Source | Liang Jiangjun ID | liangjiangjunisme

The real China is hidden in lower-tier markets.

China's third-tier and below cities account for 70% of the total population. On the land of 300 prefecture-level cities, 2,800 counties, 40,000 townships, and 660,000 villages, about 1 billion people consume and grow here. So many "invisible champions" in lower-tier markets have emerged, and so many research reports on lower-tier markets have been published, but to this day, we still have deep misunderstandings about this vast land. For example, many internet apps, when showing off their "muscles" to investors or clients, still emphasize their share of first- and second-tier users. For example, many people, at the start of their entrepreneurial journey, still prefer to anchor on first- and second-tier markets first, then try to penetrate lower-tier markets. In my view, these are all wrong approaches. From the first day of entrepreneurship, if you can anchor on a broader market, don't just focus on the so-called high-net-worth market. If you can anchor on the minds of 1 billion people, don't just think about the pockets of a small group. I believe the prerequisite for doing well in lower-tier markets is: don't use the term "lower-tier market" to define lower-tier markets! The term "lower-tier market" is just a condescending label used by people in first- and second-tier cities to look down on those outside. It's an irresponsible label. Because the lower-tier market is a very rough concept. Prefecture-level cities, counties, townships, villages, south, north, coastal, inland—people in different regions have vastly different lifestyles and consumption habits. Regional differences are not just about south vs. north; the difference between Qiqihar and Mudanjiang in Heilongjiang is also significant.

If you are a chain barbecue brand, entering Qiqihar and entering Mudanjiang require different strategies. Qiqihar is a barbecue city in the northeast; locals are accustomed to iron-plate barbecue, and competition among barbecue restaurants is especially fierce. To open a barbecue restaurant in Qiqihar, you need to re-examine your advantages and find a gap in the market.

The real name for lower-tier markets should be "graded markets." The foundation of doing well in lower-tier markets is to design marketing strategies that are tailored to each region and local conditions.

This article, while respecting differences, attempts to sort out the commonalities of lower-tier markets and find the "greatest common divisor" in them. This 10,000-word article contains 11 insights about lower-tier markets.

*I don't agree with the definition of "lower-tier market," but for the convenience of understanding, the article will continue to use the term "lower-tier market."

The "quality at low prices" model doesn't work well in lower-tier markets Many people think the biggest obstacle to entering lower-tier markets is price. Companies with this mindset often return in defeat, such as Heytea's Hey Xiaocha and JD's Jingxi Pinpin.

Many brands that opened markets in first- and second-tier cities with "quality at low prices" can offer low prices because they have large customer traffic in those cities. Some entrepreneurs who get investment in first-tier cities, when entering an industry, commonly rely on user subsidies and low prices to quickly acquire customers, generating huge order volumes instantly. This order volume, in turn, reduces supply chain production costs. For factories, the more orders, the lower the cost. The lower the cost, the cheaper the product. The cheaper the product, the easier it is to win a larger market, ultimately forming a positive business cycle. But in small towns, many stores don't have such large customer traffic, so big brands can't use this method to get low enough prices. Moreover, many first-tier brands that emphasize cost-effectiveness base their cheapness on brand premium. For example, Uniqlo: you're an international brand, you have big stars like Chen Kun and Ni Ni as endorsers, and your stores are in the most luxurious malls in city centers, so a 69-yuan pair of leggings seems especially cheap to people in first- and second-tier cities. But in lower-tier markets, Uniqlo's brand awareness is far lower than HLA and Septwolves. A 69-yuan pair of leggings isn't cheap; it's price gouging. Let's look at a chain brand called "Chao Yi Ku" (Tide Clothing Warehouse). They have many stores in lower-tier markets, and their clothing prices are generally below 20 yuan. Obviously, Chao Yi Ku directly crushes Uniqlo on price. Not only that, but even the quality that big brands pride themselves on often can't match local players in lower-tier markets. Many chain restaurants often fail when entering lower-tier markets because they can't beat the mom-and-pop shops. The dishes at mom-and-pop shops might be brought from the boss's third uncle's farm in the countryside, and the chicken might be free-range from their hometown. Not only is it fresh, but there's no middleman taking a cut. For all brands that focus on cost-effectiveness, their lethality is immediately halved after entering lower-tier markets. Cheapness is just the ticket to enter lower-tier markets, not a killer move.

