In China, the most successful brands are often the ones you expect the least. Aside from the powerful brands of LVMH and Kering, you can see a new group of brands emerging. We’re talking about independent designers and niche brands. We’re talking about these small brands that became the best examples in marketing and retail.
We give you the 5 strategies implemented by niche brands in China.
What is a Niche Brand?
A niche brand is a strong and powerful brand in a niche sector or with a small market share. It creates a contrast between its high reputation and its low market share. If we go further, a niche brand is defined by its market segment, penetration rate, and loyalty.
According to Sijun Wang, “compared with large brands in the market, niche brands tend to have small market share and enjoy higher levels of loyalty and lower levels of penetration than would be expected for their market share“.
This is the key when analyzing niche brands. These small firms managed to cut down their investment and maximize the sense of belonging in their community for long-term success. They don’t over-invest in advertising. Or over-invest in store openings. They just build a smart and efficient marketing and retail pattern to maximize the return on investment (ROI).
And this is where niche brands are teaching other firms in all industries.
Niche Brands Started in Perfume and Fragrance
When we go back in history, the term “niche brand” started with perfume. It started in 2010 when artisanal niche fragrance houses launched their own perfume to compete against designer fragrances.
According to Scent Grail, niche perfumes “are perfumes created and sold by companies that exclusively focus on producing fragrances, and accompanied fragrant products“.
In China, fragrance consumers even came up with their own vocabulary:
- They created the term “商业香” which means “commercial scents” to describe the perfumes from established brands. It refers to brands like Dior, Givenchy, Lancôme, and Calvin Klein.
- They created its antonym “沙龙香” which means “salon perfumes” to describe the perfumes from niche brands. It refers to artisanal brands and small houses like Byredo, Oriza, Maison Francis Kurkdijan, and Documents.
Fun fact, the brand Jo Malone used to be a niche brand.
However, it is now considered by Chinese consumers as a commercial brand due to the high sales and penetration rate.
Niche Brands Expand to Fashion and Accessories
While niche brands started with fragrance, they expanded to fashion and accessories where new designers and indie brands are rising. We can mention Rouje, Marine Serre, Jacquemus, or Off-White.
These creators are designers, artists, and singers. They work on their own sense of creation to propose unique collections with a disruptive vision. Marine Serre came from a small village in France and got internships in luxury brands before launching her own label. She won an LVMH Award, Ariana Grande wore a Marine Serre jumpsuit for her concerts, and the collection sold out quickly.
And this is the key insights I wanted to share with you:
- Small firms must adopt niche brand strategies.
- But large firms also use niche brand strategies to build a successful brand.
This is why Louis Vuitton appointed Pharell Williams as its Men’s Creative Director.
Let’s dive into the niche brands’ marketing examples you can leverage.
Marketing Strategies Examples from Niche Brands
It’s no secret that niche brands master the art of consumer loyalty. They gained brand awareness at a rapid pace, built a community around their brand, and turned their consumers into brand ambassadors.
And they made it through 5 marketing tools:
- Storytelling
- Events
- Celebrities
- Participation
- Localization
Let’s dive in.
1. The “Brand Relevance” with Emotions and Common Values
According to Thibaud Clément, “brand relevance is a company’s ability to connect with people’s emotions and become personally relevant to them“. This is what brands like Lululemon mastered in China. They focused their marketing and advertising on emotional connection and shared values.
Lululemon focused on yoga outfits. They built all their marketing around the theme of yoga and physical activity. Hence, they shared a base of common values inherited from yoga such as compassion, peace, kindness, hard work, discipline, honesty, and optimism. All Lululemon consumers recognized themselves in these values. It created a unique bond with the brand.
This first strategy is a defensive strategy.
It’s not about pushing consumers, it’s about pulling them to you. To do so, you don’t need an aggressive advertising campaign with millions of euros spent. You just need to sit down and find your brand’s identity and values.
