The automotive industry in China is going through a significant transition. To a great extent, these changes involve the transformation in the purchasing behavior of car buyers. Increasingly, educated urban elites of China are demanding more digital, savvy, and sophisticated features in today’s automobiles. Secondly, Chinese car buyers are not satisfied with the traditional car dealer experience. These two emerging trends among China’s car buyers are reshaping the automotive industry of China.
China is the world’s largest automobile market.
With the current transition and demand, a whole new production process of the automaker industry has been initiated, where just like any other sector China wants to take the leap. However, growth and development for Chinese automakers are still a big challenge. Since Chinese consumers have become extremely demanding, there is a huge need for consolidation, and therefore, there is considerable competition against established brands. In China, sales of brands are also affected by the digital marketing strategy they choose to market the product, as now netizens spend a substantial amount of time learning about automobiles digitally.
- New Generation of Automotive Buyers 3
- Rise in Demand of SUV and Premium Car Segment 3
- Increasing Trend of Digital Connectivity Feature 3
- China Electric Car Market 3
- Electric Car Pooling 3
- Shift from Traditional to Digital Campaign 3
- Inbound Marketing VS OutBound Marketing 4
- Which is the most Overrated Marketing Tactic? 4
- Measuring ROI 4
- Dealership Marketing Content 4
- Digital Leads Follow Up 4
- Marketing Automation 4
- Lead Generation for Car Dealers In China 5
- Content and Design 5
- Website Creation 5
- Baidu 5
- Press Relation 5
- Engaging Marketing Strategies For Automotive Dealers 6
- Social Media Strategy Based on Consumer Decision Making Process 6
- Collect Data : Do your Research Based on Demographics 6
- Story telling on Social Media Platforms 6
- Best Marketing Strategies 7
- Online Reputation 7
- Exposure 7
- Engagement 8
- Auto Dealers Recruitment Strategy 10
- Dealers Animation 10
New Generation of Automotive Buyers
In 2016, China’s car market closed with record-breaking sales of almost 23 million passenger vehicles. According to insights from the McKinsey Global Institute China’s automotive industry is the world’s largest, and still one of the fastest-growing, automobile markets. New cars buyers are Young and Connected Consumers. They search, compare, and choose wisely their cars. They are also influenced by Social Networks, new Media, and influencers.
Rise in Demand of SUV and Premium Car Segment
In recent years, Chinese car buyers have shown great interest in SUVs accounting for 78 percent of sales in past two years. Whereas, Sedan sales stand at 22 percent growth.
Demand in the SUVs segment has given rise to local OEM growth, exhibiting 98 percent of local OEM’s increase from 2012 to 2016. The overall B- and C-segment SUV markets grew by 10 percent and 38 percent a year, respectively, from 2012 to 2016. In comparison, local brands in these segments grew by 94 percent and 90 percent, respectively, during the same period.
On the other hand, in a recent survey conducted by McKinsey Global Institute, 55 percent of respondents who replaced their existing cars in 2016 chose more expensive brands as new ones.
Increasing Trend of Digital Connectivity Feature
China’s consumers are experiencing the most advanced digital age, therefore, consumers are not easy to please when it comes to in-car connectivity services. Chinese consumers are now demanding in-car services, and they are willing to switch car brands to get what they seek. Connectivity is a must-have feature, and they are more willing to pay subscriptions for content than customers in the US or Germany.
China Electric Car Market
For the past five years, the Chinese government has issued exceptionally favorable policies to encourage electric vehicles in China. In Tier 1 and 2 cities, subsidies of thirty to fifty thousand RMB have been announced, along with consumption tax reduction and free license plates. The trend of acquiring an electric vehicle is highest among educated urban elites who are willing to try new technologies. Consumers who had no choice but to buy electric vehicles also found, driving and charging experiences better than expected.
In Shanghai, the price of the Car plate costs less if you buy an electric car.
