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First-of-its-Kind Study Ranks Digital Competence of Prestige Brands in China

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NEW YORK--(BUSINESS WIRE)--According to a new, first-of-its-kind study released today by NYU Stern, digital competency is the key to success in the world’s fastest growing market, China.

The study ranks the digital competence of 100 prestige brands in China, scoring each brand against more than 100 qualitative and quantitative data points, and is assigned a Digital IQ ranking of Genius, Gifted, Average, Challenged, Feeble or Luddite. The ranking is authored by L2 Founder and NYU Stern Marketing Professor Scott Galloway and NYU Stern Management Professor, dean designate of the George Washington University School of Business and China expert Doug Guthrie.

The study reveals a large disparity in digital competence across prestige brands in China. While 80 percent of brands in the study maintain a Chinese language site, only 10 percent are e-commerce enabled in the worlds’ second largest luxury market.

“Prestige brands can do just ok everywhere else and still create enormous shareholder value by getting one thing right: China,” said Professor Galloway. “China has 384 million internet users, more than the U.S. and Japan combined, and 80 percent of Chinese luxury consumers are under 45. In addition, in 3 years the number of internet users in China will explode to over 800 million. Tapping into the enormous online market in China could define success or failure in the prestige industry over the next decade.”

The top 10 brands in the Digital IQ Index include:

1. Lancôme
2. BMW
3. Esteé Lauder
4. Audi
5. Clinique
6. Mercedes-Benz
7. Clarins
8. Acura
9. Cadillac
10. Wuliangye

The ranking and observations can be found at www.l2thinktank.com/chinadigitaliq.

Other key study findings include:

  • Selling is Knowing: The ten brands that are e-commerce enabled have Digital IQs 50 points higher than brands that are not transacting online. Beauty and Skincare brands are the earliest to embrace e-commerce, and six of the 13 brands in the study sell online in China.
  • Digital Disparity: Twenty of the brands in the study do not even maintain a Chinese language version of their brand site. Among brands categorized as Challenged or below, 64 percent lack store locator functionality and 54 percent do not offer email opt-in.
  • Social Mania: Prestige brands elicit thousands of user-generated comments and uploads on popular Chinese social networking sites RenRen, Qzone, Youku and Kaixin001, but most fail to maintain an official presence. Lancôme, Audi, BMW, Dior and Johnnie Walker are some of the few brands that are participating in the conversation.
  • Google, A Distant Second: While local search engine Baidu maintains 62 percent market share, 29 percent of prestige brand sites fail to be returned in the top three search results for a Chinese brand name search and 21 percent fail to come up in the top three for an English brand name search.
  • Mobile: While many Chinese internet users have transitioned from no internet to mobile internet only 42 percent of prestige brands maintain a site that loads on a smart phone. Only one brand, Shanghai Tang, has a Chinese language iPhone app.
  • Stores do not equal Brand Equity: There is no correlation between Digital IQ and a brand’s retail footprint in China. Furthermore, analysis of the 28 fashion brands indicates that buzz on social networking sites and brick and mortar expansion in China prove unrelated, suggesting building stores is not the only way to generate brand awareness in China.


About L2

L2 is a think tank focused on marketing innovation for prestige brands. Founded by NYU Stern Professor Scott Galloway, L2 helps brands navigate the changing marketing landscape through events, research and advisory services. www.l2thinktank.com

About New York University Leonard N. Stern School of Business
New York University Stern School of Business, located in the heart of Greenwich Village, is one of the nation’s premier management education schools and research centers. NYU Stern offers a broad portfolio of academic programs at the graduate and undergraduate levels, all of them informed and enriched by the dynamism, energy and deep resources of the world’s business capital.

Contacts

NYU Stern
Rika Nazem, 212-998-0678
rnazem@stern.nyu.edu
or
Scott Galloway, 917-567-2841
scott@stern.nyu.edu


June 16, 2010: http://www.businesswire.com/portal/site/home/permalink/?ndmViewId=news_view&newsId=20100616006413&newsLang=en