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Ashok Sethi, TNSDecember 2007
Asian Consumer Trends
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Consumer trends
Asian Markets
Demographic and socio-economic trends
Environmental trends
Changing consumer mind-set
Asian MarketsAsian Markets
4
Asia - 12 relevant marketsChina and India tower over the others (77% on the Asian population)
1,316
23
49
90
65
246
25
85
4.5
7
127
1,100
China
Taiwan
Korea
Philippines
Thailand
Indonesia
Malaysia
Vietnam
Singapore
Hong Kong
Japan
India
Population in Million
*Population estimated in 2006*Source: GeoHive (www.xist.org/earth/)
But can China really be considered as one market?
5
Several provinces of China are larger than many other Asian countriesIn reality Asia has 40+ markets – most with a population of 10 million+!
Region Population (M) Region Population (M) Region Population (M)
India 1100 Hubei 57 Malaysia 25
Indonesia 246 Zhejiang 49 Gansu 26
Japan 127 Korea 49 Inner Mongolia 24
Henan 94 Guangxi 47 Taiwan 23
Shangdong 92 Yunnan 44 Xinjiang 20
Guangdong 92 Jiangxi 43 Shanghai 18
Philippines 90 Liaoning 42 Beijing 15
Vietnam 85 Heilongjiang 38 Tianjin 10
Sichuan 82 Guizhou 37 Hainan 8
Jiangsu 75 Shaanxi 37 Hong Kong 7
Hebei 68 Fujian 35 Ningxia 6
Thailand 65 Shanxi 34 Qinghai 5Hunan 63 Chongqing 28 Singapore 5Anhui 61 Jilin 27 Tibet 3
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Asian markets
Guangdong, Jiangsu and Shandong each have a GDP which is:not very far from that of Indonesia
higher than that of Thailand and Malaysia
Shanghai alone has a GDP which is almost equal to that of the Philippines
Demographic and SocioDemographic and Socio--economic trendseconomic trends
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1. The Greying Consumer
0
4
8
12
16
20
1975 1980 1985 1990 1995 2000 2005
China
Hong Kong,ChinaIndia
Japan
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
Korea, Rep.
% of population over 65 years
Source: World Bank
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1. The Greying ConsumerThe emerging “grey market”
A new emerging market of 60 years+ with considerable buying power:With unique physical and emotional needs
Implications exist on product design, formulations, packaging
Special store and shelf design
ApparelTravel packages
Health care products
Elder care servicesTelecommunication products
10
2. Urbanisation
10
30
50
70
90
1975 1980 1985 1990 1995 2000 2005
China
India
Japan
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Korea, Rep.
Source: World Bank
% Urban population
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2. UrbanisationImplications
This group of recently “urbanized” presents a unique market as their needs are special and are neither represented by the urban nor the rural consumers.
This migrant population:Has special financial needs (sending money back home, no social security)
Unique social and emotional needs as a result of living away from the family
Entertainment needs
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3. Rising Incomes and expenditure
Household final consumption expenditure per capita (constant 2000 US$)
0
5,000
10,000
15,000
20,000
25,000
1975 1980 1985 1990 1995 2000 20050
500
1000
1500
2000
2500 Japan
Korea, Rep.
Malaysia
China
India
Indonesia
Philippines
Thailand
Vietnam
Source: World Bank
* Note: Left Axis for Japan and Korea Rep., right axis for all other contries
Asian economies growing at 7%+ per annum as compared to global growth of only 3%
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2253 2366 2476 262235872027
25773496
4283
77038472
942210493
11759
709 922 1221 1578 1926 2090 2162 221032552936
784
68606280
1700
5854542551604839
-5
1995
3995
5995
7995
9995
11995
13995
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
Rural Household per capitadisposable income
Urban Household per capitadisposable income
Value (RMB)
3. Rising Incomes and expenditureRate and quantum of increase different for urban and rural
Source: National Statistics Bureau, China
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3. Rising Incomes and expenditureImplications
In rural areas, as consumers are lifted out of poverty, it creates additional market for low priced, Bottom of the Pyramid (BOP) products.
