Asian luxury market evolves: Brands to reposition for ‘ultra lux’ and ‘mass chic’

by Marketing ON 15 March 2013

The luxury market in Asia in undergoing a paradigm shift as the ways in which Asian consumers display wealth and mark status evolve, according to a leading trend forecaster.

As the size of the middle class in many Asian nations balloons, highly coveted luxury brands are shifting focus from ultra-opulence and customisation to affordable mass-chic, transforming the idea of what constitutes luxury, trendwatching.com reveals in its upcoming Asia Pacific Trend Report.

“Luxury – from Louis Vuitton to Shanghai Tang – has played a central role in the recent Asian consumption story,” the report reads. “But the dance of success, status and material display so visible in many Asian societies – and so fundamental to luxury consumption – is evolving. In 2013, the luxury slowdown affecting some is only a staging post in a wider, more momentous shift.”

Manifestations of this trend are expected to come in the form of affordable luxury that can be bought on impulse, ‘ultra-lux’, high-visibility purchases and luxury gifting.

The burgeoning Asian middle class, which is expected to make up 85% of middle class growth globally by 2020, is expected to take up the mass chic offers and buy affordable items impulsively as well as save to afford high-end luxury offers.

Meanwhile, for wealthy Asians traditional luxury is losing its sheen prompting them to take it to the next level with face ultra-lux, in your face purchases, such as the US$26k cocktail available from Singapore bar Pangaea and limited edition Shiseido face moisturiser more expensive per gram than gold.

Goods and services that make an explicit, maximum volume declaration of elite wealth and status will win favour with the wealthy, the report predicts.

Furthermore, the custom of gifting is being adopted by rising numbers of affluent consumers as an overt and often calculated show of status and wealth. In the lead up to the Mid-Autumn Festival in September 2012, Chinese bank ICBC sold a range of 50-gram solid gold mooncakes for US$6820 to give as gifts.

While there has been a slowdown in the Asian luxury market for some – conglomerate Richemont reported flat sales in China during quarter four 2012 after several years of exceptional growth – the market is expected to continue to grow strongly by repositioning for the elevated tastes of the wealthy or the emerging wealth of the middle class.

Facebook earnings report for Q4 2012: mobile usage overtakes desktop

by Marketing ON 1 February 2013

The final 2012 quarterly results are in for social network giant Facebook and it seems that users are becoming increasingly more mobile than ever when checking in, updating their status and posting random thoughts. New figures show mobile daily active users outweighed desktop daily active users for the first time in last year’s fourth quarter.

Releasing its results for Q4 2012, Facebook also reached 1.056 billion users in the three months to December, a 25% year-on-year increase from Q4 2011.

The largest increase of users emanated from Asia, most notably Japan, while global daily active users grew to 618 million, a 34 million increase from last quarter.

Facebook reports that some 680 million of its monthly active users use mobile devices, an increase of 248 million since Q4 2011 (57%).

On the move and connected, exploring the world for business or pleasure – that’s the new status quo for Facebook users. It’s a capture-everything-around-you type mentality. Around 157 million of those monthly active users are mobile only – a 108% increase year on year.

Principal analyst at Ovum, Eden Zoller, believes that Facebook has accelerated and revamped its mobile presence in order to bring back the advertisers after key players, General Motors and Kia, lost faith with its online advertising last year.

“Mobile is helping boost advertisers’ interest in the social network,” says Zoller.

“What stands out from Facebook’s Q4 results is the centrality of mobile for its service strategy and growth. Revenues from mobile advertising accounted for 23% of total advertising revenues compared to 14% in the previous quarter, with sponsored stories in the mobile news feed and app install ads proving effective,” she adds.

Over the next quarter, it will be interesting to see the effect brought about by the recently-announced Graph Search, the feature Zuckerberg and Co. will be hoping attracts increased advertising dollars via sponsored search.

Can Australia generate a ‘Korean’ wave? Hallyu lessons for brand Australia

by Chris Baumann ON 1 August 2012

This article is co-authored by Wujin Chu, professor of management at Seoul National University.

