Discuss the marketing concepts of high-end jewelry in Chinese market

Birmingham City University for Master Degree

Discuss the marketing concepts of high-end jewelry in Chinese market

Master Candidate: Zixuan Song Major: Luxury Jewelry Management Dissertation Supervisor: Michela Ferraro-Cuda

Abstract

With the rapid growth of Chinese economy, China has become a business opportunity market for luxury brands in the world. In recent years, the consumption of Chinese luxury jewelry market is strong, and it grows rapidly at the rate of two figures every year. At present, Chinese jewelry market is mainly composed of local brands, Hong Kong investment brands and foreign brands. While the luxury jewelry market is mainly occupied by famous foreign jewelry brands, and the competitiveness of local brands is weak. Such as Cartier, Bulgari and Tiffany. At the same time, according to the domestic jewelry market performance in recent years, the annual report and market evaluation of each jewelry brand, as well as the attention of the public and the media to the jewelry industry, this series of performances can confirm that China has entered the rapid growth period of luxury products. However, the core competitiveness of jewelry enterprises is low, the cultural connotation of products is not rich enough, and the homogenization phenomenon is serious, which has become the restricting factor for the development of jewelry industry in China.

At present, the domestic research on the localization marketing of multinational companies has formed a relatively mature theory. On the one hand, this study will help Chinese enterprises to absorb the successful experience of multinational companies, on the other hand, it will provide theoretical basis for Chinese enterprises to go abroad and develop "localization" in other regions of the world. However, the research on localized marketing of jewelry enterprises is still in its infancy, with few related literature and imperfect theoretical system.

On the basis of previous studies, this paper takes the current environment of high-end jewelry market as the background, starting with the definition of high-end jewelry, main consumer groups, market overview and sales mode, to explore the new marketing concept of China's high-end jewelry market. Through the impact of COVID-19 on the economy, some suggestions are put forward for the development of jewelry enterprises. I hope to put forward new ideas for the development of China's jewelry enterprises, so that domestic jewelry enterprises can constantly improve themselves and actively respond to various challenges in the future.

Key words : luxury jewelry brand , luxury jewelry market , Chinese luxury consumers , Chinese jewelry market，COVID-19，marketing concept

Introduction

Background

Jade culture has a profound historical and cultural accumulation in China. However, the development of China's jewelry market is very slow. Until the 1980s after the reform and opening up, the development of national economy and the continuous increase of people's income, especially the nature of people's pursuit of beauty has been recognized by the society, the jewelry market has recovered, and the consumption of jewelry has also been greatly increased. It can be seen that the development of jewelry industry, like other industries, is closely related to the political and economic environment, social environment and people's awareness.

China GDP and growth trading

China GDP from 2010 - 2020

The first chart shows that China's GDP is growing every year, especially since the 21st century, it has shown a rapid development trend. From the bar chart, the figure of China's GDP is Increase steadily from 6087.16 dollars in 2010 to 14200 dollars in 2019, and expected to continue to grow in 2020. It can be seen from this that Chinese consumers have been at a relatively rich level since 2010.

In the world, the national income of 3000 US dollars is usually regarded as a boundary and symbol of the rapid upgrading of the national consumption structure. In 2008, China's per capita GDP exceeded 3000 US dollars for the first time. It can be concluded that since 2008, China's jewelry market has entered a critical period of rapid development.

The study of Global and China Jewelry Industry Report from Research and Markets shows that “The industrial development of jewelry as a luxury is subject to the per capita income growth. In 2017, global jewelry sales reported $325 billion, of which online sales of high jewelry surged by 16% versus 2016, above that of costume jewelry (12%). Diamond jewelry contributed to the largest retail share of the global jewelry industry, a 47% share of the total, followed by gold jewelry (42%).

China jewelry market size soared from RMB470 billion in 2013 to RMB721 billion in 2018, with the CAGR of 15%, ranking third in the world and next to USA and Japan, making China be the one with the most vigorously growing jewelry and jade industry worldwide. It is estimated that China jewelry market will be worth at least RMB900 billion in 2025.”

At the end of the 20th century, with the explosive development of China's economy, the major jewelry brands smell the business opportunities and expand their business in China. The Chinese people also show their love for these jewelry which can represent the upper class of Western society.

