Eighty-one percent of Chinese netizens research opinions and recommendations from fellow consumers on internet-based bulletin board sites (BBS) before making a purchase and 61% ask questions on those forums, according to I-research.
As Chinese auto dealers will tell you, car buyers will typically arrive at the showroom with facts, figures, knowledge of consumer user experiences and most importantly, their mind made up. Of all the categories tracked by CIC for IWOM, auto is the biggest by far.
In 2008, CIC analyzed a monthly average of six million comments written by 300,000 consumers coming from top auto related BBS forums.
What are they talking about? FAW-VW, a joint venture between the local car maker First Automobile Works and Germany's Volkswagen Group, was the most discussed manufacturer with an 8.8% share of voice, or 1,200,773 posts mentioning the brand or one of its model.
Ford Motor Co.'s Focus car was the most discussed model, with 427,740 posts and 2.9% of the total model share of voice. Price was the most discussed topic. It was mentioned in 24.7% of all posts mentioning that specific topic, followed by appearance (23.5%) and power systems (21.4%).
The power of having so much IWOM data at your finger tips is the ability to identify and analyze emerging trends. Perhaps as a sign of the world's worsening economic conditions, there was a steady increase of "group purchase" discussions during the second half of 2008, with the number of mentions almost doubling from .26% of all auto-related IWOM messages in July 2008 to .50% of all messages last December.
Consumers team up online for better deals
Group purchase, or tuan gou in Chinese, is a phenomenon taking place in the mainland, in which individuals organize online as a group to purchase the same car from the same dealer in order to get a discount. Group purchases, also called team buying, has spread across many categories in China including computers. While there are formal group purchase sites such as Aiche168.com, much of the activity occurs within the top auto BBS forums like Xcar.com.cn.
The typical process will see a netizen post an invitation for others to join a group purchase within a particular model's BBS community, such as the Toyota Yaris forum on Xcar. The invitation will include a QQ group number where interested participants can discuss the details. In the QQ group, a "group leader" will be selected to collect and organize the group's requirements and who will then communicate and bargain with prospective dealers to arrange the final deal.
The group purchase phenomenon demonstrates that IWOM is more than just about influencing consumers purchase decision. It can also influence how they make the purchase.
Within the 159,698 group purchase mentions in CIC's IWOM automotive practice from July-December 2008, three new trends emerged.
1. Fueled by passionate consumers sharing their experience with the car in "homework" posts, the Junjie FRV model from Brilliance China Automotive Holdings, the Chinese partner of BMW Group, is the most mentioned model in group purchase messages with 6,440 message, followed by the Ford Focus and VW's Skoda Octavia model with 6,126 and 5,542 messages respectively.
2. Beijing, which is considered to be the most competitive market for dealers, is mentioned in 29,391 messages near group purchase, which is twice as much as Shanghai with 15,456 mentions and almost three times as much as Guangzhou which has 9,356 mentions.
3. GPS, key and insurance are the top 3 non-model group purchase topics, with 3,802, 3,690 and 2,391 mentions respectively.
Group purchase has become so popular in the past three years dealers often have designated representatives who will track the BBS forums for group purchase opportunities and will join discussions.
While not new, it is still gaining traction, especially since last December, when potential buyers of a Ford Focus engaged in a heated argument and shoving match with a Ford dealership's employees, after the dealer allegedly reneged on a previously agreed-to price. The incident was discussed in BBS forums and recorded and uploaded to Youku.com and other leading video sites. That led to coverage in traditional media and, unsurprisingly, contributed to a significant spike in buzz for Ford and Focus in CIC data.
Marketers struggle with group purchase model
Group purchases also demonstrate the growing power of Chinese consumers. The aggregated opinions from consumers, or earned media, are more powerful than TV spots and magazine ads, or paid media, on the final purchase decision. And a group of 50 customers talking to a salesperson has more combined power than an individual customer.
While dealers may be aware of group purchases, the Ford incident suggests they may need to adapt their methods for handling the process, including communication, customer relationship management activities and competition.
China, perhaps the most social of internet markets, is witnessing a quick evolution. Auto makers must develop a deeper understanding of the trends in order to determine if group purchases should be seen as a threat or an opportunity--and if it is the latter, they must learn how to profit from it.
IWOM is more than chatter. It is reshaping the relationship between brands and Chinese consumers through its power to influence and even changing the way the products are purchased. It can also be a source of strategic intelligence for brands to see how marketplaces are changing. Marketers who lack that willingness to listen to their computers and fail to understand and adapt accordingly may well get left behind.
Sam Flemming is the Shanghai-based founder and CEO of CIC, a social media research and consulting firm in China.
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