“Overall, consumers in lower tier cities are ‘light on concepts, heavy on practicality’ when it comes to home appliances and digital products. They have higher expectations for the long-term quality…
“Overall, consumers in lower tier cities are ‘light on concepts, heavy on practicality’ when it comes to home appliances and digital products. They have higher expectations for the long-term quality and durability of consumer durables such as home appliances and mobile phones. At the same time, they desire functionalities that integrate with life scenarios to address practical details and pain points and help care for every member of the family. Brands can show consumers how their products can be applied in real-life scenarios through a more down-to-earth approach, both in terms of channels and marketing, to convey a sense of value for money.”
– Frank Zhang, Senior Research Analyst
Key issues covered in this Report:
Purchase occasions for major domestic appliances: looking for reasons to buy without hesitation
Purchase occasions for small household appliances: an important source of ‘little bliss’
Smart upgrade scenarios: not upgrading just for the sake of it
Purchase occasions for smartphones: not seeking the best but the most suitable
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Overview
What you need to know
Key issues covered in this Report
Objective and methodology
Quantitative research methodology
Figure 1: The sample structure for each city is as follows:
Qualitative research methodology
Figure 2: Interviewed cities in the qualitative research
Figure 3: Profiles of respondents to the qualitative research
Executive Summary
The market
Mid-late-stage urbanisation spawns new challenges and opportunities for industrial structure development in lower tier cities faces
Figure 4: GDP sector composition, by city tier, 2018-20
COVID-19 outbreaks affect the consumption environment in lower tier cities more greatly than tier 1 cities
Figure 5: Total retail sales and year-on-year growth rate of consumer goods, by city tier, 2018-20
Lower tier city consumers tend towards conservative consumption behaviours despite limited immediate impact of the outbreak
Financial confidence declines in lower tier cities, with the prospect of a steady rebound ahead
Figure 6: Confidence in improving future finances – very confident/somewhat confident, by city tier, 2020-22
The consumer
Purchase occasions for major domestic appliances: looking for reasons to buy without hesitation
Figure 7: Trading up and down in home appliances – selections combined, by age, 2022
Purchase occasions for small household appliances: an important source of ‘little bliss’
Figure 8: Purchase demand for home appliances in the next three months, by age, 2022
Smart upgrade scenarios: consumers don’t upgrade just for the sake of it
Figure 9: Smart home devices purchase motivation, by age, 2022
Purchase occasions for smartphones: not seeking for the best but the most suitable
Figure 10: Frequency of mobile phone replacement, by age, 2022
What we think
Introduction to Lower Tier Cities in China
Mid-late-stage urbanisation spawns new challenges and opportunities for industrial structure development in lower tier cities faces
Figure 11: GDP sector composition, by city tier, 2018-20
COVID-19 outbreaks affect the consumption environment in lower tier cities more greatly than tier 1 cities
Figure 12: Total retail sales and year-on-year growth rate of consumer goods, by city tier, 2018-20
Real income growth slowing down in lower tier cities
Figure 13: Per capita annual salary, by city tier, 2018-20
Proportion of single, unmarried people in high-income groups in lower tier cities is approaching that of tier 1 cities
Figure 14: Family structure of respondents, by city tier, 2019-June 2022
Car ownership and gym membership penetration rates comparable to tier 1 and tier 2 cities
Figure 15: Car ownership and gym membership, by city tier, 2017-June 2022
Market Factors
Lower tier city consumers tend towards conservative consumption behaviours despite limited immediate impact of the outbreak
Figure 16: Impact of COVID-19, by city tier, 2022
Figure 17: COVID-related actions in future, by city tier, 2020 vs 2022
Financial confidence declines in lower tier cities, with the prospect of a steady rebound ahead
Figure 18: Confidence in improving future finances – Very confident/somewhat confident, by city tier, 2020-22
Home appliances leading trading up in various categories, while commercial centres march into lower tier market
Purchase Occasions for Major Domestic Appliances: Looking for Reasons to Buy Without Hesitation
Peace of mind is more important when buying online and offline
Figure 19: Purchase channel selection for major domestic appliances – interview excerpts, 2022
Figure 20: Recommended by friends when buying major domestic appliances – interview excerpts, 2022
Local brand advantages have become the consensus, with energy saving and environmentally friendly features as standard
Figure 21: Brand perceptions and preferences for major domestic appliances – interview excerpts, 2022
Figure 22: Energy saving in home appliances – Interview excerpts, 2022
Demand for home appliance upgrades emerges as young people look to improve quality of life at home
Figure 23: Trading up and down in home appliances (selections combined), by age, 2022
Middle-aged consumers’ need to buy ‘big items’ to improve the household standard for the whole family deserves attention
Figure 24: Purchase plan for home appliances in the next three months – plan to buy* (by age), 2022
Emotional links evoke the need for quality of life for the whole family
Figure 25: Haier “Not Fresh Supermarket”, 2022
Enhancing marketing impact through creative interaction
Figure 26: Midea x JD ‘618’ Air Conditioner Trade-in Campaign
Purchase Occasions for Small Home Appliances: an Important Source of ‘Little Bliss’
Small home appliances come with labour-saving benefits and social attributes
Figure 27: Regarding the usage of small home appliances – interview excerpts, 2022
Detailed functional ‘small ideas’ to improve the satisfaction level of small home appliances
Figure 28: Satisfaction with small home appliances – interview excerpts, 2022
Young people’s expectations of happiness through small home appliances deserve attention
Figure 29: Purchase demand for home appliances in the next three months, by age, 2022
Pursuing an efficient, healthy and enriching kitchen experience through small home appliances
Figure 30: Purchasing drivers for small kitchen appliances – selected items, by age, 2022
Small home appliances with ‘self-cleaning’ feature solve pain points precisely
Using the ‘no-filter’ practical experience to demonstrate the pursuit of product detail
Figure 45: VIVO X Fold+: Benny Sa’s One Day Experience, 2022
Appendix
Abbreviations
Interviewees’ photos
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