The Voice of Luxury: Social Media and Luxury Brands in China (GroupM China and CIC)

The Voice of Luxury:Social Media andLuxury Brands in China

2011 GroupM Knowledge - CIC White Paper on Luxury

The Voice of Luxury: Social Media and Luxury Brands in China

Executive summary

i

CIC L-K-P FRAMEWORK FOR MAKING SENSE OF THE BUZZ

Participate融Know识Listen听

Topic E-Culture Communication

Listen to the buzz and find out what’s hot online.

Know the culture and context of the internet community.

Participate in the conversation.

Background: The luxury market in China is huge and growing fast.• China’s most wealthy are spending more every year, with luxury consumption

expected to account for 20% of the global market by 2015.

Methodology:• General Market Intelligence: GroupM Knowledge provided a luxury market

overview, including data from the GroupM Knowledge/ Hurun Wealth Report 2011

• Social Media Intelligence: CIC collected, mined and analyzed millions of Chinese social media comments relating to luxury, utilizing patent pending technology and a team of seasoned analysts


Executive summary

August 2011

ii

Strategy 1: Listen to talk about luxury• Brand Overview: Louis Vuitton lead the luxury market’s online discussion in

China. Chanel command high buzz volume and positive sentiment.• Category Overview: ‘Leather Goods’ (Bags) - the most discussed luxury

category in China.• Efluencer Overview: The top 20% of netizens contributed 80% of the content in

luxury category. There are 4 types of luxury efluencer shaping the conversation: Shopaholic, Style Guru, Fashionista and Brand Fan.

Strategy 2: Know and understand China’s unique cultural context• ‘shai’ 晒 (showing off) is very popular in Chinese luxury & fashion BBS

communities, accounting for an average of 90% of the comments about luxury brands.

• Globally speaking, China is positioned as ‘in the show’ stage of luxury consumption, going through different stages of shai. Product Shai, True Man Show and Lifestyle Shai.

• Overseas purchase and purchasing agents (i.e. Daigou 代购) are also hot topics.• Live broadcasting from fashion shows is a new way for Chinese netizens to

keep in touch with the latest fashion trends. Now ‘runway broadcasting’ is popular via microblog, incorporating pictures, videos and real-time interaction.

• Chinese luxury consumers are categorised in four groups: Aspirational Buyer, Quality Pursuer, Status Seeker and Trend-Setter.

Strategy 3: Participate in the conversation in a relevant and appropriate way • The microblog (weibo) offers brands a platform that is not only for listening but

also for actively participating in the online conversation. Chanel is the most mentioned brand in Chinese microblogs (600,000 tweets between January and May 2011), while Burberry’s account is the most engaged (43,001 retweetsand 5,320 comments in the same period).

• There are numerous engagement strategies that brands can employ to participate in the conversation, including leveraging celebrities’ massive social reach to spread the brand culture.

• Brands should track weibo accounts carefully to ensure they create content that resonates with netizens and is appropriate for the brand’s voice.

• Central to microblog engagement and any social media participation is a tone of voice befitting your brand culture. So, luxury brands must find the luxury voice in social media.

The Voice of Luxury: Social Media and Luxury Brands in China iii

Table of contents

Chapter IListen- Listen to the buzz and find out what’s hot online

P 02 - 1.1 Luxury Category OverviewP 07 - 1.2 Luxury target audienceP 10 - 1.3 Luxury efluencers

Chapter IIKnow- Know the culture and context of the internet community

P 13 - 2.1 Luxury brand position in ChinaP 17 - 2.2 Purchase driversP 18 - 2.3 Differences between Chinese and Western consumersP 24 - 2.4 Overseas purchaseP 27 - 2.5 Counterfeits

Chapter IIIParticipate- Participate in the conversation

P 28 - 3.1 Luxury brand microblogsP 33 - 3.2 How do luxury brands utilize social media?P 35 - 3.3 Social media strategies / Marketing luxury brandsP 37 - 3.4 New challenges and opportunities


Data Source

Research Methodology

P01

Social media intelligence

CIC has been collecting and mining luxury conversations from across the unique,

fragmented and dynamic social media landscape for over 3 years and boasts an archive of

over 10 million comments.

For this study, CIC collected, mined and analyzed millions of Chinese social media comments

about luxury utilizing patent pending technology and a team of seasoned analysts.

© 2011 GroupM Knowledge & CIC

• Microblog analysis : CIC collected over 2.4 million tweets mentioning luxury brands from Sina Weibo between January and May 2011. CIC also collected tweets from selected luxury brand’s microblog accounts. All of these were then mined for mentions of over 1000 luxury and fashion related products and related attributes.

• BBS analysis : CIC collected over 4,500,000 comments in Q1 2011 from luxury and fashion related BBS sites.

CIC Luxury & Fashion Panel Data BBS Overview (per month)

1,500,000+ messages collected per month

-Cover 40+ luxury & fashion sites

- Track 1,000+ luxury & fashion related products, 30+ related drivers & attributes

- 80,000+ posters

- 220,000+ brand messages

- 100,000+ driver mentions

General market intelligence

GroupM Knowledge provided general luxury market overview data, including data from the GroupM Knowledge/ Hurun Wealth Report 2011.

The study carried out research both from the ‘bottom-up’ and ‘top-down’. From the ‘bottom-up’, the research looked at the number of key investment and spending indicators amongst mainland Chinese. These included the number of individual properties by region worth between 5 million yuan and 10 million yuan, the number of luxury cars purchased in the last three years costing 500,000 yuan or more, the number of high bracket income tax payers, company registered capital and so on. For the ‘top-down’ approach, it applied the Gini coefficient, measuring income distribution against the 2010 China GDP and 2009 China GNP.



Chapter IChina’s Vast Luxury Market and Unique Luxury IWOM

1.1. Luxury Category Overview

1.1.1 China’s Luxury Status

Chinese luxury consumption is projected to grow 18% annually from 2010 to 2015, by which

time accounting for over 20% of the global luxury market.

Chapter I: Listen

P02

I. Growing Number of Chinese RichThe number of wealthy Chinese with a personal fortune of 10 million RMB or more reached 960,000 in 2010, an increase of 9.7% compared to the previous year.

The top 10 domestic markets by 10million+ RMB population:

Solid macro economy

8

7

1

9

5

6

10

4

2

3

1. Beijing 2. Guangdong3. Shanghai4. Zhejiang5. Jiangsu 6. Fujian7. Shandong8. Liaoning9. Sichuan10. Henan

Source: GroupM Knowledge - Hurun Wealth Report 2011

5

55 6480

180

1998 2008 2009 2010 2015EGlobal Share (%) <1% 6% 8% 10% 20%

Unit: Billion RMB

Luxury goods consumption in China, 1998-2015

Source: Mckinsey Insights China - Understanding of China’s Growing Love for Luxury



Chapter I: Listen

II. Overview of Luxury Consumption in China

- Annual consumption accounts for 5% of total assets.- China’s wealthy are spending more:

• 50% spend 1-3 million RMB per annum, a 11% increase from previous year• 37% spend less than 1 million RMB per annum, down by 8% on previous year• 13% spend more than 3 million RMB per annum, down by 3% on previous year

- Travel accounts for 29% of millionaire’s consumption, followed by daily luxuries, child education, entertainment, gift giving and finally, saving.

Consumption Pattern 2011 (%) 2010 (%) 2009 (%)

Travel 29 27 16

Daily luxuries 23 24 25

Child education 22 20 18

Entertainment 12 9 16

Gift giving 7 11 21

Saving 7 10 4

Figure 1-1 Millionaire Consumption Patterns

Source: Hurun Best of the Best 2011- Preferred brands of China's richestSource: GroupM Knowledge - Hurun Wealth Report 2011

III. Recognition of Luxury Brands Among Wealthy Chinese

- Chinese millionaires’ recognition of luxury brands has risen by 20% year on year.- Louis Vuitton once again came in first for luxury brands but Hermès performed outstandingly

this year, rising from fourth place to second in the last year. - The average Chinese millionaire has 3.7 watches.

