Indonesia 2015 | Overview | Key take-aways
1. Match aspiration with affordability
Consider how different levels of affluence affect consumer preferences; there’s being rich, and then there’s being really rich. For huge numbers of Indonesians, owning a motorcycle is no more a badge of wealth than owning a pair of shoes – it’s simply essential. Having a car, however, means someone has reached a new level of economic success, but it’s having a car with your own driver that shows you’ve really arrived. Consumer’s right across the income spectrum may have similar desires, but need different ways of realising them. Mobile phones, personal care products, innovative food items, and even cars are just a few of the categories that span a broad range of budgets, from economy to premium, so tailor your range, pricing, and emotional benefits accordingly.
2. Help consumers make smart decisions
Indonesian consumers are extremely value-conscious, and while traditional price discounts and sale periods may help attract buyers, what consumers appreciate more are brands that they feel are providing an honest product or service at the right price. Consumers in some of the poorer, more remote areas buy low-cost products out of necessity, but are looking beyond headline prices for the bundle or deal that provides the best value. Meanwhile, more affluent consumers are just as keen on buying economy brands when they feel they are not sacrificing quality for a good deal. Marketers need to understand what is perceived as good value in a given category, align with that definition and deliver it.
3. Build trust
Trust, reliability, and authenticity are essential credentials for a successful brand to possess in Indonesia. Brands need to ensure that the promise of their brand is aligned with what is actually delivered, as only then will trust be established. Brands such as Garuda Indonesia, Sunsilk and Indomie have done this over many years; Oreo and Milo have achieved high levels of trust more recently by finding a locally relevant expression of their international DNA, making a promise that speaks directly to Indonesian consumers, and delivering on that promise.
4. Study the young; view the future
Indonesia has one of the youngest populations in the region, with a median age of 29 – far younger than China (36) and the U.S. (median age 38). Young people have grown up with democracy, freedom, and access to information in a way that the older generations, who lived under a dictatorship, could only have dreamed of. They have a taste for the newest products, from food to technology, and are prepared to pay for them. They have, however, inherited something of their parents’ and grandparents’ sense of frugality – of being prepared for a rainy day. So, while they are less risk-averse than older people, there is little ostentatious spending when it could be construed as wasteful spending. Help young Indonesians balance their desire for the new with their fondness for tradition.
5. Stay focused on traditional retailing
E-commerce is the shopping mode of the moment, but it is only practised by a tiny proportion of the population despite gradual progress being made in delivery services, the ability to pay online, and in overall consumer trust that shoppers will receive the goods they’re paying for. Physical stores remain where the action is, and while a shift from wet markets and neighbourhood warungs towards the modern trade is well under way, independently owned general stores, cafés, restaurants and clothing shops are where many people spend the majority of their money. The appeal of the modern trade to marketers is the ease of gaining scale and consistency of display in an efficient way, but distribution and promotion through more traditional retailers remains important.
6. Help consumers avoid ambiguity – provide pragmatic solutions
There are few places where it matters more than in Indonesia that a product “does what it says on the tin”. Consumers here are widely perceived to be rational shoppers, making decisions about products and brands based on information about what that item can do for them – and at what price. Millward Brown’s Link™ research in Indonesia reveals that the most persuasive ads are characterised by a demonstration of the product benefits and composition. In fact, 82 percent of the most persuasive ads demonstrate the benefits of a product, compared to only 66 percent of the lowest performers. Marketers must demonstrate that their brand delivers clear benefits – and, of course great value.
7. Don’t rely solely on function to sell
Function is an important and powerful part of the story for Indonesian consumers, but brands risk falling behind if they rely solely on a compelling expression of their functional benefits in their advertising. Ultimately, the most powerful communication in Indonesia has a balance of associations, both practical and emotional – rooting an emotionally compelling brand story in a core product truth. In Indonesia, half of the most persuasive advertising strikes this balance between function and emotion, compared to 43 percent globally. A great example of this in action is chocolate milk brand Milo, which shows mothers supporting their children’s sporting achievements by giving them the nutritious energy of Milo.
8. Mind the clutter, watch for gaps
Indonesia is a market that is now crammed with advertising, to the extent that Maxus Indonesia have reported that TV audiences are now subjected to an average of 13 to 14 ads in a typical prime-time ad break. While the colour and dynamism of advertising is welcomed as novel entertainment in some of the more remote parts of the country, in the cities, especially in the capital, there’s weariness among consumers who feel they are bombarded by advertising that has become so ubiquitous it is no more effective than wallpaper. The importance of creating advertising that can cut through this clutter is, therefore, vital to appreciate, particularly as the overall investment being made in advertising continues to rise, and is forecast by GroupM to grow a further 13.5 percent in 2015.
9. Align with local values and ‘feel’ local
Give your brand a local identity – even if it’s a global success – by offering something new and aspirational that works with, rather than in opposition to, respected traditions. Millward Brown Link™ data shows that Indonesia has the lowest receptivity of any Southeast Asian market to ads coming from other markets in the region, with only 39 percent of high performing regional ads also performing well here. But adding a local face to an international campaign is only getting localisation half-right. Making a real connection means relating to consumers with a human truth that feels relevant and familiar – but without using tired national stereotypes. International brands can achieve this just as well as local brands; global shampoo brand Sunsilk, for instance, is fondly regarded as an Indonesian favorite because it ‘feels’ local.
