Tuesday, August 14, 2012

Consumers are willing to pay a premium - Tom Doctoroff

Tom Doctoroff
Sales of luxury goods to Chinese consumers is booming, not only to the very rich. More average consumers with lower incomes are willing to pay a high premium for the products they really want to have, says author Tom Doctoroff of "What Chinese Want" in the New York Times.

For example, paying high prices for 3-D or IMAX movies does not deter Chinese consumers:

The New York Times:
But those price points don’t faze Chinese consumers, according to Tom Doctoroff, the chief executive of the advertising firm JWT Greater China. They willingly pay premium prices for luxury goods — whether it’s for a 3-D movie ticket, the latest Chanel handbag or a Communist-red Ferrari — as long as there’s high visibility to their purchase. Conspicuous consumption is the whole idea. 
“In order to charge a price premium, public consumption must be dramatized,” said Mr. Doctoroff, the author of “What Chinese Want: Culture, Communism, and China’s Modern Consumer.” 
“That’s why certain categories — for example, cars and luxury goods — are growing so quickly, despite extremely high out-of-pocket costs.” 
A typical first-time car buyer in China will spend a year’s salary on a car, Mr. Doctoroff said. Proportionally, that’s about three times what a European or an American pays. 
Haagen Dazs wins with fancy ice cream parlors, not in-home consumption,” he said, noting that in China “no one pays $5 to enjoy a half pint of ice cream while watching (illegal) DVDs in the living room.”
More in the New York Times.

Tom Doctoroff is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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