China Top 100 grows steadily in value and Brand Power
China Top 100 grows steadily
in value and Brand Power
The driver of value shifts from Power to Premium
The BrandZ™ Top 100 Most Valuable Chinese Brands have grown steadily in value since 2014, culminating in the record 30 percent increase in 2019.
Brand Power, a Brand™ metric of brand equity, has improved over the past six years. The BrandZ™ China Top 100 increased in each of the three components of Power: Meaningful (meeting needs in a relevant way); Different (being distinctive); and Salience (coming to mind at the moment of consideration). Although the BrandZ™ China Top 100 scored better than average in each component, there is room for improvement, especially in Difference.
Power enables brands to grow revenue with expanded market share, by predisposing consumers to buy more. Premium, another brand equity metric, enables brands grow revenue with higher prices, by predisposing consumers to pay more. Over the past six years, the percent of China Top 100 total value contributed by the brands with the highest Power scores has decreased, while the percent of value contributed by the brands with the highest Premium scores has increased. This contrast reflects the maturation of the Chinese market as revenue growth through market share has flatten, and revenue growth through premium pricing has increased
Strong Power also predisposes consumers to select a brand. Brands with weaker Power are vulnerable to competition at the point of sale and depend more on POS promotion. The BrandZ™ Top 100 gain almost three-quarters of their sales volume because of their strong Power, and they gain the balance of sales from conversion at the point of sale. In contrast, brands not in the China Top 100 gain less than two-thirds of their sales from their Power. They are more dependent on winning at the point of sale by out-promoting the competition.
Especially in a rapidly changing market like China, it is imperative for brands to strengthen the Power and Premium aspects of brand equity. This strength helps brands to grow value. It also enables brands to increase sales revenue by predisposing consumers to choose the brand when they encounter it with competitors at the point of sale. And when market share gains become difficult to achieve, this strength enables brands to continue increasing revenue by justifying price increases.