Although unique, consumers in Asia-Pacific will follow certain predictable patterns — just in broad strokes and much faster than their Western counterparts, says Steven van der Kruit, global trends consultant to Pantone and Firmenich. “There seems to be an invisible pattern of nature that guides us all, but what has taken three or four generations in Europe is occurring in a generation here in Asia.” Asia has grown so fast it has placed immense pressure on its younger generations on becoming the best. “It’s not unlike old New York, but much bigger and much faster.”
The region can be broadly defined by affinity groups reaching different stages of the consumer life cycle, he says, and the fastest to evolve have been Korea and Singapore, where the pressure to perform is arguably at its peak. Choices in these markets have been influenced by the notion of the ideal. “It’s all about the money: you need the top job, so you go to the best hairdresser, the best makeup artist and you look like a movie star. It’s all about the appearance, because you have just that one split second to make your mark.”
Living with no margin for error has propelled status-granting luxury brands to the fore in these markets. China is experiencing the boom of Singapore and South Korea, but at an even more accelerated pace. The leading luxury brands in Asia, according to our top 1000 list, are Chanel (ninth), Gucci (12th), Calvin Klein (25th) and Christian Dior (36th). “They all want luxury brands and it’s not about exclusivity, it’s about meeting a golden standard.”
This, however, has started to change as consumers grow more discerning in their brand choices, says Vishal Bali, Nielsen’s managing director of consumer insights for Southeast Asia, North Asia and Pacific. In Korea for example, while consumers still prefer foreign luxury brands, there is a shift among younger luxury shoppers “to look at a diverse base of luxury brands including the home-grown luxury brands”. The change is most evident in the high-end cosmetics market, where Korean luxury brands have taken leadership positions. “The rise of Spectator and the launch of Lucky Chouette are examples of home-grown brands making their way into the consideration set of consumers,” says Bali.
In other developed markets such as Hong Kong and Singapore, the ‘hipster’ movement is taking root where consumers seek out modern interpretations of culturally rooted design elements. ‘Farmer’s markets’ and handicraft fairs are rising in popularity, as are artisanal products. “The local and authenticity movement has gained a lot of ground in Hong Kong and Singapore,” says Bali. “Given the high affluence and increased sophistication of consumers in these markets, the trend is going to gain momentum and will likely lead to an increase in the number of local, culturally relevant products available to consumers.”
The food industry is a great example, he adds. Not only do many global brands offer local menus or include local ingredients such as green tea-flavoured Kit Kat in Japan and Coca-Cola chicken- flavoured Lay’s potato chips in China.
And it’s not just Asia’s more developed markets that are moving in this direction, says Van der Kruit. “There is a term used by architects and artists in China: ‘Future roots’. Asia has, in a sense, built a future without roots and a plant without roots will die. So this generation is finally cooking by themselves with spices from their parents.”
There is a reason the Chinese love buying Chanel from France and Gucci from Italy, he adds: apart from travel conferring status, buying an item where it is made adds value. “When I ask why they travel to Italy to buy an item they could find in Guangzhou, they say: ‘We want to buy it in Italy. We can tell people we bought it in Italy. It makes it 10 times more valuable.’ It all comes down to what luxury means: originality and uniqueness.”
This is a manifestation of the authenticity trend, says Bali. “As the middle class in these countries becomes more affluent, the need to consume or buy a real product from the country of origin is becoming increasingly important. As the affluence level in China and Southeast Asia rises, consumers in these markets want to stand out by buying global brands from their home countries.”
This search for genuine roots in other markets and cultures can’t last, says Van der Kruit. “It’s an unrealistic bubble and there is already a search for deep pockets of cultural handicraft in Asia”.
Smart marketers looking to get ahead of this consumer trend should introduce products with local ingredients and share stories about their offerings, says Bali. “Companies should also look again at their brand portfolio and launch a brand that is 100 per cent local. Brands can also adopt or embrace a local community and communicate about it, such as Starbucks supporting local farmers.”
From subsistence to comfort
Vishal Bali, managing director of consumer insights, Southeast Asia, North Asia and Pacific, Nielsen
Asian consumers represent 29 per cent of the global middle class, but by the end of the decade, they will account for more than half the world’s middle-class population. In Southeast Asia alone, 180 million consumers are expected to join their ranks by 2020, representing US$2 trillion of new consumption.
They are among the world’s most confident, forward-looking and aspirational consumers and many, for the first time can choose the brands they want to buy, the products they need, and the items they want that will improve their lives.
Today’s middle-class consumers are not necessarily buying more, they’re buying better — purchasing in new categories, trading up, improving their lives, and looking for brands that convey their rising social status. But while they are enjoying higher income levels than ever before, they are careful with how they spend their money and look for brands that provide value for money and reassurances of quality.
Many marketers try to club emerging market consumers together as a single group and build their strategies with that notion in mind. However, it is critical for marketers to look at consumers in emerging markets as two distinct groups. On one hand, we have a group of consumers who are purchasing many products and brands for the very first time and possess limited knowledge about the brands and options available to them. On the other hand, we have consumers who are well-educated, travel widely and are very discerning in their brand choices.
For the first set of consumers, brands need to focus on building brand salience and educating them to become part of their initial consideration set. Offering smaller pack sizes or sachets can help bridge affordability gaps. For the second set of consumers who tend to be more status conscious, brands need to connect at an emotional level, become an extension of their personality and stoke their aspirations.
Regardless of which group they belong to, consumers in emerging markets place significant value on the opinions and recommendations of their friends and family. Hence, word of mouth is another important factor for brands looking to establish trust and recognition.
The bottom line is that for all the common traits linking consumers in Asia’s emerging markets, there are a myriad disparities. Brands must look for opportunities to customise, to take into account local needs, tastes and cultures.