Marketing To Emerging East Asian Consumers

Marketing To Emerging East Asian Consumers
Not-with-standing the current economic slowdown, the relatively rapid growth of East Asian nations will continue.  Asia’s stellar economic growth has created a burgeoning consumer market which will see 3.2 billion people in the middle-class segment by 2030, up from 525 million in 2009. Asia will account for more than 80 per cent of the growth in global middle-class spending, which amounts to US$55 trillion from US$21 trillion in 2009.

With the rapid growth brands in much of the developing Asia are now encountering a marketing environment as complex as that in developed countries. Product choices and communication channels are exploding; so is the potential of digital platforms and consumer empowerment (as a result of exploding choices) is on the rise.

To be sure, the challenge to secure regional opportunities lies not simply in our ability in understanding various national and local consumers.  East Asia’s consumer markets present more similarities than differences.  Culture of ‘due’ difference, Confucian hierarchy, development stage, collectivism and post-war Western influence have all helped shaped a large degree of commonness in aspirations, drive and wants among East Asian consumers.  The biggest challenge is in human resources, organizational competency and the ability and willingness to intimately understand the consumers.    

Some of the major differences between marketing FMCG to emerging East Asia-and to developed-market consumers include:

  • Intimate underestimating (or lack thereof) of the relationship between company’s strategy formulation process and its unique implementation’s capabilities and constraints can be a unique comparative advantage on its own when competing in emerging markets. In the world of nonlinear relationships (encompassing the traditional hierarchical and other boundaries that made up a command and control system within an organization) with negative and positive feedbacks, the link between cause and effect of what is happening in between and among functions, departments, layers of an organization can easily be lost in translations. Success here may be determined by how much management can stay above the happenings of the organization and to manage and control all the established processes and responses. This is the predominant route still being pursued by most large organizations whether domestic or multinationals.
  • Harnessing word of mouth: This plays a vital role in the decision journeys of emerging-market consumers. A cultural perspective on this is that East Asian – as mentioned above – is much more likely to be collectivistic thereby discussing purchasing decisions and making comparisons with neighbours and friends more often than in an individualistic culture.  Approval (awe, admiration included) from his/her peers. The correct tone can help a company distinguish itself from competitors, reinforce the brand’s personality, and underpin the brand’s promise to its consumers.
  • Understanding the importance of brand building (and act on it): This is more important in emerging markets because various researches showed that this phase of the purchase journey appears to have a significant impact on decisions. During the recession it was surprising to note that weak brands/brand-less offerings showed a larger decline in the emerging sector than their more expensive branded counterparts. The reason for this was that consumers in emerging markets have less disposable income and therefore cannot afford making the mistake of buying a lesser quality brand and having to return to purchase another.  A strong brand not only carries a promise of ‘satisfactory’ purchases and therefore a sense of security but it also helps emerging market consumers to express their continual sense of belonging even as they weather through an economic slowdown.  Indeed this is one of the major reasons why home-brand continue to be the last options among the self-actualisation seeking new middle classes East Asian consumers.
  •  The in-store experience: The in-store element of the consumer’s decision-making process tends to be longer and more important in emerging markets than in developed ones. East Asian consumers often treat the visiting of multiple stores multiple times not only to make purchases, collect information but also often treat it as a part of an important leisure rituals. As a result, there is significantly more room to influence and shape consumer decisions at the moment of purchase.  Point of Purchase (POP) branding is therefore essential in this market. Gondola ends, shelf talkers and sampling are essential tools in swaying the consumer to purchase your brand, above that of the competitor.

Although the understanding of the human resources issue as well as the realm of marketing strategy may be obvious to most, execution in many East Asian emerging markets, not least Indonesia, can be especially challenging due to lack of infrastructure, staffing difficulties as well as logistical and distribution struggling blocks. Best practices in the industry show that the ability to exploit the shorter ‘window of opportunity’ for achieving competitive advantage with a given marketing strategy may be the straightest line that connects a company’s strength with opportunities.

Posted in English, Perspectives to Ponder Upon, Rudolf's Articles.