Moreover, each region in lower-tier markets itself has different consumption stratification. There are plenty of "rich people" in these areas; this group is the main high-spending force in lower-tier markets, but their consumption concepts differ from white-collar, gold-collar, and boss classes in first- and second-tier cities. If you walk down a county town street, you'll see that Mercedes, BMW, and Cadillac are not uncommon. Some people drink tea costing one or two thousand yuan per jin; some people charge 10,000 yuan membership cards at beauty salons at once. This shows that real high consumption does exist in lower-tier markets and is not an isolated case. But who are the high-consuming classes in lower-tier markets? What moves them? These are things you don't understand.

More willing to consume for others' approval If you stroll down a county town's commercial street, you'll likely see knockoff brands from time to time. They copy the brand names and packaging styles of first- and second-tier big brands, and even their products and services are almost identical, just cheaper. Even knowing they're knockoffs, these stores still have plenty of customers.

Based on these phenomena, many people think people in lower-tier markets don't care much about brands. I think this is a very wrong perception. People in lower-tier markets also value brands, but their understanding of brands differs from that of people in first- and second-tier cities. I believe the lower the market, the more brand equals big brand. For some consumers in lower-tier markets, brand represents status and reliability. But for first- and second-tier users, brand doesn't equal big brand; brand is an expression of personality and taste, a choice of values. For residents in lower-tier areas, if they buy HLA instead of MUJI, it might be because they think HLA has better quality. But for residents in higher-tier cities, they buy MUJI instead of HLA because MUJI represents their life philosophy. This difference arises because lower-tier markets are acquaintance societies, where mutual influence is deeper and consumption concepts tend to converge. In first- and second-tier cities, consumption and lifestyle choices are diverse; often there's no so-called "best," only what suits you. Take buying clothes: if you wear LV or Chanel while shopping on Sanlitun Road, others won't necessarily think you have good taste. In everyone's eyes, being covered in famous brands might equal materialism or the daughter of a "coal boss." True taste is niche and not clashing with others; it's a comprehensive consideration of brand and styling. In an environment with a single consumption concept, you might consume because of others' approval. In a diversified consumption environment, you're more likely to pay for your own preferences. In Beijing, the down jacket brand "Canada Goose" was very popular a few years ago, but when people wearing it started clashing everywhere, everyone began to stuff their goose jackets into the closet to gather dust. But in a county town, the situation might be completely opposite. If a few wives of section chiefs in a residential compound wear a striking branded coat, then all the women in the compound want to get one. Because if others have it and you don't, it often means you're "inferior." In Beijing, Shanghai, and Guangzhou, people pursue "what others don't have, I have." In small towns, people often pursue "if you have it, I must have it too." In a county town, a person might drive a BMW worth six or seven hundred thousand yuan but wear 19.9-yuan loungewear; use a 5-yuan trash can while spending thousands of yuan treating friends to dinner at a big restaurant; on a 20,000-yuan desk, there might be a box of "Xin Xiang Yin" tissues. Users in lower-tier markets don't not value brands or willingly buy counterfeit goods; they care about brands in certain categories and don't in others. Generally, in categories related to "face," lower-tier market users especially value brands and are more willing to pay high prices. For example, high-end hotels, famous cigarettes and liquors, and big-name cosmetics. It's worth mentioning that for furniture, people in lower-tier markets place special emphasis on brands. Cities like Beijing, Shanghai, and Guangzhou are societies of strangers; your home rarely has outsiders, so your home is a private place for you, and your decoration is more for pleasing yourself. Lower-tier markets are acquaintance societies; guests often come to your home, and people there are more likely to decorate their homes for face needs. The size of the TV in the living room, the brand of the sofa, the bookshelf—these are things they especially value. If you want users in lower-tier markets to willingly pay a high premium for your brand, you need to study the "face business" here. For example, the wedding business is done completely differently in higher-tier and lower-tier markets. In higher-tier markets, the core is to create style and customize the ideal wedding according to the client's needs. But in lower-tier markets, whether the wedding is grand is crucial. Weddings in lower-tier markets still feature ceremonies that have disappeared in higher-tier markets, like motorcade parades. People also especially value which influential people attended the wedding. If you can, within the same budget, hold a grand wedding that makes townspeople talk about it, your brand might become an instant hit.

