WHAT TO DO WITH MARKETING FOLLOWING CHINA’S BLACK MONDAY?
What has the recent stock market meltdown got to do with us, being marketers and makers?
The recent turmoil in Chinese stock markets peppered with significant government intervention is not happening in isolation. As we watch how global markets react and stories unfold, we have to be aware that the high degree of global interdependencies means none of us can ignore the ripple effects such events have on our own industry of brand marketing. China, accounting for 15% of World’s GDP, is struggling with its stock markets trending continuingly downward, sending shockwaves through the system. Everyone will be impacted one way or the other.
Over lunch, we put our macro hats on and attempted to ask ourselves how these financial market jitters could impact the consumers, our clients, ie the brands, and the supply chain of creative production. Our discussion is personal and non-exhaustive; nonetheless, it is representative of certain sentiments and opinions amongst people in our industry, which are worthy of sharing, especially with brands who operate in China.
Consumers
Switch brands – The rise of value brands. With uncertainty looming large, consumers are more cautious with purchase decisions. Brands that are more affordable and/or with an emphasis on value will gain popularity amongst the Chinese consumers. FT recently reported in an article published on 26th August that Samsonite delivered an annualized 28 per cent jump in sales in the first half of the year after it shifted its focus away from luxury to a more affordable proposition. Icicle is very proud of having helped produce a product video taking a story-telling approach to demonstrate the functional value of the product versus evoking emotional sentiments.
Redefine values – Going low-key
Referring to a Harvard Business Review article published around the onset of the last recession in April 2009, the wave of bad economic news one after another would erode general confidence, affecting not only short term ‘shopping’ behavior but also driving consumers to adjust their behaviors and fundamental values in a permanent way. In policy-driven China, the recent events and government intervention are causing consumers to lose trust in the immediate future of the economy and businesses. If the gloomy situation persists, wealthy Chinese middle class may well take a u-turn in their development of a consumption heavy lifestyle, one that embraces conspicuous and excessive spending. We can expect consumers to become increasingly mindful, asking more questions and be more selective before they purchase. With such trends, we adviseallocating more budget on tactile offline marketing collaterals as well as story-telling video contents, allowing consumers to soak up brand stories that enhance consumers’ understandingwhich drive purchasing decisions.
Brands and Businesses
Reprioritise - From stock market to customers
A day after Alibaba’s stock price dipped under its IPO price during the global stock market sell-off in late August, Alibaba CEO Daniel Zhang Yung in an open letter to all employees, told them to forget about the stock market and focus on the customers. This story is well ‘shared’ and ‘liked’ on Chinese social media platforms and was picked up by some Western media. The message was clear as it was illuminating that the massive Chinese workforce is waking up to the call of creating real added values to customers and contributing to the economy with improved productivity for a more sustainable future. It is time for brands as employers to address their teams to laser focus on what matters in the long run. This is the best timing for people to listen and employers to communicate. How about creating some brand assets on company’s values, leadership messages and customer service standards?
Supply Chain
Source from China – Now is the time for a bargain
RMB is finally devalued after the longest rally in its history. Weak data on China’s manufacturing sectors is suggesting an output slump that could be threatening some independent manufacturers supplying goods, merchandise and creative production to international brands. For those who have shifted sourcing away from China due to price pressure, now is a good time to revisit the value proposition. We advise brands to rationalize and rebalance our global purchasing plan for creative production to fully take advantage of the dynamics of the current economy.
We are all in it together as global citizens. Please share with us your thoughts on the topic.
About the author
Bonnie Chan Woo is the CEO of Icicle Group. She leads the company’s strategic development with a special focus on brand integration in original content. The piece was also published on her LinkedIn page.