when the dragons fly it's time to communicate

WHEN THE DRAGONS FLY,

IT’S TIME TO IT’S TIME TO

COMMUNICATE

Luxury communication to the Chinese travelers

1

• Who are the Chinese travelers ?

2

• The 9 commandements of

communication to Chinese travelers


2

3

• The external factors contributing to

communication

WhoWho are the are the ChineseChinese travelerstravelers ? …? …


Before analysing the best ways to communicate to Chinese travelers for

a luxury brand, we need to draw an image of the Chinese travelers.a luxury brand, we need to draw an image of the Chinese travelers.


Business Trips

“Visit Friends & Relatives”

Hong Kong, Macao…

Free groups and

individual tourism

THE RISE OF CHINESE

INBOUND AND OUTBOUND

TOURISM?

1983 1997

Business Trips Hong Kong, Macao…

and neighbour

countries

individual tourism

in other countries


• 1998: South Korea

• 1999 Australia and NZ

• 2000 Japan

• 2004 France, Switzerland, Italy…

• 2005 UK and Russia

• 2007 USA

Almost all Chinese can travel but…� Strong control of travel agencies

� Many documents to get a visa:

THE RISE OF CHINESE


TOURISM?

1. A name list of all the group members

2. A detailed itinerary

3. Flight reservation

4. Name of the tour leader

5. Name and contact details of the designated

partner tour operator in the visited country

6. Confirmation from the designated

partner tour operator

� For group tours, passports are kept by the guide during all the trip


7. For each member of the group: Two duly completed visa application forms

8. For each member of the group: passport

9. For each member of the group: insurance covering the journey

10.For each member of the group: Proof of financial means

11.For each member of the group: A letter of the working unit or company

12.A deposit to ensure the tourist will go back to China

An increasing number of holidays

� 29 days public holidays

THE RISE OF CHINESE


TOURISM?

� 2-3 weeks additional paid holidays

� Weekend short trips developing


HOW MANY ARE THEY ?

� In 2011,

they were

around 70

milions

� And they


� And they

spent

55 billions USD

worldwide

Men (53%) and women (47%)

Middle-class to upper-class: 38%

earn more than $2,200 (monthly

household income)

WHO ARE THE

CHINESE TRAVELERS ?

household income)

All generations: 50% of all Chinese

outbound travelers are aged between

25-44yo


WHO ARE THE

CHINESE TRAVELERS ?

� Depending of their city of origin chinese travelers are more travelling or not


According to the Hurun report, these are the five main destinations for

Chinese travelers who can be potential customers for luxury brands

WHERE DO THEY FLY ?

ABROAD

13 %


1

Sources. Hurun Report 2011

13 %

12. 7 %

11.6 %

Chinese tourists in Europe are significantly outspending counterparts

from elsewhere. Average amount spent on tax-free shopping in 2010

WHERE DO THEY FLY ?

ABROAD OUTSPENDERS


According to the Hurun report, these are the five main destinations for

Chinese travelers who can be potential customers for luxury brands

WHERE DO THEY FLY ?

MAINLAND CHINA

SanyaSanya


1YunnanYunnan

Hong KongHong Kong

Sources. Hurun Report 2011

1/ - 14-day tour in Europe: England+France+Switzerland/Germany

EUROPE

A CLASSICAL TRAVEL OFFER

Starting price: RMB 16,800 yuan (2,400 USD)

2 examples of tours in Western Europe


Shopping: 60 mins for tax free shops, 150 mins for Galeries

Lafayette in Paris, 60 mins for watch shopping in Lucerne

EUROPE

A CLASSICAL TRAVEL OFFERDestinations:

Day 1: Beijing-London

Day 2: London

Day 3: London-Oxford-London

Day 4: London-Paris (by train)

Day 5: Paris

Day 6: Paris

Day 7: Paris-Dijon


Day 7: Paris-Dijon

Day 8: Dijon-Geneva

Day 9: Genève-Lucerne

(watch shopping)

Day 10: Lucerne-Fussen

Day 11: Fussen-Munich

Day 12: Munich-Frankfurt

Day 13: Frankfurt-Beijing

Day 14: Beijing

Other: Chinese lunches and dinners

2/ - 9-day tour in France: Paris + Riviera

EUROPE

A CLASSICAL TRAVEL OFFER

Starting price: RMB 15,300 yuan (about 2,200 USD)

