Targeting lower-income consumers

Updated: 2006-06-05 15:33
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It has already become a marketing cliché that major consumer goods manufacturers should try their luck in China. Under any calculation, a market with more than one billion potential consumers represents a sales opportunity that is too big to be overlooked.

The question has always been more about marketing strategy and which consumers to target. A recent study by US consultancy McKinsey & Co. suggested multinational companies with an eye on China should start to focus on blue-collar workers in the country.

The McKinsey report, covered in Wednesday's Wall Street Journal, categorized blue-collar workers as lower-income middle class, including households with an annual income of 25,000 yuan, or about 3,100 US dollars, to 40,000 yuan, while the middle classes will earn 40,000 yuan to 100,000 yuan.

According to McKinsey estimates, by 2011, this group will expand to about 290 million people, almost the same as the current US population.

Taking into consideration living expenses in both countries, McKinsey said that people with an annual income of 100,000 yuan in China would enjoy a similar lifestyle to what people with an annual income of 40,000 US dollars in the United States would have.

The consultancy firm cited Procter & Gamble as a successful example of working in niche markets. P&G has launched various types of shampoo, shower, and cosmetic products designed and packaged for lower-income consumers in China.

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