The Voice of Luxury: Social Media and Luxury Brands in China

The Voice of Luxury: Social Media and Luxury Brands in China
The Voice of Luxury:
                Social Media and
                Luxury Brands
                in China



2011 GroupM Knowledge - CIC White Paper on Luxury
The Voice of Luxury: Social Media and Luxury Brands in China
Executive summary
Background: The luxury market in China is huge and growing fast.
• China’s most wealthy are spending more every year, with luxury consumption
  expected to account for 20% of the global market by 2015.

Methodology:
• General Market Intelligence: GroupM Knowledge provided a luxury market
  overview, including data from the GroupM Knowledge/ Hurun Wealth Report
  2011
• Social Media Intelligence: CIC collected, mined and analyzed millions of
  Chinese social media comments relating to luxury, utilizing patent pending
  technology and a team of seasoned analysts


CIC L-K-P FRAMEWORK FOR MAKING SENSE OF THE BUZZ




 Listen听                         Know识                        Participate融
      Topic                        E-Culture                   Communication


Listen to the buzz            Know the culture                 Participate in the
and find out                  and context of the               conversation.
what’s hot online.            internet
                              community.




                     The Voice of Luxury: Social Media and Luxury Brands in China   i
The Voice of Luxury: Social Media and Luxury Brands in China
Executive summary
Strategy 1: Listen to talk about luxury
• Brand Overview: Louis Vuitton lead the luxury market’s online discussion in
   China. Chanel command high buzz volume and positive sentiment.
• Category Overview: ‘Leather Goods’ (Bags) - the most discussed luxury
   category in China.
• Efluencer Overview: The top 20% of netizens contributed 80% of the content in
   luxury category. There are 4 types of luxury efluencer shaping the
   conversation: Shopaholic, Style Guru, Fashionista and Brand Fan.

Strategy 2: Know and understand China’s unique cultural context
• ‘shai’ 晒 (showing off) is very popular in Chinese luxury & fashion BBS
   communities, accounting for an average of 90% of the comments about luxury
   brands.
• Globally speaking, China is positioned as ‘in the show’ stage of luxury
   consumption, going through different stages of shai. Product Shai, True Man
   Show and Lifestyle Shai.
• Overseas purchase and purchasing agents (i.e. Daigou 代购) are also hot topics.
• Live broadcasting from fashion shows is a new way for Chinese netizens to
   keep in touch with the latest fashion trends. Now ‘runway broadcasting’ is
   popular via microblog, incorporating pictures, videos and real-time interaction.
• Chinese luxury consumers are categorised in four groups: Aspirational Buyer,
   Quality Pursuer, Status Seeker and Trend-Setter.

Strategy 3: Participate in the conversation in a relevant and appropriate way
• The microblog (weibo) offers brands a platform that is not only for listening but
   also for actively participating in the online conversation. Chanel is the most
   mentioned brand in Chinese microblogs (600,000 tweets between January and
   May 2011), while Burberry’s account is the most engaged (43,001 retweets
   and 5,320 comments in the same period).
• There are numerous engagement strategies that brands can employ to
   participate in the conversation, including leveraging celebrities’ massive social
   reach to spread the brand culture.
• Brands should track weibo accounts carefully to ensure they create content
   that resonates with netizens and is appropriate for the brand’s voice.
• Central to microblog engagement and any social media participation is a tone
   of voice befitting your brand culture. So, luxury brands must find the luxury
   voice in social media.
                                                                     August 2011
                      The Voice of Luxury: Social Media and Luxury Brands in China     ii
The Voice of Luxury: Social Media and Luxury Brands in China
Table of contents
Chapter I
Listen- Listen to the buzz and find out what’s hot online

P 02 - 1.1 Luxury Category Overview
P 07 - 1.2 Luxury target audience
P 10 - 1.3 Luxury efluencers



Chapter II
Know- Know the culture and context of the internet community

P 13   -   2.1 Luxury brand position in China
P 17   -   2.2 Purchase drivers
P 18   -   2.3 Differences between Chinese and Western consumers
P 24   -   2.4 Overseas purchase
P 27   -   2.5 Counterfeits



Chapter III
Participate- Participate in the conversation

P 28   -   3.1 Luxury brand microblogs
P 33   -   3.2 How do luxury brands utilize social media?
P 35   -   3.3 Social media strategies / Marketing luxury brands
P 37   -   3.4 New challenges and opportunities




    The Voice of Luxury: Social Media and Luxury Brands in China   iii
The Voice of Luxury: Social Media and Luxury Brands in China
Research Methodology



       Data Source
         General market intelligence
         GroupM Knowledge provided general luxury market overview data, including data from the
         GroupM Knowledge/ Hurun Wealth Report 2011.
         The study carried out research both from the ‘bottom-up’ and ‘top-down’. From the
         ‘bottom-up’, the research looked at the number of key investment and spending indicators
         amongst mainland Chinese. These included the number of individual properties by region
         worth between 5 million yuan and 10 million yuan, the number of luxury cars purchased in
         the last three years costing 500,000 yuan or more, the number of high bracket income tax
         payers, company registered capital and so on. For the ‘top-down’ approach, it applied the
         Gini coefficient, measuring income distribution against the 2010 China GDP and 2009 China
         GNP.

         Social media intelligence
         CIC has been collecting and mining luxury conversations from across the unique,
         fragmented and dynamic social media landscape for over 3 years and boasts an archive of
         over 10 million comments.
         For this study, CIC collected, mined and analyzed millions of Chinese social media comments
         about luxury utilizing patent pending technology and a team of seasoned analysts.

         • BBS analysis : CIC collected over 4,500,000 comments in Q1 2011 from luxury and fashion
         related BBS sites.

             CIC Luxury & Fashion Panel Data BBS Overview (per month)
             1,500,000+ messages collected per month
             -Cover 40+ luxury & fashion sites
             - Track 1,000+ luxury & fashion related products, 30+ related drivers & attributes
             - 80,000+ posters
             - 220,000+ brand messages
             - 100,000+ driver mentions
         • Microblog analysis : CIC collected over 2.4 million tweets mentioning luxury brands
         from Sina Weibo between January and May 2011. CIC also collected tweets from
         selected luxury brand’s microblog accounts. All of these were then mined for
         mentions of over 1000 luxury and fashion related products and related attributes.


© 2011 GroupM Knowledge & CIC    The Voice of Luxury: Social Media and Luxury Brands in China          P01
The Voice of Luxury: Social Media and Luxury Brands in China
The Voice of Luxury: Social Media and Luxury Brands in China
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter I: Listen


         Chapter I
         China’s Vast Luxury Market and Unique Luxury IWOM

         1.1. Luxury Category Overview
         1.1.1 China’s Luxury Status
         Chinese luxury consumption is projected to grow 18% annually from 2010 to 2015, by which
         time accounting for over 20% of the global luxury market.
                                Luxury goods consumption in China, 1998-2015
                                                                                             180
                          Unit: Billion RMB
                                                                                80
                                               55                  64
                                 5

                            1998              2008                 2009         2010       2015E
           Global Share (%)
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter I: Listen


         II. Overview of Luxury Consumption in China
         - Annual consumption accounts for 5% of total assets.
         - China’s wealthy are spending more:
                 • 50% spend 1-3 million RMB per annum, a 11% increase from previous year
                 • 37% spend less than 1 million RMB per annum, down by 8% on previous year
                 • 13% spend more than 3 million RMB per annum, down by 3% on previous year
         - Travel accounts for 29% of millionaire’s consumption, followed by daily luxuries, child
           education, entertainment, gift giving and finally, saving.
                                  Figure 1-1 Millionaire Consumption Patterns

              Consumption Pattern             2011 (%)                 2010 (%)                 2009 (%)
             Travel                               29                       27                       16
             Daily luxuries                       23                       24                       25
             Child education                      22                       20                       18
             Entertainment                        12                        9                       16
             Gift giving                           7                       11                       21
             Saving                                7                       10                        4
                                          Source: Hurun Best of the Best 2011- Preferred brands of China's richest
                                                        Source: GroupM Knowledge - Hurun Wealth Report 2011


         III. Recognition of Luxury Brands Among Wealthy Chinese
         - Chinese millionaires’ recognition of luxury brands has risen by 20% year on year.
         - Louis Vuitton once again came in first for luxury brands but Hermès performed outstandingly
           this year, rising from fourth place to second in the last year.
         - The average Chinese millionaire has 3.7 watches.

