Abstract
Most foreign brands target first tier cities in China, thinking that demand in lower tier cities is unable to support their stores. The case describes how Xtep, a Chinese sportswear brand, succeeded in building a strong position in second and third tier cities by tapping into youth's need for expression through competitive pricing and aggressive sports and entertainment marketing. By targeting customers in less developed cities, it also avoided direct competition with wellknown brands. This case also describes the sportswear industry, the development of second and third tier cities in China and the consumer behaviour of residents. The case requires analysis of some of the changes that are taking place in second and third tier cities in China and their implications for firms.
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