Operational methodology for sinking markets

Some people say that the sinking market is really that amazing? Is it true that the growth of lower-tier markets is higher than that of first- and second-tier markets?

Some people also asked that they have heard the term "small town youth" for a long time, so what is the difference between them and the youth in first- and second-tier cities?

The above issues will be discussed in detail in "Dedomaining".

In this sharing, " The evolution of new normal operation methods " is the core content.

In the sinking market, how do those companies, big or small, that have been successful or are on the way to success operate? The last part is that New Hope Space is everywhere . I personally believe that the sinking market is the area most likely to have great development in the future.

The world is changing: downward growth

Why is the area of ​​sinking markets becoming more and more a topic of discussion?

First, let's look at the Source data of QuestMobile GROWTH user portrait tag database in March 2019. There are 618 million users in the sinking market, accounting for 54.3%, while there are 600 million non-sinking users, accounting for 45.7%. The data shows that the number of sinking users has obviously exceeded the number of non-sinking market users, and the incremental rate of sinking users is also higher than that of users in first- and second-tier cities. Therefore, the proportion of sinking users in the entire Chinese Internet users will become higher and higher, and will become increasingly similar to our population proportion .

In addition, we can see that not only is the proportion of sinking users becoming more and more active, but through data research on Taobao and Tmall, the growth rate of 77% of consumption categories in the sinking market has exceeded that of first- and second-tier cities, indicating that the consumption willingness and consumption demand of sinking users are also increasing. However, the monthly online spending of young people in lower-tier markets and small towns is still lower than that of young people in first- and second-tier cities, and their proportion is much higher than that in first- and second-tier cities, reaching 42%.

In terms of entertainment time, young people in small towns spend 3.74 hours online for entertainment every day, which is much higher than that of young people in first- and second-tier cities.

Small town youth: Who are they?

Are young people in small towns more willing to consume online? Let’s analyze the factors that led to this in detail:

Comfortable life, less financial pressure, close relationships with family and friends, more consumption space, more entertainment time, and obvious return flow

1. Easy life

For young people in first- and second-tier cities, many of them are burdened with mortgages and car loans; everything they do every day is to repay the loans. But for young people in small towns, it may be different, because real estate in third- and fourth-tier cities is very cheap, and some people have no or very few mortgages. The proportion of young people in small towns who own cars reaches 67%, which is higher than the 57% of young people in first- and second-tier cities. And many of them are purchased in full rather than taking out loans. At the same time, 64% of young people in small towns work less than 8 hours and have relatively stable jobs, such as civil servants in state-owned enterprises and teachers, and they do not worry about unemployment or layoffs.

In addition, small industries are very developed in small towns. There are many large chain supermarkets in first- and second-tier cities, which have squeezed out small supermarkets, small shops, and small individuals; but in third- and fourth-tier cities, these small industries are still the main force.

2. Less economic pressure

The economic pressure on young people in small towns is indeed relatively small. Although their average monthly income is only 3,730 yuan, their monthly expenditure is 309 billion yuan. The monthly income of urban youth is much higher than theirs, at 5,401 yuan, while their monthly expenditure reaches 6,230 yuan. Because of expenses such as rent, transportation, and loan repayments, although the monthly income is high, the expenses are also relatively large, and the pressure on urban youth is very high.

3. Close relationships with relatives and friends

In addition, there is a very different point between small town youth and urban youth, that is, small town youth have very close relationships with their relatives and friends. 70% of young people in small towns still live with their parents even after getting married; because their circle is relatively small, they are more dependent on and trust their relatives and friends.

4. More space for consumption

The consumption of young people in small towns is actually quite large, with 34% living paycheck to paycheck, and taking out loans mainly for daily consumption; the proportion of people born after 1985 and 1990 is higher than that in first- and second-tier cities, and more young people are concentrated in third- and fourth-tier cities.

In addition, their per capita consumption growth rate is also very high. The daily loan usage is not used for fixed assets such as houses and cars like urban youth, but more for daily consumption.

5. More time for fun

Young people in small towns also spend a lot of time on entertainment, with an extremely obvious growth in long videos, shopping, music, short videos, information, games and other areas, which is much higher than the usage time of urban youth; because they have more time.

6. Obvious backflow

In addition, their return trend is very obvious. 63% of young people from small towns have lived in first- and second-tier cities; compared with 9.4% of young people from first- and second-tier cities in 2018, they have returned to the sinking market. In fact, in 2020, more young people from first- and second-tier cities will return to small towns, and at the same time, they will bring the lifestyles and consumption patterns of first- and second-tier cities back to the third- and fourth-tier cities' sinking markets.