Category Brand

Best Jewelry Cartier

Best Fashion Label Giorgio Armani

Best Accessory Hermès

Best Luxury Writing Instrument Montblanc

Best Skincare Estee Lauder

Category Brand

Best Overall Watch Patek Philippe

Best Watches with Highcomplications

Patek Philippe

Best Jewelry Watch Cartier

Best Fashion Watch Gucci

Source: Hurun Best of the Best 2011- Preferred brands of China's richest

Figure 1-2 Best Fashion Brands by Category

P03© 2011 GroupM Knowledge & CIC


Leather Goods Shoes Fine Jewelry

WatchRTWAccessories

Buzz Volume:79,649 posts Buzz Volume:31,718 posts Buzz Volume:16,489 posts

Buzz Volume:12,514 postsBuzz Volume:13,420 postsBuzz Volume:15,182 posts

Source: CIC luxury panel data in Q1 2011

1.1.2 Luxury Category Introduction

The Chinese luxury market is booming. Many international brands are expanding their

investment in China and opening a lot of new stores, not only in tier one cities like Beijing

and Shanghai but also in lower tier cities as well.

The luxury category, as defined in this white paper, includes leather goods (bags), shoes,

fine jewelry, watches, RTW (Ready-to-wear or prêt-à-porter) and accessories (sunglasses,

belts and so on). Cars, hotels, cosmetics and service level products are not covered in this

report.

Figure 1-3 Selected Luxury Category

Chapter I: Listen

P04© 2011 GroupM Knowledge & CIC


1.1.2 Luxury Category Buzz Distribution by Site

Bulletin Board Systems (BBS) are online discussion forums or communities frequently

focusing on high engagement categories. BBS provide a good channel to listen to consumer

feedback and to gain category insights in China. BBS play a particularly important role in the

unique Chinese social media landscape. Compared with other mature categories like

Cosmetics and Auto, there is less brand initiated buzz, mainly dominated by consumers’

organic buzz.

In CIC’s luxury panel, about 360,000 posts mention luxury brands and products in each

quarter. Fashion sites, Lifestyle communities and Luxury verticals are key buzz distributors,

among which 55bbs, Yoka and Iwatch are the top 3 sites where netizens talking about

luxury.

Understanding the sites with the most buzz can assist in more effective (social) media

planning.


Figure 1-4 Luxury Category Buzz By Site

Chapter I: Listen

P05

Sites No. of Posts Post % No. of Conversation No. of Posters

55bbs 112,556 31.7% 2,139 14,868

Yoka 56,176 15.8% 1,955 4,910

Iwatch 36,978 10.4% 3,035 9,399

Belle8 27,877 7.8% 934 3,366

Liba 19,994 5.6% 697 3,541

KDS 15,290 4.3% 3,844 6,652

Watchlead 15,170 4.3% 1,513 719

Taobao 11,025 3.1% 2,571 3,245

Sohu 8,955 2.5% 1,106 598

Dianping 8,801 2.5% 461 1,698

Baidu 6,166 1.7% 1,450 1,353

Cqmmgo 5,940 1.7% 298 2,586

Tianya 5,849 1.6% 1,106 2,625

Mplife 4,493 1.3% 328 1,627

Others 20,303 5.60% 4,087 6,337

TOTAL 355,573 100.0% 25,524 63,524



1.1.3 Community Segmentation Analysis

Posting Rate (PR) is one of the online community passion indexes. A higher value indicates

that community members are more active and engaged in particular topics. Combined with

number of posters and buzz volume, we can map out community segmentation.

Figure 1-5 Map of Luxury Community

P06

0

5

10

15

20

25

0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000

Popular Communities

Niche Communities

Po

stin

g R

ate

No. of Posters +-

+Online Community Buzz Leader

Communities with less influence

− Sophisticated campaigns which require high participation

− Close cooperation with communities

− Low barrier campaign− Increasing awareness

− Key media spending− Building awareness− Establish loyal users / brand fan

relations

− Help to spread the campaign or new launches information

No. of Posters

Figure 1-6 Segmentation of Luxury Communities

55bbs

Yoka

Belle8

Watchlead

Sohu

Chapter I: Listen

Note: Bubble Size = Buzz VolumeSource: CIC luxury panel data in Q1 2011Posting Rate= No. of Posts/ No. of Posters (i.e. average num of posts per poster )

Iwatch365

QQ

KDSLiba

Taobao

Source: CIC

Brand can optimize online media planning by understanding of different segment of communities.



1.2 Luxury Target Audience

1.2.1 Luxury Category Poster Analysis

In the luxury category, the top 20% netizens contributed nearly 80% of the contents. Those active netizens frequently share their shopping experience, brand news and luxury category knowledge.

P07

Chapter I: Listen

80.0%

20.3%

20.0%

79.7%

0%

20%

40%

60%

80%

100%

Netizens Contents

Figure 1-7 Buzz Distribution by Netizens


Content Analysis of Active PostersShopping experience sharing is a common phenomena in luxury category because Chinese consumers are willing to show off their purchasing power and shopping achievements. Secondly, brand news sharing is effective in attracting netizen participation, such as seasonal new products launches, fashion shows, parties and so on. Knowledge sharing is the third hot topic, which is a particularly popular in the watch category.

Top Posters (ID) Buzz Sample Topic Content Site

烈火坚冰 1,572 爱马仕2011春夏新品鉴赏 Brand news sharing QQ

若然 1,150 Zegna 2011/2012秋冬男装 Brand news sharing Sohu

Cathyxu861 1,008 超级血拼在中港加 Shopping experience 55bbs

Ohseal 1,005[VACHERON

CONSTANTIN]6378Knowledge sharing Watchlead

Tingtingky 979 TT@2011 P44 3/17更新咯 Shopping experience Liba


Figure 1-8 Content Analysis of Active Posters



1.2.2 Hot Online Behavior Overview

‘shai’ (or, showing off a product) is very hot in China’s luxury and fashion BBS communities.

Trading second-hand luxury products and counterfeits is also common among Chinese

luxury consumers.

P08

Chapter I: Listen

Figure 1-9 Buzz Ranking of Hot Topics (Buzz Incidence)

1.8%

1.9%

2.4%

2.4%

57.5%

Trading

Brand news sharing

Product inquiry

Experience/Knowledge sharing

Shai

Source: CIC luxury panel data in Q1 2011. Base: 355,573 luxury category posts in Q1 2011

Buzz Incidence: The ratio of a specific topic buzz in the total number of buzz

Figure 1-10 Monthly Buzz Trend of ‘shai’ Posts

Unit: post National Day &Mid-autumn Festival

Christmas & New Year Holiday

Spring Festival Labor Day

0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Aug.09 Sep.09 Oct.09 Nov.09 Dec.09 Jan.10 Feb.10 Mar.10 Apr.10 May.10 Jun.10 Jul.10

I. Buzz Trend of Shai Post

Buzz trend of Luxury ‘shai posts showed obvious seasonality. Buzz peaks occurred around

festivals/holidays when people could take shopping trips. From our perspectives, ‘shai’ is an

important touching point to link netizens’ offline shopping behavior with online expression.

Source: CIC luxury panel data in Aug.2009-Jul. 2010



II. Hot Online Topics by Brand

For fashion brands (e.g. Louis Vuitton, Chanel, Gucci), product shai (87.1%) dominated the

hot content. For watch brands, like IWC, knowledge sharing and brand news sharing are

most common.

For trading luxury products, second-hand goods and counterfeit trading were also hot

buzzed online.

