Contradiction between stated brand importance and purchase behavior
Bain & Company, a global business consulting firm, and Kantar Worldpanel, a global leader in consumer panel insights, released the 2012 China FMCG Shopper report in Beijing. In most of 26 of the top consumer goods categories sold in China across packaged foods, beverages, personal care and homecare, covering more than 80 percent of the country’s fast-moving consumer goods (FMCG) market, shoppers who purchase more frequently in a category tend to buy more brands rather than more of the same brands.
Kantar Worldpanel equips shoppers from 40,000 households throughout urban China with barcode scanners to record their purchases from all channels. The findings dispel several misunderstood notions about how Chinese consumers respond to product brands. Although over 60 percent of Chinese shoppers have said that brands were their top consideration when purchasing (in previous Bain research), in reality, they rarely act on that consideration at the moment of purchase. Instead, they are in a near-constant state of trial, without leading to eventual preference and loyalty.
“Our study shows that marketers must pay attention to what Chinese shoppers do, not what they say in the survey,” said Bruno Lannes, partner of Bain & Company, head of Retail and Consumer Products Practice for Greater China and lead author of the study. “Otherwise, they risk spending money on trying to drive behaviors that simply are not possible in this market.”
With the exceptions of infant formula, baby diaper, milk, beer, carbonated soft drinks, and chewing gum, the study finds that brands increase market share by reaching a higher penetration in their category. Outside of loyalty-driven categories, Chinese shoppers typically have three to four brands in their shopping repertoire for any given category. At the same time, category leaders in China do not necessarily see a higher rate of repeat purchases or succeed in getting existing shoppers to spend more on their brand. In fact, even for the leading brand in each category, more than 30 percent of brand shoppers only purchased the top brand once over the course of a year.
In most categories studied, Chinese shoppers buy more brands as they buy more frequently in that category, expect the loyalty-driven categories. The four categories with the widest repertoires are biscuits, with an average of six to seven brands purchased per year, fabric detergent, with an average of four to five, and juice and facial tissue, with an average of three to four each. Among heavy shoppers (the top 20 percent of the most frequent shopper in a category), shoppers purchase an average of ten to eleven biscuit brands per year, while fabric softener, juice, and facial tissue average five to six brands. See chart below for the data for all categories.
The study concludes with separate plans of action for categories where shoppers purchase from a wide repertoire of brands and for those where loyalty is more prevalent.
For brands in repertoire categories:
- Marketers must ensure that their brand is part of the shopper’s repertoire and use in-store activation to recruit and capture shoppers
- Brands should use marketing initiatives, such as TV commercials, to raise shoppers’ awareness and help them to think about the brand when they shop for a specific occasion or need
- Brands should not expend energy on trying to increase loyalist behavior if it is not part of their category
- Brands need to focus first on successfully developing scale in priority regions and localities
- Brands must invest in understanding shoppers’ actual behaviors in stores, instead of asking shoppers what they want out of context
For brands in loyalist categories:
- The key is to recruit new fans in well-defined shopper segments, and encourage them to try your brand first
- Targeted marketing initiatives and public relations events build brand preference
- Brands should be easy to find in the store. But constantly motivating shoppers with in-store initiatives is not necessary
“The Chinese consumers are pampered with abundance of brand choices hence it is increasingly difficult for major brands to stand out from the clutter.” explained Jason Yu, General Manager of Kantar Worldpanel China. “It is critical for marketers to understand the nature of the categories they are competing and select the right growth strategy.’’
Added Bruno Lannes of Bain & Company, “Winning brands are those that are better at recruiting new shoppers day-in and day-out, and keep increasing the number of shoppers who buy their goods.”