Retail in Asia

In Markets

Chinese New Year promotions crucial for brands to reach higher sales in HK

Older and wealthier Chinese residents of Hong Kong are much more likely to purchase products and services from Chinese brands that engage in Chinese New Year (CNY) advertisements or promotions than from non-local or Western brands that do not heavily advertise in the run-up to the holiday, according to a new survey.

Brand consulting firm Prophet carried out a survey of 1,000 Hong Kong residents in February 2015 and found that respondents firmly believed that CNY advertisements and campaigns were crucial for local brands to promote a positive brand perception to reach higher sales.

According to the Hong Kong Census and Statistics Department, the CNY months of January and February in 2014 saw retail sales jump 22 percent higher than average months. CNY has always been perceived as "Golden Week" for consumption, and brands tend to heighten their sales, marketing and promotion activities during this period to instil a more festive mood in consumers to capture their attention and money.

The poll results prove perceptions of the strategic importance of CNY promotions: 91 percent of respondents agreed that it is important for a Hong Kong or Chinese company to be active in advertising and promotion before CNY. Fully 81 percent of respondents found that products from a Hong Kong or Chinese company that engaged in advertising and promotion before CNY were more attractive.

Traditional Hong Kong brands such as Wellcome (retail), Maxim (catering), Chow Tai Fook (jewellery) are representative of heavy CNY advertisers. All flagship companies produced festive Year of the Goat advertisements in January or February 2015 that consumers recalled as best in class, whether promoted through traditional or social media channels.

The poll results also reflect that CNY advertisements have a positive influence on purchasing behaviour. Some 82 percent of respondents said they would be more likely to buy from companies that engage in advertising and promotion before CNY. The same percentage cites the seasonal festive mood as a main reason to buy a product in a CNY advertisement or promotion.

The poll also revealed that 79 percent respondents think it is also important for non-local or western companies to be engaged in advertising and promotional activities around CNY. Established brands such as Coca-Cola and McDonald’s have long been exponents of CNY advertisements or promotions in the Asia region. This February they were joined by Apple, which for the first time updated its China website with a new video advertisement in celebration of the Chinese New Year.

"We were curious about the effectiveness of Chinese New Year promotions, and this survey shows that it is very important for brands to participate. The brands that do it best think about how they can tell their own story through the lens of Chinese New Year. They need to do it in a relevant and differentiated way to cut through the noise of all the generic seasonal communications that appear at this time of year", said David Brabbins, Associate Partner of Prophet Hong Kong.

"The other interesting learning was that this is not just for local brands – it’s important for Western brands in Asia to run CNY campaigns that show they are in tune with local sentiment," Brabbins added.