Electric Car Pooling
According to the research from PwC, car-sharing platforms have released over 10,000 electric vehicles in the Chinese market and have achieved more than 500,000 users. Car sharing facility is only available in tier1 or tier2 cities, but the penetration of electric cars in these cities is quite considerable. Car sharing increase consumer awareness of electric vehicles and leads to adoption. Also, the younger Chinese generation, who are tech-savvy have higher acceptance of new energy vehicles. These factors play an integral role in the penetration of electric vehicles in the future automobile industry of China.
Shift from Traditional to Digital Campaign
With the immense invasion of digital activities, a massive shift has been noticed in reaching audiences from traditional offline strategies to digital strategies. Until last year, dealership marketing activities were focused on generating a high number of leads but this year, automotive dealership marketing efforts are concentrating more on improving conversion.
Inbound Marketing VS OutBound Marketing
Digital marketing campaign focuses on generating leads, therefore Inbound marketing and Outbound marketing is a way of informing prospective customers. The main difference between an Inbound marketing campaign and an Outbound marketing campaign is, Inbound marketing activities show up on digital platforms such as; Google, blogs, and social media when the customer is actively looking for information for a particular product or service. Whereas, Outbound marketing activities are projected towards the mass market, and is usually done using TV advertisement, Radio, Newspaper or digital ads.
In digital campaigns, automotive dealers use Inbound marketing activities more than outbound marketing campaigns as they generate more serious leads and are considered more cost-effective than outbound activities.
Which is the most Overrated Marketing Tactic?
Among several marketing tactics in China, ranging from SEO, Blogging, Social media to Print ads, Automotive industry dealers consider Print ads the most overrated marketing tactic.
Measuring ROI
In the automotive industry, dealers still focus on offline tactics and don’t measure ROI on their digital marketing activities. According to a recent survey published in the 2017 State of Automotive marketing annual report, dealerships that measured ROI on their digital marketing activities, witnessed a four times higher increase in their ROI year over year.
Dealership Marketing Content
In recent years, among other digital activities, content marketing has gained a lot of popularity. The purpose of content marketing is to give customer insight into the product or service he/she is interested in. For automotive dealerships usually their own marketing staff or marketing agency create marketing content.
Digital Leads Follow Up
These days in the automotive industry digital leads are considered promising. The leads need to be taken care of. Therefore, now dealerships have a specific salesperson or business development center (BDC) to handle digital leads. By taking action on Digital leads, a significantly higher ROI has been noticed has in 2016 compared to 2015.
Marketing Automation
Marketing automation refers to following the digital activity of your potential customer. Mostly, it is done with the consent of the user. For example; if a potential customer, is viewing a hybrid SUV, then he or she will receive emails with information about SUV, they would see ads of that particular SUV on their social media forms, and the sales team will be informed about the potential customer. Marketing automation is also related with higher returns on ROI, dealerships that are experiencing lower ROI are also not integrating marketing automation in their digital marketing activities. This suggests that marketing automation is an integral part of the automotive marketing strategy.
Lead Generation for Car Dealers In China
Lead generation is a term used for nurturing the interest of customers in a brand and eventually converting those who are interested into customers. In China, there are 1.1 billion mobile users and that’s where Chinese customers initiate their product/service research. It is extremely important to be visible on the platforms where Chinese customers look to learn about a product. Through the implementation of a SMART digital marketing strategy, the Chinese automotive market has succeeded in selling cars online. In order to generate leads, brands need to implement a strong marketing strategy. Following tactics play an important role in generating leads for car dealers in China:
Content and Design
Content and design provide the first step in customer experience. In China, connections are often established online first before any face-to-face interaction. Content on the website, videos or blogs on social media, reviews on forums, viable presence with the help of SEO all contribute to generating and designing valuable content. In China, there is a lot of information involved when producing content. Therefore, it must be fresh and interactive and definitely Chinese customer-centric.