                                   Figure 1-2 Best Fashion Brands by Category


                    Category                     Brand                     Category                   Brand
         Best Jewelry                      Cartier                  Best Overall Watch           Patek Philippe
         Best Fashion Label                Giorgio Armani           Best Watches with High
                                                                                                 Patek Philippe
         Best Accessory                    Hermès                   complications

         Best Luxury Writing Instrument    Montblanc                Best Jewelry Watch           Cartier

         Best Skincare                     Estee Lauder             Best Fashion Watch           Gucci


                                              Source: Hurun Best of the Best 2011- Preferred brands of China's richest

© 2011 GroupM Knowledge & CIC    The Voice of Luxury: Social Media and Luxury Brands in China                            P03
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter I: Listen


         1.1.2 Luxury Category Introduction
         The Chinese luxury market is booming. Many international brands are expanding their
         investment in China and opening a lot of new stores, not only in tier one cities like Beijing
         and Shanghai but also in lower tier cities as well.

         The luxury category, as defined in this white paper, includes leather goods (bags), shoes,
         fine jewelry, watches, RTW (Ready-to-wear or prêt-à-porter) and accessories (sunglasses,
         belts and so on). Cars, hotels, cosmetics and service level products are not covered in this
         report.

                                      Figure 1-3 Selected Luxury Category



                Leather Goods                        Shoes                         Fine Jewelry




           Buzz Volume:79,649 posts        Buzz Volume:31,718 posts           Buzz Volume:16,489 posts


                  Accessories                        RTW                                Watch




           Buzz Volume:15,182 posts        Buzz Volume:13,420 posts          Buzz Volume:12,514 posts


                                                                      Source: CIC luxury panel data in Q1 2011




© 2011 GroupM Knowledge & CIC    The Voice of Luxury: Social Media and Luxury Brands in China                    P04
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter I: Listen


         1.1.2 Luxury Category Buzz Distribution by Site
         Bulletin Board Systems (BBS) are online discussion forums or communities frequently
         focusing on high engagement categories. BBS provide a good channel to listen to consumer
         feedback and to gain category insights in China. BBS play a particularly important role in the
         unique Chinese social media landscape. Compared with other mature categories like
         Cosmetics and Auto, there is less brand initiated buzz, mainly dominated by consumers’
         organic buzz.

         In CIC’s luxury panel, about 360,000 posts mention luxury brands and products in each
         quarter. Fashion sites, Lifestyle communities and Luxury verticals are key buzz distributors,
         among which 55bbs, Yoka and Iwatch are the top 3 sites where netizens talking about
         luxury.

         Understanding the sites with the most buzz can assist in more effective (social) media
         planning.
                                         Figure 1-4 Luxury Category Buzz By Site


              Sites             No. of Posts           Post %        No. of Conversation       No. of Posters
        55bbs                     112,556              31.7%                2,139                  14,868
        Yoka                      56,176               15.8%                1,955                   4,910
        Iwatch                    36,978               10.4%                3,035                   9,399
        Belle8                    27,877                7.8%                 934                    3,366
        Liba                      19,994                5.6%                 697                    3,541
        KDS                       15,290                4.3%                3,844                   6,652
        Watchlead                 15,170                4.3%                1,513                    719
        Taobao                    11,025                3.1%                2,571                   3,245
        Sohu                       8,955                2.5%                1,106                    598
        Dianping                   8,801                2.5%                 461                    1,698
        Baidu                      6,166                1.7%                1,450                   1,353
        Cqmmgo                     5,940                1.7%                 298                    2,586
        Tianya                     5,849                1.6%                1,106                   2,625
        Mplife                     4,493                1.3%                 328                    1,627
        Others                    20,303               5.60%                4,087                   6,337
             TOTAL                355,573              100.0%               25,524                 63,524

                                                                           Source: CIC luxury panel data in Q1 2011




© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                     P05
Chapter I: Listen


         1.1.3 Community Segmentation Analysis
         Posting Rate (PR) is one of the online community passion indexes. A higher value indicates
         that community members are more active and engaged in particular topics. Combined with
         number of posters and buzz volume, we can map out community segmentation.
                                                     Figure 1-5 Map of Luxury Community
                      25
                               Watchlead

                      20
                               Sohu
                      15
                                   QQ
                                                     Yoka
                      10
                                                   Belle8                                           55bbs
                           5                       Liba
                                                               KDS
                                                  Taobao
                                                                         Iwatch365
                           0
                               0        2,000    4,000      6,000    8,000   10,000 12,000 14,000 16,000 18,000

                                                                No. of Posters
         Note: Bubble Size = Buzz Volume
         Source: CIC luxury panel data in Q1 2011
         Posting Rate= No. of Posts/ No. of Posters (i.e. average num of posts per poster )

         Brand can optimize online media planning by understanding of different segment of communities.
                                                Figure 1-6 Segmentation of Luxury Communities
                +
                                   Niche Communities                         Online Community Buzz Leader
                                   − Sophisticated campaigns which           − Key media spending
                                     require high participation              − Building awareness
            Posting Rate




                                   − Close cooperation with                  − Establish loyal users / brand fan
                                     communities                               relations

                                   Communities with less influence           Popular Communities

                                   − Help to spread the campaign or          − Low barrier campaign
                                     new launches information                − Increasing awareness


                 -                                              No. of Posters                                     +
                                                                                                                   Source: CIC
© 2011 GroupM Knowledge & CIC                   The Voice of Luxury: Social Media and Luxury Brands in China                     P06
Chapter I: Listen


         1.2 Luxury Target Audience
         1.2.1 Luxury Category Poster Analysis
         In the luxury category, the top 20% netizens contributed nearly 80% of the contents. Those
         active netizens frequently share their shopping experience, brand news and luxury category
         knowledge.

                                            Figure 1-7 Buzz Distribution by Netizens

                          100%
                                                 20.0%
                             80%

                             60%                                            79.7%

                             40%                 80.0%

                             20%
                                                                            20.3%
                             0%
                                               Netizens                   Contents
                                                                             Source: CIC luxury panel data in Q1 2011

         Content Analysis of Active Posters
         Shopping experience sharing is a common phenomena in luxury category because Chinese
         consumers are willing to show off their purchasing power and shopping achievements.
         Secondly, brand news sharing is effective in attracting netizen participation, such as
         seasonal new products launches, fashion shows, parties and so on. Knowledge sharing is
         the third hot topic, which is a particularly popular in the watch category.

                                          Figure 1-8 Content Analysis of Active Posters
          Top Posters (ID)         Buzz              Sample Topic                    Content                Site

        烈火坚冰                    1,572         爱马仕2011春夏新品鉴赏                   Brand news sharing            QQ

        若 然                     1,150         Zegna 2011/2012秋冬男装             Brand news sharing           Sohu

        Cathyxu861              1,008             超级血拼在中港加                    Shopping experience          55bbs

                                                    [VACHERON
        Ohseal                  1,005                                          Knowledge sharing        Watchlead
                                                  CONSTANTIN]6378
        Tingtingky                 979        TT@2011 P44 3/17更新咯             Shopping experience           Liba
                                                                             Source: CIC luxury panel data in Q1 2011

© 2011 GroupM Knowledge & CIC         The Voice of Luxury: Social Media and Luxury Brands in China                      P07
Chapter I: Listen


         1.2.2 Hot Online Behavior Overview
         ‘shai’ (or, showing off a product) is very hot in China’s luxury and fashion BBS communities.
         Trading second-hand luxury products and counterfeits is also common among Chinese
         luxury consumers.
                                 Figure 1-9 Buzz Ranking of Hot Topics (Buzz Incidence)

                                  Shai                                                       57.5%
             Experience/Knowledge
                    sharing
                                            2.4%

                      Product inquiry       2.4%

                  Brand news sharing        1.9%

                              Trading       1.8%

        Source: CIC luxury panel data in Q1 2011. Base: 355,573 luxury category posts in Q1 2011
        Buzz Incidence: The ratio of a specific topic buzz in the total number of buzz



        I. Buzz Trend of Shai Post
        Buzz trend of Luxury ‘shai posts showed obvious seasonality. Buzz peaks occurred around
        festivals/holidays when people could take shopping trips. From our perspectives, ‘shai’ is an
        important touching point to link netizens’ offline shopping behavior with online expression.

