Social Media Marketing in China
Social media marketing is a marketing strategy that applies social media platforms to market products and services. Social media marketing in china greatly steers the growth of the Chinese economy (Lorenzo, 2020). The social media marketing strategies in china enhances the development of e-commerce and are extending to engage and reach new customers to buy and provide a trusted recommendation about the products. However, Lorenzo (2020) added that it is vital to make customers trust the brand and give the best reputations and simple ways of acquiring and purchasing the product.
Besides, there are multiple social media platforms that china marketers and advertisers apply in marketing their luxury goods. The most trending platforms are Weibo, Douyin, and WeChat (China Internet Watch). Previously, WeChat was an instant messenger, and its improvised version included content network, gaming, social networking, and payment, and currently, the primary china’s social media. Douyin or TikTok represented the short video platform. Lastly, Weibo began as China’s form of twitter and provided surfaces for breaking news. Also, various mobile applications and sites are coordinated with networking and social media features, e-commerce platforms like the online video platforms, and Taobao also included, as well as the Toutiao, a news app (China Internet Watch). Other minor platforms include Tantan, Momo, Zhihu, and Xiaohongshu.
Internet population in China has got a broad population coverage of at least 731 million and, approximately half of the people are using social media networking websites, as shown in figure 1.0. The websites are essential in influencing the purchase behaviors of customers. For instance, the sales made in a day in 2015 were 70%, and the sales were steered by social media (Linkfluence, 2020). Besides, WeChat is the most famous China messaging app, with 79% of smartphone users using the platform. Users discuss the company’s brand and products through WeChat groups, inspiring the purchase intention (Linkfluence, 2020). The introduction of online shopping also familiarized the brands and promoted the sales of luxury goods (Horton, 2016).
(Source; Linkfluence, 2020)
Fig 1.0. The population of Chinese social network consumers
Besides, China revolutionized their advertisement, communication, and interactions through four social media trends. The trends are; first, Use of Ads, which defined the lookalike customers. Second, Leverage various channels through communication. Third, Created short videos as there content, and lastly, targeted all the Tier 1, 2, 3, and 4 cities through regional focus (Gao, 2019). The trends assist brands in optimizing China’s social media marketing of luxury goods. However, Gao (2019) argued that unprecedented marketing opportunities and social connectivity are driven by big data, widespread mobile usage, and unlimited internet coverage.
Social Media Marketing and Luxury Goods in China
China is considered the fast-growing and large consumer market of luxury goods in the world because, in the previous years, the household wealth raised and the middle class grows continuously (Cision 2020). Chinese millennials maintain a more significant level of the luxury market in China and other nations (Jourdan and Master, 2018). Besides, the luxury goods purchased constitutes 8% of China’s global total. Three-quarters of the purchases from the luxury goods are made by Shoppers, who constitutes 32% of the worldwide sales (Jourdan and Master, 2018).
There are ten main luxury products in L2’s Digital IQ Index of china market: Burberry, Cartier, Coach, Bulgari, Gucci, Chow Tai Fook, Piaget, and Chow Sang Sang, Louis Vuitton, and Valentino (Rosen, 2017). Burberry is the top fashion brand and leads in search term mobile accessory visibility that is not branded. Coach is a paid and organic purchasing ads in place of handbag search terms. Cartier represents the watches and jewelry brands distributed to Baidu. Bulgari means jewelry and watches brands distributed on Fargetch. Gucci generates an iOS smartwatch app. Chow Tai Fook represented mobiles as well as desktop. Piaget is a promotion of Polos watch. Chow Sang Sang was a WeChat account stand. Valentino enhanced visibility by bidding luxury brand terms on rivals, and Louis Vuitton commanded engagements that are impressive across the platforms and online forums generated through it (Rosen, 2017).
Besides, Graziani (2019) study showed that china’s luxury goods market is expected to shoot from the 2018 value of 2,406 billion RMB to 3,117 billion RMB in 2025. Also, there will be a significant difference in the luxury market in 2025 from 2012, as shown in figure 1.1. From the figure, the annual growth rate is estimated to be 4%, and the Chinese customer’s purchase percentage from 2012 to 2025 has doubled from 19% to approximately 40% of the individual market of luxury goods.