+ optional charged visit

Day 1: Shanghai-Paris (by air)

Day 2: Paris-Nice (by air)-Monaco-

Cannes (by bus)-Marseille (by bus)

Day 3: Marseille-Aix-Arles-Avignon (all by bus)

Day 4: Avignon-Lyon (by bus)


Day 4: Avignon-Lyon (by bus)

Day 5: Lyon

Day 6: Lyon-Paris (by bus)

Arc de Triomphe-Chams-Elysees-

Place Concorde-Notre Dame de Paris

Shopping:Galeries Lafayette

Day 7: Paris (by bus)

Louvre (2h)-La Tour Eiffel (2h)-Free walk in Place Opéra (4h)

Day 8: Paris-Shanghai (by air)

Day 9: Shanghai

WHAT TO THEY BUY

ON A TRIP?


They are more buying expensive products abroad as they can get tax rebate and alsobecause they can find other products lines. They buy products on which the brand country

price index is lower than in China.

THEY SHOP MORE

EXPENSIVELY� Spending average in € on all products in Rue Saint Honoré, place

Vendôme and Rue de la Paix - 2009


THEY SHOP ALL YEAR LONG…

BUT WITH TWO PEAKS� Seasonality of chinese spending on watches and jewellery in France - FY10


THEIR EXPECTATIONS

AND MOTIVATIONS

Source: Mc Kinsey 2011 Report - Wealthy Chinese customers survey


THEIR EXPECTATIONS

AND MOTIVATIONSPrice is the Key – the example of a simple Rolex Datejust – steel

Local price

CNY 35 100

EUR 2 871

Index

100

75

Savings

- 25 %


EUR 2 871

CHF 4 089

USD 4 573

HKD 31 000

JPY 410 000

AED 15 840

75

74

89

78

85

84

- 25 %

-26 %

- 11 %

- 22 %

- 15 %

- 16 %

THEIR EXPECTATIONS

AND MOTIVATIONSPrice is the Key – the example of a complicated Patek Philippe

Local price

CNY 371 900

EUR 23 750

Index

100

58

Savings

CNY 155 131


EUR 23 750

CHF 34 653

USD 44 203

HKD 291 500

JPY 3 820 000

AED 126 140

58

59

81

69

74

63

CNY 155 131

CNY 153 833

CNY 70 123

CNY 115 521

CNY 95 152

CNY 137 440

THEIR EXPECTATIONS

AND MOTIVATIONS

Outside

China

(56 %)

Others

Aspired to be VIP

Better

Shopping

Frequent oversea

trips

Better shopping

experience

Lack of

discount


In China

(44%)

Shopping

Experience

Better size availability

Access to After-sales

services

Impulse buy(can’t wait)

discount

outlet in china

Better

availability for

new products

Broduct product

selection

Lower price

New expectations are arising among the richest travellers…

o Superior Service

o More qualitative shopping experience

o A story to tell once back home

THEIR EXPECTATIONS

AND MOTIVATIONS

… that tend to favour brand’s boutiques


Chinese consumers are increasingly able to travel thanks to reducedrestrictions and the appreciation of renminbi

Among those consumers that have traveled overseas, ninety percent buy luxury good, with almost half either specifically saving money or planning their intended purchases price to their departure.

TRENDS TO REMEMBER

planning their intended purchases price to their departure.

Over half of travelers will buy luxury goods as gifts for others whentravelling.91 % increase in chinese travelers spendingIn 2010, 90% of millionaires traveled abroad.The average number of people traveling together was four and more than half traveled with family.


The 9 commandements of The 9 commandements of luxuryluxury communicationcommunication

to to ChineseChinese travelerstravelers ……


1.1. GetGet themthem fromfrom the the beginningbeginning to the endto the end2.2. FindFind an efficient marketing and communication mixan efficient marketing and communication mix3.3. FollowFollow the four the four stepssteps of the of the processprocess4.4. Use the power of Use the power of advertadvert boardsboards5.5. Use the power of Use the power of inflightinflight and and traveltravel magazinesmagazines6.6. Target affluent Target affluent consumersconsumers throughthrough traveller’s clubtraveller’s club6.6. Target affluent Target affluent consumersconsumers throughthrough traveller’s clubtraveller’s club7.7. Target Target consumersconsumers throughthrough travelerstravelers websitewebsite8.8. AwardAward themthem withwith prestigiousprestigious experienceexperience relatedrelated to to

youryour brandbrand9.9. Use the guide business for direct communicationUse the guide business for direct communication


The aim in China is to increase fidelity from the customersThis is the reason why the customer must be exposed to the communication of a brand as much as possible following this motto.

