Mktg203

MKTG203 Consumer Behaviour

John Iihan, founder of the Crazy John’s brand once said “this may seem simple, but you need to give customers what they want, not what you think they want. And if you do this, people will keep coming back.”(Woopidoo quotations n.d) In essence, this describes the goal of consumer behaviour. Consumer behaviour aims to find out what customers want by evaluating their actions. Their actions help marketers to determine how to market their products. (Schiffman Leon Ward Steven O’Cass Aron Bednall David Paladino Angela Kanuk Leslie 2007) Two of these aspects of consumer behaviour that are used in marketing strategies are the concepts of geographic and sociocultural segmentation. Both of these aspects are discussed below in relation to their use in both Australian and Chinese marketing.

Geographic Segmentation

Geographic segmentation identifies and divides the market into different geographical units to better satisfy the needs and consumption patterns attributable to consumers of the region. (Schiffman et al. 2007) This is particularly important for multi-national brands whose market reaches consumers both domestically and internationally.
China’s geographical landscape is one of extreme variety; from broad plains to expansive deserts to mountain rangers to vast areas of inhospitable terrain. China’s land mass is over 9.8 million squared kilometres with almost two thirds of China’s territories consisting of inhospitable terrain. This has largely contributed to China’s rapid industrialisation being focused on coastal cities (Euromonitor 2008).
Australia in comparison is a country located in the southern hemisphere with an approximate population approximately 1% of China. Similarly, however, is the predominance of a number of high density cities located along the coastal fringes of the continent. Australia has the world’s largest resources of minerals including coal, lead, nickel, uranium and zinc, and is ranked second in the world for the likes of bauxite, copper, gold and silver (DFAT 2008). Although only 6.5 per cent of land mass is arable, diverse climatic zones and technical expertise of farmers have resulted in highly sought after agricultural and forestry products. (DFAT 2008) Furthermore, given Australia’s location in the Southern Hemisphere, it stands well suited to supply counter-seasonal produce to markets in the northern hemisphere during their winter months, including the likes of China. The suitability of the Australian climate for fresh fruit, vegetable and meat products are key sectors in which an Australian exporter can exploit.
Exploiting Australia’s geographical features and China’s consumer demands for resources, Australian exporters such as Rio Tinto and BHP Billiton have also capitalized on marketing opportunities and aligned themselves with large infrastructure projects such as that of the Beijing Olympics. (Laurence Creative 2009) In addition, Australia’s stable political and regulatory environment provides investors with a high degree of confidence and certainty through all stages of minerals development.

China is currently Asia’s second largest food and beverage market after Japan. Sophistication of the Chinese palate and increasing living standards has increasing demand for a higher quality level of food but also food that is convenient. As such both food and beverage companies will have a great opportunity to enter the Chinese market.
More specifically Australian wine exports to China have grown significantly with the Chinese market becoming the largest export market for Australian wines. Australia is also ranked second largest overall supplier of bottled wine to China. (Cai 2009) Through recent studies, it has been projected that China would be consuming around 1.26 billion bottles annually in the next three years. Thus, it is soon expected to be the world’s seventh largest wine consumer. (China Wines Information Website 2008) Due to this, a growing opportunity for Australian grown wines exists in China.
China’s urbanisation process has resulted in the movement of its large workforce as well as consumers to large cities such as Beijing, Guangzhou and Shanghai. However, its continued growth will rely on the development of its largely undeveloped inland in order to develop the country into an economic superpower (Euromonitor 2008).
The development of the interior of China will help decrease the large income inequality of those in its largest coastal cities compared to those in rural areas. This will also assist the country’s overly congested first-tier cities helping to overcome the issues of housing and the development of China’s interior will assist the countries relatively poor rural population (Euromonitor 2008).
The newly established markets in China’s interior will assist in increasing domestic consumption. Premier Wen Jiabao has pushed to improve living conditions of the 700 million rural Chinese population, where income are less than a third of the cities. (Zhang, Luo and Koh 2010) Banks and Lenders are moving towards rural areas and regions of western China with HSBC Limited for example has opened 6 rural banks with Citigroup also anticpated to open three rural lending companies. The increasing availability of credit for the relatively poor provides vast opportunities for an Australian exporter. As credit is more readily available, the relatively poor rural population has a high level of disposable income.

Sociocultural Segmentation
Family Values
Chinese culture places a high value on the family unit. This can be epitomised by the Chinese tradition of caring for elderly parents and grandparents, with the Chinese considering it a part of their responsibility to care for elderly family relatives. This cultural value can be reinforced through Hofstede’s cultural dimensions. This ranks individualism in China with a low score of 20 indicating a more collectivist society. This implies that China is a country that values the family highly and often intergrated into strong social and family groups from a young age (Hofstede cultural dimensions explained 2009). China’s value of the family unit is not purely due to culture but also due to a lack of social welfare in China. (Euro Monitor 2008)
Australia comparatively has an extremely high individualistic culture. Hofstede’s cultural dimension reflects that privacy and individualism are highly prized in Australian culture and as such differ from that of Chinese people.
The highly collectivist culture of the Chinese is evident in this advertisement for Coca Cola where the son is looking to return home to be with his family for Chinese New Year. The advertisement emphasises the family values that the son is longing to return home to be with his family and that Coca Cola has help him achieve goal.
Coca Cola Advertisement-China: http://www.youtube.com/watch?v=5Ith7KvAESI
By looking at the Australian equivalent of a Coca Cola advertisement, it is evident that the Australian exporter has taken the differences in culture into account. Australia’s advertisement reflects individuals relaxing and enjoying themselves, emphasising the individualistic culture in Australia.
Coca Cola Advertisment-Australia: http://www.youtube.com/watch?v=nlpZRK2Yfd0
By understanding these differences an Australian exporter can take advantage of this by advertising their products through using family imagery.