                                    Figure 1-10 Monthly Buzz Trend of ‘shai’ Posts
        Unit: post        National Day &         Christmas &       Spring
                          Mid-autumn Festival New Year Holiday Festival                       Labor Day
        70,000

        60,000

        50,000

        40,000

        30,000

        20,000

        10,000

              0
                  Aug.09 Sep.09 Oct.09 Nov.09 Dec.09 Jan.10 Feb.10 Mar.10 Apr.10 May.10 Jun.10 Jul.10
                                                                     Source: CIC luxury panel data in Aug.2009-Jul. 2010

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Chapter I: Listen


         II. Hot Online Topics by Brand
         For fashion brands (e.g. Louis Vuitton, Chanel, Gucci), product shai (87.1%) dominated the
         hot content. For watch brands, like IWC, knowledge sharing and brand news sharing are
         most common.

         For trading luxury products, second-hand goods and counterfeit trading were also hot
         buzzed online.

                         Figure 1-11 Buzz Ranking of Hot Topics by Top 10 Brands (Buzz Share)


          Louis Vuitton

                Chanel

                  Gucci

                 Coach

                 Prada

                   Dior

                Cartier

              Burberry

               Hermes

                   IWC

            TTL Brands

                          0%     10%     20%     30%      40%     50%      60%     70%     80%      90%     100%

               Shai       Experience/Knowledge sharing        Product inquiry      Brand news sharing       Trading


        Source: CIC luxury panel data in Q1 2011
        Buzz Share: Refers to percentage of posts related to each attribute out of the sum of all attributes related
        posts. The total percentage is 100%.
        Note: Base is the sum of the top 5 hot attributes. Base: TTL brands: 234,505 posts.
        Louis Vuitton : 37,105 posts, Chanel: 25,530 posts, Gucci: 24,280 posts, Coach: 27,263 posts, Prada: 14,356
        posts, Dior:11,578 posts, Cartier: 8,511 posts, Burberry: 13,832 posts, Hermes: 9,346 posts, IWC: 10,720 posts



© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                        P09
Chapter I: Listen


        1.3 Luxury Efluencers
        1.3.1 Classify Luxury Efluencers
        Luxury Efluencers: They have huge influence and effective interaction with luxury fans.
        Based on the buzz content, there are four clear behavioral characteristics amongst Luxury
        Efluencers in the online community:
                • Shopaholic: Showing off collections and ‘building floor’, which is a cumulative
                  update of their shopping achievements in a specific post, regularly updated to
                  attract netizen awareness.
                • Style Guru: Expertise sharing to build effective interaction with luxury fans,
                  especially in the watch category
                • Fashionista: Share latest fashion trends and use ‘Street Shot’(街拍) and ‘Self-
                  Shot’(自拍) to show off their trendy lifestyles.
                • Brand Fan: Fiercely loyal to a particular brand, refer to themselves as ‘Fans’ (粉) to
                  show their dedication to the brand.

        I. Case Study of Shopaholic: ‘Tingtinky’ (Netizen’s ID)
        A typical heavy buyer, regularly posting new products to ‘build floor’. In addition, she
        achieves good interaction with netizens by answering product inquiries. This post attracted
        over 18,600 replies.




        ‘Building
          Floor’




        Sample Quote of Social:                           Sample Quote of Inquiry:
        Netizens: 我觉得miumiu老合适TT宝贝的风                      Netizens:请问Betsey Johnson的鞋子哪里有
        格//I feel Miu Miu fit your style.                 卖啊? // Where do you buy Betsey’s shoes?
        Tingtinky:得到SARA额肯定~吾得意地笑啊                        Tingtinky:我在香港买的哦
        得意地笑// I’m happy because of your                  上海好像么有专卖店的// I bought in Hong
        comments. Link                                    Kong. Betsey Johnson does not have store in
                                                          Shanghai. Link


                                                                                             Source: CIC

© 2011 GroupM Knowledge & CIC    The Voice of Luxury: Social Media and Luxury Brands in China              P10
Chapter I: Listen


        II. Case Study of Style Guru: ‘瓜瓜的小光’ (Netizen’s ID)
        A typical ‘Guru’, sharing watch category knowledge and building effective interaction with
        netizen by Q&A. This post attracted over 42,800 replies.
                                                                 Sample Quote of Q&A:
                                                                 Netizens: Oris适合初玩表的人戴吗,
                                        Netizen’s question       有什么款好推荐的。// Could you give
                                                                 suggestions for new users like me?
                                                                 瓜瓜的小光: Oris不错,对于男表而
                                                                 言,它的机芯小了。 FM的定位是高
                                                                 端,低端的价格偏高了// Oris is good,
                                                                 but its men watch’s chip is small. FM is
                                瓜瓜的小光’s answer                   a high-end brand, and the price of its
                                                                 low-end watches are expensive. Link



        III. Case Study of the Fashionista: ‘喜欢旅游的小孩子’ (Netizen’s ID)
        Sharing the latest fashion trends using ‘Street Shots’ of European and US celebrities. This
        post attract over 1,000 replies.

                                                                  Sample Quote:
                                                                  Subject:欧美明星一周娱乐星闻播报
                                                                  (街拍+礼服+八卦)第87辑2.14-2.20//
                                                                  Street Shot of Western celebrities in
                                                                  Feb 14th – Feb 20th 2011.
                                                                  Reply: 我喜欢Dianna Agron 。甜死
                                                                  了// I love Dianna Agron, she is a
                                                                  sweet girl. Link


        IV. Case Study of Brand Fans: ‘外星人也爱美’ (Netizen’s ID)
        Hermes fans, focused on collecting Hermes products, including bags, scarves, watches and
        so on. This post attracted over 350 replies.

                                                                        Sample Quote:
                                                                        2010年买的5个Hermes //My
                                                                        five Hermes bags purchased in
                                                                        2010
                                                                        Reply:真美啊……蓝色的真好看
                                                                        // So beautiful, especially the
                                                                        blue one. Link



                                                                                              Source: CIC

© 2011 GroupM Knowledge & CIC   The Voice of Luxury: Social Media and Luxury Brands in China                P11
Chapter I: Listen


         1.3.2 Daren Models-The interaction of netizens on luxury social networks
         When plotting the interaction on social networks, there are essentially two axes:
         conversation and activity. Conversation is about opinions expressed and emotions
         exchanged, posting, forwarding, replying, supporting and voting. Activities generally occur
         spontaneously and are initiated by luxury Daren or by the overall community but can be
         sparked by a third party. By activity we mean things like offline event, brand promotion, and
         fashion show.


             Figure 1-12 The connecting threads of personal relationship within a luxury social network



                                                            Conversation

                                       Voting                                            Like




                   Replying                                                                          Viewing


                                                  Posting                  Forwarding



           Spectator                     Brand Fan           Luxury            Shopaholic               Spectator
                                                            Efluencer

                                                Private
                                                                           Advertising
                                                Messages


                                                                                                     Sales
                     Task                                                                          Promotion




                                                                                       Brand
                                      Gathering
                                                                                     Promotion

                                                              Activity
 Note: ‘Luxury Efluencer’ refers to
 both Style Gurus and Fashionistas
                                                                               Source: CIC White Paper, Efluencer Model, Mar 2011
© 2011 GroupM Knowledge & CIC           The Voice of Luxury: Social Media and Luxury Brands in China                       P12
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter II: Know



        Chapter II
        Chinese Consumers
        2.1 Luxury Brand Position in China
        2.1.1 Luxury Brand Buzz Volume Ranking
        According to the brand buzz volume ranking, Louis Vuitton was most discussed online,
        followed by Chanel, Gucci and Coach.