Small-town youth are not the main consumers in lower-tier markets Some reports say small-town youth are the future main consumers in lower-tier markets. In my view, this is a false proposition.

Lower-tier markets suffer severe population outflow. Most youth from counties, towns, and villages are scattered in major first- and second-tier cities, either working or studying. For most of the year, a small-town youth from a working-class family might be Mike in a Beijing, Shanghai, or Guangzhou office building, or the third child in a dormitory, only becoming "Dapeng" to relatives during the few days of Chinese New Year when they return home. Even if that small-town youth had poor grades, couldn't get into college, or couldn't squeeze into a big company, they might still choose to work away from home, perhaps at a Foxconn factory or as a delivery rider in a first-tier city. Those who stay in lower-tier markets year-round are mostly middle-aged, elderly, and children. Young people are just "wanderers" in lower-tier markets. The small-town youth who truly stay in their hometowns are extremely polarized: one type is those with some family background who can enter the local system. After finishing university elsewhere, they usually return to their hometowns to work in banks, power bureaus, schools, or take over family businesses; they belong to the local "rich second generation" group. Another type is rural kids who often drop out of school and can't rely on academics for a future, but with skills or physical strength, they've fought their way to the city. For them, that's already a kind of life victory. Those who truly live in lower-tier markets long-term are actually middle-aged, elderly, and children. Small-town youth are just a small fraction; they're on the fringes of lower-tier markets and can hardly become the main consumers. The main spending power can't be the elderly either. Although China's society is gradually aging, most Chinese elderly still aren't willing to spend money on themselves. The truly main consumer group in lower-tier markets is the mature men and women aged 35-50. This group is mostly the local backbone of society, with money and leisure. Their money goes to social interactions, children's education, filial piety to the elderly, and daily living expenses. If you capture them, you've essentially captured half of the lower-tier market. Among these middle-aged people, men usually earn the money, and women spend it. Except for big-ticket items like cars and houses, mature women control almost all household income. They spend most of it on children's education, daily life, and making themselves beautiful, occasionally buying their husbands a belt when in a good mood. Men's major spending revolves around socializing, such as business banquets and daily gift exchanges. If you want to do well in lower-tier markets, you must understand who holds the consumption initiative there. Win them over, and you might be able to grow your business in lower-tier markets.

Thinking "geographic arbitrage" is the way to open lower-tier markets The theory of geographic arbitrage was first proposed by Alexander Tamas, a partner at Russian investment firm DST. Simply put, it's about exploiting information asymmetry between different regions to gain profit.

