Consumer Behaviour Case Study 10 REPERTOIRE SHOPPING IN CHINA This case highlights a number of issues that have been discussed in this chapter, but in a particular cultural context. It shows that shopping habits are not that different wherever you look. But it also raises important questions for a brand entering a new market in terms of winning customers and managing its growth. Do Chinese people shop any differently to the rest of the world? It is commonly believed that brands matter to Chinese shoppers. In studies by Bain & Company it is clear that the brand is an important factor in choice for both food and non- food categories, with more than 60 per cent of Chinese shoppers listing the brand as being among their top considerations in their decision-making process. What is interesting is that while the choice of brand is important, this does not mean that consumers stick to only one or two of their favourites. A series of studies by Bain & Company and Kantar WorldPanel show that, just like everywhere else, the Chinese consumer shops from a repertoire of brands. Repertoire Shopping Bain and Kantar studied 26 of the top consumer goods categories across four areas: beverages, packaged food, personal care, and home care. This accounted for more than 80 per cent of the FMCG market. The research involved 40,000 households in urban China and barcode scanners were used to record purchases; 373 cities in 20 provinces and four major municipalities were represented. China's cities are ranked in five tiers. The large cities of Beijing, Shanghai, Guangzhou, and Shenzhen are in the first tier, wed by a second tier of 20 to 30 cities that are mostly developed provincial capitals. The third tier of about 20 to 30 cities includes less developed provincial capitals and comparably developed non-capital cities. There are over 200 cities in the fourth tier, while the fifth tier are county-level cities. China's urban population exceeded its rural population for the first time in 2011, and increasingly Chinese workers are leaving rural regions to move to the city. There are now 160 cities with a population of a million or more. Thus, the survey represents a huge range of very different shopping options available in China from those in the modern urban Tier 1 cities, which include hypermarkets, grocery stores, and convenience stores, to the more traditional corner grocery stores, speciality stores, and department stores in the smaller cities (see Figure 10.8). It was found that, in most cases, when consumers buy more times within a product category, they also buy more brands P. 348 (370 of 470) O Im O 10 CConsumer Behaviour It was found that, in most cases, when consumers buy more times within a product category, they also buy more brands in that category. Bain and Kantar call this "repertoire behaviour." Their research showed that this repertoire purchasing is similar for heavy and average shoppers in a category. For example. the Chinese are heavy purchasers of cookies, with an average household buying 6.2 brands in 2012. Those who bought most frequently (the top 20 per cent) bought about 10.4 brands. Similarly, while average shoppers, who bought facial tissues 6.7 times in 2012, chose among three or four brands, the heavy shoppers, who bought facial tissues 14 times in the year, chose among five or six brands. Therefore, the research concludes that a brand's heavy buyers are also likely to be heavy buyers of competing brands. This repertoire behaviour appears to be consistent. It appears to exist whether the category is in the development stage or a more mature stage. For example, colour cosmetics (mascara, eye shadow, foundation, and lipstick) is an emerging product category in China compared with many other countries, as less than 40 per cent of households had bought in this category at the time of the research. Chinese women have not been using colour cosmetics on a daily basis, as is the case in other Asian countries, and they spend much less money on them, but as they begin to buy this product category more frequently, they purchase a wider range of brands. For example, women who purchase these products more than three times a year buy on average 2.86 brands. and when they purchase them more than five times over two years, the average number of brands increases to 4.1. P. 349 (371 of 470) m P.com/app/#/view/books/1001241546219/epub/OEBPS/c10.html#page_350 Consumer Behaviour Loyalist Shoppers There do appear to be some product categories where currently Chinese consumers are more loyal, buying the same brand repeatedly. Labelled as loyalist behaviour, the categories include baby formula, diapers, beer, milk, pop, and chewing gum. For these products, an increase in buying frequency has not translated into buying more brands. Bain and Kantar suggest two reasons for such loyalist behaviour. First, in these product categories brand choices may be limited; secondly, they suggest that in some cases buying the particular brand has become a habit. However, it should still