                                Figure 2-1 Top 20 Luxury Brand Buzz Volume Ranking

             Louis Vuitton                                                                       66,659
                    Chanel                                                           55,299
                     Gucci                                           40,029
                    Coach                                            39,651
                     Prada                                  28,162
                       Dior                                26,973
                    Cartier                              25,072
                 Burberry                                24,514
                   Hermes                                23,988
                       IWC                         20,819
                    Tiffany                      17,977
                     Rolex                      16,783
                  Miu Miu                       16,284
                   Armani                11,093
               Balenciaga               9,715
          Bottega Veneta                9,385
                 Longines             7,058
                     Marni            7,019
                   Omega             6,716
               Ferragamo             6,511         Unit: Post

                                                                      Source: CIC luxury panel data in Q1 2011



© 2011 GroupM Knowledge & CIC      The Voice of Luxury: Social Media and Luxury Brands in China                  P13
Chapter II: Know


        2.1.2 Brand IWOM Health Matrix
        Regarding a brand’s IWOM health, among the top 20 luxury brands, Chanel enjoyed both
        high buzz volume and sentiment. Louis Vuitton had the most buzz volume but was
        relatively weak in online sentiment.

                                                  Figure 2-2 IWOM Health Matrix

          100%          Balenciaga
                                           Miu Tiffany    Burberry
                                     BV    Miu                 Prada         Coach
                        Marni                          Hermes
                                                Rolex                                               Chanel
              95%                    Armani

                          Ferragamo
                                                                    Dior
        NSR




              90%                                        Cartier
                            Omega
                                                                                  Gucci
                                                                                                               Louis Vuitton

              85%
                           Longines

                                                         IWC

              80%
                    0            10,000         20,000             30,000   40,000         50,000        60,000        70,000
                                                                                                             Buzz volume
                                                                                 Source: CIC luxury panel data in Q1 2011
                                                      NSR= (Positive Post – Negative Post)/ (Positive Post + Negative Post)
                           * Different colored areas were divided by the average of NSR and buzz volume of top 30 brands

         IWOM Health Matrix: a comparative analysis across selected brands/products: X axis
         (horizontal axis) stands post number, Y axis (vertical axis) refers to buzz sentiment (higher
         NSR means more positive). The position of every brand is determined by the buzz volume
         and net sentiment rate (NSR) of the brand. For the brands with high NSR but low buzz
         volume, they may need to improve marketing communication to consumers and spread
         their good reputation more effectively, for the brands with high buzz volume but low NSR,
         they may need to focus on improving consumer satisfaction and enhancing the brand buzz
         sentiment.

© 2011 GroupM Knowledge & CIC             The Voice of Luxury: Social Media and Luxury Brands in China                          P14
Chapter II: Know


        2.1.3 Content Exploration for Luxury Negative Comments
        In the luxury category, negative comments are normally associated with counterfeits,
        product quality and design, as well as things like service and celebrities.

        The counterfeit issue and ‘street bag’ are most associated with Louis Vuitton, Gucci and
        Coach. For product problems, leather goods and watches face the most complaints. Poor BA
        service and unpleasant shopping experience are associated with most famous brands.

                                        Figure 2-3 Negative Content Analysis


            Counterfeit Related                 Product Related                            Others

         • Counterfeit
                                           • Quality issue                     • Poor BA service &
         • ‘Street bag’ (too
                                           • Don’t like the taste of             shopping experience
          common to see on the
                                             design                            • Celebrity crisis
          streets)
         Sample Quotes:                    Sample Quotes:                      Sample Quotes:
         说实话LV就算是个好牌,                      Gucci的质量差啊,我的包                      我在恒隆买的LV有染色问
         在中国也被糟蹋了,A货                       没用几次,拉链尾部的金                         题去换,一个叫Olivia的服
         太多了,我背个真的出去                       属就掉下来了//Gucci's bag                 务员,态度傲慢强硬,说
         都没劲了。// To be frank,              quality is poor. My bag's           我完美主义// I found my
         there are too many                zipper was broken with just         LV bag had colored handle. I
         counterfeits of LV in China,      a few usage. Link                   want to change the bag,
         which does not make me                                                but a BA called Olivia was
         look good even I carry a                                              arrogant and did not let me
         real one. Link                                                        to change the bag. Link

         你看大街上连卖菜的包包                       觉得coach包和LV包怎么那                     当年你再嚣张跋扈拿宗教
         也有双G标志时候你觉得                       么难看// I feel Coach and              当设计都没人管你,因为
         买这个牌子还有意思么                        LV really ugly. Link                能给DIOR赚的盆满钵满。
         //Gucci has become the                                                现在借机fire你也是虚张声
         street bag. Link                                                      势,多年前因为John先生
                                                                               惊世骇俗的破坏性设计而
                                                                               起死回生//Dior leveraged
                                                                               John Galliano to revive.
                                                                               Now he is fired. Link
                                                Note: the volume chart indicates the buzz volume of negative posts
                                                                          Source: CIC luxury panel data in Q1 2011


© 2011 GroupM Knowledge & CIC   The Voice of Luxury: Social Media and Luxury Brands in China                         P15
Chapter II: Know


        2.1.3 Luxury Category Buzz Ranking
        Leather Goods (Bags) are most discussed among Chinese consumers, followed by shoes and
        fine jewelry. Bags are popular in China because they are durable and functional.
                                        Figure 2-4 Luxury Category Buzz Ranking
          Leather Goods (Bags)                                                            79,649
                          Shoes                                 31,718
                   Fine Jewelry                     16,489
                            RTW                 13,420
                       Watches                  12,514
                    Accessories              10,615
                    Sun Glasses         4,567                Unit: Post

         Source: CIC luxury panel data in Q1 2011


        2.1.4 Buzz Drivers Ranking
        Price is the most buzzed topic by Chinese luxury consumers, followed by style, celebrity and
        overseas purchase. While discussion of the brand story/history is low, it is in line with the
        developing status of the luxury category in China at this stage.
                                       Figure 2-5 Top 10 Buzz Drivers Ranking

                             Price                                              19,857
                             Style                           8,666
                        Celebrity                     6,575
              Overseas Purchase                       6,375
                  Advertisement               3,505
                          Quality            2,731
                          Service           2,405
                      Counterfeit          1,764
                         Designer          1,609
                                                              Unit: Post
             Brand Story/History      90

         Source: CIC luxury panel data in Q1 2011
© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China       P16
Chapter II: Know


        2.2 Purchase Driver
        Given the fast growth of the luxury category and China’s diversified market, we have
        observed different typologies with different motivations and behaviors. Based on the IWOM,
        Chinese luxury consumers are mainly divided into 4 types:
          • Aspirational Buyer: Most are college students and white-collar, very price sensitive.
            Another interesting insight we observed amongst aspirational buyers is an increased
            likelihood to purchase accessories of premium and famous luxury brands. This
            phenomena is called ‘Big brand, small category’ (大牌小物).
          • Quality Pursuer: Purchase luxury products in search of fine workmanship and quality.
          • Status Seeker: Prefer famous brand with big logos to show their status.
          • Trend Setter: Younger group, willing to purchase trendy but lower awareness brands.
            Use luxury brands to show their identity and individuality

                                  Figure 2-6 Purchase Driver by Four Consumer Types


          Aspirational Buyer         Quality Pursuer          Status Seeker                  Trend-Setter