Culture & Subculture
Australia is known for its laizze faire, laid back culture, and this is reflective in its approach to savings and disposable income. Australia has a savings rate of 6.5% of disposable income which is significantly less than some of its western counterparts. (Euromonitor 2010)This is a different culture to that of China.
Traditionally, the Chinese are concerned about their financial futures. As such, Chinese consumers begin to consider the costs of their retirement and the financial viability of their older family members, once they are married. This had lead to the tradition of saving as opposed to consuming. However since the average age of marriage increased due to career focused individuals, saving has decreased due to more disposable income and limited family concerns (Euromonitor 2010)
These changes in spending have also lead to an increasing trend towards recreation activities such as dining out, theatre visits, musical performances and exhibitions. This can be seen to by the increasing westernisation of the young Chinese population. Increase expenditure on clothing, shoes and cosmetics will complement growth in these areas. Fashionable high end brands such as Gucci, Ralph Lauren, Chanel etc have seen major surges in demand as the Chinese show a greater flair for a more flamboyant lifestyle. Brands are considered an essential part of image in this day and age in China. (Euromonitor 2008) This is evident in the marketing campaigns for Nike.This is evident in the use of western celebrities within Chinese marketing campaigns for western brands. The advert depicts a famous American basketball player triumphing against images representative of Chinese power and legends – indirectly suggesting that the western brand, Nike, will triumph over tradition and culture. “I only buy foreign brands”, professes a 22-year-old Xiao Xiao, who owns her own online fashion boutique. (Chang, 2009)
Nike Advertisement-China: http://www.youtube.com/watch?v=Xl2VkLdA4HU
China’s growing emphasis on luxury goods and fashion is an opportunity for Australia exporters to market their big brands. An Australia marketer would be required to develop a strong recognition for the Australian brand for these to be successful. For example, H&M moved into China’s market and through strong brand recognition, the store was successful. (Chang, 2009)
China’s growing emphasis on luxury goods and fashion is an opportunity for Australia exporters to market their big brands. An Australian marketer would be required to develop a strong recognition for the brand for it to be successful. An example of this is the movement of H&M into China’s market and through strong brand recognition, the store was successful.
Australia well established brands such as Cue, Steve Madden, Wayne Cooper, Akira are key examples for export to the Chinese market.

Social Class structure
The social class structure of China is vastly different to that of Australia. In 2001, the Chinese Academy of Social Sciences conducted research on the ‘Evolution of the Contemporary Social Structure.’ It rejected the Marxist class analysis and developed ten major social stratas.

| 1978 | 1988 | 1991 | 1999 | Total | 100.00 | 100.00 | 100.00 | 100.00 | State and social managers | 0.98 | 1.70 | 1.96 | 2.1 | Managers | 0.23 | 0.54 | 0.79 | 1.5 | Private entrepreneurs | 0.00 | 0.02 | 0.01 | 0.6 | Professional and technical workers | 3.48 | 4.76 | 5.01 | 5.1 | Clerical workers | 1.29 | 1.65 | 2.31 | 4.8 | Self-employed | 0.03 | 3.12 | 2.19 | 4.2 | Salespersons and service workers | 2.15 | 6.35 | 9.25 | 12.0 | in which: peasant workers | 0.80 | 1.80 | 2.40 | 3.7 | Industrial workers | 19.83 | 22.43 | 22.16 | 22.6 | in which: peasant workers | 1.10 | 5.40 | 6.30 | 7.8 | Agricultural labourers | 67.41 | 55.84 | 55.01 | 44.0 | in which: migrant labourers | 0.00 | 0.10 | 0.20 | 0.1 | Unemployed and under-employed | 4.60 | 3.60 | 3.30 | 3.1 |

The social structure shows a growing middle class of agricultural labours, industrial workers, and service workers. This growth can be attributed to China’s push for education. The government introduced an educational reform to fund tertiary student education. This has lead to a 30% growth in higher education year on year for the past 5 years. The increase in educated individuals has subsequently lead to substantial growth in well educated middle class. (Euromonitor 2008)
Australia has four main classes: lower class, working class, middle class, and the upper class. (McGregor 1997) According to ABS statistics, the majority of Australians can be classified as middle class with 65% of the workforce in white collar jobs (middle class) similar to that of China.
While both countries have majority of individuals in the middle class, the average salaries in China’s market varies only sightly to an average Australian salary. (Note the different dollar values)

Country: Australia | Currency: AUD | Updated: 18 Mar 2010 | Individuals Reporting: 74,933

Country: China | Currency: CNY | Updated: 17 Mar 2010 | Individuals Reporting: 5,519
$1 CNY = $0.15 AUD

Despite the relatively small differences in salary of China to Australia. The Chinese population has a significantly high level of disposable income. As such, Chinese people will be more readily able to impulse purchase than Australians. This can be reflected in the tightening of Australian consumer spending over the last few years.

From a study of the differences in geographical and sociocultural segmentation, between China and Australia, several opportunities are available for marketers to exploit.

Reference
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Cai (2009) Food and Beverage to China Available from http://www.austrade.gov.au/Food-and-beverage-to-China/default.aspx (accessed 19 March 2010)
Chang,e 2009 April 24, Western Brands eye Chinese Women Available from http://edition.cnn.com/2009/BUSINESS/04/23/china.handm.store/ (accessed 19 March 2010)

China Wines Information Website (2008) China expected to be world’s seventh largest wine consumer by 2013 Available from http://www.wines-info.com/Newshtml/201003/2282010030510361720.html (accessed 19 March 2010)
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