Website Creation
In order to be visible on digital platforms in China, a brand needs to have a high-quality designed website. A good website builds the trust of customers in the brand. Website must be created keeping the Chinese audience in mind rather than simply providing an adaptive version of a western website. The content on the Chinese website must be of high quality with relevant information, produced in simplified Chinese by a native Chinese speaker. It is also important to integrate the website with quality landing pages providing quality entry points to the website. It is a good idea to make an interactive website, especially for the automotive industry.
Baidu, DSP
Baidu is China’s most powerful search engine, with an extensive market share of over 70%. To promote a domain on Baidu, there are a few necessary considerations to follow:
- A top-level-domain (.cn) leads to a higher ranking on the Baidu search results
- A proper Keyword Analysis is absolutely necessary
- The page description (meta-tag) plays an important role
- Well written content plays an important role
- Backlinks leads to a higher ranking
- Hosting website locally
Baidu is Google of China. Generating leads in the automotive industry of China and converting prospects into clients starts with a touchpoint like visiting a website, viewing a PPC ad, or posting on social media.
Press Relation
In China, brand image is extremely important. PR (press relations) is a very effective way to create brand awareness in China. It also helps in enhancing brand reputation and plays a vital role in generating leads. In the Chinese automotive industry, PR can provide a competitive advantage to a brand.
Engaging Marketing Strategies For Automotive Dealers
Even though in China usage of social media is so popular for customer engagement and lead generation, but most industries still don’t know how to effectively use networking sites like WeChat, Weibo, and social e-commerce to unlock these benefits.
With the advent of social media, the decision-making process for purchasing a car has been highly influenced by social media marketing. In the versatile digital eco-system of modern China, automotive brands need to host their marketing activities on Chinese platforms that cater to Chinese users in a functional way.
In China, netizens don’t use Facebook instead they use WeChat, similarly, there is no Twitter, but Weibo, and no Google, instead Baidu, again no Youtube, but use Youku to watch videos. These platforms are continuing to develop to facilitate Chinese users, all social sites have unique characteristics and they are very effective for reaching China’s large, active and impressionable audiences. However, with more and more consumers turning to social, the automotive industry needs to get fully engaged with the social selling of China.
Social Media Strategy Based on Consumer Decision Making Process
There’s no doubt that digital channels (including mobile and social networks) have fundamentally sketched the map of the automobile purchase journey. New BCG consumer research in —China, France, Germany, and the US—indicates that 50% to 70% of auto buyers (depending on the country) choose the brand and model online, that they wish to buy before they visit a dealer’s showroom. Also, 40% to 50% of their choice depends on the basis of information they gained online.
Collect Data : Do your Research Based on Demographics
Marketing automation has proved to be an extremely useful tool in collecting data of potential, interested customers. Learn about the involvement of demographics involved in the decision-making process. According to OMD Dive Search China, consumers start searching 4 months before the automobile purchase, their main online sources are Baidu ( 72%) Autohome (69%), and WeChat (48%). According to some source, females cares more about branding and basic knowledge whereas males are concerned about pragmatic buying issues.
The Magic Power of Storytelling in China
According to OMD Dive Search, Chinese customers use search engines and auto vertical websites as the main platforms to get informed about their future cars. These platform includes; Search engine (94%), Auto vertical ( 91%), Social media ( 64%) , Online video (53% ), E-commerce(45% ). Storytelling on social sites is an adept way to encourage emotional interaction with the audience to develop relationships and brand loyalty. Social platforms must be used as a conversation channel rather than advertising channels. Share experiences and humanize your brand. For example, the post features of your brand that provides a competitive advantage and provide usefulness.
In China, a brand can rave within minutes if a social media marketing strategy is placed correctly, with keeping customers in mind, offering the right thing at the right place and at the right time.
Best Marketing Strategies in China for Automotive Brands
Following are digital marketing strategies that work for a Chinese audience, they have been created after intently studying Chinese consumer behavior and spending patterns.
Online Reputation : What other People say about this Model ?
