Marketing Observation about chinese customers

Marketing – Observation task 

An interesting consumer behavior in China is their relation with luxury brands. With the world’s biggest population China is currently one of the fastest growing market in the luxury goods industry and the second largest consumer of luxury goods. Thus during the past 3 decades we could observe most of the international luxury brands entering China. This increasing interest of Chinese customers for that kind of products is driven by social and economic factors. First since China is opening to the world the consumer behavior is evolving along with the increase of western-culture awareness and the symbolic it provides. This awareness led Chinese consumers to be more willing to buy a product if it is an internationally well-known brand rather than a unknown luxury product. Even if consumers would naturally choose the lowest cost option some customers will be looking a high value-added product where the customer can also find a psychological benefit. As a result, the fact that China is still a developing country with the world’s largest population, the percentage of middle-class people with an income high enough to consume luxury product is constantly increasing. We can observe in the following graph that the purchasing power per capita of an American was 42 times higher than its Chinese counterpart in 1980 but is now only 4 times higher than a Chinese person.

Besides economic factors the interest of Chinese consumers for luxury brands has a social value and rely on material possessions to communicate social status. A luxury product will be linked to the symbol, image and brand value it represents and communicate the prestige and uniqueness of its owner. Also, the Chinese collectivist culture has an impact on the luxury good consummation. Indeed, the importance of a group and its norms emphasize the social need to buy a product to be part of a group or to assert a certain status. This behavior is interesting in a way that Chinese people have a better image of people buying luxury products than it would have been in Europe or America since luxury brands are also popular among less wealthy customers so that even those lower incomes may save money to buy luxury goods.

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