This theory is commonly used by Chinese internet companies. Baidu initially learned from Google; Alibaba saw eBay's success and replicated Taobao. This leads many entrepreneurs to believe that business models validated in first- and second-tier cities can be simply modified and replicated in lower-tier markets. Many projects that just became popular in first- and second-tier cities, when people think they're mature and migrate them to lower-tier markets, end in miserable failure. For example, script murder games, cat cafes, blind boxes, and Xiabuxiabu... These products, highly sought after in first- and second-tier cities, get hit with a dull thud when entering lower-tier markets. Especially Xiabuxiabu: you might think it's very suitable for lower-tier markets. Because Xiabuxiabu's average order value is low, it's mainly product-driven, doesn't emphasize service, and the whole model is very light. They thought opening lower-tier markets would be smooth, but they actually face great resistance. Xiabuxiabu can thrive in first-tier cities because first-tier people's lifestyle emphasizes efficiency, and interpersonal relationships are more distant. In an environment without disturbance, and with cheap products, customers feel at ease. So, the "dining alone" scenario is valid. But in lower-tier cities, "eating out" is still a social activity; the scenario of dining alone almost doesn't exist. Another example: Yuanqi Forest, with its zero sugar and zero fat, became popular in first- and second-tier cities, but people in lower-tier markets think it has no taste and isn't a drink. In counties and villages, many people still buy push-up bras because they shape better; they think wire-free, size-free bras are low-end products. People in lower-tier markets have vastly different lifestyles, consumption habits, aesthetics, and even perceptions of the same thing compared to first-tier cities. If you try to directly transplant mature business models from first-tier cities to lower-tier cities, it often fails. That's the first reason geographic arbitrage doesn't work well. Another reason is that information gaps still exist. When a big brand succeeds in first- and second-tier cities and wants to enter lower-tier markets, you'll find your brand power isn't as strong as you imagined. Although everyone says the internet has flattened the world and eliminated information gaps, under China's 9.6 million square kilometers, the information gap between regions is far larger than you think. I have a friend who wanted to choose a high-end furniture brand for his villa. In our minds, furniture brands worthy of a villa are at least HUA YI SPACE or Rui Chi. But when my friend chatted with his brother in a county-level city in Heilongjiang, his brother asked in surprise, "Why not buy Suofeiya?" In the eyes of first-tier users, Suofeiya is a mid-to-low-end brand. But his brother thinks Suofeiya is a high-end brand. Because Suofeiya has a very large flagship store in Harbin. In the eyes of Harbin people, high-end home furnishing brands equal Suofeiya. To write this topic, I had my colleagues ask their relatives in their hometowns what they consider high-end brands. When we asked about menswear brands, we found many peers in third- and fourth-tier cities say the high-end menswear brand is HLA. But HLA, in the eyes of many first-tier city users, is a brand full of "dad vibes." People in first- and second-tier cities often mock the taste of those who wear HLA. I want to say to all higher-tier brands entering lower-tier markets: Don't treat geographic arbitrage as a shortcut; always maintain reverence, and you might be able to understand lower-tier markets.

Personal connections business: Higher-tier de-personalizes, lower-tier emphasizes personal connections To open up lower-tier markets, the most important thing is to understand the personal-connection society there. This is a big difference between higher-tier and lower-tier cities.

For example, people working in Beijing, Shanghai, and Guangzhou rarely give gifts to their leaders. Because white-collar workers in these cities change jobs frequently; after a year, either you leave or your direct leader leaves. But in a lower-tier city, the leader you join after graduation might be your leader for life. Your work, life, and everything will intersect with him in complex ways. This personal-connection atmosphere in lower-tier markets also affects business models. For example, would a brand like Haidilao, with strong brand power, a powerful supply chain, and extreme service, go smoothly in lower-tier markets? I think it wouldn't be too optimistic. First, Haidilao's biggest advantage is good service, but think back to the restaurants in your hometown: the boss and customers almost all know each other, even are friends. They can not only waive the change when you pay, but also help you receive packages and watch your kids for a while. No matter how extreme Haidilao's service is, it can't sever their personal ties. Then there's product quality. In small cities, I can get live fish, prawns, and crabs just caught. If you talk about cost-effectiveness, your prices can't compare with the lamb from a restaurant owner's uncle's farm or the vegetables from his second uncle's garden. In lower-tier markets, personal-connection business isn't just emotional bonding; personal connections can not only ensure product quality and cost prices, but even achieve unexpected extreme service. To do service well, you must understand that the "good service" defined in first- and second-tier cities and that defined in lower-tier markets are not the same: Good service in first- and second-tier cities means getting things done without disturbing you as much as possible. Good service in lower-tier markets means you should help me like a friend. For example, opening a bakery in Beijing, your focus is on making good products and giving staff a standard SOP. But opening a bakery in a lower-tier market, you need to know the names of regular customers, their taste preferences, and occasionally reserve a bread for them... Only then will your revenue rise. But if you do this privately in a first-tier city, customers might consider it harassment. This difference arises because lower-tier markets are small and are acquaintance societies, while first- and second-tier markets are stranger societies. Doing business in first- and second-tier cities, you need to respect others' privacy more and standardize service while maintaining social distance. When doing business in lower-tier markets, you can't just pursue professionalism and standards; you also need to add a human touch, and give more power to franchisees, store managers, and employees in lower-tier markets. To do business in a personal-connection society, you need to cater to it and adjust your service model.