P09

Chapter I: Listen

Figure 1-11 Buzz Ranking of Hot Topics by Top 10 Brands (Buzz Share)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TTL Brands

IWC

Hermes

Burberry

Cartier

Dior

Prada

Coach

Gucci

Chanel

Louis Vuitton

Shai Experience/Knowledge sharing Product inquiry Brand news sharing Trading

Source: CIC luxury panel data in Q1 2011Buzz Share: Refers to percentage of posts related to each attribute out of the sum of all attributes related posts. The total percentage is 100%.Note: Base is the sum of the top 5 hot attributes. Base: TTL brands: 234,505 posts.Louis Vuitton : 37,105 posts, Chanel: 25,530 posts, Gucci: 24,280 posts, Coach: 27,263 posts, Prada: 14,356 posts, Dior:11,578 posts, Cartier: 8,511 posts, Burberry: 13,832 posts, Hermes: 9,346 posts, IWC: 10,720 posts


The Voice of Luxury: Social Media and Luxury Brands in China P10

Chapter I: Listen

1.3 Luxury Efluencers

1.3.1 Classify Luxury Efluencers

Luxury Efluencers: They have huge influence and effective interaction with luxury fans.

Based on the buzz content, there are four clear behavioral characteristics amongst Luxury

Efluencers in the online community:

• Shopaholic: Showing off collections and ‘building floor’, which is a cumulative

update of their shopping achievements in a specific post, regularly updated to

attract netizen awareness.

• Style Guru: Expertise sharing to build effective interaction with luxury fans,

especially in the watch category

• Fashionista: Share latest fashion trends and use ‘Street Shot’(街拍) and ‘Self-

Shot’(自拍) to show off their trendy lifestyles.

• Brand Fan: Fiercely loyal to a particular brand, refer to themselves as ‘Fans’ (粉) to

show their dedication to the brand.

I. Case Study of Shopaholic: ‘Tingtinky’ (Netizen’s ID)A typical heavy buyer, regularly posting new products to ‘build floor’. In addition, she achieves good interaction with netizens by answering product inquiries. This post attracted over 18,600 replies.

Sample Quote of Social:Netizens: 我觉得miumiu老合适TT宝贝的风格//I feel Miu Miu fit your style.Tingtinky:得到SARA额肯定~吾得意地笑啊得意地笑// I’m happy because of your comments. Link

‘Building Floor’

Sample Quote of Inquiry:Netizens:请问Betsey Johnson的鞋子哪里有卖啊？ // Where do you buy Betsey’s shoes?Tingtinky:我在香港买的哦上海好像么有专卖店的// I bought in Hong Kong. Betsey Johnson does not have store in Shanghai. Link

Source: CIC


http://bbs.libaclub.com/t_90_4723660_555.htm

http://bbs.sh.libaclub.com/t_90_4723660_5.htm


Chapter I: Listen

II. Case Study of Style Guru: ‘瓜瓜的小光’ (Netizen’s ID)A typical ‘Guru’, sharing watch category knowledge and building effective interaction with netizen by Q&A. This post attracted over 42,800 replies.

Sample Quote of Q&A:Netizens: Oris适合初玩表的人戴吗，有什么款好推荐的。// Could you give suggestions for new users like me?瓜瓜的小光: Oris不错，对于男表而言，它的机芯小了。 FM的定位是高端，低端的价格偏高了// Oris is good, but its men watch’s chip is small. FM is a high-end brand, and the price of its low-end watches are expensive. Link

瓜瓜的小光’s answer

Netizen’s question

III. Case Study of the Fashionista: ‘喜欢旅游的小孩子’ (Netizen’s ID)Sharing the latest fashion trends using ‘Street Shots’ of European and US celebrities. This post attract over 1,000 replies.

IV. Case Study of Brand Fans: ‘外星人也爱美’ (Netizen’s ID)Hermes fans, focused on collecting Hermes products, including bags, scarves, watches and so on. This post attracted over 350 replies.

Sample Quote:Subject:欧美明星一周娱乐星闻播报(街拍+礼服+八卦)第87辑2.14-2.20// Street Shot of Western celebrities in Feb 14th – Feb 20th 2011.Reply: 我喜欢Dianna Agron 。甜死了// I love Dianna Agron, she is a sweet girl. Link

Sample Quote:2010年买的5个Hermes //My five Hermes bags purchased in 2010 Reply:真美啊……蓝色的真好看// So beautiful, especially the blue one. Link

Source: CIC



http://www.tianya.cn/publicforum/content/no11/1/980220.shtml

http://bbs.yoka.com/thread-1917586-1-1.html


Chapter I: Listen

1.3.2 Daren Models-The interaction of netizens on luxury social networks

When plotting the interaction on social networks, there are essentially two axes:

conversation and activity. Conversation is about opinions expressed and emotions

exchanged, posting, forwarding, replying, supporting and voting. Activities generally occur

spontaneously and are initiated by luxury Daren or by the overall community but can be

sparked by a third party. By activity we mean things like offline event, brand promotion, and

fashion show.

Figure 1-12 The connecting threads of personal relationship within a luxury social network

Source: CIC White Paper, Efluencer Model, Mar 2011

Note: ‘Luxury Efluencer’ refers to both Style Gurus and Fashionistas


Conversation

Like

Viewing

Sales Promotion

Brand Promotion

Gathering

Task

Replying

Voting

Luxury Efluencer

Posting Forwarding

AdvertisingPrivate

Messages

Activity

Spectator SpectatorBrand Fan Shopaholic



6,511

6,716

7,019

7,058

9,385

9,715

11,093

16,284

16,783

17,977

20,819

23,988

24,514

25,072

26,973

28,162

39,651

40,029

55,299

66,659

Ferragamo

Omega

Marni

Longines

Bottega Veneta

Balenciaga

Armani

Miu Miu

Rolex

Tiffany

IWC

Hermes

Burberry

Cartier

Dior

Prada

Coach

Gucci

Chanel

Louis Vuitton

Chapter IIChinese Consumers

2.1 Luxury Brand Position in China

2.1.1 Luxury Brand Buzz Volume Ranking

According to the brand buzz volume ranking, Louis Vuitton was most discussed online,

followed by Chanel, Gucci and Coach.

Figure 2-1 Top 20 Luxury Brand Buzz Volume Ranking

P13

Chapter II: Know


Unit: Post



2.1.2 Brand IWOM Health Matrix

Regarding a brand’s IWOM health, among the top 20 luxury brands, Chanel enjoyed both

high buzz volume and sentiment. Louis Vuitton had the most buzz volume but was

relatively weak in online sentiment.

P14

Chapter II: Know

Hermes

Dior

Prada

Chanel

Gucci

Louis Vuitton

Ferragamo

NSR

Buzz volume

Source: CIC luxury panel data in Q1 2011NSR= (Positive Post – Negative Post)/ (Positive Post + Negative Post)

* Different colored areas were divided by the average of NSR and buzz volume of top 30 brands

Figure 2-2 IWOM Health Matrix

Coach

Burberry

Cartier

IWC

Tiffany

Rolex

MiuMiu

Balenciaga

Omega

Longines

Marni

Armani

BV

IWOM Health Matrix: a comparative analysis across selected brands/products: X axis

(horizontal axis) stands post number, Y axis (vertical axis) refers to buzz sentiment (higher

NSR means more positive). The position of every brand is determined by the buzz volume

and net sentiment rate (NSR) of the brand. For the brands with high NSR but low buzz

volume, they may need to improve marketing communication to consumers and spread

their good reputation more effectively, for the brands with high buzz volume but low NSR,

they may need to focus on improving consumer satisfaction and enhancing the brand buzz

sentiment.


80%

85%

90%

95%

100%

0 10,000 20,000 30,000 40,000 50,000 60,000 70,000


2.1.3 Content Exploration for Luxury Negative Comments

In the luxury category, negative comments are normally associated with counterfeits,

product quality and design, as well as things like service and celebrities.

The counterfeit issue and ‘street bag’ are most associated with Louis Vuitton, Gucci and

Coach. For product problems, leather goods and watches face the most complaints. Poor BA

service and unpleasant shopping experience are associated with most famous brands.