                                                                                       1.   Style & design
         1. Price                   1. Quality             1. Brand awareness
                                                                                       2.   Price
         2. Style & design          2. Style & design      2. Style
                                                                                       3.   Quality
         3. Brand awareness         3. Price               3. Quality
                                                                                       4.   Exclusivity
         Sample Quote:              Sample Quote:          Sample Quote:               Sample Quote:
         我最贵的包包也不到                  我也不是名牌的疯               炫一下很少出现在55                  看到Sergio rossi了,呵
         5000哦,我的口号是                狂追求者。就是自               上的大牌ETRO、                   呵,这个牌子我也很喜
         理性败家// My most             己用东西很注重品               GUCCI、PRADA,                欢,设计很大气,鞋子很
         expensive bag is lower     质和质感// I’m not         MIUMIU等// Show off          舒服,国内知道这个牌
         than 5,000 RMB. My         big brand fans,        my famous luxury            子的人不大多//
         slogan is purchasing       quality is most        brands, such as Gucci,      Although most of Chinese
         luxury products            import for me to buy   Prada, Miu Miu, etc.        people do not know
         rationally Link            products. Link         Link                        Sergio Rossi, I like it. It
                                                                                       has good design and
                                                                                       comfortable. Link




                                                           Note: the number means the priority of purchase drivers
                                                                         Source: CIC luxury panel data in Q1 2011



© 2011 GroupM Knowledge & CIC       The Voice of Luxury: Social Media and Luxury Brands in China                     P17
Chapter II: Know


        2.3 Differences between Chinese and Western luxury consumers
        2.3.1 Chinese Luxury ‘shai’ Culture
        Chinese luxury consumers are keen to show off (‘shai’) their luxury products and trendy
        lifestyle.
                                   Figure 2-7 Chinese Luxury ‘shai’ Culture
                Knowledge


                           In the know                              Show I know
                     (very knowledgeable and                  (very knowledgeable and
                     not so willing to show off)                 willing to show off)


                   Don’t know & can’t show                          In the show
                     (limited knowledge and                     (limited knowledge and
                    not so willing to show off)                    willing to show off)

                                                                                                      Showing off
                                                Note: Developed markets Vs. developing markets in Asian countries

        Evolution of Chinese luxury ‘shai’ Culture
        Chinese ‘shai’ culture evolved with the development of the luxury market in China. Over
        time, the form of ‘shai’ is being consistently enriched. Generally, there are three stages: Shai
        Product, True Man Show (真人秀) and Shai Lifestyle.
                                 Figure 2-8 Evolution of Chinese Luxury ‘shai’ Culture


                                                      Shai        The original appearance of ‘shai’ –
                                                    Product       showing off your purchasing power
        The updated version
        of ‘shai’ product –              True man
                                           Show
        showing off your
                                         (真人秀)
        expertise & creativity                                                   Very emotional –
                                                           Shai                  showing off your overall taste
                                                        Lifestyle
                                                                                 (what’s your life looks like)

                                                                                                     Source: CIC
© 2011 GroupM Knowledge & CIC     The Voice of Luxury: Social Media and Luxury Brands in China                      P18
Chapter II: Know


        I. Product Shai
        The original expression of ‘shai’ - showing off your purchasing power.

        To ‘shai’ a product is one of the favorite online behaviors in the luxury / fashion category.
        Given that Chinese luxury consumers are still in the preliminary stage (‘in the show’ stage),
        to ‘shai’ products becomes a very popular way for them to show off and learn more about
        the luxury category from other consumers’ ‘shai’.

        In a typical product ‘shai’, there are pictures of the product, normally including the whole
        collection (全家福), followed by a single picture for each SKU. In addition, it may include
        some introduction of the product and emotional sharing of personal shopping experience
        (败家经验分享).

        ‘Building floor’ is commonly used by luxury Shopaholics to continuously shai their ever
        expanding collections. (‘Shaiers’ would write a summary on the topic post, which is easier
        for ‘Shaiees’ to view their interested topics). The regular update of ‘shai’ can consistently
        attract people’s awareness.

                                Figure 2-9 Building Floor Culture of Product Shai




                                                             Top 10 topics:
                                                             P1: Gucci bag, Coach necklace and bag
                                                             P2: Tissot watch, Biotherm skincare products
                                                             P3: Swarovski necklace
                                                             P4: Zhoudafu bracelet
        ‘Building                                            P5: Bally men’s bag
          Floor’                                             P6: LV Palermo PM
                                                             P8: LV Neverfull
                                                             P9: True Man Show for LV Neverfull
                                                             P11: Gucci key bag
                                                             P12: Giorgio Armani sunglass
                                                             Link


                                                        Virtual Luxury Shopping Basket

                                                                                            Source: CIC
© 2011 GroupM Knowledge & CIC   The Voice of Luxury: Social Media and Luxury Brands in China                P19
Chapter II: Know


        II. True man Show (真人秀)
        The first stage in the evolution of ‘shai’ product – showing off your expertise and creativity.
        ‘True Man Show’ or Live Demo is an emerging way to ‘shai’ products. Netizens not only shai
        the product but also show the real efficacy and personal taste of dressing up. Due to its
        tangible efficacy, it attracts significant popularity among luxury/fashion fans and has
        become a new means of expression in the luxury/fashion category.

        It has also been observed that in the ‘True Man Show’, netizens are more willing to share
        their opinions and interact with others’. In this regard, it could be leveraged in brand
        campaign ideation to broaden brand awareness and increase consumer engagement.

                                             Figure 2-10 True man Show


                     DIY Outfit Matching Show                            Decoding of Fashion Trend




                                                              Sample quote
            Sample quote:
                                                              Subject: [V] 2009秋冬教你如何打扮''色彩
            Subject: 十一出游SHOW搭配 Link // My
                                                              搭配''Link// Teach you how to wear in fall-
            showcase of outfit for National Day holiday
                                                              winter
            outing
                                                              Topic post:有些MM总认为色彩堆砌越
            Re:就喜欢这样的贴,既养眼又叙事清
                                                              多,越“丰富多彩”。集五色于一身,
            楚,支持美女继续发贴// I love this post
            for it’s not only an eye candy but also good      遍体罗绮,镶金挂银,其实效果并不
                                                              好。 // Some girls hold that the more
            learning for us.
                                                              colors they put on, the more fabulous look
                                                              they will get. However, the fact is quite the
                                                              opposite.

                                                                                                  Source: CIC




© 2011 GroupM Knowledge & CIC      The Voice of Luxury: Social Media and Luxury Brands in China                 P20
Chapter II: Know


        III. Shai Lifestyle
        ‘Shai Lifestyle’ talks to the emotional side of luxury consumers – showing off their overall
        taste. Essentially, it’s a question of what your luxury life looks like.

        On top of product related ‘shai’, Lifestyle related ‘shai’ is also very popular in luxury / fashion
        category, including ‘street shots’ or ‘self-shots’. The photos are mainly about people’s
        fashion and luxury lifestyle, such as night life/clubbing, travel and stylish hobbies.

        Lifestyle related ‘shai’ is a hot trend in China. Brands could consider collaborating with
        lifestyle communities and leveraging the emerging microblog and SNS platforms to
        maximize the influence, which would resonate well with luxury fashion consumers.



                                         Figure 2-11 Lifestyle Related Shai

              Street Shot               Night Life               Hobbies                   Travel




           Sample quotes:                                     Sample quotes:
           Subject: 9月北京街拍 全是漂亮的MM Link
                                                              三亚圣诞归来,碧海蓝天+亚龙湾+大东海
           //September Street Snapshot in Beijing, all
                                                              +蜈支洲+西岛, 实在太棒了 (Link) // Just
           the pretty girls.
                                                              come back from Haina, it’s really great!
           Re:不错哦,都好潮啊// Good. They are so
           fashion.
                                                                                               Source: CIC




© 2011 GroupM Knowledge & CIC     The Voice of Luxury: Social Media and Luxury Brands in China                P21
Chapter II: Know


        2.3.2 Live Runway Broadcasting Culture
        Live runway broadcasting is a new form for Chinese netizens to keep in touch with fashion
        trends. Before the emergence of the microblog in China, runway live broadcasting was on
        BBS. Now runway live broadcasting is hot via microblog thanks to imbedded pictures, videos
        and real-time interaction.

        Case Study: Burberry Beijing Show
        Burberry broadcast its fashion show for Burberry Prorsum in Bejing on April 13th 2011 and
        invited Chinese celebrities Su Hong and Cheng Kung to run the brand account, posting
        photos and video with descriptions to promote interaction with netizens. In addition,
        designer Christopher Bailey answered netizens questions about Burberry, which attracted
        over 10,000 retweets.