The real "private domain" is in lower-tier markets People in county towns rarely use Didi for rides because it's convenient to hail a cab on the street, but intercity ride-sharing is common. Some young people going from a village to the city for shopping don't take a bus; they take a ride-share that can pick them up right at their doorstep. Many of these ride-share drivers are full-time; after taking orders on Didi and Hello, they directly add users to their WeChat groups. But in first-tier cities, few ride-share drivers take their business to such extremes. Not because they're not hardworking, but because the social forms of higher-tier and lower-tier markets are different. Higher-tier markets are stranger societies; people have USB-like relationships—plug and unplug—and prefer to stay in weak ties. But lower-tier markets are acquaintance societies; if you say where you live, the driver might have family or relatives in the same compound, and everyone defaults to being neighbors or fellow townsfolk. Doing business across platforms seems normal and efficient to drivers. When doing business in lower-tier markets, besides catering to personal connections in service, you also need to pay more attention to private domain operations than in first-tier cities. The advantage of doing private domain in lower-tier markets is: people in first- and second-tier cities spend more time online and are very protective of their attention resources, often blocking groups and moments. But county town people have plenty of free time and often don't need to block anyone. Their social networks are simpler, with less distracting information, so private domain reach is more efficient. Interestingly: when companies in lower-tier markets do private domain, not many use WeChat Work; people prefer to add personal WeChat. But in some big-brand stores in higher-tier cities, like Chanel or Lancôme, salespeople will ask you to add WeChat Work.

Image | User communicating via personal WeChat (left) vs. WeChat Work

This is because big brands need systematic private domain management and use many features of WeChat Work. Especially when employees leave, new employees can inherit old employees' customers with one click. Moreover, customers in higher-tier cities have no psychological barrier to adding WeChat Work, while people in lower-tier cities have no barrier to adding personal WeChat. Because people in higher-tier cities think WeChat Work is just an account, not a person, so they don't worry about privacy invasion. But people in lower-tier cities don't want to add a cold account that's often hard to reach. Using personal WeChat is the way to connect with the personal connections of small cities.

Value offline word-of-mouth rather than online word-of-mouth When it comes to word-of-mouth marketing, people think of Xiaohongshu seeding and Douyin seeding, using KOL content to influence consumer decisions. Many first- and second-tier brands focus their word-of-mouth efforts online. But in lower-tier markets, your word-of-mouth efforts should focus more offline.

Small places have no secrets. Because everyone knows each other, information spreads very quickly. Director Li's colleague might know earlier than Director Li's wife which residential compound Director Li's mistress lives in. Word-of-mouth is essentially the monetization of trust. A skincare cream recommended by a friend is more likely to win your trust than a brand recommended by strangers online. In small towns, everyone has some kind of connection. If your cousin's classmate runs a mother-and-baby store in the county, that store owner's influence might far exceed that of online KOLs. So, in lower-tier markets, store managers are often local KOLs, and all users who have bought products are more likely to become brand KOCs, helping you promote. If in first- and second-tier cities, word-of-mouth marketing leverages influencers' fan relationships, then in lower-tier markets, the core of word-of-mouth is driving acquaintance relationships, letting these people help you achieve user fission through word of mouth. Moreover, because it's an acquaintance society, county town people naturally have class divisions. This class division is very different from so-called online circles; online circles are more interest-based, like anime, Korean wave, or pet ownership. Offline naturally formed circles are maintained by blood ties and income. An official's wife is more likely to become best friends with another official's wife because they often visit each other during festivals, or even live in the same compound and have children in the same class. In the northern Henan region, there's a tea drink brand called Jing Cha Pin Mo that leverages acquaintance relationships in county towns for user fission. They created a separate VIP group for customers with high repurchase rates. VIP customers enjoy a long-term half-price second cup; if they bring friends to buy milk tea, as long as there are no more than five friends, each friend gets a free cup. This referral activity not only makes old customers feel proud but also lets new customers try for free, naturally forming word-of-mouth fission.

First-tier cities segment, lower-tier markets mix In Dongxing Village, Shantou, Guangdong, there's a coffee shop that, despite being in a village, can reach a daily turnover of up to 10,000 yuan. I searched and found that most village coffee shops have daily turnover of less than 1,000 yuan and don't survive a year. This coffee shop thrives in a village because its business model is completely different from first-tier city coffee shops.

