By Zhang Weijiong

In recent years, with the continuous development of China's economy, the continuous improvement of people's living standards, and developments in internet technology, the consumer market has undergone great changes. Traditional marketing methods have been severely challenged, but the market remains full of growth opportunities.

By correctly understanding the challenges and grasping these opportunities, a company can achieve growth. Currently, opportunities and challenges in the market are mainly reflected in the following five aspects.

1. A new round of changes is taking place in the consumer market.
The reform and opening up of the past 40 years has greatly improved China’s productivity and people’s living standards. At present, individual’s daily necessities are basically met. The market has changed from one where there are supply shortages to the current situation where surplus supply exceeds demand. With the basic necessities of daily life basically satisfied, people's desire for a better life has increased.

Consumers are no longer focused on buying cheap products, but products that can bring value to them.

Real value includes factors such as product positioning, brand and taste (who will use these products in the market; whether their interests, hobbies, emotions are in line with mine), along with the aesthetics, function and quality of the product, and other factors such as whether an item is trendy, or convenient to buy.

For the post-90s generation of consumers and those born in the new millennium, product price is no longer the determining factor. The low-price strategy, once considered very effective in marketing, has lost its appeal in the face of a new generation of consumers.

2. Cost of information dissemination greatly reduced.
There is an old saying in China, "Fragrant wine fears no dark alley". But in fact, people who are engaged in marketing know that "the wine is afraid of the alley". Good wine still needs to be advertised, and information about the wine needs to be spread beyond the alley, which will help boost sales. But advertising and information dissemination take money and time.

The development of information technology has reduced the time and cost of information dissemination to almost zero. Consumers can get complete information on products at extremely low prices anytime anywhere, and at the same time get other consumers' product evaluations and compare them with competitive products. This situation was unimaginable before the internet era. Companies must face the information explosion brought about by technological development and find effective ways to spread information to their target customers.

3. IT technology has revolutionised the trading platform.
The emergence of online stores such as Tmall and JD.com has not only reduced transaction costs, but also provided consumers with 24/7 buying opportunities and more product choices. Consumers can browse big shopping malls without leaving home. This makes it extremely challenging for traditional sales models, especially those used by department stores.

4. Customer segmentation now a lot easier.​
The emergence of big data technology, especially the emergence of AI, provides a very convenient, effective and inexpensive tool for customer segmentation. The most difficult task in marketing is to discover and capture target customers. If a company understands its target customers, knows where they are, knows their consumption behaviour and other characteristics, it can design products for specific customer groups and develop corresponding strategies for precise marketing.

Big data and AI technology can help companies easily integrate products, scenarios and consumer behaviour, services and feedback, and customer data. It can also help them label each consumer with brand tags, deeply understand user needs, build and deepen the link between their brand and consumers, and achieve a comprehensive positioning strategy.

5. Mining customers has become less costly.
In the past, there were many so-called “long tail” customers who companies would choose to give up on because of the high cost of mining. Now with the help of IT platforms and big data, companies can — at very low cost — tap into the previously unattainable “long tail” customers distributed across the country or even the world, making the corresponding market size even larger. In this way, companies can design, produce and market each product based on a relatively large customer base, which enables the company to achieve economies of scale in mass production.

Of course, mass production and scale effects also increase the risk of business operations. Because the market is large, investment will inevitably increase accordingly. If the product or brand is unsuccessful, the losses to the company will be huge — or even fatal.

In conclusion

1. Economic development has fuelled the transformation of people's lives from mere subsistence to enjoyment, so people's consumption behaviour has undergone great changes.
2. The development of information technology has reduced the time and cost of information dissemination to almost zero.
3. The emergence of internet stores has revolutionised the trading platform.
4. Big data technology makes accurate customer segmentation possible.
5. The IT platform links “long tail customers” distributed around the world into a huge market, which has produced economies of scale.

These five changes have brought both challenges and opportunities. On the surface, these changes can be said to disrupt the entire existing marketing model. But if we carefully analyse the underlying logic, we will find that these five changes only upend the marketing method — the nature or essence of marketing has not changed. It is still customer-centric, providing value for customers via products, which is the nature of marketing.

My 3 suggestions

• Re-examine market trends and redefine customer demographics.
• Starting from users’ most basic needs, consider their need for quality improvement and desire to express themselves.
• Through accurate marketing in the target segment, we provide customers with more suitable products, better services, higher value, and at the same time achieve the goal of enterprise growth.

Zhang Weijiong is Professor of Strategy, Vice President and Co-Dean at CEIBS. This article is based on a speech he delivered during the December 19, 2018 China Marketing Leadership Summit jointly organized by CEIBS Alumni Marketing Association, CEIBS Alumni Fashion Creative Association and CEIBS Alumni Financial Investment Association.