What started on a small flame with Korean dramas and Korean music entering the US market in the 1960s has recently turned into a full-blown Korean wave, or Hallyu, swamping the rest of Asia, Brazil and Europe. This K-Wave phenomenon includes girl bands such as Wonder Girls with 39 million YouTube downloads and Girls’ Generation with 24 million downloads, or the boy bands Bigbang and Superjunior. Korea’s rival Japan has its own version with J-Pop and Hong Kong competes with Canto-pop, but the Korean pop stars are unique in combining absolute perfectionism in terms of their singing, their music and dance, and also their appearance and overall entertainment.

Consumers of K-Pop are predominantly teenage girls and young female adults that look up to the K-Pop stars, viewing them as role models. The fan base also rapidly expands to ‘Uncle fans’, males that enjoy the stars’ talent and beauty. Fans not only passively consume, but increasingly engage more actively with cover singing and cover dancing, sometimes costume play. While the Korean wave is in its infancy in Australia, it is fast growing in India, Indonesia, USA and Brazil, and has already reached maturity in Japan, China and Southeast Asia.

The Korean culture is unique in its fascinating blend of traditional Confucianism and modern dynamism, two seemingly opposite extremes. But perhaps Western consumers find this hybrid attractive because their own cultures can no longer offer either – traditional values have been somewhat removed from education and everyday life, and Western markets are also much less dynamic in comparison to fast paced East Asia.

Korea has grown from a war-torn country to an emerging market and now OECD member in the lifespan of less than 50 years. This impressive economic progression is now reflected in the cultural Korean wave Hallyu, with forerunners in Korean electronics (TV, computers, smart phones) by Samsung and LG, and the Korean car brands Hyundai and Kia. Besides products, Korean services are on the way to conquer global markets with Korea’s two major airlines Asiana and Korean Air winning numerous prestigious passenger awards. Their home base, Seoul’s Incheon airport, is one of the world’s most modern and convenient for visitors and transit passengers. Subsequently, tourism into Korea has also grown from 5 million foreign visitors to over 11 million over the past decade. Other services such as tertiary education in Korea are also among the world’s best with globally top ranked Seoul National University, Korea University and Yonsei University.

Contrast the Korean wave to Australia’s standing in global markets. Manufacturing of products is competitive if heavily subsidised by the Government (eg. Holden, Toyota), and the services sector faces dropping tourist and international student numbers. Qantas is continually losing market share and its brand is becoming more ‘Jet-star-ised’ with little growth in its network nor brand equity in contrast to the expanding East Asian carriers. Sydney airport is dated and in urgent need of an upgrade and renovation, but public funds are allocated otherwise. Overall Australia’s service quality is somewhat below levels found in East Asia with a ‘no worries’ attitude rather than a ‘serve’ approach found in East Asia, and opening hours for shopping and restaurants are restricted. Asian tourists find shopping in Australian centres boring and are instead flocking to their own emerging tourist destinations like China, Thailand and Korea.

Can Australia learn from the Korean wave to reposition former glory? To begin with, there is no obvious co-ordinated unique nation branding for Australia, whereas the Korean government actively participates in communicating what Korea has to offer. Australia also lacks a cultural wave like a Korean wave in terms of music, drama, movies or food promotions that would showcase what Australia has to offer and ultimately attract tourists. The Korean wave occurs in phases with the first wave (1995-2005) promoting Korea to the world, generating more tourism, while the second wave (2006 to present) aspires an overall expansion and performance, ultimately leading into the future third wave that will promote Koreanism as mainstream. Australia may have to attempt a similar step-by-step approach, but it will take time and effort to establish a globally attractive unique positioning strategy for Australia that could spread into the domains of music, drama (beyond Home and Away) and food. Internal efforts have to come first to improve service quality and infrastructure, followed by establishing Aussieness beyond a ‘no worries’ attitude. ‘No worries’ in service delivery is not viewed as an attractive proposition by the aspiring Chinese and Koreans with their high expectations, so Australia needs to beef up its services. What is Australia’s ‘wow’ factor? How can Australia’s market orientation be communicated with a more global and better co-ordinated media strategy? K-Pop penetrates YouTube, Google searches and Facebook. Once Australia has found its unified and sustainable marketing message, a similar media strategy to Koreas has to be implemented including mobile applications and Twitter. It could be argued that rather than introducing a carbon tax with automated welfare payments, focusing on improving Australia’s infrastructure and service environment would contribute more to the creation of a potential A-Wave, so that ultimately more than just ocean waves attract global business and tourists to Australia.

