. Sites like Douban different places. Same City, Gewara and Shanghai  Specialist aggregation sites, like Culture Information Center help “Frontiers of Science”, keep people up consumers sort through what‟s on or to date on news and new directions in what‟s going to be on (movies, plays, different fields. concerts etc.) in different cities and also offer special deals on tickets.
  • 33. @TaobaoForTheLazy Has this ever happened to you? You are walking on the street or browsing online and you see something that takes your fancy, but you have no idea what brand it is or where to buy it. However, going off on a search to find out about it is going to be quite an undertaking, far too troublesome for the efficiency-conscious modern consumer in you.. It is at this point that the arrival of @TaobaoForTheLazy is greeted with cheers. @TaobaoForTheLazy, as the name suggests, is a service targeted at lazy people. If you publish here a photo of the product you are looking for, all sorts of experts will quickly give you the information you want, saving you time and effort.
  • 34. TREND 8 Grass Roots Decision Makers There‟s an ancient Chinese saying which gets it right: “When everybody adds fuel the flames rise high.” This is exactly how to succeed in the internet age, by deploying the wisdom and strength of the general public to the greatest possible extent. A single move or pronouncement from a marketer can quickly get a massive response, and can end up making big waves. The invitation to “tell me your ideal dessert” appeared on a microblog, and despite its simplicity was answered by a vast number of netizens. Since it is so easy and convenient to get involved like this, consumers do not need to think too much. If, by lifting a finger, consumers can change the world, why not do it?
  • 35. Popular Participation Have made comments on the internet % Is on the Rise The proportion of Chinese who have commented online has risen from 2.8% in 2009 to 9.4% in 2011. Things they have commented on include community affairs, entertainment gossip and shared items from friends. Popular participation in China is on the rise. Instead of just following instructions from others, people are now becoming aware of the role they themselves can play. Grass-Roots Detectives When the Guo Meimei story was exposed, the public‟s craving for the real truth made them intensely interested. Huge numbers of netizens tried to unearth and piece together the facts. Fooling the public is becoming less and less easy, as more and more people are aware of their powers and rights. People will get together and assert their authority. Source: CMMS2009A~CMMS2011SU Scope of survey:30 cities
  • 36. Xiaomi mobile phone – a live OS This year, while most people around the world are waiting for the launch of a new version of the iPhone, another mobile phone was enthusiastically awaited for by the Chinese consumers. This is the Xiaomi mobile phone. One of the characteristics of the Xiaomi mobile phone is that it uses an original designed operating system called MIUI. It is the first Chinese designed OS that allows zealots to participate in the improvement of the original design. Every zealot of Xiaomi can contribute to the betterment of the mobile phone and is a designer of the product. Upgrades are carried out on every Friday. MIUI is a live operating system, allowing consumers to continuously experience a better version of the mobile phone. Xiaomi was very well received and got 300,000 orders within the first 34 hours of its launch in October 2011.
  • 37. Buyers Creators The VW „People‟s Car Project‟ is an interactive creative platform which invites consumers into a dialogue. Consumers can join the process of creation. VW stimulates their creative imagination. In return, consumers with their innovative and creative ideas inject new inspiration into VW‟s brand creativity. VW is completely committed to listening to what Chinese consumers want, and „The People‟s Car Project‟ is an extremely interactive and engaging way into consumers‟ hearts. Consumers can vote on all the original design features, and those which get the most votes will end up being used by VW in the production of the final product. This is surely the formula for producing a winning product which is completely in line with what consumers want.
  • 38. TREND 9 Alternative Sensory Experience Sensory Alternative 2011 Experience Consumption 2012 Sensory Experience Traditional sensory experience involving a single sense, however powerful it may be, is becoming less and less able to grab consumers‟ attention.There is a better chance of their interest being aroused if they have experiences, in more than one of their senses, which go beyond conventional expectations. Sometimes this means switching to another sense, such as voice-controlled instead of touchscreen games, or food being played instead of simply eaten. Sometimes different senses are combined – for example 4D movies exploit the linked activation of different senses. These new-style novelty experiences act powerfully on consumers to persuade them to try new products and brands.