P15

Chapter II: Know

Counterfeit Related Product Related Others

• Counterfeit• ‘Street bag’ (too

common to see on the streets)

• Quality issue• Don’t like the taste of

design

• Poor BA service & shopping experience

• Celebrity crisis

Sample Quotes:说实话LV就算是个好牌，在中国也被糟蹋了，A货

太多了，我背个真的出去都没劲了。// To be frank, there are too many counterfeits of LV in China, which does not make me look good even I carry a real one. Link

你看大街上连卖菜的包包也有双G标志时候你觉得

买这个牌子还有意思么//Gucci has become the street bag. Link

Sample Quotes:Gucci的质量差啊，我的包

没用几次，拉链尾部的金属就掉下来了//Gucci's bag quality is poor. My bag's zipper was broken with just a few usage. Link

觉得coach包和LV包怎么那么难看// I feel Coach and LV really ugly. Link

Sample Quotes:我在恒隆买的LV有染色问题去换，一个叫Olivia的服

务员，态度傲慢强硬，说我完美主义// I found my LV bag had colored handle. I want to change the bag, but a BA called Olivia was arrogant and did not let me to change the bag. Link

当年你再嚣张跋扈拿宗教当设计都没人管你，因为能给DIOR赚的盆满钵满。现在借机fire你也是虚张声势，多年前因为John先生

惊世骇俗的破坏性设计而起死回生//Dior leveraged John Galliano to revive. Now he is fired. Link

Note: the volume chart indicates the buzz volume of negative postsSource: CIC luxury panel data in Q1 2011

Figure 2-3 Negative Content Analysis



2.1.3 Luxury Category Buzz Ranking

Leather Goods (Bags) are most discussed among Chinese consumers, followed by shoes and

fine jewelry. Bags are popular in China because they are durable and functional.

P16

Chapter II: Know

Figure 2-4 Luxury Category Buzz Ranking


4,567

10,615

12,514

13,420

16,489

31,718

79,649

Sun Glasses

Accessories

Watches

RTW

Fine Jewelry

Shoes

Leather Goods (Bags)

2.1.4 Buzz Drivers Ranking

Price is the most buzzed topic by Chinese luxury consumers, followed by style, celebrity and

overseas purchase. While discussion of the brand story/history is low, it is in line with the

developing status of the luxury category in China at this stage.

Figure 2-5 Top 10 Buzz Drivers Ranking

90

1,609

1,764

2,405

2,731

3,505

6,375

6,575

8,666

19,857

Brand Story/History

Designer

Counterfeit

Service

Quality

Advertisement

Overseas Purchase

Celebrity

Style

Price


Unit: Post

Unit: Post



2.2 Purchase Driver

Given the fast growth of the luxury category and China’s diversified market, we have

observed different typologies with different motivations and behaviors. Based on the IWOM,

Chinese luxury consumers are mainly divided into 4 types:

• Aspirational Buyer: Most are college students and white-collar, very price sensitive.

Another interesting insight we observed amongst aspirational buyers is an increased

likelihood to purchase accessories of premium and famous luxury brands. This

phenomena is called ‘Big brand, small category’ (大牌小物).

• Quality Pursuer: Purchase luxury products in search of fine workmanship and quality.

• Status Seeker: Prefer famous brand with big logos to show their status.

• Trend Setter: Younger group, willing to purchase trendy but lower awareness brands.

Use luxury brands to show their identity and individuality

P17

Chapter II: Know

Note: the number means the priority of purchase driversSource: CIC luxury panel data in Q1 2011

Figure 2-6 Purchase Driver by Four Consumer Types

Aspirational Buyer Quality Pursuer Status Seeker Trend-Setter

1. Price2. Style & design3. Brand awareness

1. Quality2. Style & design3. Price

1. Brand awareness2. Style3. Quality

1. Style & design2. Price3. Quality4. Exclusivity

Sample Quote：

我最贵的包包也不到5000哦，我的口号是理性败家// My most expensive bag is lower than 5,000 RMB. My slogan is purchasing luxury products rationally Link

Sample Quote:

我也不是名牌的疯狂追求者。就是自己用东西很注重品质和质感// I’m not big brand fans, quality is most import for me to buy products. Link

Sample Quote:炫一下很少出现在55上的大牌ETRO、GUCCI、PRADA, MIUMIU等// Show off my famous luxury brands, such as Gucci, Prada, Miu Miu, etc. Link

Sample Quote：看到Sergio rossi了，呵

呵，这个牌子我也很喜欢，设计很大气,鞋子很

舒服，国内知道这个牌子的人不大多//Although most of Chinesepeople do not know Sergio Rossi, I like it. Ithas good design and comfortable. Link



2.3 Differences between Chinese and Western luxury consumers

2.3.1 Chinese Luxury ‘shai’ Culture

Chinese luxury consumers are keen to show off (‘shai’) their luxury products and trendy

lifestyle.

P18

Chapter II: Know

In the know(very knowledgeable andnot so willing to show off)

Show I know (very knowledgeable and

willing to show off)

Don’t know & can’t show(limited knowledge and

not so willing to show off)

In the show(limited knowledge and

willing to show off)

Knowledge

Showing off

Figure 2-7 Chinese Luxury ‘shai’ Culture

Evolution of Chinese luxury ‘shai’ Culture

Chinese ‘shai’ culture evolved with the development of the luxury market in China. Over

time, the form of ‘shai’ is being consistently enriched. Generally, there are three stages: Shai

Product, True Man Show (真人秀) and Shai Lifestyle.

ShaiLifestyle

True man Show

(真人秀)

ShaiProduct

The original appearance of ‘shai’ –showing off your purchasing power

Figure 2-8 Evolution of Chinese Luxury ‘shai’ Culture

Very emotional –showing off your overall taste (what’s your life looks like)

The updated version of ‘shai’ product –showing off your expertise & creativity

Note: Developed markets Vs. developing markets in Asian countries

Source: CIC



Chapter II: Know

I. Product Shai

The original expression of ‘shai’ - showing off your purchasing power.

To ‘shai’ a product is one of the favorite online behaviors in the luxury / fashion category.

Given that Chinese luxury consumers are still in the preliminary stage (‘in the show’ stage),

to ‘shai’ products becomes a very popular way for them to show off and learn more about

the luxury category from other consumers’ ‘shai’.

In a typical product ‘shai’, there are pictures of the product, normally including the whole

collection (全家福), followed by a single picture for each SKU. In addition, it may include

some introduction of the product and emotional sharing of personal shopping experience

(败家经验分享).

‘Building floor’ is commonly used by luxury Shopaholics to continuously shai their ever

expanding collections. (‘Shaiers’ would write a summary on the topic post, which is easier

for ‘Shaiees’ to view their interested topics). The regular update of ‘shai’ can consistently

attract people’s awareness.

Figure 2-9 Building Floor Culture of Product Shai

Source: CIC

Top 10 topics:P1: Gucci bag, Coach necklace and bagP2: Tissot watch, Biotherm skincare productsP3: Swarovski necklaceP4: Zhoudafu braceletP5: Bally men’s bagP6: LV Palermo PMP8: LV NeverfullP9: True Man Show for LV NeverfullP11: Gucci key bagP12: Giorgio Armani sunglassLink

‘Building Floor’

Virtual Luxury Shopping Basket





Chapter II: Know

II. True man Show (真人秀)

The first stage in the evolution of ‘shai’ product – showing off your expertise and creativity.

‘True Man Show’ or Live Demo is an emerging way to ‘shai’ products. Netizens not only shaithe product but also show the real efficacy and personal taste of dressing up. Due to its tangible efficacy, it attracts significant popularity among luxury/fashion fans and has become a new means of expression in the luxury/fashion category.

It has also been observed that in the ‘True Man Show’, netizens are more willing to share their opinions and interact with others’. In this regard, it could be leveraged in brand campaign ideation to broaden brand awareness and increase consumer engagement.

