In growing low-tier Chinese cities, people are looking for fresh ways to spend their money, and enterprising locals are opening businesses to cater to them.
They currently hold a small market, but these savvy operators are influencing consumption and leading trends. So what can we learn from them?
In Yiyang, Hunan province, we interviewed owners and managers from fitness centers, luxury salons, outdoor adventure tours, break dance studios, and cafés, as well as their customers and potential customers, to find some answers.
Give them something special
Everybody loves new, especially when it’s new and exclusive.
“My friends and I have been to every café and restaurant in town,” says He Xingwen, 30, Yiyang native and foreign-educated marketing professional. “If Starbucks came, of course we would go there.”
The local twist? Customers can indulge in online gaming or massage while they get a haircut.The problem in low-tier cities is that customers tend to flock to exciting new brands when they first come to town, with a significant drop off when something else comes along.
Local entrepreneurs earn loyalty by educating their customers in new behaviors, behaviors that create a sense of self worth and individuality.
Zeng Xiaoping runs Desert Wolf Outdoor Club, a trek operation leading tours across China. “In Yiyang, the trend among young adults is to be more individual,” says Zeng.
Fitness and personal grooming are great categories for providing consumers with snazzier self-images, without veering too far from community standards.
And what begins with services leads to products: trekking requires outdoor gear; working out requires athletic clothing, and so on. Zhou Zhi founded Rock Dance School after graduating from a local college, to provide the kind of outlet for students that he didn’t have. He also provides a line of apparel in collaboration with a friend’s brand.
“You need suitable clothes to dance,” says Zhou. “Kids come in tight jeans and it just doesn’t work.”
Peer recommendations are strong influencers for purchases in low tiers, so collaborating with local service operators to push products is a promising channel.
Big city style, lower tier city adaptation
Local entrepreneurs usually have the big city training and experience to bring enticing modern urban services back to their hometown.
They also know that their customers need some familiar added value elements to make adopting new habits easier. Ling Pao Total Fitness Gym has signed up more than 3,000 members in just over a year, with plans to expand (the boss lives in Guangzhou).
“As our city develops, we should develop,” says Huang Qiu, manager of Ling Pao. “Exercise makes life better.” But exercise can be hard. So besides a broad range of exercise machines and fitness classes like yoga and spinning, Ling Pao features billiard tables and Internet terminals for budding fitness enthusiasts that need a break.
SK Beauty is a salon franchise on the rise, actually expanding up a tier, from Yiyang to Changsha.
Of course SK’s top-tier trained stylists give sophisticated coiffures. The local twist? Customers can indulge in online gaming or massage while they get a haircut.
Huang Qiu says her most important demographic is young adults age 20-30. Young working adults have more money to spend than students, no children, and no campus facilities or student life activities to fill out their schedule. And in low-tier cities, the increased importance of personal relationships and family mean that older peers have more influence over their young buddies than in first-tier cities.
So when aiming for the low tier youth market, aim high: mid-20s to 30s is a sweet spot.
Read more: How entrepreneurs are booming in China's smaller cities | CNNGo.com http://www.cnngo.com/shanghai/none/low-tier-entrepreneurs-secrets-success-988046#ixzz0nioE50mq
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