  • 39. % Consider the product’s outlook when buying a camera For hi-tech products like mobile Consider the product’s outlook when buying a mobile phones and cameras, high phone performance is not enough. For Chinese consumers, they are not just communication or imaging tools, they are also fashion accessories. For this reason, how they look visually is getting more and more attention, and can even be the deciding factor when a purchase is made. % Interest in touchscreen in the China Touch-screen mobile phones are one of the % mobile phone market great technical breakthroughs of the past few years, and are becoming more and more popular with consumers. The sense of touch is now one of the things people care about most in a mobile phone. Just a couple of years ago, who would have asked: “How does the phone feel?” Source:CC03S~CC11SU Base: 30 cities S=Spring, SU=Summer, A=Autumn, WI=Winter Internet Consumer Research Centre (ZDC), 2010-2011
  • 40. Voice-Controlled Games Do you remember when you were young, there were „hands and feet‟ games, and you twisted yourself into strange shapes to use hands and feet together? Nowadays, some games require „no hands, no feet‟. Voice-controlled games have appeared, changing all our assumptions about how games can be played. They have been greeted with astonishment and great enthusiasm. The game Pah! for the iOS platform involves using a voice-controlled spaceship to eliminate obstacles. As the player‟s voice goes up or down, the spaceship heads Pah! skywards or earthwards to dodge the asteroids heading towards it. With a short, sharp “pah” sound you can launch a missile.
  • 41. Handsets Not Just for Hands A transparent mobile that can “change faces”: the Window Phone. With the Window Phone, when you touch the „weather report‟, information are delivered in multi-sensory form. This completely overturns what we usually do with our mobiles, and so has aroused a lot of interest in the market.
  • 42. TREND 10 “Com”plex Consumption As today‟s consumers get more sophisticated and have more money in their pockets, they no longer consume just to fit in with other people‟s taste. They also no longer confine themselves to practical products and services. Buying for interest is becoming the consumption focus of more and more Chinese, and in consequence the „complexes‟ have arrived: cartoon character complex, travel complex, IT complex. On the things they are especially interested in, those who have a complex will spend their money without stint. What kind of „complex‟ do you have?
  • 43. Bye Bye, Rationality The Chinese have always been thrifty, so they like to buy things that are functional. “I will buy things that I do not need and are not practical, so long as I like it” When you buy something the first question % you get asked is: “What are you going to use it for?” But these days, with the development of the economy & society, we find that Chinese are more and more ready to act on their interests and enthusiasms. If they like something they may be prepared to buy it even if it has no practical use. Whether you like something or not, instead of its usefulness, has become the main criterion for buying. As the Chinese craze for virtual products Badge Fanatics gathers momentum, some people are prepared to spend a lot of money and time getting badges from QQ or Weibo or jiepang.com, even though they are of no practical use and cannot be touched. Source: CNRS2006~CNRS2010 Scope of survey: 30 cities
  • 44. The Foodie There are some people who have only one interest. They love to taste all kinds of fine food. These are the „foodies‟, and they have recently been on the rise. They let no difficulty stand in their way and they overcome all obstacles just to eat. Apple hairstyle The Apple Fan As Apple becomes more popular in the Chinese market, a group known as „Apple fans‟ has come into existence. They are passionately loyal Apple enthusiasts who own every kind of Apple products and would like “Apple Family Portrait” from an Apple fan their lives to become all Apple. This is one of the reasons why last year one eighth of Apple‟s Eat hotpot while on IV drip profits came from China.
  • 45. The Media “Com”plex With the growing importance of the various media in consumers‟ lives, the media have joined products and brands as a target of “com”plex consumption. These consumers use all kinds of media many times a day, and they cannot stop themselves. Phrases like „microblog complex‟, „Xiaonei complex‟, and „TV complex‟ are on everybody‟s lips these days.