In China, brand reputation plays an important factor in buying cycle. Chinese consumers research the brands and products extensively as compared to foreign customers. Chinese consumers keep track of the entire business function of the brand. A survey by McKinsey showed that “on average a Chinese consumer will make 10 to 12 visits to online and offline touchpoints – including search engines, product sites, and physical store – Automobile customers spend 40 hours online before purchasing a car.
Forums, Q&A : Zhihu number One
Chinese consumers start searching a talking about a brand even before it taps into the Chinese market. Therefore, it is essential to build a positive image of the brand. Online Reputation Management is a process of creating and spreading positive information about your brand and products on online forums, where customers exchange information on brands/ products and give their reviews.
Social Media : way of Life for millennials
Most of the time, buying decision of Chinese consumers is influenced by reviews of others and through word of mouth. Consumers search online and search (search engines) to learn what other consumers are saying about the brand or product. Chinese consumers trust independent reviews by other users more than the information available on the brand’s website. Most of the reviews are read on the brand’s official website or social accounts. Negative reviews and comments can easily destroy the reputation of the brand. Therefore, managing online reputation counts in digital marketing strategy in China.
Review of Influencers: Key Opinion Leader make the Trend
Key Opinion Leader (KOL’s) is a popular way of learning about a product from a trusted source. In China, online celebrities with a large number of impressionable followers play a big role in the purchasing process of Chinese customers. KOL’s or Influencers are recruited by brands and they represent a brand. It is highly important to hire somebody with characteristics that resonate with your brand values.KOLs generates and review products and receive comments. It’s important to monitor comments closely for user feedback and queries. The Influencer cannot be expected to act as a customer service representative. Therefore, it is important to hire somebody with expert knowledge about the car and its features.
Baidu SEO to highlight the best Answers
When a brand enters the Chinese market, it might be popular on Google but it is not known by the Chinese audience. By creating and sharing positive content across the search engines and key digital platforms, customers will be able to find positive information regarding the brand. When Chinese customers show interest in the brand they ask many questions, on Baidu best answers can be highlighted by using SEO. This will create a positive image of the brand by satisfying the queries of customers.
Brand Awareness
Brand exposure or brand awareness is the familiarity of the consumer with the brand. In China, brand exposure is done using social media websites, such as; WeChat, Weibo, and QQ. Before stepping foot into any dealership or auto show, prospective customers do most of their research on mobile. According to Cars.com, a major international car reviews site, 4 out of 5 people use their smartphones for auto research.
Increase Exposition among potentials buyers
Chinese consumers have started to pay attention to the values and lifestyle push behind brands. To win or convert consumers into paying customers, it is important to increase the exposure to brand values that customers can relate to. To increase exposure, now brands produce a series of short videos to convey the value and beliefs of the brand. it is important to be original and to be consistent.
Target a segment of population
Chinese consumers are seeking personalized services, so niche marketing should be implemented. For example, Tencent recently developed in-depth profiles of SUV consumers in lower-tier cities and compared them against their counterparts in Tier 1 and 2 cities. Gaining insights from more than 100,000 SUV consumers and potential customers, and by observing millions of pieces of digital behavior data and social-network patterns in Tencent’s ecosystem, they developed a prioritized shortlist of target commercial and residential areas and defined consumer preferences for music, games, sports, holiday travel, and social-network engagement by city tier. Using these insights, one automaker improved its ROI by over 30 percent.
Re- targeting : maximize Contact point with Brand
Marketing campaigns must target customers on various social media platforms. Chinese digital eco-system is fragmented. However, the major platforms like Weibo, WeChat, Baidu, and Taobao boast the largest volume of users. Platforms are either segmented by function or cater to niche interest communities.
Social Media Marketing : create a Community
Automobile brands are advised to use social media marketing platforms effectively to create high exposure to the brand. Brands must create interesting, shareable content in mandarin that will appeal to Chinese consumers. Marketing tactics, such as deploying advanced analytics to define customer micro-segments more precisely can prove to be helpful, determine their preferences, and target them with customized offers.