Contact us if you need to clarify your brand identity, values, and storytelling.
2. Offline Events to Build a Sense of Belonging
Niche brands often implement offline events. Instead of investing in several store locations, they will invest in short-term events to maximize their agility and flexibility. They will go to lower-tier cities to meet their consumers who are not used to seeing brand events in their town. They create a sense of uniqueness.
This strategy is so powerful that it was used by leading brands like Gucci.
In 2012, Gucci opened a store in Chongqing. At that time, the city was a Tier-2 or Tier-3 city with fewer population and attractivity. When the brand opened the store, it was a local event with tons of consumers gathering to purchase luxury offline. Since then, Chongqing has become a “new Tier-1 city”.
Even more, the Italian luxury brand multiplied the niche events to build a sense of belonging with its local consumers. In Shenzhen, Gucci created a local event called “Summer Stories” displaying the beach collection of the brand. A niche marketing angle right? However, since Shenzhen is a coastal city, the event gathered millions of views on Chinese social media.
Opening your store in lower-tier cities in China is the key.
3. The “Identity Claim” with Celebrities
Among the main niche brands examples, we can talk about celebrity endorsement. In general, large firms go with A+ celebrities that can be recognized by everyone. They are singers, actors, athletes, or models. They are appointed as brand ambassadors to be recognized by all Chinese consumers from all cities, ages, and genders.
The strategy implemented by niche brands is to appoint celebrities who have a unique and niche positioning.
They picked different brand ambassadors to enable their consumers to show their true identity. And the best in class is (once again) Lululemon. The brand appointed 3 different celebrities for their Hot Yoga Class:
- Amber Liu: A Taiwanese-American singer originally from the K-pop group f(x) who represents the genderless style with short hair and masculine clothing
- Cacien: A Chinese singer from the hip-hop talent reality show Girls Like Us (黑怕女孩) who represents the Chinese Garlic Princess vibe with hip-hop songs and outstanding pink Lululemon outfits
- Cici Wang: A renowned Chinese actress with dance talents who represents the delicate ballet dancer, always dancing in a ‘cleanfit’ minimalist outfit
4. Encourage O2O Participation of Community
The most successful brands in China are creating interaction and engagement. This technique is inherited from niche brands that leveraged customized hashtags and community participation. Niche brands encourage customers and netizens to engage with the brand by using a specific hashtag or sharing their perspectives.
This strategy is often used during new product launches or new store openings. It enables niche brands to push the exposure of their novelty with a limited budget. They don’t need to over-invest in advertising, they capitalize on their existing dynamic community that is always ready to share “en masse”.
It was common for the niche brands mentioned earlier to also include their fans in the creation process. Customers can participate in the creation, select their favorite items, and build the brand positioning together.
To another extent, the brand Cruel Pancake is doing pretty well in the West today.
Last week, they asked their community to create their new logo and design. They received hundreds of creative proposals.
5. The Right “Local Marketing Asset Partner”
Niche brands managed to expand globally while keeping their brand DNA and identity. And this is what all brands are looking for. And somewhat ending up failing at it. The reason why niche brands mastered this art is because they chose the right local asset partner.
What is the difference?
- Large firms invest 1 to 3 million USD straight with a large TP or agency to convince Chinese consumers to purchase
- Niche brands start with a small budget and implement “test and learn” with a local consulting and creative agency
And this is what makes the difference.
This is what makes any brand, no matter its size, to build its own success in China. It’s not about proving to Chinese consumers that your brand is the best on Earth and selling through ROAS. No, it’s about understanding your local consumers, listening to what they like, how they feel, and who you are. It’s about building a strong connection that can turn your local consumer into your best brand ambassador in the country.
At AB ADVISORY, we help large firms and niche brands to navigate the Chinese market. We have 5+ years of experience in conducting luxury and fashion consumers’ interviews in China and bringing our creative teams together to make your message heard in China.