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AsiaNext - Volume 4 - Indonesia

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AsiaNext - Volume 4 - Indonesia

  1. 1. ENGAGING INDONESIA’S EMERGENT MIDDLE CLASSASIA NEXT
  2. 2. ASIA NEXT A typical Indonesian mini-mart franchise displaying promotions. Photo: Distro42According to a recent report by Nielsen, Indo-nesians are predicted to earn, on average, $3,000USD per capita by 2020, which means many globalcompanies have started “eyeing” the potentialexpansion of their businesses in Indonesia. So, how can we reach the Indonesian middle class? remain the highest in terms of spending outlets,The continuous economic growth in Indonesia followed by supermarkets, with traditionaltranslates into the growing number of the middle- Given the many opportunities in the marketplace, retailers retaining relevance for fresh food andclass citizens. According to the World Bank, there how can retailers, manufacturers, marketers the convenience in location they offer.are about 50 million people entering the middle- and media companies connect with Indonesia’sincome bracket with increasingly disposable middle-class consumer? Who’s Doing it Right?incomes (from $2 in 2003 to $20 per in 2010).Indonesia’s gross domestic product per capita is Nielsen’s report discovered that innovation has In a recent article by NYTimes.com, the mush-now more than $3,600, exceeding that of India, proven to be the growth engine in a number of rooming trend of 7-Eleven as new hangout placethe second-largest consumer market in Asia consumer goods categories and the key to most for Indonesian consumers is an interestingafter China. middle-class spending. With an additionally case study of the changing trends in young strong focus on value, wide opportunities for brands Indonesians and how they socialize offline. TheThe majority of the Indonesian population lives to explore new innovations have been created. article found that Indonesia’s rapid economicin the islands of Java (57.5%) and Sumatra. The growth also brought about social change as justmajority are Muslims (86%) and 71 percent of Convenience has also become an important ten short years ago, young people in Indonesiathe population is under the age of 40. Indonesia connection point for the middle class, as they gathered at street-side food stalls called warungsboasts the 4th largest population in the world tend to visit mini-markets closest to their home to hang out and gossip.at 248 million, making the region a promising and participate in in-store promotions. Many ofmarket for countless retail products targeting them are looking for attractive and interesting Currently, modern retailers such as 7-Eleven haveyounger generations. promotions. In terms of shopping, mini-markets successfully changed the way young Indonesians
  3. 3. ASIA NEXThang out, especially in the evening. An alternativeto “warung-style” and offering better quality foodand beverages, 7-Eleven quickly brought abouta trend of fast growing retailers in Indonesiawith outlets in almost every corner of the city.Their strategy of blending a small supermarketwith inexpensive ready-made food and seatingsuccessfully attracted customers in a citydesperately seeking outdoor recreation spacewhile waiting for the mobility-restricting trafficjams to ease.With many of its customers under the age of thirty,7-Eleven tapped into what Indonesians love to domost: engage in social networking platforms. With57,000 Twitter followers and more than 44,000Facebook fans, 7-Eleven successfully grabbed theattention of those who love to engage online byproviding free Wi-Fi in their outlets. For addedentertainment, the store will occasionally hostlocal bands with the hopes that its customers willupdate their social networking statuses to helpdraw bigger crowds.Indonesians’ rising disposable incomes and stronginterest in “affordable luxury” have also made7-Eleven stores attractive enough to draw crowds A music group performs outside a typical 7-Elevenfrom both the middle-class and nouveau riche. franchise, which has adapted to Indonesian cultureThe “trendy café” is being leveraged by brand by modeling the warung.partnerships. Apple introduced the new iPhone Photo: bigWOWO5 to the Indonesia market in one of the 7-Eleven
  4. 4. ASIA NEXToutlets in the suburbs. They invited people consumers. There is also an interesting trend of With all of the gadgets gaining market entry, thethrough what was dubbed a “digital buzzer” to a growing awareness of political and social issues main Indonesian source for information remainscome to a designated location and witness the (unthinkable during Soeharto’s regime). This is television, with nearly all middle-class homesintroduction of the product. ever present in Millennials, who are more vocal owning a TV and 96 percent watching programs and receptive of what’s going on with society daily. Radio and newspapers are still popular7-Eleven is proof of how innovation has helped and government. traditional media as well, but are increasinglycreate new on and offline ways for consumers being engaged via online. Advertising still playsto connect, offering convenience and value. The Mobile penetration is already high, and purchase an important role to Indonesians in general withretailer successfully changed the way young intent for smartphones is strong. Internet some unique TV ad approaches using “powerfulIndonesians spend their leisure time and capture usage and mobile phone ownership are surging Indonesian” slang and catchy phrases that cantheir attention. at a fast pace. Smartphone devices are quickly be repeated by people on the streets and nearly becoming the primary platform for a variety of everywhere. On example is the recent fad of “Kasih activities, including watching videos, accessing tau ngga yaaa…” (Would I tell you… this translationGo Online the Internet and connecting to social networks, in is not as fun as the Indonesia version though)Nearly a quarter of middle-class consumers turn opening channels for marketers and contenthave Internet access and spend 1.5 hours a providers to focus their efforts to include mobile Therefore, the best way to engage the risingday accessing the Internet to connect to social devices in their content distribution. Indonesian middle-class consumer is through anetwork sites, with Facebook dominating their more holistic marketing mix approach includingtime spent online. The potential attraction to public relations, advertising and activationthe middle-class via the digital world has been But Don’t Forget About Offline program in modern trade with a focus on value,widespread among producers and adopted by convenience and innovation. We also need to takenearly all brands in Indonesia. From shampoo, With the habit of visiting modern trade for their into consideration on digital approach, whichto deodorant to the ever-growing Blackberry monthly shopping, it has become very common includes social media platforms and interesting(Edelman client) - various gimmicks, prizes for brands to conduct consumer-reaching mobile apps.and perks draw consumers via online platforms activities in these locations. The activities canincluding Facebook, Twitter and the brand/ vary from product sampling, demonstration andcompany ’s owned content. With a more even games to engage the consumer in product Sources:demanding, time-starved, informed, and trial and point-of-sale. For example, Carrefourchoice-saturated consumer, a brand presence trained “brand representatives” also known http://blog.nielsen.com/nielsenwire/consumer/reaching-indone- sias-middle-class/in the digital world has been attracting more as Sales Person Girl (SPG) or Sales Person Boy http://www.nytimes.com/2012/05/29/business/global/29i-consumers to engage with their favorite brands. (SPB) to line up and offer various products for ht-stores29.html?pagewanted=all consumers to sample and offer special bundle http://blog.euromonitor.com/2012/07/indonesias-rising-mid-This approach has given brands the advan- prices for the product. This is becoming a dle-class-to-transform-the-countrys-consumer-market.htmltage of gaining insights directly from their common practice in Indonesia’s marketing mix. http://www.trendwatching.com/trends/servilebrands/

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