At the upper end, rapid increases in income and consumers catapulting into the HNWI (high net worth individuals) category, are boosting the market for luxury products in Asia
In the middle, increasing white collar jobs and service industry jobs are lifting BOP and lower middle class consumers to well groomed middle class, creating market for mid level discretionary products.
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4. Emergence of the independent female consumer Traditional concept of “housewife” does not exist in most of Asia
75.8
22.4
48.7
50.3
49.6
64.0
48.6
45.8
51.2
87.8
55.1
67.4
74.1
79.2
80.9
84.7
79.9
55.7
China
India
Taiwan
Korea
Philippines
Thailand
Indonesia
Malaysia
Vietnam
Female(%)
Male (%)
Employment%:*Data estimated in 2005*Source: Asian Development Bank (ADB)- Key Indicators 2007 (www.adb.org/statistics)
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5. Smaller families Smaller families – with distinct marketing implications
Average numbers per household2.7
3.3
3.3
3.3
3.5
3.8
3.8
4.4
4.4
4.8
4.9
5.4
2.6
2.7
3.2
3.2
3.5
3.5
3.6
3.8
4.7
3.3
5.0
5.3
Japan
Korea, Rep.
Hong Kong
Taiwan
Singarpore
China
Thailand
Indonesia
Malaysia
Vietnam
Philippines
India
2003
2006
Source: The Economist
EnvironmentalEnvironmental trendstrends
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1. Environmental awareness Evidence of increasing concern across Asia …
Pollution and global warming are now touching the lives of the people. Concern is no longer merely academic – and is increasing sharply.
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1. Environmental awareness Evidence of increasing concern across Asia…
Sources: Grey Group study
Ave
3.4
3.3
3.3
3.3
3.1
3.1
3.0
2.8
2.8
2.7
2.6
I would be willing to pay 10% more for groceries/products that are more environmentally friendly
15
10
15
15
22
26
28
41
44
38
51
38
54
54
55
58
56
55
47
46
55
42
34
33
27
27
18
17
14
11
9
6
5
13
3
4
3
2
1
3
1
1
1
2
0% 20% 40% 60% 80% 100%
New Zealand
Japan
Hong Kong
Singapore
South Korea
Thailand
Malaysia
Indonesia
Philippines
Chinese mainland
India
Strongly agree Somewhat agree Somewhat disagree Strongly disagree
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1. Environmental awareness “Environmental-friendly” products likely to find increasing favour
Phosphorus-fre
e~Eco-friendly is the new status symbol!
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2. Internet and Web 2.0 Several Asian countries are at par with the West. Penetration in China is also very high in large urban areas.
48 9 10
1318
4448 50
61 6367 66 67 68 70
Indi
a
Indo
nesi
a
Phi
lippi
nes
Chi
na
Thai
land
Vie
tnam
Spa
in
Mal
aysi
a
Fran
ce
Ger
man
y
Taiw
an
Japa
n
Sin
gapo
re
Sou
th K
orea
Hon
g K
ong
US
A
Past month internet usage %
Source: Internet World Stats
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8.0%
32.2%36.8%
47.6%53.4%
0%
10%
20%
30%
40%
50%
60%
National, 6+ yrs 36 cities, 15+ yrs 4 cities, 15+ yrs 4 cities, 15-44 yrs 4 cities, 15-44 yrs,MHI RMB 2000 or
aboveSource: CNNIC / CNRS
2250 26503370
45805910
68007950
87009400
1030011100
1230013700
16200
0
4000
8000
12000
16000
20000
2000.12 2001.06 2001.12 2002.06 2002.12 2003.06 2003.12 2004.06 2004.12 2005.06 2005.12 2006.06 2006.12 2007.06
(0,000) users
Internet population: China is the home to the second largest internet population in the world!
