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Media Consumption Map of China Cities

群邑智库 · 公众号 · · 2022-03-02 18:12

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Influenced by the international situation and the pandemic, Chinese domestic economy tends to go with “internal circulation,” boosted by “external circulation” at the same time. New urbanization strategy promoted population mobility not only flow to megacities but also lower-tier core cities. The global epidemic has led to the stagnation of overseas manufacturing and accelerated the upgrading of domestic industries to high-end production. High-end manufacturers are cultivating consumers in lower-tier markets with “new consumption driver ”, as these consumers will affect the future consumer market in terms of public opinion, media, and consumption choices. Therefore, understanding lower-tier markets and exploring needs of potential market are critical for brands. In this issue of Media Express, GroupM Knowledge analyst will present insights on city groups.

Key takeaways are as below：

We divide all Chinese cities in ten groups according to five dimensions, including market size, consumption willingness, transportation and logistics, media consumption, and social culture in thousands of cities across the country: for brand marketing, the introduction of the five dimensions derives from considerations of market in general, marketing exposure and content.

From the perspective of the market

Market size: market size ranks down like ladders, but population mobility will change the future. The potential middle-tier market will usher in more dividends: the market scale determines the city’s consumption scale. To expand the market, brands must consider both the current situation and future potential of the market.
Consumption willingness: consumption is transforming from basic to hedonic and symbolic consumption. Middle and low-tier markets show significant growth in hedonic consumption. Symbolic consumption takes up a huge scale in high-tier markets: With various consumption willingness, and multiple consumption patterns and categories in each market, different markets have different maturity and adaptability.
Transportation and logistics: transportation and logistics determine the reachability of the consumption end and affect the consumers’ choices: with the increased capability of roads and railways logistics, low-tier markets show rapid growth in online shopping. Consumer behaviors and the development of e-commerce platforms are interrelated. With the rise of e-commerce, consumers in low-tier markets show a strong intention to share after online shopping.

From the perspective of marketing exposure and content

Media consumption: changes in media consumption correlate with the development of media platforms, while differences in media consumption in various markets are enlarging: in digital media, low-tier markets show a high trust in ads published on private e-commerce platforms or related with recommendation content, but with low exposure. In traditional media, especially for OOH, preferences are varied in different market groups, but always closely related with local life.
Social culture: preference in content is affected by local culture. Drama content highly correlates with local development and industrial structure: new industrial cities preferred youth dramas. The audience in early matured, under-developed markets prefer history and army dramas.

Cities are grouped according to market size, consumption willingness, transportation and logistics, media consumption, and social culture, aiming to promote brand marketing strategy

Market consumption scale is a critical index for brand marketing. To help brands understand the vast market in China and find opportunities for further penetration and expansion, we have quantified the consumption willingness, market size, social culture, transportation and logistics, and media consumption in thousands of cities across the country. We have taken all these five dimensions into consideration and subdivided the 2198 cities (excluding districts) into ten city groups.

For brand marketing, the five indexes derive from considerations of the market in general and the marketing exposure and content. After grouping cities into ten classes, we classify them into higher, middle, and lower consumption groups. We will reveal the differences in consumption patterns, media, channels, and content among different consumption groups.

Market consumption scale ranks down like ladders. The future potential market strongly correlates with population mobility

The scale of a city represents the possible consumption level in that market. From the current situation, consumption levels among cities are ranked down like a ladder shape, and there is a massive gap between the top and middle-tier markets. The potential of consumption growth is highly correlated with the inflow of the population. Currently, top cities show slower growth of population. Medium cities benefit from the country’s policies, acquiring a large population inflow. For example, cities like Foshan (T3 group), and Guiyang (T5 group), acquired a population growth of 6% in recent five years, outnumbering the population growth in Shanghai (T1 group). However, Xining(T7 group) still possesses a mild attractiveness to talents. Hence, middle-tire markets will be the potential market in the future.