CATCH ME

BEFORE,

GET THEM FROM THE

BEGINNING TO THE END

BEFORE, DURING

& ON-SITE


FIND AN EFFICIENT

MARKETING MIX


Price of main

adverts means for

the luxury brands

in China

Cost per head

Developawareness in

China

Communicate on your brand

during the full trip

Attract them and be sure they go and talk about

your stores

Offer the right boutique

experience so thatthey will talk about you back in China

FOLLOW THE FOUR STEPS

OF AN EFFICIENT TRAVELERS

COMMUNICATION?

trip your stores you back in China


DEVELOP THEIR

AWARENESS IN CHINA


� Internet and social media are key tools to prepare their trip…

… and very often define a precise shopping list

USE YOUR INTERNET WEBSITE

TO HELP THEM PREPARE

THEIR SHOPPING LIST

As Chinese travelers are willing to buy the newest products abroad to not hesitate to put forward

your newest products on your corporate websites


The most efficient way for a brand is to use two types of boards:

-Local in-city boards on the road to airport

- airport city boards from the beginning to the end of their trips

Local inLocal in--city boardscity boards

-Vibrant cities like Shanghai, Beijing and Guangzhou offer highly creative outdoor media and

USE THE POWER

OF ADVERT BOARDS (1/6)

-Vibrant cities like Shanghai, Beijing and Guangzhou offer highly creative outdoor media and

boards

- Advertisements on large LED screens and street furniture (privileged spaces)

- Special luxury streets boards can be also efficient such as Nanjing Lu in Shanghai

- Particularly adapted to promote luxury brands

- Efficient in the biggest cities and in targeted areas

The aim is :

⇒to build creative campaigns on a targeted area

⇒mixing several outdoor media, and focusing on precise consumers groups.

⇒ strategic periods of the year must be chosen when Chinese tourists plan their holidays and are

eager to explore new exciting destinations.


Airports ad boardsAirports ad boards

- Premium positionning advert (JCDecaux 2010 study)

- It creates a more modern and international status for the brand

- Passengers are highly driven in the Chinese airports

Dued to authority will to regulate and prevent any danger

USE THE POWER

OF ADVERT BOARDS

(2/6)

Dued to authority will to regulate and prevent any danger

-Advertising points in airports are highly strategic

=> 41% of airport passengers look at airport ads in China

- Airports boards opportunity

- More numerous than in Europe

- Bigger than in Europe dued to no restrictions on sizes

and to bigger spaces in the airports than in Europe


Have the recent Chinese Government restrictions

on advertising of luxury affected the way foreign

luxury brands advertise in China?

Yes, they advertise even more !!!

USE THE POWER

OF ADVERT BOARDS

(3/6)

Yes, they advertise even more !!!

-The government restrictions aimed at some inappropriate wording

- Only for some local brands or real-estate companies in China that promoted some kind of

luxury or hedonistic spirit that the government doesn’t really like.

- The restrictions don’t apply to the established luxury brands from overseas

⇒ They use creative visuals and logos in their ads.

⇒ The only limits on these brands concerns the sexiness of some visuals that may have a

hard time to get approved by the censorship bureau.


The Little Fagguoren who became the Xiongmao

of outdoor advertising in China

In 2005, French outdoor advertising giant JCDecaux, which ranks world No.1 in airport

advertising, started its business in China with the establishment of JCDecaux Momentum

USE THE POWER

OF ADVERT BOARDS

(4/6)

advertising, started its business in China with the establishment of JCDecaux Momentum

Shanghai Airports Advertising Co. Ltd., providing exclusive high-profile media portfolio with

impressive visual impact at strategic locations, to reach target audience and enhance brand

image efficiently and effectively.

We are now operating Shanghai Pudong International Airport, Shanghai Hongqiao

International Airport, major part of Beijing Capital International Airport and Qingdao Liuting

International Airport.