Cars App news
Increased appetite for In-car connectivity among Chinese consumers has geared tech titans of China; Baidu, Alibaba, and Tencent to develop apps (operating software). Shanghai-based Alibaba joint venture SAIC has developed an operating system that consists of touch screens, GPS maps, and other features that are usually found in a smartphone. Banm software known as YunOS was fitted in the Roewe RX5 sports utility vehicle. According to the latest McKinsey report, In China, “connectivity is a must-have feature”.
New generation of Display ads
The innovative Chinese digital advertising market is the second-largest in the world after The United States of America. According to iResearch, online advertising in China reached 209 billion Chinese yuan ($30.4 billion) in 2016. The growth is expected to remain stable for the next few years. It’s more than advertising, brands must launch next-generation display ads as part of online campaigns, encouraging users to interact and participate by offering incentives, while growing exposure and followers.
Engagement make the Difference
In a highly connected environment of China, customer engagement must be a top priority for the automobile industry. In China, this can be achieved with the help of interactive apps, designed by the automobile brand. Chinese customers look for personal experience in an app, that could be encouraged with one-to-one dialogue or contextual engagement. A successful mobile strategy should also draw actionable data in order to understand the customer’s perspective and intentions.
- Question
Probing is one of the most interactive ways to engage the customer and learn about their needs and providing them with customized value solutions. The in-app survey is a great example of contextual engagement. Feedback received by customers also provides fixes and plans for future apps. Best customer engagement experience synchronizes all online platforms, for example, in-app, social media, e-commerce, and brand website.
- Participation
Customer engagement is a sign of brand loyalty. Automobile companies need to understand customer requirements and deliver a personalized consistent experiences across all channels. Participation of Chinese customers has been increased in the form of sharing customer experience with fellow customers via online forums, aggregator websites, and social media. Brand perception formed in China’s connected-customer-centric society plays an important role in influencing purchasing decisions.
- Gaming
Mobile gaming is a great way to engage customers. Chinese customers like to play games on their mobile devices. A well knows automobile brand launched an app for Guangzhou Auto Show, featuring a mobile game, called DragonBall. Visitors would get information through geo-fencing, on their mobile devices upon entering the exhibition center. For every car, the user would ‘chase’ (stand close to it for a second and be registered by beacons), he or she would get a DragonBall. After they collecting five DragonBall’s users was promoted to collect the prize. The app would then generate the voucher for a pair of sunglasses to redeem immediately at the exhibition booth.
Buzz Viral Marketing
Creating Buzz in the automobile industry of China is a vital way to reach a substantial amount of population. In order to create buzz first, a target market must be selected and engaging content needs to be designed to which Chinese customers respond. Automobile companies need to drive a strategy that is in line with online and offline mediums and create a 360 buzz in the market.
Engagement is the key in Social Media
China’s social media users are very active and expect responses to each and every post. It is not easy to handle social media engagement in China, therefore companies need to develop new models and processes for effectively engaging individuals in a way that communicates brand identity and values. Responses on social media must satisfy consumer concerns, and should not lead to a negative viral spiral. Customer engagement on social media in China has the power to make or break a brand.
Tesla for kids is a good way to engage Chinese Parents
Emergence of E-Commerce
E-commerce has weakened the traditional selling process of the auto market in China. While consumers elsewhere are still visiting brick-and-mortar shops to buy cars, shoppers in the world’s largest auto market – where 28 million vehicles were sold last year – are increasingly doing it online, prompting brands to open virtual showrooms, partner with e-commerce sites to promote new models and re-examine their investment in the traditional dealership. In 2016, 1 million vehicles worth a whopping $15 billion were sold online in China, according to consultancy Frost & Sullivan. On Singles Day, an annual shopping gala created by e-commerce giant Alibaba, 100,000 cars were sold on its Taobao and Tmall shopping platforms.