  • 46. TREND 11 World of Gamification „Be serious!‟ is a phrase which has echoed across many generations, giving voice to the respect Chinese have for sobriety. However, playfulness is an ancient characteristic that is written into the human genes, and it will never be completely stamped out. „Amusing yourself to death‟ is back on the scene, but this time consumers are not simply after the entertainment or amusement, but have developed an interest in some basic game mechanics inherent in game-playing, such as fun, competition, rewards and levels. One example is game- based teaching known as „edutainment‟. Nowadays, more and more game mechanics are being applied to commercial practice, attracting consumers to participate and rewarding them as they move to ever higher levels. % As far as the Chinese are concerned, the days of belt- tightening poverty have faded from view, and enjoying the present moment is the new theme. For this very reason, game mechanics are welcomed by consumers. It is like the line which crops up often in martial arts fiction: “Time is something I‟m not short of; so there‟s no reason not to have a bit of fun.” Source: CMMS2003S~CMMS2011SU Scope of survey: 30 cities
  • 47. Comparison of What Chinese & Americans Do Online instant messaging As has been shown in many research, Chinese on-line music are keener on games news-reading than other people. Many on-line video people in China have search engines been deeply influenced by these games, not on-line games China least the new generation email USA of young people, who blogs have been immersed in social networking them throughout their upbringing. The game e-commerce mechanics on which on-line banking games are built play an discussion forums important role in making job-seeking the games addictive. Source: China‟s Digital Generations 2.0, BCG
  • 48. Games for Adults Against the claim that games are the special preserve of kids, the success of Angry Birds and Fruit Ninja in the adult world reminds us that perhaps adults need games even more. Adults are under lots of pressure in their daily lives, but they cannot let off steam the way children do. Games have become one of the ways in which they relax and let off steam. This provides the basis for gamification, in which marketers employ game mechanics to attract consumers.
  • 49. “Class” Society If somebody introduces himself by saying “Hi, I‟m the Laird of the Oriental Pearl Tower”, do not think he is crazy, because that is who he really is. Or rather, that is who he is in the virtual world Badges, titles, certification…… the virtual position and status conferred by these virtual objects encourage active Laird participation. The reason is that every one wants to prove that s/he is “a person of status!”
  • 50. A Sense of Competition With the rise of social network sites such as Renren and Weibo, statistics such as the number of „fans‟ (like Twitter „followers‟) and the number of times a person‟s Weibo post has been forwarded or commented on, have become a measure of personal influence. When the need for emulation kicks in, the Chinese tend to pit themselves against others in the virtual world. There is actually a market for selling „fans‟. Nike+ uses „community‟ concepts to appeal to consumers‟ natural competitiveness, setting up head to head competitions in sporting activities and thus encouraging people to do sport. In the Nike+ online community, users can issue all kinds of challenges, daring their friends & colleagues to trials of strength. Let‟s see who‟s the better sportsman?!
  • 51. They Can Play Together There is an often heard sentence, “They can play together,” which brings out the social function of gaming. Famous sports brands like Nike, Puma and Li Ning have all taken to promoting „night running‟, which, as the name suggests, is going running after dark. As people run, others begin to tag along, and the group gradually swells in number. Through sport you get to know other people with the same interest, and your social needs are met.
  • 53. The „cocooning‟ man or woman is not a novelty. Faith Popcorn, the famous US trend forecaster, first proposed „Cocooning‟ as a trend in 1992. In recent years, this trend has gained critical mass and is becoming more prominent in China. Cocooners are called Zhais in Chinese. The proliferation of the Zhai lifestyle brings with it an entire Zhai economy, such as home delivery service, E-shopping, increased need for communication and technology products etc. Furthermore, Zhais come in different varieties. They are no longer just the stay-at- home type. With the maturity of mobile technologies, many Zhais go out and get around. However, they morph into IT Zhais. Despite being and hanging around with people, their main focus is their mobile device instead of people.
  • 54. From 2004 to 2010 saw a general upward trend in the proportion of consumers whose lifestyle fitted the definition of Zhais % Source: CMMS05S~CMMS11S Scope of survey: 30 cities
  • 55. 76% of respondents agreed with the statement: “The Zhaithe future. likely to be adopted by more and more lifestyle is people in ” 81.2% of respondents agreed that: “E-shopping is replacing traditional shopping, becoming my main means of consumption. ” Source: The Zhai Lifestyle, MEC proprietary research, 2011
  • 56. The Rise of A wall covered with take-out menus and a Favorites folder crammed full of various e- the Zhai Economy shopping web-sites have become an indispensable part of life for more and more consumers. These forms of economic activities are part and parcel of the Zhai lifestyle. As the Zhai community grows bigger, such services are more in demand. Source: Numbers of Users in the Chinese Online Market , iResearch Consulting 2010
  • 57. New Pleasures for the Zhai Lifestyle October 09, 2011 Shortly before the Mid-Autumn Festival, Baidu Encyclopaedia made a change to its entry under the word „Moon‟. The site visitor‟s IP address and server time were used to establish which city they were in, and the web page showed a real time image of the moon as it appeared where the user was. In this way, even people who were lounging about indoors and had no intention of going out were able to follow and enjoy the changes of the beautiful mid-autumn moon. As Zhais grow in number, they will look with greater favour on brands or products which let them enjoy indoors the beauties of the outside world without having to physically go out.