For example, its business hours are from 8 a.m. to midnight, while Starbucks opens at most until 10 p.m. It stays open so late because there are few entertainment venues in villages; young people who want a place to sit at night can only come here. Although it's called coffee, it doesn't just sell coffee; it also sells fresh milk tea, tea, lemon tea, sparkling water, and alcohol. This coffee shop's business model, in the eyes of professional brand people, has a very vague positioning. But this approach actually fits the consumption habits of lower-tier markets. Because lower-tier markets have few entertainment venues and consumption choices, their consumption and entertainment needs aren't fully met. This leads to a mix of business formats. Those segmented professional brands might not actually suit lower-tier markets. Still using the coffee industry as an example, Manner's business model thrives in first- and second-tier cities but might be very unsuccessful in lower-tier markets. Most Manner stores are a few square meters, coffee is cheap, and the business relies on delivery and takeout, rarely dine-in. Manner's operating logic targets heavy coffee users in first- and second-tier cities. These people have a habit of ordering a cup of coffee every day and don't seek to savor it in Starbucks. For them, coffee is a rigid need like cigarettes or alcohol. But in lower-tier cities, the loyal coffee group isn't that large; most customers who come to your store probably want to sit in a comfortable environment, order a drink, and relax for a while. During the Spring Festival, my team visited a county-level city in Shanxi and found that tea drink shops like Mixue Bingcheng, Yihetang, and Shanghai Aunt are often deep in structure, with ordering at the front and ten to twenty seats at the back, and almost every store was full of young people.

Image | Shanghai Aunt store in a county-level city in Shanxi

Milk tea and coffee are similar; in lower-tier markets, the venue you provide is as important as your coffee product. With relatively scarce consumption choices, if you can offer more diverse products and services, you can convert coffee users into dining users, milk tea users, or alcohol users. The conversion cost for users is relatively low. In summary: Higher-tier cities are segmented markets; lower-tier cities are mixed markets. When we enter lower-tier markets, while finding our own positioning, we must fully consider what peripheral needs this business might generate. Business in lower-tier markets isn't black and white; it's more likely gray. In Henan, there's a convenience store called Code 7 Days. Although it's called a convenience store, it has a courier station and sells fresh produce like vegetables and fruits. On the surface, it's a convenience store, but in reality, it mixes the daily needs of surrounding residents and can be considered a convenience complex. The reason to fully consider people's peripheral needs is that lower-tier markets seem huge, but when cut into each county and village, the market becomes very small. If you only do a single segmented category, you might not sustain the business.

"Commercial centralization" breeds greater homogeneous competition To write this article, we also did some rural surveys. When my colleagues asked relatives living in county towns what clothing brands they buy and what toy brands they buy for their children, several relatives looked bewildered.

When mentioning buying gold and silver jewelry, they immediately thought of "Lao Feng Xiang" on the county town's commercial street. Lao Feng Xiang is a big brand in county towns and the top choice for many young people buying "three golds" for marriage. But in the minds of higher-tier city users, Lao Feng Xiang is actually a somewhat "outdated" brand. The reason Lao Feng Xiang became a local big brand is that it has an impressive store on the largest and busiest commercial street in the local area. This store makes Lao Feng Xiang look very powerful. People in higher-tier and lower-tier cities have different channels for brand perception. Simply put, higher-tier city users' brand awareness comes more from online advertising bombardment, while lower-tier city users' brand perception is often influenced by offline store formats. Why does offline have a greater brand effect in county towns than online? Because higher-tier cities usually have multiple commercial centers. Beijing, for example, has commercial clusters like Sanlitun, Guomao, Wangfujing, and Zhongguancun. But county towns usually have only one large commercial cluster, where almost all local merchants with some strength gather in this "commercial center."

This gives local people an illusion: brands in the commercial center are big brands; brands outside are small brands. If a brand is still the "most handsome guy" on this prime commercial street, it's likely the big brand among big brands.

Commercial centralization leads to clustering of similar brands.

For example, in some county towns, electric bike sellers often gather on one street, restaurants cluster together, and fertilizer, seed, and even wedding businesses also appear in groups.