DIY Outfit Matching Show

Figure 2-10 True man Show

Decoding of Fashion Trend

Source: CIC

Sample quote: Subject: 十一出游SHOW搭配 Link // My showcase of outfit for National Day holiday outing Re:就喜欢这样的贴，既养眼又叙事清楚，支持美女继续发贴// I love this post for it’s not only an eye candy but also good learning for us.

Sample quote Subject: [V] 2009秋冬教你如何打扮''色彩搭配''Link// Teach you how to wear in fall-winterTopic post:有些MM总认为色彩堆砌越

多，越“丰富多彩”。集五色于一身，遍体罗绮，镶金挂银，其实效果并不好。 // Some girls hold that the more colors they put on, the more fabulous look they will get. However, the fact is quite the opposite.


http://bbs.lady.163.com/bbs/fashion/153579312.html

http://bbs.lady.163.com/bbs/dapeiriji/155647020.html


Chapter II: Know

III. Shai Lifestyle

‘Shai Lifestyle’ talks to the emotional side of luxury consumers – showing off their overall

taste. Essentially, it’s a question of what your luxury life looks like.

On top of product related ‘shai’, Lifestyle related ‘shai’ is also very popular in luxury / fashion

category, including ‘street shots’ or ‘self-shots’. The photos are mainly about people’s

fashion and luxury lifestyle, such as night life/clubbing, travel and stylish hobbies.

Lifestyle related ‘shai’ is a hot trend in China. Brands could consider collaborating with

lifestyle communities and leveraging the emerging microblog and SNS platforms to

maximize the influence, which would resonate well with luxury fashion consumers.

Figure 2-11 Lifestyle Related Shai

Night Life Hobbies TravelStreet Shot

Sample quotes:

三亚圣诞归来，碧海蓝天+亚龙湾+大东海+蜈支洲+西岛, 实在太棒了 (Link) // Just come back from Haina， it’s really great!

Sample quotes: Subject: 9月北京街拍全是漂亮的MM Link//September Street Snapshot in Beijing, all the pretty girls.Re:不错哦，都好潮啊// Good. They are so fashion.

Source: CIC


http://bbs.sh.libaclub.com/topic.php?forumId=445&topicId=5027032

http://club.women.sohu.com/r-zz1116-6120-0-81-900.html


Chapter II: Know

2.3.2 Live Runway Broadcasting Culture

Live runway broadcasting is a new form for Chinese netizens to keep in touch with fashion

trends. Before the emergence of the microblog in China, runway live broadcasting was on

BBS. Now runway live broadcasting is hot via microblog thanks to imbedded pictures, videos

and real-time interaction.

Case Study: Burberry Beijing ShowBurberry broadcast its fashion show for Burberry Prorsum in Bejing on April 13th 2011 and invited Chinese celebrities Su Hong and Cheng Kung to run the brand account, posting photos and video with descriptions to promote interaction with netizens. In addition, designer Christopher Bailey answered netizens questions about Burberry, which attracted over 10,000 retweets.

Figure 2-12 Burberry’s 3D Fashion Show in Beijing

Sample quotes of Netizens Feedbacks: 我看的触目惊心的非常震撼 Burberry和Keane真的是很好的结合很硬朗很英伦 Link // I’m impressed by Burberry. It’s great, Burberry launched a typical British style with Keane.

我对这个品牌所传达理念的认识也翻新了 Link// I get new understanding of the brand culture of Burberry from this fashion show.

Source: CIC


http://t.sina.com.cn/1924007153/zF4mTCv61x

http://t.sina.com.cn/1924007153/wr4mTCArNi


2.3.3 Luxury E-commerce Platform

A host of third party e-commerce platforms emerged in 2010. Emporio Armani also

launched their first Chinese official online store. The third party e-commerce platforms

provide luxury products with big discounts to attract consumers. The safe payment system,

mature delivery service and variety of promotions enhance the shopping experience.

Emporio Armani’s e-commerce site faces some common problems that branded e-

commerce has previously encountered in China, the price is not attractive because the

product price is same online and offline, less product choice and the lack of luxury, in-store

shopping experience also affect sales.

P23

Chapter II: Know

Emporio Armani E-commerce Platform Third Party E-commerce Platform

Emporio Armani launched Chinese onlinestore on Nov 26th 2010

Figure 2-13 Online Luxury E-commerce Platform

Source: CIC

Case Study of Third Party E-commerce Platform: MeiciMeici is an e-commerce website selling luxury products at a discount. Meici also has Luxury Care , which provides professional maintenance service for luxury products, including cleansing, color care and repair service. Its maintenance service is popular because luxury brands do not provide maintenance service in China. Furthermore, Meici set up a reliable e-commerce platform, authenticity of products guaranteed, fast and nationwide logistics system and return or refund policy within 7days.

Meici Ecommerce Link Meici Luxury Care Link

Source: CIC


http://www.meici.com/

http://www.meici.com/care


2.4 Overseas Purchase

2.4.1 Overseas Purchase OverviewAs ever larger numbers of Chinese consumers travel overseas, they recognize that certain

products are significantly cheaper abroad. One netizen claims that a Prada bag is 12,600

RMB in Beijing but it only 795 EUR (7,398.75 RMB) in Europe (Link). It is more than just price

that has netizens talking though. They mention that there is more choice, more styles and a

better shopping experience.

Of all the destinations, Hong Kong is the most mentioned specially in relation to shopping.

Strategy is also popular when netizens discuss the shopping in Hong Kong. The second

destination for luxury shoppers is the US, where most netizens leverage business trips to

shop and will discuss their preparations before traveling. Paris is the third most popular,

regarded as an extremely fashionable and charming city with a good shopping environment.

However, in line with the new tax policy, the price difference between HK and the Chinese

mainland is becoming smaller. Japan, Korea and Singapore are becoming increasingly

popular shopping destinations for Chinese consumers. Duty free shopping (DFS) at the

airport is the most mentioned in relation to tax free shopping and credit card promotions.

P24

Chapter II: Know

Figure 2-14 Emporio Armani Price Difference: China Vs. France

China France

China: 3,300 RMBFrance: 250 EURExchange Rate:1 EUR=9.3066 RMB250 EUR= 2,326.65 RMBPrice difference=3,300-2326.65=973.35 RMB

Source: Ecommerce of Emporio Armani

肩背包¥ 3,300.00

Sac porté épauleEUR 250.00


http://bbs.55bbs.com/thread-4974304-2-1.html


Chapter II: Know

Figure 2-15 Three Types of Purchasing Agents

Profit-driven

Relationship-driven

Individual Organization

Source: CICNote: The bigger the circle, the higher the visibility/ buzz volume

Amateurs (random and

one off)

Specialist (regular and long term)

Masters(24/7 and long term)

2.4.3 Comparison of Three Purchasing Agents

Masters and Specialists are the main focus of netizens’ discussion of online purchasing agents

because they provide a mature purchasing model and a wider variety of brands and products.

2.4.2 Daigou: Types of Purchasing AgentThe majority of people are not actually able to travel overseas as frequently as they’d like. So,

purchasing agents (Daigou) are emerging quickly in China. Based on scale and motivation,

purchasing agents can be divided in to three types: Amateurs, Specialists and Masters.