To seize vast branding opportunities in 2010 World Expo, Decaux presented the advertisers

with unparalleled media solutions in the brand-new Terminal 2 of Hongqiao International

Airport, which is one of the most promising air hubs in Asia-pacific region.


� JCDecaux Momentum Shanghai Airport Advertising and Nielsen, a worldwide leader in

measurement and information, have been working together to conduct a 360 degree

comprehensive passenger survey. In terms of face-to-face interviews, 2,200 interviews

were completed for the short questionnaire and 1,200 interviews for the long

questionnaire, with a further 100 completed online by VIP lounge users in just four

weeks in June 2011.

�

USE THE POWER


�

� The survey was carried out in Pudong International Airport and Hongqiao International

Airport to get the profile of airport passengers and get a comprehensive understanding

of passenger purchase behaviour (brands insight)

� The main findings of the survey can be placed into the following categories; airport

media benefits, Shanghai airport media benefits and passenger profiling.


Shanghai airports : a real costly but effective advertising opportunity to

catch Chinese luxury travelers

� Shanghai airports were voted as the best in mainland China.

Shanghai airports are leading the market in terms of significant attributes such as "modern, service oriented, international and harmonious".

� Nearly 90% of passengers have seen an advertisement in Shanghai Airports.

USE THE POWER


� Nearly 90% of passengers have seen an advertisement in Shanghai Airports.

This figure is astonishing and when combined with the fact that the Shanghai Airport environment provides a captive setting to passengers for an average time of 2 hours 22 minutes, it comes as no surprise!

� 1 out of 2 passengers are from an affluent and upper-middle class household

with an annual household income of RMB 180,000 and higher, double that of the general Shanghai population (RMB 84,000). For every 1 out of 3 passengers, the amount is RMB 360,000- among the richest in China.

This shows that Shanghai airports provide the best environment to capture those high-spending consumers.


-A determined budget must be fixed

- A highly targeted list of websites and blogs has to be created

The aim is to :

TARGET CONSUMERS

THROUGH TRAVELER’S

WEBSITES

The aim is to :

⇒ adjust your budget for a maximum ROI.

⇒ impact on Chinese travelers

⇒ build and implement successful advertisement campaigns in the most popular travel and

tourism websites viewed by millions of Chinese travelers preparing for their next trip abroad.

=> Communicate to prepare their purchases abroad=> Communicate to prepare their purchases abroad


These two types of magazines are efficient for a brand as the potential target

prepare their stay before flying and as they spend at least 10 hours in flight to go to Europe.

The aim is to :

⇒ adjust your budget for a maximum ROI.


USE THE POWER

OF INFLIGHT MAGAZINES

AND TRAVEL MAGAZINES (1/3)


⇒ build and implement successful advertisement campaigns in the most popular travel and

tourism websites viewed by millions of Chinese travelers preparing for their next trip abroad.

For example, the most powerful magazines inflight magazines are the magazines from:

Chinese airlines And other nations airlines


USE THE POWER


AND TRAVEL MAGAZINES (2/3)The impact of these magazine and the way its influences Chinese travelers consumers

- An inflight magazine is read at least

twice during a flight


-There is no real interference as

the consumer is not given too many

ads and information.

-Enclosed indoor space pushes

the consumer to read it

USE THE POWER


AND TRAVEL MAGAZINES (3/3)Example or a lifestyle travel magazine in China : efficiency for a maximum ROI

Life Elements

Effective communication channel between the brands and the readers

Columns: international, Auto, Design, Lifestyle, Culture


Columns: international, Auto, Design, Lifestyle, Culture

Mainly distributed in specific points in Beijing, Shanghai, Guangzhou

-Golf Clubs

- 5-star hotels

- Clubhouses

- Foreign embassies and foreign commerce chambers

Readers:

- 50 % in high class residential areas

- 20 % in commercial areas eg A-Class commercial building

- 20 % free subscriptions in business suites of hotels and golf clubs

The Shanghai Travelers’s Club is certainly the most prestigious luxury travel club in China.

3,000 members : all affluent Chinese frequent travelers

This club is the ideal place to build the reputation of a brand.

Club linked with the local Shanghaiese communist party section.