Japan the only place where Twitter is more popular than Facebook

by Marketing ON 10 January 2012

A new whitepaper from online measurement firm ComScore reports that Japan is the only country in the world where Twitter outperforms Facebook in terms of monthly unique visitors.

Unique monthly Japanese Twitter users number 21.6 million in Japan, representing a reach of 29.4%, while Facebook counts 14.4 million users, a reach of 19.6%. Japan’s next most popular social network is Mixi, a local offering that until mid-2011 rivalled Twitter, but has since dropped off and has just been taken over by Facebook.

But Business Insider predicts Twitter’s Japanese dominance may not continue for long, suggesting that if the current rates of growth continue, Facebook will overtake Twitter within a year or two. And when time spent on each site is considered, Facebook commands a much larger chunk of its users’ time.

One reason for the success of Twitter and Mixi over Facebook among internet users in Japan may be the Japanese preference for online anonymity. AdAge quotes a recent Forrester report suggesting that cultural anxieties about privacy have affected the uptake of social media.

JAPAN

Top 5 social networks in Japan

Contrast the above graph to Australia’s, which is a more typical scenario among the 43 countries included in ComScore’s measurements.

AUSTRALIA

Top 5 social networks in Australia

The only other countries where Facebook doesn’t reign supreme are Russia, South Korea, Brazil and Poland, although the latter pair will not remain this way for long.

Japan is anomalous in its social media profile for another reason. While in most countries social media accounts for the majority of time spent online, now surpassing even email and porn, in Japan just 58% of the internet population uses social media. The only other country where less than 85% of internet users were using social networking was China, where Facebook and Twitter are blocked, although local substitutes enjoy popularity.

Worldwide social media penetration

Multichannel banking the norm in developed Asia

by Marketing ON 20 December 2011

The impact of the internet on the media and retail industries is well documented, but less so is the change it is starting to bring in consumer financial services.

According to McKinsey’s ‘2011 Asia Personal Financial Services’ survey, the use of bank branches is faltering across Asia, down 27% since 2007 – the first recorded drop in branch visitation since McKinsey began the survey in 1998. The annual survey examines developed Asian countries Korea, Japan, Taiwan, Hong Kong, Australia and Singapore.

Of the six interactions consumers in developed Asia have with their banks each month, more are now conducted using the internet and mobile channels (averaging 3.2 times a month) than traditional channels such as in-branch and telephone (2.6 times a month).

This change is being noticed across both subscription (purchase of a new product) and transaction interactions. In fact, more than a quarter (27%) of consumers say they would prefer to subscribe through digital channels the next time they buy a savings or basic investment product, an increase of 5% since 2007.

The study also found that the changes in consumer behaviour were not just a shift towards digital, but that consumers have started using multiple channels. The majority of respondents in the six developed Asian markets used at least five channels to research a new savings or basic investment product, 1.7 channels for making a transaction and 1.8 channels for service requests.

Word of mouth, offline media and third party agents were the additional channels that people were using for their banking needs.

The authors of the report commented, “Banks need to provide customers with a seamless experience across all channels.

“Done right, the institutions that create the right kind of experience will win tangible economic rewards through increased cross-selling and customer loyalty.”

In the six developed Asian markets surveyed, Japan and Australia led the pack when it came to accessing subscription and transaction services through digital channels, with Singapore also showing strong usage.

The report notes that the increased use of digital was not limited to tech-savvy, younger consumers. Consumers aged 55 and older were just as likely to use online banking for transactions and services as any other age group.

McKinsey’s 2011 Asia PFS surveyed 20,000 consumers in 13 countries to understand how consumer behaviour in the banking sector is changing.

Asia-Pacific fuels rapid growth in internet audience

by Marketing ON 17 November 2009

A study has found that visitors to internet sites in the Asia-Pacific region has increased 22% to nearly half a billion, with most individual countries in the region experiencing double-digit growth rates.

The comScore report on the growth of internet audiences in the Asia-Pacific region was based on data from its World Metrix service.

In September 2009 the internet population in the Asia-Pacific region reached 484 million visitors, explained the report, with age groups 15-plus accessing the internet from a home or work location.

With nearly half a billion people online, the region now accounts for 41% of the total 1.2-billion person global internet audience.