                                  Figure 2-12 Burberry’s 3D Fashion Show in Beijing




           Sample quotes of Netizens Feedbacks:
           我看的触目惊心的 非常震撼 Burberry和Keane真的是很好的结合 很硬朗很英伦 Link //
           I’m impressed by Burberry. It’s great, Burberry launched a typical British style with Keane.

           我对这个品牌所传达理念的认识也翻新了 Link// I get new understanding of the brand
           culture of Burberry from this fashion show.

                                                                                                   Source: CIC




© 2011 GroupM Knowledge & CIC      The Voice of Luxury: Social Media and Luxury Brands in China                  P22
Chapter II: Know


        2.3.3 Luxury E-commerce Platform
        A host of third party e-commerce platforms emerged in 2010. Emporio Armani also
        launched their first Chinese official online store. The third party e-commerce platforms
        provide luxury products with big discounts to attract consumers. The safe payment system,
        mature delivery service and variety of promotions enhance the shopping experience.
        Emporio Armani’s e-commerce site faces some common problems that branded e-
        commerce has previously encountered in China, the price is not attractive because the
        product price is same online and offline, less product choice and the lack of luxury, in-store
        shopping experience also affect sales.


                                Figure 2-13 Online Luxury E-commerce Platform
             Emporio Armani E-commerce Platform                Third Party E-commerce Platform




         Emporio Armani launched Chinese online
         store on Nov 26th 2010
                                                                                              Source: CIC

        Case Study of Third Party E-commerce Platform: Meici
        Meici is an e-commerce website selling luxury products at a discount. Meici also has Luxury
        Care , which provides professional maintenance service for luxury products, including
        cleansing, color care and repair service. Its maintenance service is popular because luxury
        brands do not provide maintenance service in China. Furthermore, Meici set up a reliable
        e-commerce platform, authenticity of products guaranteed, fast and nationwide logistics
        system and return or refund policy within 7days.

                                Meici Ecommerce Link                         Meici Luxury Care Link




                                                                                             Source: CIC

© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China           P23
Chapter II: Know


        2.4 Overseas Purchase
        2.4.1 Overseas Purchase Overview
        As ever larger numbers of Chinese consumers travel overseas, they recognize that certain
        products are significantly cheaper abroad. One netizen claims that a Prada bag is 12,600
        RMB in Beijing but it only 795 EUR (7,398.75 RMB) in Europe (Link). It is more than just price
        that has netizens talking though. They mention that there is more choice, more styles and a
        better shopping experience.

        Of all the destinations, Hong Kong is the most mentioned specially in relation to shopping.
        Strategy is also popular when netizens discuss the shopping in Hong Kong. The second
        destination for luxury shoppers is the US, where most netizens leverage business trips to
        shop and will discuss their preparations before traveling. Paris is the third most popular,
        regarded as an extremely fashionable and charming city with a good shopping environment.

        However, in line with the new tax policy, the price difference between HK and the Chinese
        mainland is becoming smaller. Japan, Korea and Singapore are becoming increasingly
        popular shopping destinations for Chinese consumers. Duty free shopping (DFS) at the
        airport is the most mentioned in relation to tax free shopping and credit card promotions.

                           Figure 2-14 Emporio Armani Price Difference: China Vs. France
                         China                                                      France




                                              China: 3,300 RMB
                                              France: 250 EUR
                                              Exchange Rate:
                                              1 EUR=9.3066 RMB
                                              250 EUR= 2,326.65 RMB
                                              Price difference=
                                              3,300-2326.65=973.35 RMB




                         肩背包                                                    Sac porté épaule
                       ¥ 3,300.00                                                 EUR 250.00

                                                                       Source: Ecommerce of Emporio Armani
© 2011 GroupM Knowledge & CIC       The Voice of Luxury: Social Media and Luxury Brands in China             P24
Chapter II: Know


    2.4.2 Daigou: Types of Purchasing Agent
    The majority of people are not actually able to travel overseas as frequently as they’d like. So,
    purchasing agents (Daigou) are emerging quickly in China. Based on scale and motivation,
    purchasing agents can be divided in to three types: Amateurs, Specialists and Masters.



                                     Figure 2-15 Three Types of Purchasing Agents



        Profit-driven

                                                                                       Masters
                                                                                  (24/7 and long term)
                                             Specialist
                                             (regular and
                                              long term)




                            Amateurs
                            (random and
                               one off)
        Relationship-
        driven
                        Individual                                                                  Organization

                                                                                                            Source: CIC
                                                   Note: The bigger the circle, the higher the visibility/ buzz volume




    2.4.3 Comparison of Three Purchasing Agents
    Masters and Specialists are the main focus of netizens’ discussion of online purchasing agents
    because they provide a mature purchasing model and a wider variety of brands and products.




© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                         P25
Chapter II: Know


                                Masters                     Specialists                    Amateurs
                      • B2C sites with suppliers      • Individuals with             • Individuals travelling
          Who           abroad                          constant overseas              overseas occasionally
                                                        connections (e.g. family
                                                        living overseas)

                      • Provide information and       • Information on               • Information can be on any
                        direct purchase on own          purchasing agent sub-          site or forum
         Where          e-commerce platform             forums portals, lifestyle    • Most offline
                                                        sites or beauty verticals
                                                      • Both online and offline

                      • For profit                    • Make a living or subsidize   • Out of goodwill/ friendship
           Why                                          they’re other work
                                                      • Sometimes also involve
                                                        good relationship

                      • Set menu: comprehensive       • Provide a list of brands/    • As needed. No menu
                        product catalogue on own        products                     • Price tag
                        platform (e-commerce site)    • Sometimes provide
                      • A la carte: browse products     personal recommendation
         What &         from external sources (e.g.   • Buyers sometimes can
         How            brand’s own site) and then      order items they want
                        order from purchasing         • Very little promotion
                        agent site
                      • Various types of promotion




        2.4.4 Tax Policy Influenced the Daigou Price
        China custom announced the new tax policy for ‘personal postal articles’ from 1st
        September 2010. The inward/outward tax for ‘personal postal articles’ was adjusted. The
        lowest duty-free allowance is adjusted from RMB 500 to RMB 50 at one time

        Daigou price was hugely influenced and lots of taobao stores stopped their Daigou business
        or raised their Daigou price already.




                                                                                                     Source: CIC

© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                    P26
Chapter II: Know


        2.5 Counterfeit Issue
        2.5.1 Why do people purchase counterfeit luxury goods?

        Counterfeits are an inevitable topic when talking about luxury market in China. Based on the
        IWOM content, it’s observed that Chinese counterfeit buyers had various motivations. For
        brands though, some of these fake buyers can be converted to authentic luxury consumers.




            Can’t afford, but driven by vanity
            “买不起 买买山寨的 过过念头,虚荣心                                      Like the design, but not willing to afford the
            啊虚荣心~ (link) // I can’t afford. Just                     price of authenticity
            bought a counterfeit due to vanity.”
                                                                     “俺看上真货的款式,看不上真货的价格 SO
                                                                     我买个假的. 款式和价格我都看的上!! (link)
                                                                     // I like the design and pattern of real LV. But I
                                                                     don’t like the price. So I’d like to buy the
                                                                     counterfeit which had good design and
                                                                     acceptable price”




     No brand awareness
                                                  Counterfeit
     “有的人(比如很多阿姨)就压根不知道                              Buyer
     那个是LV,只当是个寻常包就买了背了
     (link)// some people, they have no brand                             Own both authentic and
     awareness at all. They just take the                                 counterfeits
     counterfeit as an ordinary bag.”                                     “真的也有,假的也要.真真假假
                                                                          很好玩啊(link) // I owned both
                                                                          the real ones and counterfeits. It’s
                                                                          interesting to mix use the real and
                                                                          the fake.“




                                                                                                    Source: CIC


© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                   P27
The Voice of Luxury: Social Media and Luxury Brands in China
Chapter III: Participate