Chapter II: Know

Masters Specialists Amateurs

Who

Where

Why

• B2C sites with suppliers abroad

• Individuals with constant overseas connections (e.g. family living overseas)

• Individuals travelling overseas occasionally

• Provide information and direct purchase on own e-commerce platform

• Information on purchasing agent sub-forums portals, lifestyle sites or beauty verticals

• Both online and offline

• Information can be on any site or forum

• Most offline

• For profit • Make a living or subsidize they’re other work

• Sometimes also involve good relationship

• Out of goodwill/ friendship

What & How

• Set menu: comprehensive product catalogue on own platform (e-commerce site)

• A la carte: browse products from external sources (e.g. brand’s own site) and then order from purchasing agent site

• Various types of promotion

• Provide a list of brands/ products

• Sometimes provide personal recommendation

• Buyers sometimes can order items they want

• Very little promotion

• As needed. No menu

• Price tag

2.4.4 Tax Policy Influenced the Daigou Price

China custom announced the new tax policy for ‘personal postal articles’ from 1st

September 2010. The inward/outward tax for ‘personal postal articles’ was adjusted. The

lowest duty-free allowance is adjusted from RMB 500 to RMB 50 at one time

Daigou price was hugely influenced and lots of taobao stores stopped their Daigou business

or raised their Daigou price already.

Source: CIC



2.5 Counterfeit Issue

2.5.1 Why do people purchase counterfeit luxury goods?

Counterfeits are an inevitable topic when talking about luxury market in China. Based on the

IWOM content, it’s observed that Chinese counterfeit buyers had various motivations. For

brands though, some of these fake buyers can be converted to authentic luxury consumers.

P27

Chapter II: Know

Counterfeit

Buyer

Like the design, but not willing to afford the price of authenticity

“俺看上真货的款式,看不上真货的价格 SO 我买个假的. 款式和价格我都看的上!! (link) // I like the design and pattern of real LV. But I don’t like the price. So I’d like to buy the counterfeit which had good design and acceptable price”

No brand awareness

“有的人(比如很多阿姨)就压根不知道那个是LV,只当是个寻常包就买了背了(link)// some people, they have no brand awareness at all. They just take the counterfeit as an ordinary bag.”

Own both authentic and counterfeits

“真的也有，假的也要.真真假假很好玩啊(link) // I owned both the real ones and counterfeits. It’s interesting to mix use the real and the fake.“

Can’t afford, but driven by vanity

“买不起买买山寨的过过念头，虚荣心啊虚荣心～ (link) // I can’t afford. Just bought a counterfeit due to vanity.”

Source: CIC


http://bbs.onlylady.com/thread-309550-2--.html



http://club.pchome.net/thread_1_15_5060521__.html



Chapter IIILuxury Brands Social Media Strategy

3.1 Luxury Brands on Weibo

3.1.1 Luxury Brands Weibo Buzz Overview

Weibo (microblog) has emerged as an important channel for real-time information updates,

recently capturing the attention of the world’s leading luxury and fashion brands. In

October 2010, Louis Vuitton became the first global fashion brand to launch a microblog

presence in China. In Q1 2011, we have witnessed a rapid build up of luxury brands on

Weibo, including Gucci and Burberry. Among the top 20 most discussed luxury brands on

the Chinese Internet, there are 8 luxury brands that have launched official accounts on Sina

Weibo. BBS remains an important channel for listening but Weibo also facilitates

participation.

Figure 3-1 Top 20 Luxury Brand Buzz Ranking by Tweet

P28

Chapter III: Participate

Data source: CIC Weibo tracking, Jan - May 2011.

Ranking Brand No. of Mentions Brand Account (Y/N)

1 Chanel 593,075 N

2 Dior 311,211 N

3 Gucci 253,232 37,548 followers

4 Hermes 236,208 N

5 Prada 204,298 N

6 Burberry 188,860 152,120 followers

7 Armani 92,568 N

8 Tiffany 89,582 N

9 Cartier 88,312 56,496 followers

10 IWC 80,862 1,619 followers

11 Coach 49,475 845 followers

12 Balenciaga 40,963 N

13 Louis Vuitton 38,917 99,491 followers

14 Rolex 36,706 N

15 Omega 31,388 N

16 Ferragamo 27,663 N

17 Longines 26,600 17,408 followers

18 Miu Miu 26,017 N

19 Bottega Veneta 12,767 4,016 followers

20 Marni 4,167 N




3.1.2 Luxury Brands Account Performance

Among the top luxury brands with official accounts on Sina Weibo, Burberry generates the

most engagement, that is, more retweets and netizen comments than their competitors.

Much of this was driven by its Beijing fashion show and the live runway content released via

its Sina Weibo account. Louis Vuitton also attracts high participation and enjoys the highest

retweet rate return from their activity due to effective content and strong brand awareness

(the most well-know luxury brand in China).Figure 3-2 Luxury Brands’ Weibo Account Performance Overview, Jan-May 2011

69

209

799

3,076

3,207

4,142

5,320

176

550

2,777

4,465

9,512

18,067

43,001

Coach

IWC

Bottega Veneta

Longines

Gucci

Louis Vuitton

Burberry

Num of Retweets

Num of Comments

Figure 3-3 Brand Account Retweet Rate and Comment Rate Overview, Jan-May 2011

277

61

144

342

74 57

97

155

296

6613 38

10 219

6822

9 11 4 10

50

100

150

200

250

300

350

400

Burberry Louis Vuitton Gucci Longines Bottega Veneta IWC Coach

Num of Tweets Retweet Rate Comment Rate

Source: CICNote: Retweet rate= Num of retweets/No. of tweets, Comment Rate=Num of comments/No. of tweets.




3.1.3 Content Analysis of Brand Accounts

Product introductions, celebrities & designers, fashion events and sponsorships are the most

common content produced by luxury brands. In addition, online campaigns employing the

‘@friends’ tactic is also common. For example, Longines launched a series of incentivized

retweet campaigns about tennis, while Coach launched emotional campaigns on Mother’s

Day.

For fashion brands like Burberry, Louis Vuitton and Gucci, the content of articles are most

focused on fashion events and celebrities. Watch brands like IWC and Longines share

category knowledge, which is also an important tactic in releasing content that resonates

with netizens.

Figure 3-4 Content Analysis of Luxury Brands’ Account by Tweet, Jan-May 2011

0% 20% 40% 60% 80% 100%

Average*

Coach

IWC

Bottega Veneta

Longines

Gucci

Louis Vuitton

Burberry

Product Introduction Celebrity & Designer Fashion Event & Sponsorship

Online Campaigns Store Promotion & Opening Brand Story

Charity Knowledge Sharing Others

Source: CIC Weibo TrackingNote*: Average refers to total 7 brands average.




Figure 3-5 Retweet Rate by Topic by Brand, Jan-May 2011

Retweet Rate: average num of retweets per tweetTTL Brands are the average of the 7 luxury brand

Source: CIC

Retweet Rate by Topic by Brand

In terms of retweet rate, charity, fashion events and store promotions are the most popular

amongst luxury brand accounts. Brands could consider releasing more content relating to

fashion events in order to attract netizens’ attention and increase their weibo exposure.

TopicTTL

BrandsBurberry

LouisVuitton

Gucci LonginesBottegaVeneta

IWC Coach

Product Introduction

74 57 330 72 6 36 12 6

Celebrity &Designer

64 52 272 85 4 26 8 2

Fashion Event & Sponsorship

109 323 331 41 8 57 4 0

Online Campaigns 14 N/A N/A N/A 26 N/A N/A 1

Store Promotion & Opening

90 36 336 100 14 49 6 N/A

Brand Story 43 N/A 146 28 N/A 37 4 0

Charity 175 N/A 644 51 3 N/A 2 N/A

KnowledgeSharing

6 N/A N/A N/A 7 N/A 5 N/A

Others 50 17 260 13 2 N/A 6 0

Fashion Event Celebrity & Designer Product Introduction




3.1.4 Brand Owned Weibo Followers Analysis

For luxury brands, it’s important to have the both quantity and quality of followers. For

example, Bottega Veneta enjoyed a relatively high proportion of quality followers, those

whose accounts have more than 100 followers. A high-quality follower group helps branded

weibo accounts with reach and exposure of their content.

