Marketing to the Second Tier

The residents of Shanghai and Beijing have, by now, gotten used to a superabundance of advertising. On television and on the radio, in newspapers and magazines, in buses and subways, on the streets and in taxicabs and even in elevators. They haven’t reached the level of cynicism of Western audiences, perhaps, but they’re increasingly more sophisticated and demanding consumers.

By comparison, consumers in China’s second and third-tier cities are where the tier-one cities were a few years ago: they’re less used to advertising, less familiar with the products being advertised, and less willing to pay more for foreign brands.

They need more explanation of what a product does, and they need a lower price to be able to afford it. But, at the same time, they don’t want to be talked down to, or get an inferior product pawned off on them.

Discovery Ogilvy China recently surveyed consumers in 65 lower-tier cities around China. The report, “The Real China,” was released this month and shows some interesting insights, the results of which can be seen in our lead story.

To me, the fact that Ogilvy conducted this survey is a sign that international marketers are increasingly starting to look beyond Shanghai and Beijing when marketing their products in China.

And it’s about time. Chinese consumers throughout the country need the same kind of services and products available in the big cities. They may have less purchasing power, and will be more selective in what they buy, but their sheer numbers far outweigh the populations in the tier one cities.

And as the economy continues to grow, so will their wallets. When the coastal markets are becoming increasingly saturated and hyper-competitive, it makes sense to look inland for new opportunities.

It will be interesting to see how fast the changes will come – and which foreign companies will take advantage of these trends, and which will stumble.

I hope that Ogilvy will continue to conduct this survey in the years to come, and that other marketing organizations join them in helping create a better picture of the Chinese consumer.