        Chapter III
        Luxury Brands Social Media Strategy
        3.1 Luxury Brands on Weibo
        3.1.1 Luxury Brands Weibo Buzz Overview
        Weibo (microblog) has emerged as an important channel for real-time information updates,
        recently capturing the attention of the world’s leading luxury and fashion brands. In
        October 2010, Louis Vuitton became the first global fashion brand to launch a microblog
        presence in China. In Q1 2011, we have witnessed a rapid build up of luxury brands on
        Weibo, including Gucci and Burberry. Among the top 20 most discussed luxury brands on
        the Chinese Internet, there are 8 luxury brands that have launched official accounts on Sina
        Weibo. BBS remains an important channel for listening but Weibo also facilitates
        participation.
                                Figure 3-1 Top 20 Luxury Brand Buzz Ranking by Tweet
                Ranking                Brand             No. of Mentions          Brand Account (Y/N)
                   1                   Chanel                593,075                        N
                   2                    Dior                 311,211                        N
                   3                    Gucci                253,232                37,548 followers
                   4                   Hermes                236,208                        N
                   5                    Prada                204,298                        N
                   6                  Burberry               188,860               152,120 followers
                   7                   Armani                 92,568                        N
                   8                   Tiffany                89,582                        N
                   9                   Cartier                88,312                56,496 followers
                   10                   IWC                   80,862                 1,619 followers
                   11                  Coach                  49,475                  845 followers
                   12                Balenciaga               40,963                        N
                   13               Louis Vuitton             38,917                99,491 followers
                   14                   Rolex                 36,706                        N
                   15                  Omega                  31,388                        N
                   16                Ferragamo                27,663                        N
                   17                 Longines                26,600                17,408 followers
                   18                 Miu Miu                 26,017                       N
                   19              Bottega Veneta             12,767                4,016 followers
                   20                  Marni                   4,167                       N
                                                             Data source: CIC Weibo tracking, Jan - May 2011.
© 2011 GroupM Knowledge & CIC      The Voice of Luxury: Social Media and Luxury Brands in China                 P28
Chapter III: Participate


        3.1.2 Luxury Brands Account Performance
        Among the top luxury brands with official accounts on Sina Weibo, Burberry generates the
        most engagement, that is, more retweets and netizen comments than their competitors.
        Much of this was driven by its Beijing fashion show and the live runway content released via
        its Sina Weibo account. Louis Vuitton also attracts high participation and enjoys the highest
        retweet rate return from their activity due to effective content and strong brand awareness
        (the most well-know luxury brand in China).
                  Figure 3-2 Luxury Brands’ Weibo Account Performance Overview, Jan-May 2011

                       Burberry                                                        43,001
                                              5,320
                  Louis Vuitton                            18,067
                                          4,142
                           Gucci                  9,512
                                        3,207
                       Longines           4,465
                                        3,076

                Bottega Veneta       2,777
                                   799
                                   550                       Num of Retweets
                            IWC
                                   209                       Num of Comments
                           Coach   176
                                   69

                Figure 3-3 Brand Account Retweet Rate and Comment Rate Overview, Jan-May 2011

                                   Num of Tweets           Retweet Rate        Comment Rate
          400
                                                              342
          350
          300       277                 296
          250
          200       155
                                                  144
          150
                                                                                                  97
          100                      61                 66                  74           57
           50         19                                      13          38
                                                      22                               10 4        2
                                   68                                           11                       1
            0                                                       9
                  Burberry Louis Vuitton          Gucci    Longines Bottega Veneta    IWC        Coach

                                                                                               Source: CIC
             Note: Retweet rate= Num of retweets/No. of tweets, Comment Rate=Num of comments/No. of tweets.

© 2011 GroupM Knowledge & CIC      The Voice of Luxury: Social Media and Luxury Brands in China               P29
Chapter III: Participate


        3.1.3 Content Analysis of Brand Accounts
        Product introductions, celebrities & designers, fashion events and sponsorships are the most
        common content produced by luxury brands. In addition, online campaigns employing the
        ‘@friends’ tactic is also common. For example, Longines launched a series of incentivized
        retweet campaigns about tennis, while Coach launched emotional campaigns on Mother’s
        Day.

        For fashion brands like Burberry, Louis Vuitton and Gucci, the content of articles are most
        focused on fashion events and celebrities. Watch brands like IWC and Longines share
        category knowledge, which is also an important tactic in releasing content that resonates
        with netizens.
                  Figure 3-4 Content Analysis of Luxury Brands’ Account by Tweet, Jan-May 2011


            Burberry


        Louis Vuitton


               Gucci


            Longines

             Bottega
             Veneta

                 IWC


               Coach


           Average*


                        0%            20%           40%           60%              80%              100%

              Product Introduction            Celebrity & Designer           Fashion Event & Sponsorship
              Online Campaigns                Store Promotion & Opening      Brand Story
              Charity                         Knowledge Sharing              Others


                                                                                  Source: CIC Weibo Tracking
                                                              Note*: Average refers to total 7 brands average.

© 2011 GroupM Knowledge & CIC        The Voice of Luxury: Social Media and Luxury Brands in China                P30
Chapter III: Participate


         Retweet Rate by Topic by Brand
         In terms of retweet rate, charity, fashion events and store promotions are the most popular
         amongst luxury brand accounts. Brands could consider releasing more content relating to
         fashion events in order to attract netizens’ attention and increase their weibo exposure.

                                Figure 3-5 Retweet Rate by Topic by Brand, Jan-May 2011

                              TTL                   Louis                         Bottega
              Topic                     Burberry             Gucci    Longines                 IWC       Coach
                             Brands                Vuitton                        Veneta
             Product
                                74        57        330        72         6         36          12          6
           Introduction
            Celebrity &
                                64        52        272        85         4         26          8           2
             Designer
         Fashion Event &
                                109       323       331        41         8         57          4           0
           Sponsorship

        Online Campaigns        14        N/A       N/A       N/A        26         N/A        N/A          1
         Store Promotion
                                90        36        336       100        14         49          6         N/A
            & Opening

           Brand Story          43        N/A       146        28       N/A         37          4           0

             Charity            175       N/A       644        51         3         N/A         2         N/A
           Knowledge
                                 6        N/A       N/A       N/A         7         N/A         5         N/A
            Sharing

              Others            50        17        260        13         2         N/A         6           0

                                                               Retweet Rate: average num of retweets per tweet
                                                                TTL Brands are the average of the 7 luxury brand
                                                                                                      Source: CIC


                      Fashion Event                   Celebrity & Designer          Product Introduction




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        3.1.4 Brand Owned Weibo Followers Analysis
        For luxury brands, it’s important to have the both quantity and quality of followers. For
        example, Bottega Veneta enjoyed a relatively high proportion of quality followers, those
        whose accounts have more than 100 followers. A high-quality follower group helps branded
        weibo accounts with reach and exposure of their content.


                 Figure 3-6 Brand Weibo Followers’ Breakdown by Num of Second Layer Followers


          Followers >200        Followers 101~200     Followers 51~100       Followers 10~50       Followers < 10

        100%
                                 15%                                             12%         12%
                   19%                      21%         17%
                                                                     27%                                  28%
         80%                                                                     16%
                                                                                             29%
                   28%           33%
                                                        36%                      16%                      18%
         60%                                35%                      27%

                                                                                             18%
                   17%                                                           21%                      15%
         40%                     19%
                                                        18%          15%
                                            18%
                                                                                             19%
                   17%                                                                                    19%
                                 17%                                 13%
         20%                                            15%
                                            14%                                  34%
                   19%                                                                       22%          19%
                                 15%                    14%          17%
                                            12%
          0%
                 Average Burberry          Louis       Gucci      Longines     Bottega       IWC        Coach
                                          Vuitton                              Veneta

          Followers Num         152,120    99,491      37,548       17,408       4,016       80,862        845
           Launch Time          2011.2    2010.10      2011.1      2010.11      2011.4       2011.3      2011.4

         Source: CIC Weibo tracking, random sampling of brand account followers. (API data access of followers profiles)
         Note: Average refers to total 7 brands average.




