Keeping up with Southeast Asia’s ever-changing consumers is a sizable, but increasingly rewarding, challenge for brands. The region has twice as many consumers as the US and comprises a market worth US$330 billion. In a region moving towards economic integration, Southeast Asian firms also have the chance to create regional brands and connect with a larger group of consumers.
A consumer survey by JWT to identify the challenges that lie ahead for brands in 2015 finds nearly 60 per cent feel Southeast Asia is about to peak and is on the verge of a new era. And although the region is home to diverse cultures, religions and levels of affluence, the survey found that people feel a strong cultural connection.
Companies can draw on common motivators and themes to create brand ideas that travel and communications that resonate across the region. Vishnu Mohan, Asia-Pacific CEO of Havas, believes brands need to embrace such cultural values across different societies. He says advertisers have found consumers respond well to certain similar types of advertising, both in content and tone.
But Rob Hall, GM of Open & Partners Thailand, says the divisive nature of politics and social unrest has unsettled many people in Southeast Asia and there are great concerns about social unity and harmony among consumers.
Agencies in Thailand in particular have been successful with some well-accepted and heart-warming campaigns that project brands in a new light. Hall points to Thai Life Insurance (which ranked 56th in the domestic market) as an example. “Brands are trying hard to reaffirm messages of family, social engagement and social mobility as part of their efforts to connect with important core values during these uncertain times,” he says.
Mohan notes that brands need to appeal on an emotional level, not just a rational one. They also start to realise that they need to be meaningful, including having a “wider good”. This is no longer a vague option, but something consumers expect.
For instance, organic and green products are appealing more to Southeast Asian consumers. Aneesh Reddy, co-founder and CEO of Capillary Technologies, an IT firm that provides consumer engagement solutions, noted earlier this year that 55 per cent of consumers in the region are willing to pay more for something if it comes from a company they see as socially and environmentally responsible.
Technology also has a major role to play in creating greater brand strength. The explosion and growth of e-commerce and m-commerce is what will drive many brands. Findings from Capillary Technologies indicate that global smartphone growth is shifting increasingly towards the region as suppliers focus on volume rather than margins, inundating the market with mobile phones that serve as a marketing channel rather than just a product.
The statistics speak loud and clear. In Indonesia, 29 per cent of the population are mobile internet users and in Vietnam, more than half of the population use the internet via their mobile devices. Almost 60 per cent of Malaysians will own a smartphone in two years, and currently almost 40 per cent of the population own two mobile phones, making for a 138 per cent market penetration. Sales of tablets are up more than 100 per cent across Southeast Asia.
“Companies are always trying to find the best channels to reach prospective consumers,” says Reddy. “As digital venues proliferate, that challenge takes on greater significance. The overall industry spending projection for 2014 is up 4 to 6 per cent from the previous year.”
People across the region expect to be able to access branded content from their mobiles, and to be enabled and entertained by brands. When technology facilitates all of these, it has massive influence on a brand’s strength. Digital channels need to demonstrate their effectiveness in delivering either as a sales driver or as a brand equity driver. Marketers who can effectively measure and optimise all digital channels effectively with these two goals in mind will prevail.
Hall says that for a society where health and beauty rank highly, it is important that technology helps point to brand superiority, product efficacy and innovations, and delivers in this area — be it in food and beverage, health supplements, telecommunications or cosmetics. “Thus, brands need to show how all channels are shifting either sales or brand metrics, irrespective of channels. Developing platforms, content, campaigns and tools to show this is being done is the biggest change [taking place] in the marketing environment right now,” says Hall.
As a general rule, MNCs still dominate in areas of technical/product superiority, while home-grown brands can build on local service and taste adaptation. But to Mohan, brands transcend boundaries. “There may be a touch of nationalism surrounding a brand, but consumers are more affected by how the brands are able to relate to them and what feelings are evoked in rational, emotional and meaningful way. It’s a question of how you speak to consumer and what overall value brands bring,” he says.
Mohan says the process of brand building is evolutionary, and must go hand in hand with the behavioural change of consumers. He also points to the ‘VIP’ market, a subset of Southeast Asia that groups the emerging economies of Vietnam, Indonesia and the Philippines, which have a combined population of close to half a billion people, all of whom are young, social and digitally inclined. These are the countries that have much potential for brand building with a growing number of consumers who are more exposed to the Western market.
Boston Consulting Group estimates that the number of middle-class and affluent Indonesian consumers will double by 2020 alongside expansion of the country’s GDP. That’s 141 million Indonesian consumers with money to spend on consumer goods.
The number of middle class and affluent consumers in Southeast Asian countries continues to rise. Luxury purchases have become more casual and more common and a larger proportion of overall luxury sales take place in emerging markets. According to Capillary Technologies, women will gain even greater influence in the ASEAN consumer class in 2014 and beyond.
More female shoppers are also purchasing more autonomously and often unilaterally. More than 80 per cent of purchases by Asian women are made for the woman making the purchase only, rather than for her family or friends, adding power to individual Asian female purchases. Thirty-one per cent of women in Asia are chief income earners in their households, and purchase more than 60 per cent of traditionally male products.
Rob Hall, GM, Open & Partners Thailand
Marketing tactics that seem to be most prevalent in or unique to Southeast Asia include:
- Use of online video: Long-form storytelling has really taken off this year as a way for brands to drive awareness;
- Online use of celebrity influencers: The popularity of celebrities — and their communications on online platforms such as Instagram — has made these channels an important driver for marketing success;
- Large-scale retail promotions: Some of the larger beverage companies have entered into a promotion war offering massive promotional prizes and this has caught a lot of attention in the market this year;
- In-market activation: Many Thai consumers in rural areas need to be connected via offline market events, trials and activities to experience brands, and these programmes have become more integrated and sophisticated.
Approaches that have fallen out of fashion include:
- ‘Fixed’ celebrity marketing: While still very popular to increase awareness, many brands are getting smarter about changing and varying the celebrity endorsers so as not to overshadow the brand;
- Massive prize promotions: The promotion war of the past year (combined with price wars) has turned many marketers off this tactic, as it’s not sustainable.