On the busiest commercial street in a northern county-level city, there are two Mixue Bingcheng stores, two Zhengxin Chicken Steak stores, two HLA stores, and two Chow Sang Sang stores. How close are these stores? There's a Mixue Bingcheng on the south side of the street, and another Mixue Bingcheng less than 200 meters across the street.

Image | Two Mixue Bingcheng stores on both sides of a commercial street

This location strategy seems baffling to some higher-tier city companies. Because brand location in higher-tier markets often avoids fierce competition. For example, the same mall usually can only have one Heytea and one Haidilao.

But for lower-tier merchants, users are accustomed to going to one place to choose their desired products at once. Same-type and same-brand merchants crowding together indeed face brutal homogeneous competition, but if you're unique and not in the center of traffic, you might not even have a chance to compete.

Products make money, but service wins customers When our editor returned to her county town hometown during the Spring Festival, she found that over 80% of beauty stores there are skincare experience stores. You can buy a skincare set, store the products in the store, and then come for free beauty treatments.

After asking several store managers, she learned that a skincare gift box costs between 450 and 500 yuan. Customers who buy a set can come for 10 skincare treatments, each lasting at least 40 minutes. From an operational efficiency and cost perspective, this seems unprofitable. But several of the stores she interviewed had been operating for six or seven years; even if they changed locations, old customers still followed them. In many lower-tier markets, products and services are more tightly bound. In higher-tier markets, we might focus more on polishing products, pursuing product standardization to reduce backend services and lower operating costs. But for lower-tier markets, you need to cluster with peers to capture county center traffic, and price wars and homogeneous competition among brands are often more intense. The reason users buy from you rather than others might be some "softer" reasons. For example, whether the saleswoman introduces products more carefully and is friendly enough. In lower-tier markets, the human element weighs more in closing deals. For many stores, although products make money, it's service that wins customers. For example, my relative bought an internet TV in her hometown. She often calls the TV seller to ask how to connect the TV to the internet and how to watch member-only dramas. These aren't actually within the seller's after-sales scope, but my relative simply thinks that since she bought the TV there, they should help with all this. The TV seller never says "that's not my job" but patiently tells her how to operate, even visiting to help. In lower-tier markets, for any business with a "service" attribute, the scope of service might far exceed the items in the after-sales manual.

In lower-tier markets, stores often outweigh brand power Brands active in first-tier cities often win trust through online advertising bombardment.

But current internet marketing has led to an explosion of consumption information, making it hard for users to distinguish who's good or bad, strong or weak. For users in first-tier cities, they're more likely to actively search on platforms like Xiaohongshu to find the truth about brands. Compared to users in first- and second-tier cities, people in small towns trust what they see more. A brand that can open an impressive store on the busiest commercial street often convinces people of its strength more than buying three days of splash ads on an app. In our visits, we found that brands like Suofeiya, Lao Feng Xiang, and HLA, which are considered high-end in lower-tier markets, all have very large and impressive stores. But in first- and second-tier cities, it's hard to "show muscles" and demonstrate brand strength through stores. Because land in first- and second-tier cities is expensive, the cost of building a large store is too high. Small towns not only have cheap land but usually only one commercial street, so the cost of being discovered in a large store is low; an impressive store is the best billboard. For example, many people in Qinhuangdao only trust Qu Mei Home Furnishings for decoration. Because Qu Mei has a very large store in Qinhuangdao, which is a landmark building. In everyone's perception, being able to open such a large store proves strength, and the products must be better and more "reliable." Let's imagine: CK and HLA enter the same county-level city. Although CK is a high-end brand, it only has a 100-square-meter store-in-store in a mall, while HLA has a 1,000-square-meter independent large store in the commercial center, plus HLA's advertising bombardment. Would people there think wearing CK is more high-end? Making your store a landmark building is a shortcut to building a brand in lower-tier markets. When you become a city landmark, residents of a small place quickly form a consensus that you're the best locally. This visual experience is far more convincing than 20 days of CCTV advertising.

Conclusion:

Writing this article is to sort out the commonalities of business in lower-tier markets and find the "greatest common divisor" in them. But I still want to remind everyone again: the individuality in lower-tier markets is far greater than the commonality. Only with reverence can you possibly mine gold in lower-tier markets.

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