GroupM reveals what lies beneath China’s core cities

Project Deep Dive: Understanding the lower tiers in depth

SHANGHAI — Lower tier markets should not be grouped into one big “catch-all” category, and that within this relatively virgin frontier, there are lots of opportunities for both foreign and domestic brands, as long as they understand which segment of consumers they are targeting, and that their money is best spent in TV and activation/WOM efforts.

That’s the findings of Project Deep Dive (PDD), from GroupM China, which shines a light into areas others have chosen to leave in shadow. Widely seen as one of the most ambitious and far reaching studies ever to be performed in the mainland, Project Deep Dive (PDD) provides a unique view of consumer behavior and segmentation in lower tier marketplaces, the home to the majority of Chinese consumers.

To give PDD context, it has a built-in mechanism allowing for its findings to be compared with that of China Marketing & Media Study (CMMS) – which covers 30 key cities and provincial capitals – allowing us to see how similar or different consumers in lower tier markets are from their counterparts in upper tier cities.

PDD respondents are slightly more likely than their top tier counterparts to be married (64.6% vs. 60%); on the other hand, CMMS respondents are better educated and better paid – 31.7% have a degree compared to 22.7% of PDD, average personal monthly income is Rmb2,373 to Rmb1,601.

The research also revealed that the reach of TV, Magazine and Internet are higher in PDD cities, than CMMS territories. Also, higher Internet reach is recorded in middle, west and northeast PDD markets in contrast with their CMMS peer cities, while coastal east CMMS cities excel in higher Internet reach than PDD cities in the same region. Perhaps most importantly of all for marketers, TVC & WOM are the key influencers on consumers’ decision making in mobile phone purchasing.

PDD’s detailed research methodology identifies five distinct groups of consumers, each with their own set of values and buying habits:

Conventional Homemakers (Most likely to be female, aged 30-45, married with kids, senior high school education or below with a Rmb1,000 personal monthly income, agree with “I always choose the cheapest product”).

NewGen Progressives (Most likely to be a student aged 15-24, single or married with no kid, educated to senior high school/technical school level and have a personal monthly income of Rmb2,000-5,000, agrees with “I prefer foreign brands”).

Pragmatic & Practical (Most likely to be male, aged 25-34 with a college education or above; typically has a personal monthly income Rmb2,000 or above, strongly agrees with “I value the quality of product more than its brand name”).

Emerging Trendsetters (Most likely to be a student aged 15-29, single or married without children and possesses a senior high school education or above. They are likely to have a personal monthly income of Rmb3,000-7,000, and agree with “I like to be recognized as a fashionable person”).

Responsible Achievers (Most likely to be aged 30-45, married with kids and possess a senior high school education or below; on average they have a personal monthly income of Rmb2,000 or below, and agree with “Computers confuse me and I think I will never be able to use one” and “I prefer foreign brands”).

“PDD does not just provide insights into consumers of low tier markets, more importantly it offers them the chance to compare and contrast consumers in lower tier markets with their CMMS counterparts. By knowing how consumers in lower tier satellite markets act compared to their provincial capital counterparts can help brands with their market expansion strategies and whether they can use the same product /marketing mix to penetrate the market, “ said Lucy Zhang, Future Director, GroupM Knowledge Center.

Other key insights for marketers:

1) Low tier markets offer tremendous opportunities for lots of marketers: for leading brands in upper tier cities that are ready for geographical penetration; for brands who fail to make it big in upper tier cities; for local or regional brands looking for expansion opportunities.
2) Consumers in low tier markets are different and marketers need to learn to speak to them in their own language. Product functionality and quality are paramount and the product-value ratio has to be well balanced.

3) TV remains the most dominant medium and is the best means to build brand awareness in low tier markets. In the short term, it has no competition. However, once we break the data down by age group, we see that teens and young adults are moving away from TV screens towards online. Fragmentation of media consumption is also prevalent in low tier markets.

4) The fast growth of Internet reach in low tier markets makes communicating with consumers online an attractive option. The fact that consumers of low tier markets access the Internet via Internet cafés also offers marketers an alternative venue in which events, road shows and sponsorship activities can be deployed.

5) The growing importance of online shopping opens up a new retail channel for marketers. It is a channel that is worthy of close monitoring and marketers can start looking into online sales models.

6) WOM is an important marketing tool for brands with ambitions in lower tier markets. Marrying this understanding with the increasing use of the Internet points to the fact that social networking might be an effective way to spread product message and build brand affinity. A successful WOM campaign on the Internet will significantly drive costs down, as it is earned media.

Methodology of Project Deep Dive (PDD):

PDD is a quantitative survey which takes 542 of China’s 2,000 cities spread across 27 provinces. The survey consists of over 7500 respondents aged 15-45, and covers eight media types, 13 categories and 200 brands.


GroupM China
GroupM is WPP’s consolidated media investment management operation, serving as the parent company to agencies including Kinetic, Maxus, MEC, MediaCom, and Mindshare.
GroupM is the global number one media investment management group.

GroupM employs more than a thousand people in eight cities across China. With total media billings in excess of USD 3.36 billion (RECMA: 2008 Definitive), GroupM is China’s top media communications group and the industry’s biggest investor in syndicated and proprietary media research and optimization tool development.