Small town youth: the process of escaping from the domain

The user portrait of young people in small towns is not static. If it were static, the market would not be so important. The reason why the sinking market is so important is that their consumption concepts and consumption levels are still continuing to improve, which is what we call "de-domaining."

Deterritorialization in progress: Deterritorialization is a sociological concept, which refers to the fact that people’s social relations transcend their regional connections and enter a broader realm.

They were originally more in the regional circle, and all the information they obtained came from the people around them. Now they are increasingly influenced by mobile Internet, and their pursuits are more similar to those of urban youth in first- and second-tier cities.

Then we will introduce how they are off-domain in four aspects.

1. More and more people are making purchases online, not only spending money to buy goods, but also spending time to enjoy entertainment.
2. While consumption is increasing, the quality of consumption is also improving. Young people in small towns are pursuing consumption quality that is increasingly consistent with that of young people in first- and second-tier cities.
3. Through the field of tourism, we can see that the equal rights of young people in small towns are becoming more and more progressive, just like the urban youth in first- and second-tier cities.
4. Consumption based on symbols is also a very important characteristic of young people in small towns. Their symbolic consumption is very strong, and they are more easily influenced by Internet IPs, the same products of Internet celebrities on Douyin, and so on.

Online consumption, quality improvement

1. Eliminate barriers to online consumption

We can see that overall online consumption has been penetrating deeper into the grassroots and its influence has been growing, and online consumption has eliminated many of the original barriers. Before there was online shopping, it was inconvenient to buy many things in third- and fourth-tier cities; now with e-commerce, they can basically enjoy the convenience of online shopping like us.

For example, take snowboards. We believe that these are entertainments enjoyed more by young people in first- and second-tier cities. However, according to data from Tmall, the consumption of snowboards in third- and fourth-tier cities has actually exceeded that in first- and second-tier cities in terms of both absolute numbers and average values.

In addition, as entertainment has become fully online today, young people in small towns spend 35% of their online time in the entertainment field. Because they have plenty of time, and there are many people working in state-owned enterprises who work 8 hours a day and have a leisurely time after get off work. After work, many people spend their time picking up their mobile phones and watching short or long videos on them.

2. Entertainment is fully online

There is another feature that is quite different from ours. After watching short videos, the consumption rate reached 31.8%, which is far ahead of the 20% of our metropolitan youth. You can imagine when we go to catch up with new dramas. Would you buy movie tickets after watching the movie at home? The proportion should be very low, but in the third and fourth tier markets, its influence is far greater than ours.

3. Consumption goes beyond the surrounding living circle

In addition, their consumption has gone beyond their surrounding living circles. Recommendations from acquaintances used to be their biggest influencing factor, but now it has been reduced to the second determining factor and is still slowly declining. The number of users of social apps such as Weibo and Xiaohongshu, as well as products that focus on e-commerce or consumer decision-making, is increasing in third- and fourth-tier cities. The user growth of Weibo and Xiaohongshu in recent years was basically achieved in the sinking market.

Quality consumption, pursuit of equal rights

While continuously expanding online consumption, they are also pursuing higher consumption quality. For example: let’s look at the four items of dried fruits, beverages, women’s clothing, and mobile phones separately.

This is also the real consumption data that can be obtained through Tmall and Taobao.

The sales of high-fat dried fruits are declining significantly year by year, but at the same time, the sales of fresh fruits and vegetables are increasing significantly.

Another one is beverages with "alcohol", which achieved rapid growth in 2018. This is because users in the lower-tier markets would equate this beverage with “thinness”. They are also moving further away from some high-sugar drinks and considering more whether these drinks can bring them more health . Tea drinks like Oriental Leaf, which are popular in first- and second-tier cities, were originally not drunk by anyone in third- and fourth-tier cities. However, in the past two years, they have gradually become a beverage that they enjoy.

In addition, the beauty brands in third- and fourth-tier cities were originally very mixed, especially some relatively low-priced brands and less well-known brands with strong regional characteristics, which were also very popular in third- and fourth-tier cities. But now, the sales of first-tier beauty brands in rural markets are gradually increasing, and the growth rate is much higher than those of miscellaneous brands .

Another interesting point is that the previous impression of people in third- and fourth-tier cities was that their favorite phones were vivo and OPPO, because vivo and OPPO have very good offline channels; but through a survey conducted by Tmall in 2019, it was found that the mobile phone brand that people in third- and fourth-tier cities want to own more is Huawei, because the big bosses in big cities are all using Huawei phones. The proportion of mobile phones he expects to replace is as high as 73%.

Quality tourism, breakthrough space

In addition, the tourism market is also very broad. For the sinking market , the room for tourism expansion and their willingness to improve tourism quality are very strong, and the tourism penetration rate is also very high .