(Source: Graziani, 2019)
Fig 1.1. The evolution of global personal luxury goods in billion RMB
Social media marketing has enabled Chinese society to maintain its competitive status with the luxury good by allowing creativity and consumers to recognize products via communication. Authenticity expectation is vital among Chinese millennials to brands like Gucci since its content is devious, sharp, amusing, and visual; hence it is seen as china’s authentic product. All the western social media marketing platforms networks, for instance, Instagram, Twitter, and Facebook, are banned in China, and therefore, the main social media platforms used in china in marketing are; WeChat, Weibo, and Tencent (Bonhome, 2018). The platforms are therefore discussed in detail as shown;
First, WeChat is widely used, with approximately 980 million monthly users. According to Bonhome (2018), WeChat entails a one-to-one method of communication. In addition, many businesses use it in sending specific messages to the target people hence attracting them to a selling point and collection of additional information like email, phone number, and social behavior. Besides, a good management platform of customer relationships is represented by WeChat, and it is also vital in e-commerce channels. Second is Weibo, and it is commonly applied in storytelling, product positioning, and exposure. Consequently, unlike WeChat, Weibo is a one-to-many form of communication, allowing people to view their friends. The last is Tencent video or Youku, and it is a representation of YouTube to Chinese (Bonhome, 2018). Besides, the closure of western social media platforms in China has enabled the emergence of various communication ways to specified languages and varied types of customers.
Social media made China be the leading marketers of fashion luxury goods with their fashion retailers located in Hong Kong (Horton, 2016). Horton (2016) argued that luxury goods were used as a wealth symbol among the Chinese consumers in the past but nowadays, they purchase the goods for their pleasure. Consequently, social media has also changed the selection ways of fashion models (Hope, 2016). Hope (2016) noted that L2’s Digital IQ Index arranges fashion products according to their social media awareness, website marketing, digital marketing, and e-commerce.
The live streaming of social media e-commerce is growing fast in China through bloggers who use lipstick to film themselves and allow a button that encourages buyers to purchase the product (Bonhome, 2018). The luxury brands in China are also using large social media e-commerce platforms like Tmall. VIP.com and JD.com to sell and raise brand awareness (Bonhome, 2018). Also, the luxury products have two social media markets, for instance, external and internal. No one recognizes but draws their product community in the external market while in internal, everyone knows and maybe a consumer.
(Source: Jourdan and Master, 2018)
Fig 1.2. A JD’s VIP official delivering a luxury product to a customer
However, more attention is exhibited to the internal market, and many brands are not exclusively searching for new followers. The information about followers is done by collecting information from different points, for instance, online and offline (Bonhome, 2018). Figure 1.2 below, therefore, illustrates the Chinese luxury online and offline spending. The need of consumers to seek information about luxury brands made McKinsey and Company (2019) conduct a survey to consult the offline and online sources on luxury and fashion in a week, as shown in figure 1.3 below.
(Source: Graziani, 2019).
Fig. 1.3. Chinese online and offline luxury spending
(Source; McKinsey and Company, 2019).
Fig. 1.4. The impact of offline and online touchpoints to Chinese luxury goods
Figure 1.2 indicates that the luxury market of China is still an offline market. However, the luxury market’s online sales share is growing from 8% to 20 % by the end of 2025 (Graziani, 2019). Figure 1.3 results showed that consumers are exposed to digital influence at each touchpoint (McKinsey and Company, 2019). Besides, China is widening the use of social media marketing to the top luxury brands to attract younger customers (Togoh, 2019). However, the relationship goes either way as discerns customers can determine whom to follow. Togoh (2019) argued that shoppers decide and influence others on what to buy and to do.
Brand Awareness and Purchase Intention of Luxury Goods
The study concerning the purchasing behavior of luxury goods is carried by various authors and devoted to multiple books as well as specialized articles and journals (Shadma and Rahela, 2019). According to Shadma and Rahela (2019), an excellent understanding of consumer behavior, which maximizes luxury goods’ purchase intention, is constructed through the studies. Chinese customers are the primary consumers of luxury goods, with an approximate purchase intention of 33% (Graziani, 2019). Graziani (2019) conducted research, and the results showed that more customers are from China, as shown in figure 1.6. Social media marketing platforms like WeChat enhanced the brand awareness and purchase intention of Chinese luxury goods. Additionally, the most frequent information source for luxury customers in China was the offline store experience (Graziani, 2019).
(Source: Graziani, 2019)
Fig. 1.5. The information sources that influence the purchase intention of luxury goods
(Source: Graziani, 2019)
Fig. 1.6. The purchase intentions of luxury goods nationwide
From fig. 1.5, the in-person experiences at brand stores affect influence purchase intention significantly while traditional ads impact the least. Besides, in China, WeChat is the main platform used to create luxury goods brand awareness. Therefore, customers rated the WeChat messages highly from the stores as their best purchase decision drivers, as shown in figure 1.8 (McKinsey and Company, 2019). Offline stores influence the purchase decision importantly, but Graziani (2019) also argued that new brand awareness is discovered by digital marketing and the marketing budget proportion of luxury brands raised from 35% to 70% in the year 2015 to 2018, as shown in figure 1.7 below(Graziani, 2019). Besides, WeChat has the most digital marketing budget compared to other platforms of marketing luxury brands, as shown in figure 1.8 below.
