Confidence is rising across the region. In terms of the marketing industry, speak to the majority of agencies, be they creative or media, and the overall impression is that they are far more optimistic heading for the second half of 2010 than they were even six months ago. Business is up. Clients are spending, perhaps nowhere near pre-recession levels, but they are at least spending.
This confidence is mirrored, or perhaps driven, by the attitude of the region's consumers. According to The Nielsen Company's latest global survey, consumer confidence in Asia-Pacific is among the strongest in the world, with India and Indonesia ranking as the top two markets globally in terms of consumer sentiment. China, Singapore and the Philippines also featured in the top 10.
If the survey results are to be taken at face value, the first quarter of this year represents the first outward show of a global economic recovery, which will be good news for brands and marketers.
But behind the headline survey results is a more sobering fact. Increased expressions of confidence do not necessarily mean higher levels of consumption.
Chastened by the effects of the financial crisis, it is only to be expected that consumers are still cautious about how they spend their hard earned dollars, ringgit or Rmb. And then there is the savings factor, particularly relevant to Asian consumers, which is impacting how willing consumers are to make purchases.
In mainland China, for example, consumer willingness to spend is either flat or down, depending on which city tier or geographical region one looks at. Concerns in that country about putting enough aside for adequate healthcare, family education and spiralling property prices are impacting spend. And this culture of thrift is not unique to China. Many Asian societies place particular emphasis on saving, something that has been amplified by the economic uncertainty of the past several years.
So while brands should be encouraged by the rise in confidence, they should also pay attention to how much these consumers are prepared to spend and on what kind of products they are looking to invest in.
One argument is that value, a prime concern for marketers in 2009, is still a key consumption driver. Not so much getting the lowest possible price; more ensuring that, whatever the cost, the purchase can deliver on the promise. The brand itself is secondary. What is more important is what the product can bring to the consumer's life.
Being able to improve an individual's life in some way, whether perceived or real, and being able to deliver a tangible value, could be crucial to reconciling confidence with spend in the year ahead.
Got a view?
Email michael.o'[email protected]
This article was originally published in the 20 May 2010 issue of Media.
May 25, 2010
Consumption vs confidence levels in Asia
Consumption levels have a long way to go to match the rising confidence levels in Asia.
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