The proportion of people who have traveled in the past year in the sinking market reached 76.5%, which is not far from the 81.9% of first- and second-tier cities. Where is the biggest gap? The proportion of domestic travel exceeds 50%, and more people still drive a car to a tourist attraction within the province, which is still the mainstream. Overseas travel only accounts for 4%, which is 1/3 of first- and second-tier cities, while first- and second-tier cities can probably reach around 15%.

But their tourism demand is very strong, increasing by more than 85%. In the second half of 2019, we conducted an offline interview and asked them whether their investment in tourism in 2020 would be greater than in 2019. 85% of the people said it would definitely be more. Moreover, their demand for overseas travel is also growing significantly, especially among younger young people in small towns, who are more eager to travel abroad.

Currently, 70 to 80 percent of users in China have never been on a plane, and many users have not yet enjoyed the experience of traveling to first- and second-tier cities. There is huge room for development in this area.

In addition, 56% of young people in small towns choose to travel by car. While they are traveling by car, they are also driving the development of industries like Jiaqing daily chemicals and clothing.

Symbolic consumption, identity transformation

Another characteristic of small town youth that brings about differences in consumption is their symbolic consumption.

There are many listed here, such as customized screens, snacks of the same IP, snacks of Internet celebrities, and snacks of the same Douyin. I believe that everyone will see them when watching videos on Douyin. I think the proportion of purchases after watching them should be very low. However, according to research by Taobao and Tmall, young people in third- and fourth-tier cities have watched short videos and bought the same snacks after seeing their favorite Internet celebrities’ recommendations. The proportion is very high, which is more than twice that of urban youth.

Including IP-the same snacks and Douyin-the same snacks, their penetration rate is very high, with an increase of more than 150%, which is a situation that is difficult to encounter in first- and second-tier cities. Because there are too many areas of interest, too many favorite stars, too busy work, and too much pressure in life, it may be difficult to have such a strong sense of immersion in a short video or a long video.

So they are facing a situation that seems contradictory but also somewhat unified, they are both trendy and nostalgic - they miss the feeling of the original green mountains and clear waters, but they also like to pursue trends and pursue the same content and dramas as young people in big cities.

The slogan at that time was " Watch the same dramas and pull the same weeds ", and never fall behind.

The pursuit of products, commodities, services, and content is converging, and although there is actually a certain time lag for this convergence - for example, if young people in first- and second-tier cities watch a drama and go to buy a celebrity's product, it may take another two or three months for that product to become popular in second- and third-tier cities - this time lag is now shortening rapidly.

New Hope: Space is Everywhere

There is still a lot of room for growth in the sinking market, and part of it can even be considered a blue ocean.

The following four areas have great potential: daily consumption, short videos, tourism, and consumer finance.

1. Living expenses

In the general consumer field, products that solve the last mile problem, such as take-out, shopping, and supermarkets, will gradually gather together to become a relatively large product market, and users will develop very strong online consumption habits. Although online shopping may be more expensive, it is convenient, and you are destined to choose between convenience and price. As income levels and quality of life improve, people will become more and more dependent on online consumption.

2. Short videos

Tik Tok and Kuaishou have already achieved a high penetration rate in the short video field. As to why short videos still have development prospects, we can look at what Taobao e-commerce companies are doing: they are doing live broadcasts and short videos in their own native products. We will find that there is still a lot of room for improvement in internal short videos and live broadcasts. Young people in small towns spend more than 35% of their time on entertainment. Stimulating their consumption through entertainment is an effective method that has been explored.

3. Travel

Although the sinking market in third- and fourth-tier cities is still concentrated on domestic travel and self-driving tours, data shows that their desire and demand for tourism consumption is growing, and young people in small towns are increasingly pursuing overseas travel. The sinking market is still basically a blue ocean, and there is great potential for the tourism market.

4. Consumer finance

Nowadays, all young people like to consume ahead of time and borrow money to enjoy themselves. People in first- and second-tier cities tend to spend on large fixed assets, while young people in small towns often spend money as they please and have no pressure to spend every month because they can live with their parents and their daily living expenses are not as high as those in big cities, so they can spend more money to improve their quality of life.

The field of consumer finance is also changing. People who are middle-aged or older basically still focus on saving and are unwilling to borrow money; but young people are different. If we penetrate into their hearts earlier and let them develop the habit of using our consumer finance to consume, then the snowball will get bigger and bigger in the future.

These are the areas that I think have more potential for continued growth in the sinking markets and among young people in small towns. These are some of the contents of the sinking markets that I can think of, observe, and think about. I also hope that it can provide some inspiration to everyone.

Now or in the near future, whether in the field of consumption or content, young people from small towns are getting rid of the label of followers and gradually becoming leaders of their own style.

Author: Qidian College Source: Qidian College