- Branding

Digital IQ of Prestige Brands in China

A unique report from L2 and Labbrand

The huge possibility of retail companies in China isn’t any surprise to anybody-least of prestige brands. After many years of annual double-digit growth, China’s booming economy leaves millions of consumers seeking new methods to spend their disposable earnings. In ’09, China grew to become the earth’s second largest luxury market behind Japan, surpassing the U . s . States.

Despite the fact that these trends were recognizable a minimum of twenty years ago, many prestige brands continue to be playing catch-in this different and quickly altering marketplace. With 384 million online users-greater than the U.S. and Japan combined-a lot of your competition for purchasers and brand loyalty will have out online. An investment prestige brands make in their own individual digital competence might be a deciding element in remarkable ability to outlive and thrive in China, and will probably become more and more essential as the marketplace matures.

What’s Digital IQ and just how could it be Measured?

In This summer of 2010, L2, a think tank for prestige brands, partnered with Labbrand to determine and rank digital competence of 1 hundred prestige brands in China[1]. The measurement methodology, “Digital IQ,” gives each brand a combined score according to website translation, functionality and content, internet search engine optimization (Search engine optimization), social networking performance, and internet marketing efforts

Digital IQ Ranking: China

A Closer Inspection in the Figures

These rankings reveal several interesting trends and correlations along with other available metrics. For instance, the eight fashion brands measured show a powerful positive correlation (.72) between Digital IQ and brand value as reported in BusinessWeek’s annual 100 Best Global Brands report[2]. For that six automotive brands measured both in studies, the correlation can also be strongly positive, at .61. These correlations don’t always imply that growing Digital IQ guarantees an improved brand value. Nonetheless, the effectiveness of these correlations shows that the connection between brand value and Digital IQ isn’t arbitrary. It’s possible that valuable brands are more inclined to have greater brand awareness, and for that reason enjoy greater returns on a single or smaller sized investments in digital. Alternatively, valuable brands might be more prone to have greater marketing budgets and invest more heavily in digital media.

Prestige brands using the greatest Digital IQ scores are breaking from the pack. In mature markets, measurements of digital competence show prestige brands tightly bunched together-

leaders don’t achieve significant separation from brands with average Digital IQ scores. However in China, digital Geniuses are not only within the lead-they are winning big. For instance, the 5 brands within the Genius category boast an average Digital IQ greater than 25 points greater compared to the following five brands. Compared, brands rated six through ten show an average difference of just 13.2 points when compared with individuals rated eleven through 15. Digital leaders start “moving away” in an inflection point around Digital IQ 120. Brands at the end finish from the ranking demonstrate an identical but opposite effect-they lag considerably behind brands with average Digital IQ scores.

Fifty-nine percent from the luxury brands in study regarding Digital IQ in China were also measured inside a separate study from the Digital IQ of luxury brands within the U.S., dated September 2009. Brands measured both in indices shown a correlation of .58 between their Chinese Digital IQ as well as their U.S. Digital IQ, suggesting that digital competence in a single market could be leveraged in another. Beauty brands Lancme, Clarins, and Este Lauder show the finest positive disparity between Chinese and U.S. Digital IQ. This means their recognition from the chance to construct brands in China through digital media. Meanwhile, champagne brands Veuve Clicquot, Mot & Chandon, and Dom Prignon demonstrate the biggest negative disparity-not one of them support a Oriental form of their brand site. Negative disparities may talk to lack of ability or negligence when converting digital competence from West to East.

About Chad Harrison

James Harrison: James, a supply chain expert, shares industry trends, logistics solutions, and best practices in his insightful blog.
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