be noted that these loyalists are a small group, accounting for only 10 per cent of total brand sales in these categories. The research identified that leading brands in all the repertoire categories had one thing in common-they all had relatively high rates of penetration. For example, in toothpaste, Crest had 57 per cent penetration compared with an average of 15 per cent for other top 20 brands, even though its repeat purchase is not very different from these brands. It is also the category leader, with a 15 per cent market share. Similarly, Oreo has a penetration of 46 per cent, which is about three times the national average for the top 30 brands. Oreo also has the highest rate of repurchasing frequency at 3.3 times per household in 2011. Even for the leading brands in a category, more than 40 per cent of shoppers only buy the brand once a year. The findings from the research show a number of other important factors: 1. There appears to be no difference in repertoire and loyalist behaviour in terms of whether the brand is foreign or locally owned. Chinese consumers are looking for brands they consider to be safe and trustworthy, whether they are home-grown or from abroad. They will not necessarily take note at the point of sale as to whether they are buying a foreign or a local brand. 2. Where shoppers live appears to impact on repertoire behaviour. Shoppers living in Tier 1 or Tier 2 cities buy more brands in a category than those living in Tier 3, 4, or 5 cities. For example, in 2011, the average family in Beijing, Shanghai, and Guangzhou made 22 purchases of cookies and bought nine different brands, while those in a Tier 5 city bought four brands, on average 11 times. However, in loyalist categories such as milk and beer, there does not seem to be a great difference among cities. 3. Repertoire behaviour does not vary by a person's stage in their life cycle. Some may think that young shoppers are less brand loyal, while the older shoppers like to stick to tried and tested brands. This does not appear to be the case; the only difference found was that young families bought more cookies, candy, and yogurt brands, but that may well be because they are at a stage where they are just consuming more of that product category. Questions 1. Explain the reasons for brand loyalty in different tiers of city. P. 350 (372 of 470) O 10 0Le X Mail - Gizel Attedjro - Out X 2021/FA MATH-2208-18: (x G restaurants in halifax - Go x BibliU - Reader https://bibliu.com/app/#/view/books/1001241546219/epub/OEBPS/c10.html#page_350 Consumer Behaviour 1. There appears to be no difference in repertoire and loyalist behaviour in terms of whether the brand is foreign or locally owned. Chinese consumers are looking for brands they consider to be safe and trustworthy, whether they are home-grown or from abroad. They will not necessarily take note at the point of sale as to whether they are buying a foreign or a local brand. 2. Where shoppers live appears to impact on repertoire behaviour. Shoppers living in Tier 1 or Tier 2 cities buy more brands in a category than those living in Tier 3, 4, or 5 cities. For example, in 2011, the average family in Beijing, Shanghai, and Guangzhou made 22 purchases of cookies and bought nine different brands, while those in a Tier 5 city bought four brands, on average 11 times. However, in loyalist categories such as milk and beer, there does not seem to be a great difference among cities. 3. Repertoire behaviour does not vary by a person's stage in their life cycle. Some may think that young shoppers are less brand loyal, while the older shoppers like to stick to tried and tested brands. This does not appear to be the case; the only difference found was that young families bought more cookies, candy, and yogurt brands, but that may well be because they are at a stage where they are just consuming more of that product category. Questions 1. Explain the reasons for brand loyalty in different tiers of city. 2. Would you expect to see repertoire behaviour increase in Tier 3, 4, and 5 cities? Why or why not? 3. What does the case tell us about penetration versus brand loyalty? 4. What recommendations would you make to a foreign FMCG brand entering China for the first time? 5. Would you expect the loyalist brands to change? How and why? Sources: Bain & Company and Kantar WorldPanel (2012); Bolger (2012); Yu and Lannes (2013); www.chinanormal.com REFERENCES Anesbury, Z., Greenacre, L., Wilson, A.L., and Huang, A. (2018), "Patterns of fruit and vegetable buying behaviour in the United States and India," International Journal of Market Research, 60, 1, 14-31. Anschuetz, N. (2002), "Why a brand's most valuable customer is the next one it adds," Journal of Advertising Research, January/February, 15-21 Bain & Company and Kantar World Panel (2012), "What Chinese shoppers really do but will never tell you," http:/mmi hoin com/Imanas/RAIN DEDODT What Chinese chonnore really in hut will never tall you wolf forcassad ? Tune P. 350 (372 of 470) O P 10 C C