China, home to the largest internet population in the world, experienced a 31% increase to 220.8 million, making it the fastest-growing internet country in the region.

Japan saw its online population increase 18% to 68.3 million, while India climbed 17% to 35.8 million users.

“With most markets in the region experiencing double-digit growth, marketers and advertisers have the opportunity to capitalise on the potential of the online channel to reach and engage a surging number of people engaging in a variety of consumer activities online, including reading content, watching video, playing online games, engaging with brands, conducting financial transactions and making online purchases,” said Will Hodgman, comScore executive vice president for the Asia-Pacific region.

Dont bother passing me the remote

by Marketing ON 5 August 2009

Over the past six months my blogs have focused on the digital consumer, but in this months post Ill focus on one of the bigger, and potentially controversial, consumer trends at play. Its a trend were all familiar with – multi-tasking – and specifically watching TV while surfing the web. Its nothing new – many of you probably do it (maybe even whilst you are reading this), but it’s prevalence is growing and it has big implications on the marketing community. So what are the facts:

Australia is the most likely market in Asia where the PC is based in the lounge
32% of online Australians watch TV and surf the web simultaneously on a regular basis
Evenings are the most likely time, with no particular skew to particular days, although weekends are marginally lower than weekdays
The behaviour is slightly higher among the under 30s, but prevalent throughout society, and
Typical activities are emailing (82%), general browsing (69%), social networking (60%) and online shopping (39%).

The trend is being driven by a fundamental shift in the home-PC market. Most consumers opt for laptops these days, with an increasing proportion choosing entry level netbooks. Over 60% of online households have WiFi. In essence, browsing is no longer limited to sitting at the PC in the study.

Im an avid multi-tasker but I also know in reality Im hopeless at it, and can only ever focus on one thing at once. Is it really possible to concentrate on two things at once? Numerous scientific projects have set out to prove that multi-tasking is a physical impossibility, with a mixture of outcomes. However, what we can assume is that consumers can only allocate partial attention to each activity and will generally have a hierarchy of focus – they will be concentrating on one task over the other.

So which device – the TV or the PC – is more engaging? In our most recent digital study (May 2009) we asked our respondents to split their concentration between the PC and the TV. The result was an allocation of concentration at 39% TV to 61% internet. While I would not claim this is a scientific test, it does indicate where consumers are generally more focused when multi-tasking.

So what are the implications? The obvious implication would be that TV adverts will have to work even harder to cut through – the TV might be on, but to actively engage with an audience, to grab their attention, advertising has to work harder than ever. Perhaps (although we did not test this), the importance of audio cues is growing as a means of attracting attention?

However, a second, more important implication, is the opportunity it provides for marketers to generate brand interaction using the TV. If the content is engaging enough and you can spark curiosity in the consumer, you can encourage consumers to interact immediately. For example, 68% of consumers have responded (immediately) to content in a TV show and gone online to find out more while 54% have responded to a TV advert by going online to find out more.

There is an immediate implication that search should always be integrated into your media plan – while this might seem obvious I still find it surprising when I type in key advertising messaging, be it tag lines, slogans, etc., that I regularly do not get a link through to the brands website or the campaign microsite.

But the most important implication is the sheer range of opportunities it creates for marketers, and the opportunity to combine engagement with scale. I like to refer to digital marketing as being a blank piece of paper – there are few rules about what you can and cant do creatively. It’s nature promotes engagement, but the challenge has always been scale. The multi-tasking trend provides an opportunity to create this scale for digital, by using other media such as TV in a co-active manner. In essence, multi-tasking creates an abundance of opportunities for original, cross-media campaigns to tap into mass, mainstream audiences.

Weekly podcast: digital life in Asia

by Marketing ON 30 March 2009

Marketingmag.com.au has teamed up with the guys at Love Digital to bring you this weekly podcast on all things digital.

In this weeks show:

With talk that Asia is likely to emerge from this financial crisis with
much more prominence in the world, we wondered: what is digital life
like in Asia?
News in 90: with Kate Kendall – the latest from the Twittersphere regarding the outing of the Fake Stephen Conroy and regional broadcaster rallying for digital radio.
Interview: Interview with Thomas Crampton, regional director of digital influence at OgilvyPR.