Fine tuning your marketing efforts in China during Chinese New Year will result in higher ROI explains Troy Yang, AP's Managing Director based in Hong Kong
Chinese New Year is by far the biggest festive season in China when many consumer goods manufacturers benefit from the gift-giving tradition. With the change in consumers’ purchase behavior in CNY, advertising and promotions have historically proven to be far more efficient for CNY despite higher operation costs. Based on the numerous brands that Analytic Partners has consulted in China, there are a few lessons learned that could help marketers to fine-tune their marketing strategy during CNY.
- Leveraging Emotional Copy - In Chinese culture, CNY is the time of the year to celebrate with family and friends, with everyone wishing for a year of good fortune ahead. Thus, it is always effective to start advertising early to generate excitement of the coming of the new Chinese animal zodiac and communicate how the brand relates to friends and family connections. Well-executed emotional-type campaigns tend to have better cut through and brand recognition for CNY in particular. Also, media has been most efficient when airing at least two to three weeks before the actual festival despite the higher than average advertising costs and competition. It is important to note that the sales lift is typically magnified by a factor of 2x to 5x around and during the Chinese New Year period.
- Promoting Special Packs - During festivals like CNY, consumers are typically less price sensitive so offering steep price discounts is not the most efficient strategy. Deep price discounts generate low incrementality by cannibalizing volume that would have regardless been sold and are much less profitable. In fact, more effort should be focused on special packs, which are much more popular during CNY because they are perceived as premium and are naturally suitable for gifting. A higher price for temporary festival special packs (including sharing sizes) will increase both the value and volume of sales. Such tactics consistently offer better return during CNY as consumers are willing to spend more during the holiday.
- Increasing Availability & Off-Shelf Displays – Most consumers will start their CNY shopping one to two weeks before the first day of the New Year. Securing secondary locations within retail stores will far outweigh the listing-related fees, and almost always pays off during key festivals. The ability for consumers to pick-up special CNY packs at several locations in the store is key, especially in an environment where many local and imported brands are competing. Also, gondola off-shelf displays will increase visibility and provide an additional touch point in the store. Finally, while in-store promotions will help to drive sales, our statistical modelling has shown again and again that most of the incremental sales during festivals derives from special packs and off-shelf displays.
As more brands are now competing in CNY, marketers have started to explore opportunities during the relatively less celebrated and less marketing-saturated western festivals such as Christmas and Valentine’s Day. These western holidays provide an opportunity to create more occasions for purchase and consumption in China. With the slowdown in the economy of China in 2016, marketers need to stay vigilant in not only identifying growth opportunities but also in optimizing marketing spending to fuel growth.