Sales Experience In China-010 Intensified Segmentation Among Chinese Rental Customers

1. Manufacturer's customer source

In the current economic and market environment, for well-known reasons, the willingness of customers (especially rental companies) to purchase new equipment has significantly decreased. This has led to a more pronounced segmentation within the customer base. For most manufacturers, market activity budgets are limited, so it's crucial to accurately identify and target their customer segments. By focusing on the right audience and concentrating resources, manufacturers can aim for "one-hit breakthroughs" to trigger follow-up purchases from other customers.

In a favorable economic climate, when optimism about the future prevails, companies tend to spend future earnings. For instance, through financial leasing, an Audi dealership could attract some of the smaller customers typically associated with the cheaper Aoti brand. In times of economic prosperity, customers of lower-end brands like Aoti are willing to spend on higher-end products like Audi because they feel financially secure about the future. However, when the economy is struggling, and there is uncertainty about future income, customers who typically purchase lower-end brands like Aoti become more cautious with their spending. Even if they visit Audi's showroom, they are unlikely to make a purchase. This illustrates that in poor economic conditions, customers with limited financial resources cannot afford to move "upmarket," while wealthier customers are still able to "downgrade."

For major brand manufacturers, in a good economic environment, they can capture customers from mid-to-small brands. However, in times of economic downturn, if large brands fail to anticipate market conditions in advance and adjust their prices and business terms accordingly, they risk losing a portion of their customer base due to missed opportunities. This is certainly not a scenario that large brand manufacturers want to face.

In times of economic decline, large brand manufacturers need to proactively predict market trends and adjust their prices and terms. Although this may result in short-term reductions in profit margins, it helps to prevent customer loss in the long term. Customers who have long-term relationships with large brands are generally very clear about their needs and preferences, and they are less likely to abandon their chosen brands. These customers may not have the same level of foresight or information as manufacturers, but as a risk mitigation strategy, they may "temporarily downgrade" their choices during economic downturns. However, this behavior is typically seen as a temporary measure driven by financial necessity.

Taking the automotive market as an example, although there is no direct competition between Audi and Aoti, or between Porsche and Baozitai, during special economic conditions, retaining existing customers and acquiring new ones becomes crucial for manufacturers. In a market economy, customers are the lifeblood of any business. Manufacturers must continuously understand customer needs and market changes to adapt their strategies accordingly and remain competitive. Even though purchasing willingness tends to decline during difficult economic times, this does not mean that businesses should abandon their existing customer base. On the contrary, manufacturers should work harder to understand customer demands and market changes, offering better services and products to retain customers and maintain their market position.

2. Purchasing Logic of Aerial Work Platform (AWP) Rental Companies

Domestic brand manufacturers often use the quality of foreign, well-established brands to compare with their own products during the sales process. By leveraging the influence of these global brands, domestic manufacturers aim to enhance the perceived value of their own products.

Based on market observations over the past few years, the following conclusions can be drawn:

In 2021,despite being the second year of the pandemic, the external market conditions and economic environment were relatively stable. In such conditions, the core purchasing logic for Aerial Work Platform (AWP) rental companies was as follows:

• For similar price points, the key differentiating factor for rental companies was?product quality. The company that offered better quality at a comparable price point emerged as the winner.

In 2022,the primary challenge was the pressure on cash flow. With a deteriorating external market environment and economic conditions, medium and small rental companies began to prioritize?lower cost?when product quality was roughly similar. Therefore, the purchasing logic for medium and small rental companies shifted:

• For similar quality, the company that offered the?lowest price?was the preferred choice.

By mid-2022, many medium and small rental companies faced a decline in cash receipts, with outstanding debts accumulating month after month. This exacerbated their financial strain, leading to mounting debt, which many smaller rental businesses struggled to manage. Some of these companies began to "lie flat"—i.e., reducing their operations or ceasing to make further investments. Additionally, the ongoing impact of pandemic control measures weakened the growth rate of the AWP rental market. In this challenging environment, medium and small businesses that still had purchasing needs began to place more focus on the?product's overall value proposition.

For these businesses, the?product's performance—including factors like durability, operational efficiency, and overall reliability—became critical factors in their purchasing decisions. The specific aspects of product performance that are most relevant to these customers can be found in the final table of this series of articles.

The logic above is based on the state of the economy. When the economy is doing very well, customers will start to think about the "brand ratio"; In the case of downward economic development, customers will start to consider "cost performance".