19% 15% 12% 14% 17%

34%

22% 19%

17%17%

14%15%

13%

21%

19%19%

17%19%

18%18% 15%

16%

18%15%

28% 33%

35%36%

27%

16%

29%

18%

19% 15%21% 17%

27%

12% 12%

28%

0%

20%

40%

60%

80%

100%

Average Burberry Louis Vuitton

Gucci Longines Bottega Veneta

IWC Coach

Followers >200 Followers 101~200 Followers 51~100 Followers 10~50 Followers < 10

Figure 3-6 Brand Weibo Followers’ Breakdown by Num of Second Layer Followers

Source: CIC Weibo tracking, random sampling of brand account followers. (API data access of followers profiles)Note: Average refers to total 7 brands average.

Followers Num 152,120 99,491 37,548 17,408 4,016 80,862 845

Launch Time 2011.2 2010.10 2011.1 2010.11 2011.4 2011.3 2011.4




3.2 How do luxury brands utilize social media?

3.2.1 General Tactics

Generally, brands can develop digital tactics in relation to the following perspectives:

Platform (where you launch the campaign), People (who you target and leverage to help

communication and broadcast) and Culture (the hottest trends, content and behavior).

Source: CIC

Platform & Channel:

Multi-channel Broadcasting

Culture:

Hot Online Culture

People:

Efluencers

• Brand’s campaign can utilize multiple social media platforms, including microblog, blog, BBS, video sharing etc.

• BBS good for listening, microblog good for listening, engagement and viral.

• Fashion editors and celebrities are good choices for luxury brands to leverage with campaign activity, especially when it comes to their microblog campaign.

• The diversified ‘shai’ culture• Creative ‘DIY’ culture• Live broadcasting




3.2.2 Case Study: Tweet Diffusion Model for Burberry 3D Fashion Show

It’s interesting to look at the tweet’s journey through the social network. In this case,

Burberry posted a warm note about a 3D fashion show in Beijing via Sina Weibo, which

generated 854 retweets, 104 comments and achieved a total exposure of over 3 million

netizens. From the below tweet diffusion model, we can identify efluencers’ performance

(e.g. “全球热门排行榜”) and evaluate their effectiveness in spread of brand’s tweet.

Figure 3-7 Analysis Tweet Diffusion Model

Layer Retweets % of Retweet

1 324 37.9%

2 444 52.0%

3 47 5.5%

4 12 1.4%

5 18 2.1%

6 6 0.7%

7 3 0.4%

Total 854 100%

Layer of Followers

Exposure% of total Exposure

Contributed

Original 133,274 4.28%

1st 2,525,826 81.04%

2nd 247,868 7.95%

3rd 173,247 5.56%

4th 23,910 0.77%

5th 8,570 0.27%

6th 2,913 0.09%

7th 1,146 0.04%

Total 3,116,754 100%

Layer 1

Layer 2

Layer 3

Layer 4

Layer 5

Layer 6

Layer 7

Source: CICNote: Tweet Exposure = total number of direct followers + Nth (n>1) layer followers of whom did the retweet% of total Exposure Contributed= each layer’s followers/ total followers% of Retweet = Each layer’s retweets count/ total layers’ count

‘The famous British band, Keane will attend the event @Burberry. They will have their first show in China in Burberry’s Beijing event on Apr 13th, so as to show the close relationship between Burberry and British music. Tom Chaplin, singer of Keane made a special video for Chinese fans’




3.3 Social Media Strategies/Marketing for Luxury Brands

3.3.1 Offline to Online

Luxury brands can increase brand awareness and make a connection with consumers

through the ‘O2O’ campaign approach.

Increase awareness &Making the connection

Brand offline campaigns Online platforms

Figure 3-8 The cycle of ‘O2O’ scenario:

Brands can leverage online platforms to promote offline campaigns

Offline participants would shaitheir experience and share feedback on online platforms

Source: CIC




3.3.2 How to Build Brand Relationship with Social Media?

As Chinese social media platforms differ in various ways, luxury brands should take

advantage of the particular strength of the platform for different marketing strategies.

Popular Microblog/ Video Sites

(e.g. Weibo, Youku)

• Mass awareness distribution

• Mainly target aspirationalconsumers

Fashion Sites & Premium SNS

(e.g. Yoka, Liba, P1.cn)

• More relevant target groups

• More sophisticated luxury consumers

• Social elements with special focus on relation building.

Brand Fans Club

(e.g. Weibo brand account, Douban fans group)

• Very focused target group

• Brand users and brand fans

• Fan management or CRM

Broad Awareness & Appeal

Brand Appreciation

Emotional Attachment

Figure 3-9 Social Media Approach for Luxury Brands

Sina Weibo & Youku P1.cn Fans Group

Source: CIC




3.4 The Expansion of Weibo Presents New Opportunities andChallenges for Luxury Brands

3.4.1 The Opportunities for Luxury Brands

With the expansion of the microblog medium in China, it brings new opportunities for luxury

brands to enhance their social media marketing and strategy.

I. Source of Celebrities on Weibo

Microblogging is largely personality-driven and the top ten accounts are celebrities and other prominent individuals (Chinese actress Yao Chen currently holds the most popular account in China, with over 10 million followers). As a result, the personal accounts of fashion industry figures often attract more followers than the accounts of large fashion brands themselves. Luxury brands could leverage the influence of celebrities and collaborate with them in both awareness and engagement campaigns.

Burberry : Chen Kun and Su Hong turn over Burberry account on the Beijing 3D fashion showBurberry announced that Chen Kun and Su Hong would report on its Beijing 3D fashion show in April 2011 via the Burberry Sina Weibo account. This tweet attracted 2,449 retweets .

II. Branded Communication via Weibo: What’s the right voice for a luxury microblog?

From our perspective, the microblog is a humanized window into brand culture. It is important for luxury brands to use an appropriate tone and content that is in line with their brand image and position. This will help to protect brand image while building an emotional bond with netizens and maintaining a ‘distance’ appropriate for prestige brands.

Video: Louis Vuitton City Guide, LV uses text description with attached related video to show the luxurious brand culture

Source: CIC

Source: CIC




3.4.2 The Challenges for Luxury Brands

Microblogging also creates challenges for brands, from crisis management to followers

maintenance.

I. Brand Crisis Management

The microblog is an open platform and as such, it is a challenge for luxury brands to maintain the proper image and publicly manage any crisis. When there is such a crisis, the viral nature of the microblog medium will make the spread much faster than any other media channel.

Case Study: Dior John Galliano CaseOn the 25th of February 2011, Dior’s chief designer John Galliano was arrested by French police. This news rapidly spread on Sina Weibo and aroused a lot of discussion, over 16,000 tweets.

II. Follower Maintenance

With a growing number of followers, brands will spend more time on follower maintenance. Luxury brands with an unmanageably large number of followers find it difficult to build good interaction with the majority, which can reduce the followers’ brand loyalty.

In addition, more and more brand accounts face the problem of ghost followers (僵尸粉), which not only increases the cost of follower maintenance but is also detrimental to the efficiency of brand broadcasting.

Source: CIC

Note: Ghost Followers - Virtual followers are registered by software, its main purpose is to increase the number of an account’s followers. Ghost followers generally post little content and undertake little interaction with others. There are also some artificial ‘real followers’ with account information and the appearance of genuine activity. However, these accounts are not legitimate and their purpose is the same with ghost followers.

John Galliano被Dior炒鱿鱼了！消息被

确认了，惊人。大家还是要努力工作啊//It’s confirmed that John Galliano was fired by Dior. It’s shocking.

John Galliano，英国的时装icon，因醉酒涉

及闹事及歧视犹太人言论被拘留，并在今日被Dior公司宣布停职。 Link //John Galliano was arrested by police due to abuse Jewish and then was fired by Dior today




About GroupM Knowledge


About GroupM China

GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Kinetic, Maxus, MEC, MediaCom, and Mindshare.

GroupM is the global number one media investment management group.

GroupM employs more than a thousand people in eight cities across China. With total media billings in excess of USD 4 billion (RECMA: 2010 Definitive), GroupM is China’s top media communications group and the industry’s biggest investor in syndicated and proprietary media research and optimization tool development.