Foreign jewelry giants also regard the Chinese market as the main market in the future. Chamnam Nouri, chief executive officer of the Earl, once said: "although the specific proportion is not disclosed, the proportion of Chinese market sales in the overall market is very high, which also makes us look forward to the performance of this market." At present, China's jewelry market is mostly divided into three forces: domestic brands, Hong Kong funded brands and foreign brands. Now, foreign brands, represented by Cartier, Bulgari and other brands, have firmly occupied the high-end jewelry market in China's major cities, and began to expand to second and third tier cities.

According to Goldman Sachs investment bank, the global value chain of jewelry products in 2008 was $40 billion, ranking third after wine and spirits, perfume and cosmetics. The total sales volume of luxury goods in mainland China is US $6 billion, of which jewelry is US $1.3 billion, ranking fifth. It is worth noting that the annual growth rate of luxury goods market in China is as high as 25-30%. At present, China consumes 253 tons of gold annually, which is the third largest gold consumer in the world, accounting for 8% of global consumption. It can be seen that China's jewelry market has great potential.

Research Aim & Objective

The purpose of this study is to explore the current situation and future development trend of China's jewelry market, as well as the possibility for an emerging luxury jewelry brand to enter and expand the Chinese market。 Take Italian jewelry brand Alessio Boschi as an example ， formulate corresponding strategic policies to make the brand more suitable for the Chinese market, win the favor of Chinese consumers, and achieve the purpose of expanding the Chinese market. To achieve this goal, there are eight questions:

What is luxury (the definition of luxury)?

What are the consumer groups of high-end jewelry in China? What are the characteristics of different consumer groups?

What is their consumption attitude towards high-end jewelry?

Which brands or enterprises occupy the high-end jewelry market in China

What is the core competitiveness of luxury jewelry enterprises

What are the industries greatly affected by COVID-19 and what do they have in common

What are the performance of foreign high-end jewelry brands in China's localization

What are the marketing models of foreign high-end jewelry brands in China

There are four basic objectives:

Collect information to understand the development of China's jewelry market.

By using interview and questionnaire, this paper investigates specific groups of people to understand the attitude of Chinese luxury consumers towards jewelry consumption, their preference for jewelry design, materials and brand stories, and their annual expenditure on jewelry consumption.

Analyze the possibility of local brands entering and expanding China's high-end market through investigation and research(five forces)

What are the marketing concepts of high-end jewelry in China

Literature review

Definition of luxury

According to luxury marketing expert Lorre White, who is CEO and founder of White Light Consulting. In business, luxury is a term defined professionally, and it is not determined by everyone's preferences. Despite the wide range of luxury, at the end of the day, the products in the luxury industry are not mass-produced or distributed. They are not price sensitive and usually not fashionable. Lorre White thinks mass production and mass marketing are almost the opposite of luxury. She said :"Luxury must always stay interesting and ahead of the mass market. Luxury industry spends more in development, and often much of what they do, trickles down and applied to the mass market. Luxury industry pays the prices to stay “sexy” to the most demanding audience, so in one sense you could say it is always changing….but not really from a professional business definition. ”

Image source : https://eatlovesavor.com/leaders-thinkers-and-creators-interview-with-luxury-marketing-expert-lorre-white/

The study of Kaufmann Klaus Heine not only focuses on consumers, but also develops a structured conceptual framework based on detailed semantic and dimensional analysis. By interviewing 31 German millionaires, this paper summarizes the main characteristics of luxury brands, including high pricing, high quality, unique brand personality, and can provide consumers with certain emotional value.

The research adopts a specific research method of luxury market segmentation, the repertory grid method (RGM), and carries out a questionnaire survey on more than 1000 participants to summarize a luxury brand concept including 52 personality traits and five major dimensions.

Eunju Ko ，John P. Costello ，and Charles R. Taylor summarizes the knowledge of luxury brands by reviewing relevant literature, and provides a new definition for luxury brands. He also outlined the key theoretical perspectives used in the field of luxury goods, and summarized the key research results.

