The Chinese market offers apparent market potentials for those who want to do business with emerging players in the baby product market in China. The steady growth in this industry is due to the increasing urbanization and the higher disposable income per capita, as well as the opening of the two-child policy in China. According to Euromonitor, the category foresees a robust value CAGR (Compound Annual Growth Rate) of 18% at the constant 2015 prices to 2020.
Baby product market in China: Case description
Daxue Consulting’s client, an international retail brand in the baby product market in China, was already successfully operating in China but was recently facing fierce competition from local and imported premium brands. Therefore, the client approached Daxue Consulting to audit the brand’s performance in different China POS (Point-of-Sales) as well as to benchmark competitors’ in-stores strategies. Additionally, our client requested the assessment of the Chinese retail market for a new product launch.
Phases of the market research: POS Audits for retail customer experience analysis
Understanding the perception of the client’s product on the shelf in its China operations was the primary goal. Daxue Consulting’s team created a tailor-made project for the case and provided a full analysis of the market situation and the retail environment within the industry to answer the following fundamental questions:
- Why are the competing brands standing out?
- Which brands do not stand out in the aisle and what is the reason?
- How should the aisle/shelf look like, compared to the competition and considering the different product attributes?
- What are the key channels with the most significant impact?
- What are the essential chains and stores to include?
According to the head of research at Daxue Consulting, Clément Mougenot, it is complicated for China market leaders to follow-up with the changing needs of the growing middle-class population. Brands that offer and position themselves as “safer,” “better quality,” or even “more convenient” will have a key advantage to target consumers that want to trade-up. Major brands can no longer count on only their name. They need to re-invent themselves, innovate, and adapt their marketing mix to offer a product that will feature and display real value to the consumers. In-store shop-ability and visibility are one of the levers major retail brands use to keep a competitive edge.
The research team, therefore, has created a four-step procedure for our clients:
Phase 1: Desk research
As a first step, Daxue Consulting executed an extensive market research using desk research. Our market research team gathered general information about the current market situation including demographics, shifts in consumers’ preferences, as well as information about our client’s key competitors, to gain an understanding of the baby product market in China and its upcoming trends.
Phase 2: In-depth interviews and Focus groups
Additionally, Daxue Consulting conducted a series of in-depth interviews with professionals who have a long experience in China as well as focus groups with customers. The goal of this step was to gain primary research information from market insiders which helped our market research team to fill the remaining gaps in our knowledge through secondary research methods.
Phase 3: Store checks & Competitors’ benchmarking
As a third step, Daxue’s research team performed a comprehensive benchmark testing. To uncover the differences in the performance against its competitors, Daxue Consulting compared the client’s strategy against one of its key competitors’. Our team gathered information about the products’ visibility in the aisle, in-store brand signage, packaging and pricing to be able to optimize our client’s in-store conversion rate (browsers to real buyers).
Daxue Consulting, therefore, used The Store Checker APP to assess the shelf situation, both of our client as well as its competitors. Daxue Consulting uniquely designed this app for large-scale store checks and mystery shopping projects. It allows for efficient, affordable and reliable data collection, such as monitoring the distribution of (competitors’) products. Thanks to its vast network of app users across China, the Store-Checker can carry out an on-site assessment on a national level and in different tier-cities. Geo-localization tells the Store-Checker his mission and where to go. It makes our research team able to assess a product or a store in any given city or province, as it sends detailed feedback to The Store Checker Management team very fast. Moreover, a particular Quality Assessment System (QAS) continuously monitors the Store Checkers.
The design of the app is adapted to each and every project, tailor-made to meet national geographical and economic representativeness. Our Daxue research team, therefore, started with setting up parameters on behalf of the research for the actual operation. After preparing the guidelines and features, our research team executed a pilot run (5-10 stores). Then, Daxue Consulting made modifications according to the debriefing. Finally, Daxue’s research team ran 330 store checks in China including 20 cities (different tiers) in 19 different provinces as well as diverse distribution channels such as hypermarkets or maternity stores. By taking photos of the overall shelf-situation in the different POS, our research team figured out client’s as well as competitor’s products presence, prices, shelf-position, etc. Additionally, Daxue prepared questions for the Store-Checkers, open as well as closed-ended, to gain qualitative data about the shopping experience such as first impressions, perceptions, what they saw and did not see. Also, questions to clerks had been asked to figure out on-site recommendations from them.
Phase 4: Final Report & Recommendations
After Daxue Consulting had processed the data which included cross-analyzing the data during all phases of the desk research to the store checks, our research team provided the final report. It comprised detailed information about the baby product market in China, its trends and competitors’ strengths and weaknesses. Additionally, Daxue’s team gave recommendations to the client with a complete ‘ideal’ retail strategy route for their product line. Moreover, our research team suggested our client the best practices including key POS and shelf-details in the industry, thus making it possible to build up their brand in China and successfully launch their new product.
To know more about the Retail Market Opportunity in China, please don’t hesitate to contact us.
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