Thinking Local Helps You Go Global

Most luxury goods companies focus on getting their product right and assumed that the market would follow. Until recently, this philosophy of “if you build it, they will come” has worked. However, China, with its 1.3 billion people of which at least 300 million are luxury goods consumers and whose pipeline increases exponentially daily, has changed this mantra. Now, the Chinese demands are driving the market.

An example of this is Porsche. Chinese demand drove the automaker to develop, for the first time ever, a luxury four-door sedan. Porsche was frustrated by its inability to attract Chinese luxury buyers. It couldn’t figure out why Chinese government officials and the newly minted billionaires weren’t buying its product until it was pointed out to them that these people don’t drive themselves. It is standard for them to have a driver. And it is unheard of to sit in the front seat next to the driver. So, because Porsche only offered two-seater models, there was no room for them to sit.

Once Porsche realized this, it began working on a four-door model that met the needs of this customer group while maintaining its brand image. The resulting product was the Porsche Panerma, which was rated by U.S. News and World Report as the top luxury sedan of 2012.

China’s demand for lush rear seating has migrated to the rest of the world. A recent article in USA Today, “Luxury gets into the back seat in the new premium sedans,” highlighted that the back seats of luxury cars are now getting attention from automakers such as Cadillac, Acura, Lexus, BMW, Lincoln and Audi.

Another example is in the beauty industry where Asian women demanded 5-in-1 products that acted as a primer, tinted moisturizer, anti-aging serum, pimple treatment, and sunscreen (whew). As a result, early 2012 showed that every major and indie cosmetics company including Clinique, Estee Lauder, Smashbox, and Boscia launched its version of the BB (beauty balm) cream in the U.S. The only trouble is that these products behave differently (i.e., don’t work as well) due to the fact that the pigments in the coveted Asian market products are not allowed for use in the U.S. 

The lesson learned: Think local and replicate local to your global customers. (I’m now heading to Beijing to find the top-selling BB cream which is not able to be sold in the U.S. …)

Tags: affluent, china
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