By Jenny Zhang, Research Analyst
Companies looking to market in China will hear about the country’s city tiers and wonder what it’s all about. It’s no question that the world’s most populated country would have the highest consumer demand. Their consumer expendable income is also on the rise, and with a flashy, name-brand-recognizing culture, marketing is more important than ever. The question is, can we market products to these so-called “tier cities” and how can we do so? I’ll start with a little explanation and let’s work on answering that question.
I’d like to reference South China Morning Post’s (SCMP) interactive definition of tiers. Here, they divide 613 cities into 4 tiers, but another popular approach is 6 tiers. As you can see, there is no standard way of defining tiers from the government, but the highest tiers, 1 and 2, are generally agreed upon by economists, politicians and the public.
Name a city in China: Beijing? Shanghai? These are Tier 1. The combination of GDP, Politics and Population classifies cities into the four tiers, however, some cities rank differently in the three areas so the average is taken to identify the tier, says SCMP. You can start to see how companies would want to understand tiers so they can target certain people. Consumers in Tier 1 cities tend to be more affluent and highly educated. Tier 4 cities are in the rural parts of Western China. Population is scarce and so are resources. They include provinces such as Tibet and Inner Mongolia. Are you starting to get ideas?
Advertising needs to appeal to the demographics. Same with promotions or deals. We will start asking what kind of media to advertise on based on what the consumers have access to. So the answer to the question we had in the beginning is “yes”, we can market products to different tiers and the way to do so depends on your product. The next time a client asks you about marketing in China, suggest looking at tiers and see where your research takes you.