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        3.2 How do luxury brands utilize social media?
        3.2.1 General Tactics
        Generally, brands can develop digital tactics in relation to the following perspectives:
        Platform (where you launch the campaign), People (who you target and leverage to help
        communication and broadcast) and Culture (the hottest trends, content and behavior).




                                                              • Brand’s campaign can utilize multiple
                                    Platform & Channel:         social media platforms, including
                                          Multi-channel         microblog, blog, BBS, video sharing etc.
                                          Broadcasting        • BBS good for listening, microblog good
                                                                for listening, engagement and viral.




                       People:                                   Culture:
                      Efluencers                           Hot Online Culture


        • Fashion editors and                             • The diversified ‘shai’ culture
          celebrities are good choices                    • Creative ‘DIY’ culture
          for luxury brands to leverage                   • Live broadcasting
          with campaign activity,
          especially when it comes to
          their microblog campaign.




                                                                                                Source: CIC




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        3.2.2 Case Study: Tweet Diffusion Model for Burberry 3D Fashion Show
        It’s interesting to look at the tweet’s journey through the social network. In this case,
        Burberry posted a warm note about a 3D fashion show in Beijing via Sina Weibo, which
        generated 854 retweets, 104 comments and achieved a total exposure of over 3 million
        netizens. From the below tweet diffusion model, we can identify efluencers’ performance
        (e.g. “全球热门排行榜”) and evaluate their effectiveness in spread of brand’s tweet.



                                       Figure 3-7 Analysis Tweet Diffusion Model

                                                                                              Layer 7

                                                                                          Layer 6


                                                                                    Layer 5
       ‘The famous British band,                                                Layer 4
       Keane will attend the event
       @Burberry. They will have                                          Layer 3
       their first show in China in            Layer 1
       Burberry’s Beijing event on
       Apr 13th, so as to show the
       close relationship between
       Burberry and British music.
       Tom Chaplin, singer of Keane
       made a special video for
       Chinese fans’                              Layer 2


           Layer of                   % of total Exposure
                       Exposure                                   Layer        Retweets             % of Retweet
          Followers                      Contributed
           Original     133,274             4.28%                   1             324                   37.9%
              1st      2,525,826            81.04%                  2             444                   52.0%
              2nd       247,868             7.95%                   3              47                   5.5%
              3rd       173,247             5.56%                   4              12                   1.4%
              4th       23,910              0.77%                   5              18                   2.1%
              5th        8,570              0.27%                   6              6                    0.7%
              6th        2,913              0.09%                   7              3                    0.4%
              7th        1,146              0.04%                 Total           854                   100%
            Total      3,116,754             100%
                                                                                                          Source: CIC
      Note: Tweet Exposure = total number of direct followers + Nth (n>1) layer followers of whom did the retweet
      % of total Exposure Contributed= each layer’s followers/ total followers
      % of Retweet = Each layer’s retweets count/ total layers’ count
© 2011 GroupM Knowledge & CIC       The Voice of Luxury: Social Media and Luxury Brands in China                        P34
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        3.3 Social Media Strategies/Marketing for Luxury Brands
        3.3.1 Offline to Online
        Luxury brands can increase brand awareness and make a connection with consumers
        through the ‘O2O’ campaign approach.


                                    Figure 3-8 The cycle of ‘O2O’ scenario:




                                        Brands can leverage online
                                        platforms to promote offline
                                        campaigns

           Brand offline campaigns                                            Online platforms

                                        Increase awareness &
                                        Making the connection




                                        Offline participants would shai
                                        their experience and share
                                        feedback on online platforms




                                                                                         Source: CIC




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        3.3.2 How to Build Brand Relationship with Social Media?
        As Chinese social media platforms differ in various ways, luxury brands should take
        advantage of the particular strength of the platform for different marketing strategies.


                                Figure 3-9 Social Media Approach for Luxury Brands




             Popular Microblog/            Fashion Sites &                Brand Fans Club
             Video Sites                   Premium SNS                    (e.g. Weibo brand
             (e.g. Weibo, Youku)           (e.g. Yoka, Liba, P1.cn)       account, Douban fans
                                                                          group)
             • Mass awareness              • More relevant target
               distribution                  groups                       • Very focused target
             • Mainly target               • More sophisticated             group
               aspirational                  luxury consumers             • Brand users and
               consumers                   • Social elements with           brand fans
                                             special focus on             • Fan management or
                                             relation building.             CRM




         Broad Awareness & Appeal                                         Emotional Attachment


                                              Brand Appreciation


           Sina Weibo & Youku                      P1.cn                             Fans Group




                                                                                             Source: CIC

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        3.4 The Expansion of Weibo Presents New Opportunities and
        Challenges for Luxury Brands
        3.4.1 The Opportunities for Luxury Brands
        With the expansion of the microblog medium in China, it brings new opportunities for luxury
        brands to enhance their social media marketing and strategy.
        I. Source of Celebrities on Weibo
        Microblogging is largely personality-driven and the top ten accounts are celebrities and
        other prominent individuals (Chinese actress Yao Chen currently holds the most popular
        account in China, with over 10 million followers). As a result, the personal accounts of
        fashion industry figures often attract more followers than the accounts of large fashion
        brands themselves. Luxury brands could leverage the influence of celebrities and collaborate
        with them in both awareness and engagement campaigns.
        Burberry : Chen Kun and Su Hong turn over Burberry account on the Beijing 3D fashion show
        Burberry announced that Chen Kun and Su Hong would report on its Beijing 3D fashion show in April
        2011 via the Burberry Sina Weibo account. This tweet attracted 2,449 retweets .




                                                                                              Source: CIC

        II. Branded Communication via Weibo: What’s the right voice for a luxury microblog?
        From our perspective, the microblog is a humanized window into brand culture. It is
        important for luxury brands to use an appropriate tone and content that is in line with their
        brand image and position. This will help to protect brand image while building an emotional
        bond with netizens and maintaining a ‘distance’ appropriate for prestige brands.




                                 Video: Louis Vuitton City Guide, LV uses text
                                 description with attached related video to show the
                                 luxurious brand culture



                                                                                              Source: CIC

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        3.4.2 The Challenges for Luxury Brands
        Microblogging also creates challenges for brands, from crisis management to followers
        maintenance.

        I. Brand Crisis Management
        The microblog is an open platform and as such, it is a challenge for luxury brands to maintain
        the proper image and publicly manage any crisis. When there is such a crisis, the viral nature
        of the microblog medium will make the spread much faster than any other media channel.


        Case Study: Dior John Galliano Case
        On the 25th of February 2011, Dior’s chief designer John Galliano was arrested by French police. This
        news rapidly spread on Sina Weibo and aroused a lot of discussion, over 16,000 tweets.




                 John Galliano被Dior炒鱿鱼了!消息被                          John Galliano,英国的时装icon,因醉酒涉
                 确认了,惊人。大家还是要努力工作                                    及闹事及歧视犹太人言论被拘留,并在今
                 啊//It’s confirmed that John Galliano was            日被Dior公司宣布停职。 Link //John
                 fired by Dior. It’s shocking.                       Galliano was arrested by police due to abuse
                                                                     Jewish and then was fired by Dior today




        II. Follower Maintenance
        With a growing number of followers, brands will spend more time on follower
        maintenance. Luxury brands with an unmanageably large number of followers find it
        difficult to build good interaction with the majority, which can reduce the followers’ brand
        loyalty.

        In addition, more and more brand accounts face the problem of ghost followers (僵尸粉),
        which not only increases the cost of follower maintenance but is also detrimental to the
        efficiency of brand broadcasting.

        Note: Ghost Followers - Virtual followers are registered by software, its main purpose is to
        increase the number of an account’s followers. Ghost followers generally post little content
        and undertake little interaction with others. There are also some artificial ‘real followers’
        with account information and the appearance of genuine activity. However, these accounts
        are not legitimate and their purpose is the same with ghost followers.                 Source: CIC

© 2011 GroupM Knowledge & CIC       The Voice of Luxury: Social Media and Luxury Brands in China                    P38
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