(Source: Graziani, 2019).
Fig 1.7. Traditional marketing and digital marketing of luxury goods based on the budget proportion
(Source: Graziani, 2019).
Fig. 1.8. The marketing budget of WeChat and other marketing platforms in 2018
(Source; McKinsey and Company, 2019).
Fig. 1.9. Offline brand channels that Influence purchase intentions of luxury goods
Social media marketing platforms made china’s luxury products to be recognized both internally and externally. Therefore, the increased awareness enhances the purchase intention of the product internationally, thereby accounting for at least 40% of the sales outside China, which comprises Hong Kong, Macau, and Mainland (Horton, 2016). The following figures demonstrate the purchase intention of the luxury goods from the previous years, for instance, from 2011 to 2018to 2018, and also predicts the future purchase intention of the year 2025 and the intended future purchase intention based on generation.
(Source: Graziani, 2019)
Fig. 2.0. The Chinese luxury goods purchase intentions
(Source: Linkfluence, 2020).
Fig. 2.1. The intent post-purchase intention basing on generation
From fig 2.0, it is noted that the overseas nations had a greater purchase intention of the Chinese luxury goods. The product’s purchase intention in Mainland China was increasing steadily and expected to reach 50% by 2025. The steady increase is due to importation duty reduction, harmonization of the prize, and gray market crackdown between mainland China and oversea, which shifts the Chinese customers to purchase the luxury brands mostly from mainland China (Graziani, 2019). Consequently, age also has an impact on brand awareness and purchase intentions of luxury goods. Figure 2.2 below summarizes the trend. Also, the level of education influences purchase intention and brand awareness of the Chinese luxury product as well as the gender, as shown in figure 2.3 and figure 2.4 below;
(Source: Graziani, 2019).
Fig 2.2. The influence of ages to Chinese luxury goods consumers (Graziani, 2019)
(Source: Graziani, 2019).
Fig. 2.3. The influence of education on Chinese purchase intentions of luxury goods
(Source: Graziani, 2019).
Fig. 2.4. The influence of gender to purchase intention and brand awareness of the Chinese luxury products
Figure 2.2 shows that the Chinese luxury buyers of age between18-24 have a higher purchase intention than those above 41 years. The figure also shows that as the age increases from 24, the purchase intention of tents to degrease (Graziani, 2019). Figure 2.3 shows that consumers with a college degree have a higher usage of luxury goods, while graduates have the least use. Consequently, figure 2.4 reveals that most luxury buyers in China are females with a rate of 71% (Graziani, 2019).
Additionally, the offline purchases of the post-90s are different from the old generations because they will rarely buy from department stores such as premium Galeries Lafayette (Graziani, 2019). The post-90s consumers are widely committed and prepared to explore beyond their comfort zone, but the generations’ themes are trying new products (McKinsey and Company, 2019). The figures below illustrates the preferences of Brand basket and customers’ loyalty to purchase intention of post-80s and post-90s and the final store type that conducted the purchase of luxury goods by the post-90s.
(Source; McKinsey and Company, 2019).
Fig. 2.5. Brand basket preferences and consumer loyalty to luxury goods purchase intentions
(Source: Graziani, 2019).
Fig. 2.6. The final stores’ figures that conducted buying of the luxury products by the post-70s, post-80s, and post-90s.
The barrier beyond the Chinese luxury brand’s success is represented by a lack of brand awareness (Hsu, 2018). Hsu (2019) explained that Chinese celebrities assisted in reaching customers. However, other researchers found that buyers want to be part of the global product, hence causing much localization in the market. The color issue also impacted the marketing of the Chinese luxury products in that, when it comes to visuals across the board, the blue color is given priority. In contrast, the red color has a strong association with China (Francisco, 2014). Also, the coronavirus outbreak has affected the purchase intention of luxury goods because there is the closure of international boundaries, which formed the basis of the luxury goods customers (Beijing, 2020). The latest reports warn that there is a need for extra brand awareness of social media statements after the COVID-19 era (Zheng, 2020).
(Source: Danziger, 2020).
Fig. 2.7. A picture of Chinese luxury goods staff members wearing a mask due to the COVID-19 outbreak in Wuhan
The luxury goods also become China’s problem in 2018, reducing investors’ choices and, therefore, making the investors get used to the product. The growth of products like Burberry, Chanel, and Louis Vuitton got a lion share, whereas the Chinese customers got approximately a third of the sales (Ryan, 2020). Similarly, luxury goods marketing got an impact on fake products (Stroppa, Stefano, and Parrella, 2016). For instance, it was hard to tell that the two luxury boutiques in China city were fake since the storefronts seemed to be the Prada and Louis Vuitton brands’ belongings (Thomas, 2018).