About GroupM Knowledge

GroupM Knowledge is GroupM’s think tank and knowledge management arm in China. This unit is responsible for industry-wide thought leadership research, exploring issues affecting the media industry in China; working with syndicated research suppliers, and managing the Group’s proprietary tools, research and systems. The unit also manages a media consultancy, advising clients with specific media research requirements.


About Other GroupM Knowledge Research Projects


Project Deep Dive (PDD) 2011: GroupM proprietary survey on China’s lower

tier markets

Digital Touch with TNS: Reveal China’s most effective touch points

Mobile 360: Mobile phone as an effective communications touch point

China’s Youth Research: To understand media consumption habits and

aspirations of Chinese youth

LuxC: Understanding luxury car users and segmentation research

‘Big Bang’Eye Spy Research: Using eye tracking to evaluate effectiveness of

magazine and online ads


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Shanghai:

28F, The Center, No.989, Changle Rd. Shanghai 200031 ChinaTel: 021 – 2405 – 1293 / 94

Beijing:Room1202,12/F Hua Li Building, No.58 Jin Bao Street Dong Cheng District Beijing 10005 China Tel: 010 – 8523 – 3679

长乐路989号世纪商贸28楼，上海, 200031, 中国电话: 021 – 2405 – 1293 / 94

东城区金宝街58号华丽大厦12层1202室, 北京, 10005, 中国电话: 010 – 8523 – 3679

Contact us: Lucy Zhang [email protected] Director of GroupM Knowledge

www.groupmchina.com www.igroupm.cn (Q4.2011)

weibo.com/groupmknowledge

Guangzhou:8/F, Development Center, 3 Lin Jiang Road, Pearl River New CityGuangzhou 510623 China Tel: 020 – 2881 – 8288

天河区珠江新城临江大道3号发展中心8楼, 广州, 510623, 中国电话: 020 – 2881 – 8288


mailto:[email protected]


About CIC

About CIC

CIC is China's leading social business intelligence provider. CIC enablesbusinesses to fully leverage the power of social media and (Internet Word ofMouth) IWOM intelligence across the organization. Since coining the termIWOM in 2004, CIC has pioneered the industry to help companies meet theirsocial media marketing and social business needs by providing customizedresearch, consulting services, syndicated reports, as well as technicalsolutions and platforms all via an objective, third party perspective. In additionto helping companies leverage social media intelligence for more informeddecisions, CIC is monetizing the social business industry in China by creating anintegrated social business support system.

CIC utilizes its own patent pending technology to capture millions of onlineconversations and ‘makes sense of the buzz’ by assembling them into easy tounderstand intelligence and provides interpretation which informs strategicdecisions and leads to action. CIC gathers and mines over 100 million naturallyoccurring consumer comments every month from a range of uniquely Chinesesocial media platforms including blogs, BBS and social network sites and appliesits unique, China-derived methodology and indexes to provide a detailed andcomprehensive picture of the social media landscape and its implications forbusiness. CIC has well over 2 billion mentions of brands and products from wellover 1 billion consumer comments that have been indexed and archived.

CIC has strong, long term retainer relationships with multinational agencies andFortune 500 companies, including Nike, Pepsi, Intel, L‘Oreal Group, BMW, P&G,Unilever and many more.

This report is copyrighted material owned by CIC. Any improper use of thisdocument or its content will be considered a violation of CIC IP copyright andCIC has the right to take legal action.

Copyright Statement


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CIC white paper archive

Find more CIC white papers on our CIC slideshare site: www.slideshare.net/CIC_China

2011: CIC 2011 White Paper: From Social Media to Social Business Topic 1: An Overview of the Evolution of Chinese Social Media | view

2010: Chinese Consumer Report (in collaboration with Roland Berger) | view

2010: Internet word of mouth proven to have impact (CIC and R3) | view

2010: ExpoSay: Shanghai Expo tickets are the focus of intense buzz in China's Social Media (Edition_1) | view

2009: Making Sense of IWOMTopic 1: IWOM White Paper on the Role of Internet Word of Mouth in Driving Purchase Decisions | viewTopic 2: How IWOM is generated and disseminated | viewTopic 3: How Brands Can Participate in Online Communities | view

2009: Chinese Consumer Report (in collaboration with Roland Berger) | view

2008: The Internet is THE communityTopic 1: The Chinese IWOM Landscape | viewTopic 2: Alternative Ways to Measure Internet Community Dynamics | viewTopic 3: The Diversity of Chinese Net Language | viewTopic 4: Reshaping the Relationship between Brands and Consumers | view

2008: Tuning into Sports IWOM | view

2008: Tuning into Notebook IWOM | view

2007: What's Driving Auto Buzz | view

2007: The Talk About Phones | view

2007: Word of Health: China | view


http://www.slideshare.net/CIC_China/from-social-media-to-social-business-topic-1

http://www.slideshare.net/CIC_China/2010-chinese-consumer-report-by-cic-and-roland-berger

http://www.slideshare.net/CIC_China/internet-word-of-mouth-proven-to-have-impact-cic-and-r3

http://www.slideshare.net/CIC_China/exposay-shanghai-expo-tickets-are-the-focus-of-inense-buzz-in-chinas-social-media-edition1-201002

http://www.slideshare.net/CIC_China/making-sense-of-iwom-iwom-white-paper-on-the-role-of-internet-word-of-mouth-in-driving-purchase-decisions

http://www.slideshare.net/CIC_China/making-sense-of-iwom-how-iwom-is-generated-and-disseminated

http://www.slideshare.net/CIC_China/making-sense-of-iwom-topic-3-how-brands-can-participate-in-online-communities

http://www.slideshare.net/CIC_China/roland-berger-chinese-consumer-report-2009

http://www.slideshare.net/CIC_China/q3-wp-topic-onethe-chinese-iwom-landscapeen-presentation

http://www.slideshare.net/CIC_China/q3-wp-topic-twoalternative-ways-to-measure-internet-community-dynamicsen-presentation

http://www.slideshare.net/CIC_China/q3-wp-topic-threethe-diversity-of-chinese-net-language-presentation

http://www.slideshare.net/CIC_China/q3-wp-topic-fourreshaping-the-relationship-between-brands-and-consumers-presentation

http://www.slideshare.net/CIC_China/tuning-into-sports-iwom-q4-2007

http://www.slideshare.net/CIC_China/tuning-into-notebook-iwom-2007-q3-416884

http://www.slideshare.net/CIC_China/whats-driving-auto-buzz

http://www.slideshare.net/CIC_China/talk-about-phones-june-2007-white-paper-slides-cic

http://www.slideshare.net/CIC_China/word-of-health-china-oncology-public


Contact us

Shanghai:Suite 108, Block A, UDC Innovative Plaza, 125 Jiangsu North RoadShanghai, China, 200042Tel: 021 - 5237 3860 | Fax: 021 - 5237 3632

Beijing:1006 / 10F, Block C, No. 60, Dongsihuanzhong Road, Chaoyang DistrictBeijing, China, 100025

江苏北路125号华联创意广场A栋108室, 上海, 200042, 中国电话: 021 - 5237 3860 | 传真: 021 - 5237 3632

朝阳区东四环中路60号远洋国际中心C座1006室, 北京, 100025, 中国电话: 010 – 5908 0268

Contact us: [email protected]

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@cicdata

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www.slideshare.net/CIC_China




Site: www.ciccorporate.com Blog: www.seeisee.comFounder Blog: www.seeisee.com/samIWOMmaster platform: www.iwommaster.comIWOMdiscover platform: discover.iwommaster.comIWOMexplorer platform: explorer.iwommaster.comIWOMcooperator platform: cooperator.iwommaster.com

www.groupmchina.comwww.igroupm.cn (Q4.2011)weibo.com/groupmknowledge

The Voice of Luxury: Social Media and Luxury Brands in China (GroupM China and CIC)

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