  • 58. The „IT Zhais‟ The development of mobile technology enables Zhais to go outdoors. Even when they actually go out, more and more people remain in their own small world. They do not communicate much with the outside world, or rather they do not communicate face to face. It is in the virtual world that they have built for themselves that they socialize and interact with others. Two people sitting side by side, not saying a word to each other, but absorb in surfing on their mobiles – this has become a common scene. These are the IT Zhais.
  • 60. Implications & recommendations - 1 • With the continuous integration of technology and media (T3: Hybrid Economy and T4: Tech 360), brands should have a core idea that can be expanded and content that is liquid enough to flow from one channel to another. Conversely, each channel can carry different pieces of information about the brand, inviting consumers to participate in piecing together the brand content or using the bits and pieces of information to create their own UGC (user generated content). • With the development of T1: Me Consumption and T8: Grass Roots Decision Makers, how to leverage the power of grass roots decision makers is the next Mount Everest that marketers have to climb. Marketers do not just have to invite consumers into their brand communications, but also to tap into their creativity and innovativeness by letting them participate in the development of products and services.
  • 61. Implications & recommendations - 2 • The boundaries of „new media‟ will continue to broaden. With the development of T1: Me Consumption and T8: Grass Roots Decision Makers, every consumer can potentially be a new channel for a brand to communicate through. At the same time, with T6: Free??Free!!, the “free strategy” is an effective means to enroll consumers to communicate the brand message in exchange for goods and services. • In order to ride on the continuously growing trend of T12: Zhai, there are three things that a brand can do: • 1) Become a friend of the consumer in the digital world, and help them to lead a healthy and exciting Zhai lifestyle; • 2) Build a positive, forward looking brand personality and host events that entice Zhais to leave their homes and go into the physical world to socialize with others; • 3) Act as a bridge to assist Zhais to traverse the virtual and physical worlds seamlessly.
  • 62. Implications & recommendations - 3 • Given its huge gamer base, China will probably progress from gaming to T11: World of Gamification faster than most other countries. Gamification is a wildcard and lends fun and excitement to anything that it is associated with: • 1) Deploying games in brand communication, or building game mechanics into the purchasing process to move consumers along the purchase funnel, are great ways for brands to engage with consumers. • 2) Gamification can also breath new life into loyalty programs. Accumulation of loyalty points for a consumer can be made more competitive and more social by tying the consumer‟s progress to others for competition. If both the participants and their friends/competitors can see the results in real time, the process create an immediate feedback loop and can drive a sense of urgency to accumulate more loyalty points. • Applying T6: Free??Free!! to T11: World of Gamification, games can be designed in such a way that gamers get free gifts, points or virtual coins when they get their friends to sign up, complete tasks with their friends‟ help and post their accomplishments on social media websites. This gets more people to participate, creating an endless loop of cooperative play.
  • 63. Implications & recommendations - 4 • T4: Tech 360 is changing consumers‟ usage and preference for products. A brand needs to incorporate new technology into its products and services, so that the product and technology become one and the same in consumers‟ minds. When consumers think of the new technology, they think of the brand. Technology is also at the heart of enabling creativity and delivery of T9: Alternative Sensory Experience and T5: Virtual & Physical Worlds Seeping into Each Other. • With the acceleration of pace of life, increasing pressure, and T7: Lazy Consumption, consumer demands begin to polarize. On the one end, products, services and technology that are simple and intuitive are welcomed. On the other end of the scale, packaged solutions that bundles complicated steps into a one-stop solution will also be well-received, as they cut down on the time and resources that consumers have to put in.
  • 64. For more information, please contact: Theresa Loo National Director – Strategic Planning, Analytics & Insight MEC China 29/F, The Center 989 Changle Road Shanghai China 200031 Direct line: +86 21 2307 7790 Switchboard: +86 21 2307 7800 theresa.loo@mecglobal.com Project Manager & Editor: Wu Jin (Mandy) Project Consultant: Amanda Song Trends Researcher: Liu Jie (Jane) , Stephanie Chai, Anita Wang, Cai Jing