Consumption is transforming from basic consumption to hedonic and symbolic consumption

Under the influence of the international situation and the development of the Chinese economy, the consumption structure has changed significantly in recent five years. Basic consumption occupied a minor scale after 2018, as hedonic consumption increased. Hedonic consumption remains at 47% after 2020, but symbolic consumption increased slightly.

The pace of change is different among urban groups. Hedonic consumption in middle-tier markets increases rapidly, and the symbolic consumption occupies large scale in high-tier markets

The consumption stage of each city group is different, and the change of attitude towards consumption is also different. With the increase of income, basic consumption gave way to hedonic and symbolic consumption as consumers are caring more about personal issues. This behavior further boosts the growth of hedonic consumption. Specifically, consumers care more about themselves in middle and high-tier markets, while consumers in lower-tier markets do not care that much.

Consumers in high-tier markets have already satisfied at the level of basic consumption, so besides hedonic consumption, symbolic consumption gains significant growth. In middle-tier markets, hedonic consumption increases rapidly, with a moderate increase in symbolic consumption. Basic consumption in low-tier markets shows a decline, but the rate of decline is not apparent, and hedonic consumption takes up a larger scale.

With the increasing capability of railroads and roads logistics, the online shopping index within low-tier markets has increased rapidly

The expansion of railroads and the improvement of road logistic capacity give consumers in middle and lower-tier markets more shopping choices, helping online shopping to penetrate further. Consumers tend to purchase snacks and beverages online, as these items are cheap and have more products to choose online than offline scenario. This phenomenon is especially obvious within city group T6-T9. When hedonic consumption is more favored by consumers, the online shopping creates more opportunities for skin care consumption. Especially in the lower-tier markets, the online shopping index has increased rapidly.

Consumer behaviors and the development of e-commerce platforms are interrelated. Consumers in low-tier markets show a strong intention to share after purchasing online

Looking at the path of consumer’s purchasing on e-commerce according to the integrated analysis during 2017-2020, we find most purchasing behaviors occur at the middle of the path, which means consumers rarely compare prices before purchasing or share product usage experience after purchasing.

It happened because of the shopping pattern of purchasers and the content design of the e-commerce platform. Recently, the purchasing path has developed more comprehensively, but all markets vary.

From the perspective of different markets, consumers in high-tier markets are active in pre-purchasing behaviors. In middle-tier markets, consumers are paying more attention to pre-purchasing behaviors, which promotes e-commerce platforms to create more interest-based content helping consumers to make purchase decisions. Consumers in low-tier markets prefer social e-commerce platforms, like Pinduoduo, which satisfies their sharing needs, encouraging after-purchasing behavior.

Digital media gains a low media exposure but high trust in low-tier markets, especially for official and recommendation notes

Consumers in low-tier markets show a high trust with advertisements but with low media exposure. Low exposure could be explained by consumers' purchasing habits and the insufficient guidance from brands and media. Changes in media consumption correlate with the development of media platforms, while differences in media consumption in various markets are broadening. For brands marketing, it is recommended to promote their products on platforms they trust, make sure media exposure reaches consumers effectively by pushing interest-based content, and strengthen the guidance of purchasing path. In traditional media, especially for OOH, preferences are varied in different market groups, but always closely related with local life.

Preference in content is affected by local culture. Drama content highly correlates with local development and industrial structure

The graph on left revealed that T6, T7, and T9 are characterized as a younger industrial city group. Consumers in this group are relatively energetic and more youthful, as they prefer youth drama. Inside the group, T7 and T9 have a lower income as they somewhat prefer rural, periodic, and war dramas, closing to the preference of T8 and T10 groups. Early matured undeveloped markets are mainly located at T5 group, as consumers prefer drama content like history and army. Consumers in high-tier markets prefer urban drama and other themes related to their life. Thus, when brands finish setting their exposure destinations, they should adjust the marketing content according to consumers’ preferences. However, please be aware that consumers‘ preferences will constantly change with the local development and industrial structural adjustments.

For a full version of Media Consumption Map of China Cities report, please reach out to GMK Helpdesk or GroupM Knowledge’s official WeChat account or contact [email protected].

Media Consumption Map of China Cities

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