Internet penetration: Big city penetration in China is close to Western cities
2. Internet and Web 2.0Surfing in i-cafes, at home, office or school
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2. Internet and Web 2.0 Implications
Explosion of informationConsumers make much more informed choices
Transparency critical
Web 2.0 or user generated contentAn opportunity to tap into consumer creativity
A threat if left unmonitored and ignored
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3. Growing prominence of Asia
Economic performance
Economic clout and influence
Excellence in sports
Reaching for the space!
Asia now the centre of the world!
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3. Growing prominence of AsiaA palpable sense of optimism
When people are asked “Do you think the next generation will have more economic prosperity, less economic prosperity or the same as now?”, countries around the world have diversified opinions.
44%
17%
2% 2%
73%
1% 1% 5% 6%
42%
30%
10%
44%
13% 9%
22% 20%
6%
20%
17%
27%
21%21%
28%23%
4%
28%
37%
24%
44%47%
25%
20%
2% 5%
8%
3%
13%21% 15%
17%
2% 0% 6%
24%
1% 1%1%0%
7%
1%
14%26%
2%
0%
20%
40%
60%
80%
100%
120%
CHI IND JPN KOR VNM FRA GER UK USAA lot more economic prosperity than A little more economic prosperity than The same as now A little less economic prosperity than A lot less economic prosperity than now Don't know(DO NOT READ!)
Source: Gallup International report 2006 of “Worldwide Survey Highlights lack of faith in leaders in an uncertain world”
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3. Growing prominence of AsiaIncreasing cultural influence
Feng shui, Yoga and the Korean wave
Cultural influence also ascending – including cross border influence within Asia.
Changing consumer mindsetChanging consumer mindset
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1. From affiliation to individualismConcomitant of changing demographics
Traditional marketing has always sold products in the context ofhusband/children/wife/family/friends (“buy this and be a good mother!”). However current sentiment has veered towards “I am important and deserve it!”. Consumption is now legitimate for oneself!
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2. The evolving consumer needs of individuality, connoisseurship and indulgence
Beyond status, needs of consumers have evolved towards two directions: individuality and experience
‘Bling’ (status)
‘Indulgence’(Enjoyment
and experience)
Connoisseurship(Taste and
discernment)
Trend-setter (Individuality)
INDIVIDUALITY
EXPERIENCE
CONFORMITY
OWNERSHIP
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3. Trade up & trade downStore label kitchen roll and LV bag
The same consumer displays extreme price sensitivity for one product (normally functional products of low perceived differentiation) but an extraordinary premium for another product (mostly visible consumption products or products of high perceived differentiation).Asian Luxury products market in China is forecasted to become the largest in the world in another decade or so.
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4. Health and wellness Evidence of increasing concern across Asia …
Health products and supplements are some of the most advertised products in Asia. Health clubs and fitness centers have been mushrooming across Asia.
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5. Consumer assertivismCoke and Pepsi targeted in India. SK II in China.
Consumers determined to get the best out of the companies – and pouncing on any lapse. Tuangou, or team buying, aims to drive unprecedented bargains by combining the reach of the internet with the power of the group.
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6. From products and services to solutions and experienceImplications
Moving from functional needs to emotive needs
From functional to emotional gratifications
Hence from products to experiences
Diluting the product category boundaries
Creating opportunities for companies to collaborate
Nike + iPod Mplayer (iRiver + Disney)
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7. Ascendance of DesignImplications
From the marketer’s perspectiveDecreasing opportunities for product differentiation
At the same time a strong need to uniquely position the brand
From the consumer’s point of viewDemand to find greater value
Desire for higher gratification
As a result design reigns supreme in almost all product categories
From product, to packaging, to advertising to web design
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7. Ascendance of DesignDesign finds a role even in credit cards
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7. Ascendance of DesignAs also in packaging
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Ten important trends
Growing concerns about
the environment
Growing prominence of
Asia
From affiliation to individualism
Emerging needs of connoiseurship
and indulgence
Internet and Web 2.0
Consumer assertivism
From products to solutions and
experience
Ascendance of design
Health andwellness
Trade up and trade down
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For more details :
Ashok SethiRegional Director, Methodology and Analytics
t: +86.21.63601808ashok.sethi@tns-global.com
www.tnsglobal.com