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The Sunday Paper – Long Term Effects of Experience during Youth: Evidence from Consumption in China

That tastes formed while young are sticky is not a new observation. I’ve lived away from the U.K. for over 30-years and you’ll still find Marmite somewhere in my kitchen.

What this paper, by K. Sudhir and Ishani Tewari of the Yale School of Management produced in March this year, however adds to the understanding of this phenomenon has significant implications for any company trying to introduce a new product into China specifically and, by implication, emerging markets generally.

Using the China Health and Nutrition Survey that collected data from 8, 000 households from nine provinces over the 20-year period from 1992 to 2011 they’ve been able to get a much more nuanced bead on the Prosperity In Youth (PIY) effect already noted in other studies.

They find not only that persistency effects highlighted in U.S. studies (most notably that seniors consume as much soda in later life as when young) apply to China but more importantly that the PIY effect has two components. The first being the obvious direct effect but the second being the less intuitive one that growing up around prosperous people can predict consumption choices later on. In fact, this effect of seeing consumption but not being able to participate, is a stronger predictor of behavior later in life than the direct PIY effect.

The lessons for marketers of new products (and investors in those hopefuls) are summarized thus:

Don’t underestimate the importance of heterogeneity in a large country. The paper points out people in Jiangsu are twice as likely to want to consume coffee as peers in Guizhou.

Target young people who can’t afford your product if economic momentum in the locale suggests they may be able to afford the product later on.

Once you’ve snared a cohort, follow them, they’ll be consuming your product for a very long time.

Breakfast time for me now. Toast and smear of Marmite perhaps?

You can access the paper in full via this link Long Term Effects of Experience During Youth and if you just want to jump to the Conclusion it starts on page-25.

Happy Sunday.

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