Ipsos Strategy3 | New ways of brand building in China

Warren Wang, Managing Director of Strategy3 Service Line, Ipsos China, was invited to make an in-depth interpretation of the new ideas of brand building in China under the changes of market circumstances, competition, consumer demand and channels, so as to help all industries drive brand growth through innovation and upgrading in the rapidly changing market environment. 

Market changed 
From an era of products to an era of brands 

It evolves from the needs of middle- and low-end products due to the shortage of necessities in 1980s to the needs of functional products with high cost performance due to the market saturation in 1990s, and to the needs of personalization in the era of brands in the context of Internet economy. Consumers are more expecting to express themselves through brands. The individuality, cultural connotation and values of brands become crucial. Therefore, creating strong resonance between consumers and brands through brand marketing so as to form strong brand loyalty is the magic weapon for the success of brands in the Internet era. 

Competition changed 
From horizontal competition to global competition

More and more enterprises appear in the form of platforms to enhance brand value through "dimensionality reduction". The platform brands develop more peripheral products and services around the core products, and expand new fields and channels. Consumers will be willing to try other products and services on the platform because of their recognition of a certain category or core product of an enterprise, forming a benign interaction with the brand and stronger brand loyalty. For example, the ecosystem built by MI is also a huge ecosystem platform system serving consumers and based on consumers' needs. It builds a whole industrial value chain and platform brand with mobile phones as the core. 

In the era of scale competition, vertical brand marketing stands out. By seizing the advantages of products and services in a certain market segment, enterprises can develop specialized products, services and experiences, expand the scale of their market segments, and finally become successful vertical brands. For example, Three Squirrels, with a rapid growth for 5 consecutive years through the heavy vertical brand management model, has grown from a Taobao shop to the No. 1 snack nut brand in China with annual sales of nearly 4.5 billion RMB Yuan. It does not directly produce products. By playing the role of an open platform, it links the flow from various channels (E-shops, its own App, offline channels, etc.) at the front end and more than 200 suppliers at the back end, thus getting through the whole process from farmers to processing plants to sales and distribution. 

Consumers changed 
Rich consumption types lead to consumption upgrades 

Based on consumer demand, consumption can be roughly divided into three types: functional, enjoyment-centric and value-based. For functional consumption, consumers advocate the functions brought about by products or services. For enjoyment-centric consumption, consumers focus on reflecting their class and status by purchasing products and services. While for value-based consumption, consumers expect that the products and services purchased can enhance their self-cultivation, help to highlight self-personality, show good taste and so on. Consumption is graded but also blended. More and more residents in first- and second-tier cities pursue high cost performance, gradually giving up their slightly insubstantial consumption reflecting status, re-examining the nature of retail and returning to rational consumption. However, the rise of the consumer finance industry has also brought about overstepping consumption. For example, low- and middle-income people can buy expensive smartphones or luxury goods in advance by installments.   

Channels changed 
Digital and scenario-based marketing disrupt the traditional marketing mode 

During the e-commerce outbreak in China, Alipay and Tenpay are prevalent, and you can finish purchase just by touching your finger. According to Forrster Reaserch and iResearch, the size of mobile payments in the US was only 2% of China's in 2016. China is leading the way in the development of new retail, which brings consumers innovative consumption experience and sense of security and safety. However, much of the new retail in traditional western markets is still about buying online and receiving goods offline.     China's diversified emerging platforms centered on young users are rising rapidly. TikTok, a short video platform, has 150 million daily active users, and 300 million + monthly active users. Xiaohongshu, a high-quality content sharing platform, has 100 million users in total and 30 million monthly active users. Bilibili, a high-quality content innovation platform, has 71.8 million monthly active users. 

Relationship with brands changed
People become the subject of marketing

When the brands change from being product-centered to user-centered, from simple trading to emotional communication through interaction with consumers, users not only pay attention to the quality and function of products, but also have more emotional and spiritual needs when choosing brands. They expect to find a resonance with and express themselves through brands. 

New ideas for brand building in this circumstance ，"Innovation" has become the basis of survival for enterprises

 
Relationship with brands changed. Consumers' expectations on brands are not limited to the material level, but also the spiritual level. In the face of increasingly diversified and personalized consumer needs, the conventional brand building ideas have long been unable to meet the needs of brand owners. Ipsos Strategy3 is dedicated to providing innovative brand solutions based on data fusion. It labels consumers and screens target groups via big data, and at the same time, provides more accurate insight into their behaviors and needs via small data. This innovative research method integrating big and small data enables the images of consumers "on paper" in previous studies to evolve into more vivid images, so as to truly dig out the potential factors affecting consumer behaviors.