Jewelry marketing

The report released by Grand View Research in 2019 analyzes the general environment of the current jewelry market from the scale, share and trend of the jewelry market, and forecasts the development of the jewelry industry in the future. Jewelry manufacturers strive to cater to the market, innovate product design, and obtain rich profits. In addition, the change of people's life style and the symbolic significance of jewelry also promote the development of jewelry market. The progress of consumer's concept of jewelry consumption has a positive impact on the jewelry market. However, e-commerce fraud will hinder the development of the market

Gold is still the most important material for jewelry, followed by platinum. Diamonds are seen as a symbol of success and are therefore becoming more and more popular.

Rings are generally considered fashionable and elegant, so they are the most popular products, especially those with diamonds.

The Asia Pacific region has the largest market share. With the rapid development of China's economy and the improvement of people's consumption level, China has become the leading country in the Asia Pacific market.

Due to the existence of large jewelry manufacturers, such as Tiffany, Cartier, and Chow Tai Fook, the jewelry market is highly competitive, while local brands occupy the main share of the local jewelry market.

According to McKinsey's prediction of the jewelry market in 2020, the development trend of the jewelry industry is repeating the trend of the clothing industry 30 years ago, but it is much slower than that of the clothing industry. There are five trends: internationalization of brands and industry consolidation, growth of branded jewelry, reconfiguration of the channel landscape, polarization and hybrid consumption, fashion and acceleration

Due to industry integration, some local brands will almost certainly become global famous brands: international retail groups will acquire small local jewelers.

By 2020, the market share of the top ten jewelry companies is expected to double, mainly through the acquisition of local enterprises.

The study identified three types of consumers that will drive the growth of brand jewelry: “new money” consumers, emerging market consumers and young consumers. It is predicted that brand jewelry will occupy 30% - 40% of the market share in 2020.

As physical stores are more reliable and provide opportunities to touch and feel jewelry, most consumers prefer to buy jewelry in physical stores. Therefore, it is expected that the proportion of online sales of jewelry will reach 10% by 2020 and will not grow much.

The survey shows that most consumers will conduct online survey or obtain suggestions through mass media before purchasing jewelry products.

In a word, the jewelry industry will be more active and global in 2020, and the industry competition will be more fierce.

Consumer

A journal from Cynthia Jasper mainly aims at the consumer's consumption motivation and consumer's shopping preference. In the luxury industry, store shopping can provide consumers with better service and shopping experience, so consumers are more inclined to shop. At the same time, this study well describes consumers' shopping motivation and their shopping preferences when they buy jewelry products in retail stores. Jewelry shoppers are more influenced by functional motivation than non functional motivation.

A report from McKinsey-Chinese luxury consumers: More global, more demanding, still spending studies the role of Chinese consumers in the global luxury market, the evolution of Chinese consumer behavior, and their shopping patterns at China and overseas.

China's rich occupy the core position in the global luxury market, and Chinese luxury consumers account for almost one third of the global luxury market.

From 2008 to 2014, the number of luxury goods consumed by Chinese households doubled. Since 2015, the growth of luxury consumption has mainly benefited from the incremental consumption of consumers. Therefore, it is suggested that luxury enterprises establish customer loyalty and maintain existing customers.

Compared with ordinary Chinese consumers, affluent consumers tend to spend more on luxury goods. The Chinese of the upper class will become the main force to promote the growth of luxury consumption.

Literature gap

As China does not have its own domestic luxury jewelry brands, the existing literature on the Chinese luxury jewelry market is not sufficient and detailed, and the segmentation of Chinese luxury jewelry consumer groups is not clear enough. Therefore, this study will focus on investigating which brands make up the luxury jewelry market in China, the segmentation of luxury consumer groups in China, the impact of brands on consumers, the attitudes of various groups towards high-end jewelry consumption, and consumer preferences. In addition, investigate what kind of media and transmission Chinese consumers are more willing to accept.

