Economic factors, consumer attitudes heat up competition
Difference drives brand growth in disrupted market
Competition is rising in China as new brands emerge, the rate of economic growth slows, and Chinese consumers become more rational about their purchasing decisions. These market disruptions make being seen as Different increasingly critical for brand success.
Seventeen newcomer brands entered the BrandZ™ China Top 100 this year, more than twice the number of newcomer brands that entered the BrandZ™ Global Top 100. The China ranking changes reflect the dynamism of the Chinese market and the impact of unicorn brands, which appear in the China Top 100 for the first time because of revised eligibility criteria.
In part because of the newcomers, the brand value of the China Top 100 rose a record 30 percent year-on-year. And the level of brand value required to enter the China Top 100 more than doubled. Brands need to achieve almost $700 million in brand value to rank in the 2019 China Top 100, compared with a threshold of around $300 million a year ago.
In addition, the average Brand Power of a Top 100 brand rose to 170 from 162. Brand Power is a BrandZ™ metric of brand equity and correlates with the ability to grow market share. Average Brand Power is 100. Brand Power is comprised of three components: Meaningful (meeting needs in relevant ways), Difference (being perceived as distinctive or trendsetting), and Salience (coming to mind when consumers are considering a purchase).
Difference made the difference. The BrandZ™ China Top 100 brands scored an average of 113 in Difference overall, which is strong, but the China Top 10 Risers, brands that increased most in value year-on-year, scored a stronger 118. Meaningful and Salience scores were comparably high in both instances.
The need to be seen as Different applies to both Chinese and foreign brands that compete in China. Consumers view Chinese brands as more Meaningful and Salient across Tier 1, 2, and 3 cities, but not as Different as foreign brands, at least in Tier 1 cities. Chinese brands need to strengthen Difference in Tier 1 cities, and foreign brands need to sustain Difference as they expand deeper into China.
- Being seen as Different is no longer an option for brands competing in China. It is an imperative for rapidly growing market share and brand value.
- The BrandZ™ China Top 10 Risers, which scored strongly in Different, represent six categories, indicating the potential for brands across all categories to strengthen Difference.
- Chinese brands have an advantage across Tiers 1, 2, and 3 where they are seen as more Meaningful and Salient than foreign brands. To fully benefit from this advantage, Chinese brands need to strengthen Difference with innovative products and marketing.
- Both Chinese and foreign brands need to work harder at being seen as Different, although foreign brands have an advantage over Chinese brands in Tier 1 cities. To sustain that advantage as they expand to lower tier cities, foreign brands need to base Difference not on provenance alone, but rather on meeting local needs in relevant ways.