![]() ![]() The differences between school kids and professionals are mainly due to their disparate life stages and buying power. They are aware of racket brands and wear professional sportswear to display social status. One of the major reasons they play badminton is to make friends or develop business relationships. Professionals and businesspeople, however, usually play badminton in indoor badminton clubs, gyms, or stadiums. Most Chinese school kids who play badminton do so in an outdoor playground with a group of friends, wear non-professional badminton sportswear, and purchase a relatively inexpensive racket in a sports stadium or shop near school. The Chinese badminton industry is a good example. Studies by the Monitor Group indicate that scores of non-income-related hooks-including age, the stage in a consumer’s career, and location of purchase-influence purchase decisions. Thus, companies must find meaningful alternatives to predict what consumers can afford and what they are willing to pay for certain goods and services. In addition, income is a difficult variable to act upon, in part because the data on income in China tends to be either unavailable or unreliable. Using income as the only indicator of spending habits allows much information to slip through the cracks. Deciding to buy chocolate, for example, depends significantly more on consumers’ emotion and shopping experience-a store’s ambience, for example-than it does on how much money they make. When products are relatively inexpensive, income has little influence on a consumer’s decision making process. ![]() Income plays a powerful role in most purchasing decisions for any consumer segment, but other elements play a role that is sometimes greater than income. Such marketers trying to reach the middle class have to know more than their salaries: They must know what makes middle class consumers tick. But simply judging a group by income is far from sufficient for marketers of consumer goods. From an investment bank’s perspective, using income level as the defining criterion makes sense. For example, HSBC Holdings plc and Deutsche Bank AG have used income to differentiate the middle class from the affluent and laboring classes in China. What does it mean to be middle class?ĭifferent types of companies have different concepts of exactly what it means to be middle class in China. Considering its swelling numbers, purchasing power, and trajectory, China’s middle class presents marketing opportunities that companies cannot afford to miss. By 2015, that percentage is expected to rise to more than 40 percent (see Figure 3). At present, the middle class accounts for 27 percent of China’s total urban disposable income. By 2016, that percentage will likely rise to 60 percent. In 2006, around 39 percent of urban households were middle class (see Figure 2). The purchasing power-disposable income minus savings-of China’s middle class is also growing. China’s middle class will jump to 340 million by 2016 (see Figure 1). From 1995 to 2005, the population of China’s middle class-defined here as households with annual incomes ranging from $6,000 to $25,000-grew from close to zero in 1995 to an estimated 87 million in 2005, according to MasterCard Worldwide, Asia Pacific. Though many foreign companies have remarked on the importance of China’s middle class as a consumer segment, few realize just how dramatic its ascendance is. Companies that can effectively understand the composition and needs of this diverse group will be positioned to reap massive rewards. These working consumers, once among the country’s poorest, will steadily climb the income ladder and join the new middle class. As China’s economy continues to grow, more people will migrate to China’s booming metropolises to find better-paying jobs. Companies are now focusing on how to capture small segments of China’s giant market, and none of these segments is as attractive or as full of potential as the country’s rapidly growing-and multifaceted-middle class. Gone are the days when companies looked at China as a monolithic land of 1 billion potential customers. Targeting key segments of China’s diverse and rapidly emerging middle class will be crucial as household incomes rise
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