Firstly, this paper puts forward that jewelry enterprises should integrate internal resources, improve product service and quality, build a strong brand, establish an open and cooperative corporate culture atmosphere, update the knowledge composition of enterprise talents, and cultivate the overall learning and innovation ability of enterprises. At the same time, jewelry enterprises should actively seek foreign cooperation, realize resource sharing and complementary advantages, and use internal and external resources to establish the core competitiveness of enterprises. Then, in view of the lack of rich cultural connotation of jewelry products, this paper proposes that jewelry enterprises should also take culture as the cornerstone, take the road of cultural marketing, establish corporate brand culture by enriching the cultural connotation of jewelry products, and widely promote the product culture and brand culture to show jewelry as a cultural carrier for jewelry consumers It has cultural characteristics and unique cultural connotation of jewelry brand. In view of the homogenization of jewelry products, this paper also puts forward that jewelry enterprises should establish a localized marketing concept, and take a localized road in two aspects of jewelry product design, creation and jewelry marketing concept: 1. The product creation and design of jewelry enterprises should be rooted in the people Ethnic culture, in the national culture, seeks inspiration and material, carry forward the essence of the national culture, and integrate the essence of Western Jewelry creation ideas, and develop the jewelry design and creation concept dialectically. 2. Aiming at the special "relationship" complex of Chinese consumers, carry out relationship marketing, pay attention to the management of customer relationship, and establish long-term and sustainable customer relationship. Finally, according to the characteristics of jewelry products and the unique psychological needs of jewelry consumers, jewelry enterprises should fully display the cultural connotation and decoration function of jewelry through new marketing methods such as customer participation in marketing, concept marketing and integrated sales of jewelry and related products.

The key to the implementation of the new marketing concept of jewelry enterprises lies in the promotion of core competitiveness, the establishment of localized marketing strategies based on cultural marketing, and the implementation of marketing upgrading strategies.

Methodology

The purpose of this study is to explore the marketing concept of luxury jewelry brands in the Chinese market. In this study, quantitative and qualitative methods are used. Quantitative method is a process that emphasizes the collection and analysis of numerical data. Using this method can avoid research bias (Bryman and bell, 2007). In the quantitative method, the information is presented in numerical form, and the information source can collect a large number of data support in a limited time. However, there are also some limitations, which may not be very correct, because of limited time and limited knowledge. Qualitative method is a necessary means to understand the research object. Therefore, the combination of qualitative and quantitative methods is helpful for data triangulation, reducing the data error caused by a single method and the low efficiency of research.

Research question

What are the consumer groups of high-end jewelry in China?

What are the consumption attitudes of different consumer groups towards high-end jewelry?

What are the sales methods of luxury jewelry market in China?

What are the consumption behaviors, preferences and factors influencing consumption in luxury jewelry market?

What inspiration and reflection does covid-19 bring to jewelry industry?

What are the marketing concepts of high-end jewelry brands in China?

Methods

Data mining

Collect a large amount of data initially and filter it to ensure that all data are verified or sourced from authoritative websites. In order to fully understand the market, a large number of data on luxury goods and jewelry industry must be collected, including big data on domestic and international jewelry markets, market share of Chinese luxury consumers, online and offline transactions, market share of various brands, and high-end jewelry consumers in China.

Questionnaire

Through a questionnaire survey, this paper studies the consumption attitude of Chinese high-end jewelry consumers, the values and life styles of different consumer groups, consumers' brand awareness of luxury jewelry, consumers' consumption behavior, consumption preference, as well as consumers' purchase psychology and purchase motivation

interviews

Through interviewing the consumers who often buy luxury jewelry, we can understand their psychological process, purchase factors, and which marketing methods have a greater impact on them, as well as their cognition and purchase preferences for famous brand jewelry, niche brands and designer brands.

Browsing online

Online data collection is the most commonly used way. Because of the rich online data and the convenience of data collection, this research method is more common. However, the quality of online materials is uneven, which requires careful screening and identification to ensure the quality of references. Study the status quo of China's jewelry market through online browsing, the sales mode of China's high-end jewelry market, the influence of the brand, the important role of the brand story and brand culture for the brand, etc.

Time t

Activity	March	April	May	June	July
Week number	1	2	3	4	1	2	3	4	1	2	3	4	1	2	3	4	1	2	3	4
Submit the proposal to the tutor
Read literature
Read methodology literature
Develop questionnaire
Searching the information about interview
Administer questionnaire and interview
Enter data into computer
Analyse data
Rebuild data
Draft findings chapters
Update literature
Complete remaining chapter
Submit to tutor
Revise draft& format
print
submit

able

Reference

Franca Sozzani (2011) What is the meaning of luxury? VOGUE, 05(03) p.16

Marc Bain (2018) Nobody knows what luxury is anymore. Available at: https://qz.com/1303457/nobody-knows-what-luxury-is-anymore/ [Accessed 16 June 2018].