TARGET AFFLUENT

CONSUMERS

THROUGH TRAVELER’S CLUBS

Efficient and highly targeted communication means :

- Newsletter trough articles - Shanghai traveler’s magazine

- Sponsoring traveler’s club events

=> increase brand awareness and relationship with customers to sell them => increase brand awareness and relationship with customers to sell them

high price goodshigh price goods

The Club has the right to select the sponsors according to its standards of luxury and excellence in

travel services.

Such clubs are existing all over China but this club is one of the most efficient

for communication to high-income luxury consumers and travelers.


- Reserving the Chinese customers a unique sponsored experience onsite could be a tremendous idea

to create new means of communication of a brand to luxury travelers.

-Example: the Coco Chanel experience at the Ritz Hotel organized by Chanel

AWARD THEM OF UNIQUE

PRESTIGIOUS EXPERIENCES

RELATED TO YOUR BRAND (1/2)

-The first of these 'Once in a lifetime' travel collections

by Leading Hotel of the World and a brand is an opulent 3-day jaunt to Paris

where guests can enjoy three nights of exceptional luxury in the legendary "Coco Chanel Suite" at the

Ritz Paris. Shanghai Travelers' Club members will also receive special gifts from Chanel.

Still complete with the legendary designer's own furniture including original rare Coromandel screens

and magnificent art and antique pieces, as well as views of the city's famous Place Vendôme, the Coco

Chanel Suite is the pinnacle of prestige in the City of Lights. Part of the programme will also include a

private tour of Mme Chanel's private apartments on Rue Cambon and the Chanel store on Place

Vendôme.


The aim is to :

⇒ co-brand a unique experience paid by the customer

⇒ Increase customer’s history knowledge

⇒ Increase quality image to the customers

⇒ Increase brand attraction by word to mouth. (high efficient mean)

AWARD THEM OF UNIQUE

PRESTIGIOUS EXPERIENCES

RELATED TO YOUR BRAND (2/2)

⇒ Increase brand attraction by word to mouth. (high efficient mean)

⇒ Create the perfect atmosphere for high luxury sales

⇒Create buzz around the experience in the Chinese high society

⇒⇒Communicate to impact the increase the quality image, increase customers’ Communicate to impact the increase the quality image, increase customers’

knowledge and make the most of the experience in term of salesknowledge and make the most of the experience in term of sales

Other example: Luxury watches brands communicate also with highly private Manufacture’s Visit in

Switzerland to their best potential Chinese customers.


� Multiple task: tourist guide,

translator, negotiator, shopping adviser…

� They meet with the need for reassurance

USE THE GUIDES BUSINESS

IMPACT ON COMMUNICATION

(1/2)

� They meet with the need for reassurance

� A strong influence on the selection

of places of shopping


► Globally, they tend to act as a brake to

the increasing freedom of Chinese tourists.

� The fee system

USE THE GUIDES BUSINESS

IMPACT ON COMMUNICATION

(2/2)


“OFFICIAL” CONTRACTS

Fee from the department store:

- Travel agency: 5 to 15%

- Guide: 10%

Fee from the brand (not systematic)

-Guide: 3 to 5%

Dedicated interlocutor

OCCASIONAL FEES

Guides are treated

like Hotel Concierge

or Drivers: 3 to 5%

Individual relationships between sales

associates and guides

The The externalexternal factorsfactors contributingcontributing to communication …to communication …


Luxury travelers have less and less time to spend in airports

Less time during the stop overs

Less time in the shop

This is the reason why communication to luxury consumer travelling

needs to be highly efficient.

THE IMPACT OF TIME

ON COMMUNICATION

needs to be highly efficient.

Short or no Slogan

Brand codes and logo are and must be highlighted


ALLOW LUXURY TO EXPRESS ITSELF IN TRAVEL RETAIL

YOU WILL ENJOY THE RESULTS


THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR THANK YOU FOR YOUR

ATTENTIONATTENTIONATTENTIONATTENTIONATTENTIONATTENTIONATTENTIONATTENTION


SOURCES

Hurun Report 2010

www.ormita.hk


www.ormita.hkwww.maosuit.com

www.jcdecaux.com.cn

Richemont Marketing and Communication Conference

KPMG Studies

when the dragons fly it's time to communicate

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