Byravee Iyer
Nov 27, 2013

A solid brand and regional game plan vital for SEA companies: JWT and A.T Kearney

SINGAPORE - To emerge as regional champions, Southeast Asian companies need to plan ahead and invest more in branding, according to study by JWT Asia Pacific and A.T. Kearney.

Air Asia and Singapore Airlines have built emotional connections
Air Asia and Singapore Airlines have built emotional connections

Companies across Southeast Asia are going to have to work harder to defend their home turf against a growing number of global and regional competitors, according to the report, titled "Countdown to 2015: Creating ASEAN Champions".

Many domestic players in the region have historically faced little competition in their home markets. Many more have created scale through mass production of low-cost goods, with little thought to building real brands, according to the report. The ASEAN Economic Community, which comes into effect in two years, will be a "game-changer" in the region, not only creating opportunities for companies to expand into new markets but also exposing them to unprecedented competition in their home markets.  

For the study, JWT and A.T. Kearney spoke to 50 corporate leaders, the majority from domestic companies across Southeast Asia.

Of the companies the study looked at with annual revenue under $100 million, nearly 40 per cent of leaders conceded that their top-selling product does not have a clear brand ideaor no brand idea at all.

Companies have to make the switch from manufacturing products to selling brands, and it is time to get out of the commodity game, move up the value curve and form a long-term relationship with consumers through brands, said Bob Hekkelman, JWT’s Southeast Asia CEO. “The region’s consumers are moving fast into the middle class and are much more sophisticated in terms of what they buy and what they expect,” he said.

With limited growth opportunities elsewhere, Southeast Asia remains one of the world’s most compelling growth stories. ASEAN’s population is projected to reach more than 650 million by 2020, with half under the age of 30. By 2030, 51 per cent of the population (not including Myanmar, Laos, and Brunei) will be in the middle class, according to the report, citing the Brookings Institute. This young population is educated and technology-savvy; its members will continue to want more products and services and demand more from the brands they buy.

When it comes to advertising, domestic companies tend to spend the bulk of their marketing budgets on tactical ads, investing less on brand campaigns to build emotional connections and affinity with consumers. This is particularly true for mid-sized and smaller companies.

The larger companies spend more than half of their budgets on brand campaigns, but the companies with revenue under $100 million spend 70 per cent of their marketing budgets on tactical ads and less than one-third on brand campaigns.

Southeast Asian CEOs and chief marketing officers want immediate business results but sometimes fail to grasp the bigger picture, according to the report.

Of course, there are some Southeast Asian companies that understand the value of a brand. The report cites AirAsia, for example, for pioneering affordable air travel in Asia and Singapore Airlines for setting the bar for full-service carriers.

If companies want to move up the value chain, a strong brand is crucial in the face of fierce competition and rapidly advancing technologies where tangible product differences can be replicated within a brief time frame. 

 

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