Angela Tunner Leaders(2019) Thinkers and Creators : Interview with Luxury Marketing Expert Lorre White. EAT LOVE SAVOR, Available at: https://eatlovesavor.com/leaders-thinkers-and-creators-interview-with-luxury-marketing-expert-lorre-white/

Kaufmann Klaus Heine ,Dr. Hans Hirth Berichter, Dr. Volker Trommsdorff Berichter, Dr. Frank Jacob(2012) The Identity of Luxury Brands.[pdf] Available at: https://pdfs.semanticscholar.org/f702/fabfe6af96159aeee3b6cd19f20cf5a1f071.pdf [Accessed 06 February 2012].

Allison (2018) How millenials and low-tier cities are shaping China’s jewelry market. Available at: https://daxueconsulting.com/how-millenials-and-low-tier-cities-are-shaping-chinas-jewelry-market/ [Accessed 15 August 2018].

Camille Lake (2017) The Rise of Luxury Jewelry with Chinese Millennials. Available at: https://www.luxurysociety.com/en/articles/2017/10/millennial-womens-changing-mindsets-luxury-jewelry-china/ [Accessed 18 October 2017].

Research and Markets (2019) Global and China Jewelry Industry Report 2019-2025. Available at: https://www.globenewswire.com/news-release/2019/05/24/1843113/0/en/Global-and-China-Jewelry-Industry-Report-2019-2025.html [Accessed 24 May 2019].

RESEARCH (2019) China’s Jewellery Market. Available at: http://china-trade-research.hktdc.com/business-news/article/China-Consumer-Market/China-s-Jewellery-Market/ccm/en/1/1X000000/1X002MMK.htm [Accessed 08 July 2019].

Gerry Chen (2018) Potential for growth in China’s jewellery market. Available at: https://www.gold.org/goldhub/research/gold-investor/gold-investor-october-2018/potential-for-growth-in-chinas-jewellery-market [Accessed 18 October 2018].

Lambert Bu, Benjamin Durand-Servoingt, Aimee Kim, and Naomi Yamakawa (2017) Chinese luxury consumers: More global, more demanding, still spending. Available at: https://www.mckinsey.com/business-functions/marketing-and-sales/our-insights/chinese-luxury-consumers-more-global-more-demanding-still-spending [Accessed August 2017].

McKinsey Greater China’s Apparel, Fashion and Luxury Group (2019) China Luxury Report 2019: How young Chinese consumers are reshaping global luxury. Available at: https://www.mckinsey.com/~/media/mckinsey/featured%20insights/china/how%20young%20chinese%20consumers%20are%20reshaping%20global%20luxury/mckinsey-china-luxury-report-2019-how-young-chinese-consumers-are-reshaping-global-luxury.ashx [Accessed April 2019].

Aimee Kim, Lan Luan, and Daniel Zipser (2019) The Chinese luxury consumer. Available at: https://www.mckinsey.com/featured-insights/china/the-chinese-luxury-consumer [Accessed August 2019].

Aimee Kim, Lan Luan, Daniel Zipser (2019) The Chinese luxury consumer. Available at: https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/China/The%20Chinese%20luxury%20consumer/The-Chinese-luxury-consumer.ashx [Accessed August 2019].

GRAND VIEW RESEARCH (2019) Jewelry Market Size, Share & Trends Analysis Report By Product (Necklace, Earrings, Ring, Bracelet), By Material Type (Gold, Platinum, Diamond), By Region, And Segment Forecasts, 2019 - 2025. Available at: https://www.grandviewresearch.com/industry-analysis/jewelry-market [Accessed June 2019].

Linda Dauriz, Nathalie Remy, Thomas Tochtermann (2014) A multifaceted future:The jewelry industry in 2020. Available at: http://guldsmed.dk/tinymce/jscripts/tiny_mce/plugins/filemanager/files/Leverandorforeningen/A_multifaceted_future_The_jewelry_industry_in_2020.pdf [Accessed February 2014].