Auto Dealers Recruitment Strategy
For foreign companies seeking to enter the Chinese market, there is a high chance that a foreign brand needs to have a joint venture with a local company. In order to be successful among Chinese consumers, it is highly advised to partner with powerful state-owned enterprises. A good example is, Volkswagen, the brand has a joint venture with the Shanghai SAIC—the Shanghai Automobile Industrial Corporation. Even today, after the Volkswagen fuel scandal, Chinese consumers still trust the brand. The reason for this brand loyalty is that products of Volkswagen like Audi had been purchased by many government units. Chinese consumers believe and trust in brands acquired and used by government officials as they know the particular brand meets the government regulations. To partner with these highly trusted local brands, foreign brands need to be highly visible on Chinese search engines.
Lead Generation for Car Trial
No matter how popular a brand is outside China, but to a Chinese audience only what is visible on the Chinese digital platform is known. In B2B lead generation more trust and visibility are needed. Firstly, branding and consumer awareness of the automobile brand needs to be comprehensive. A foreign brand must have a localized Chinese customer-rented website. PPC can increase the brands’ visibility and conversion rate. B2B, lead generation can be earned on Chinese social media platforms by sharing content on LinkedIn China and Dajie.
Baidu Marketing & Search Engine Marketing
On a Chinese search engines, the better a site ranks, it is more likely to create opportunities by appearing in or near the top of search hits. This involves producing regular content that is optimized with specific keywords, and backlinks. For China, you will need to have your site optimized for local search engines, such as Baidu and Qihoo 360.
Dealers Animation
Automakers are devising new digital ways to attract and inform Chinese consumers about their brand values and features of the car. Lately, it has been really difficult for auto car dealerships to stand out. Consumer interest has been noticed in Whiteboard animation techniques, it is thought to be a fast and efficient method of informing customers.
Animation of Dealers Sale Force
According to research, the car buying experience has been redefined, as consumers are more interested in learning about the car through online mediums. Wang Xi, a 27-year-old property salesman, said he quit his job selling cars two years ago since most of the selling car process can be done online.
“I think there’s a high risk of car salesmen losing their jobs,” said Wang. “You can buy a car from an online platform, without asking for a test drive, based on your friend’s recommendation. A robot can easily provide all the information about a car to customers.”
Game, New social networks ,information, video
In the highly connected tech-savvy environment of China, there are numerous opportunities for car dealers to engage and interact with customers digitally. Passenger vehicle sales in China are forecast to hit 25.6 million units by 2019, topping an estimated 21.2 million in North America in the same year, according to a recent Nomura industry report. Car dealers must synchronize all-digital mediums to provide seamless customers experience while improvising and updating their digital marketing strategies to meet the needs of highly demanding customers of China.
Author
- Fatima RIZVI : International Marketer specialized about Digital in China. Fatima has a great expertise of the Chinese Market and spends several months to study Automotive Market in China.
- Olivier VEROT : Founder of GMA, Olivier is Results driven Marketer. He has a good knowledge about Chinese Marketing with 10 years of Practices and likes to identify Trends and best practices.
GMA : a Marketing Agency Specialized about Digital in China
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the core DNA of GMA is bringing Results to our clients. We work to optimize conversion. maximize Exposure, develop Leads/sales and develop online Branding
Expertise :
we have the expertise in Market Business in China, know the best Channels, best influencers, and understand the communication among the new Chinese Middle Class.
Digital Native:
as a pure Digital Player, we perform with Digital Marketing Campaign and have the Digital Philosophy to Do, learn, Adapt and Optimize. We believe that perfect Results arrive by analyze and nonstop Optimize.
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We know that China is a difficult market for new Brands and we are obsessed with delivering Results that bring ROI to our clients. We provide cost-effective solutions to Maximize Results. It is when we make money that our clients make money.
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2 comments
Antonio
Hello
Thank you for this amazing article Olivier, the best analysis I read about Cars Market in China.
Questions for you :
– Which Car brands are the most popular in China? Any link to their Marketing Campaign?
– Market an electric Car Brand, do you think it is different from Market traditional car model?
Do you have any case studies for automotive marketing Brand?
kioyodo
Why hasn’t China conquered the world automobile industry?
Why is automotive manufacturing industry in China generally not competitive