10. Be mindful of regional variation in attitudes
While Jakarta is the centre of commerce and is where trends are set for many other cities, it’s important to remember that only 4 percent of the country’s population calls the capital ‘home’. Businesses seeking to build national brands need to look to other major cities and beyond, and consider the differences between each. While Jakarta is a very modern city and is quite westernized, the central Javanese city of Yogyakarta – another major centre on the same island – has a more traditional feel to it, and is a place where politeness, hierarchical structures, and respect for one’s elders is more apparent. Cynicism regarding advertising is growing in the capital, while in places such as Medan, Padang, Pontianak, and Bodetabek, consumers are enthusiastic about ads generally and are inclined to find them entertaining.
11. Emphasise relationships, not individuality, in communications
For many Indonesians, there is an emphasis on collective achievement and smooth interpersonal relationships, ahead of individual success. People feel more confident when they’re part of a group. There is also a great deal of respect for authority, which means people appreciate being given clear guidance on how to do something, and will avoid uncertainty and ambiguity when they can. Accepted wisdom has it, therefore, that the best way to make a great Indonesian ad is to feature a harmonious family around the dinner table.
12. Look beyond the family dining table
The propensity for Indonesian people to identify with groups has grown beyond the family group, and marketers should consider the new ways in which individuals think about togetherness with other groups of people and in situations. Friends, work colleagues and wider communities have become a second family for many, especially young people who have moved away from their family home to study or to work. For them, togetherness can mean ‘hangout’ time at a cinema or shopping mall, or time playing sport or pursuing another shared interest. For older people and couples without children, social gatherings with workmates are a little-acknowledged opportunity to identify with a group. At the same time as Indonesians are forming groups outside the family, dynamics within family homes are changing, with spaces and devices becoming more personal rather than communal.
13. Respect religion, but don’t preach
Indonesia is home to the largest Muslim population in the world, and brands need to be mindful of this in their communications. Local cosmetics brand Wardah, for instance, has successfully reshaped the Indonesian cosmetics category with strong halal claims about its products, providing women with the chance to express themselves and feel beautiful without compromising on their values. But this is a delicate path to tread, and in most categories, consumers like brands to acknowledge their religious views in a subtle way, but don’t like the idea of religion being used as a sales platform. Financial services is perhaps one of the few exceptions to this, as many banks offer Islamic products, though, even then, the most successful brands steer clear of overtly religious messages.
14. Use television wisely – then stop spending
Television attracts the lion’s share of advertising investment for a very good reason: it helps brands to achieve national reach in an efficient way. And, despite the rise of digital media, TV will continue to be the cornerstone of great national ad campaigns in Indonesia for quite some time. But a bigger TV investment does not guarantee a bigger impact; while the optimal number of exposures to an ad required to affect brand KPIs is high by global standards, once that frequency has been reached, there is very little additional lift for any additional exposure. So, establish what the ideal level of TV exposure is for your brand, and then look to other media to complement that investment.
15. Use multiscreening to your advantage
The scale of the ‘multiscreen’ opportunity in Indonesia is huge; of 26 countries in Millward Brown’s AdReaction study in 2014, Indonesia was found to have the fifth-highest level of multiscreening behaviour. In fact, one in five multiscreen minutes in Indonesia are spent meshing – simultaneously looking up related content – which equates to over an hour a day. Ambitious brands must invest in building a layered relationship with consumers across multiple touch-points simultaneously if they are to keep pace with changing consumer habits. TV remains an unparalleled driver of reach and, therefore, saliency, but non-TV screens such as mobile can be the perfect vehicle for a more layered and meaningful conversation with consumers.
16. Go digital, but on Indonesian time
Everyone is getting connected, but internet speeds in Indonesia remain among the slowest in the world. Broadband outside Jakarta is rare, and average connection speeds across the country are just 1.9Mbps, slower than India, China, the Philippines, and Vietnam, and just 10 percent of the average speed achieved in Singapore, and an even smaller fraction of the world-leading connections achieved in South Korea (22.2Mbps in Q4 2014). In designing web sites and e-commerce solutions, focus on functional elements and provide easy navigation to save users loading unnecessary pages by mistake. Use images sparingly and in lower-resolution formats than you might otherwise, and be even more judicious about using video. It is possible to run attractive and effective sites that work over low bandwidth connections.
17. Build in opportunities for co-creation
Indonesians see their digital devices as tools for creation, not just consumption. Brands seeking true engagement with consumers – especially those with a young and tech-savvy target market – should encourage that creativity to find a voice that is linked to their offering. Coca-Cola Indonesia is a leader in this field, and has shown that by providing brand advocates with the tools to create their own content, a proliferation of brand-centric communication online results. The volume of user-created, brand-related content often far outweighs that generated by a brand itself, and has a different level of stickiness and credibility when shared because it is the work of a friend.
18. Think social – consumers do
This is a country that is social by nature, and Indonesians with access to the internet are seizing upon the opportunity to socialise digitally. More than 15 million Indonesian consumers are on Facebook, local social networking site Kaskus has nearly 6 million, and Twitter and LinkedIn are also widely used. These sites operate freely in Indonesia, in marked contrast to China, and are becoming increasingly popular as the number of people upgrading to smartphones continues to climb. Social networking can be a key tool for improving brand engagement, and these platforms, which provide not just reach but precision targeting by demographics, preferences, social connections and behavior, provide an attractive proposition for advertisers.
19. Get mobile
Indonesians spend, on average, a remarkable three hours a day using their mobile phone – more time than they spend watching TV. Among young people, the role of mobiles in people’s lives is even stronger, with 16 to 24-year-olds spending an average of four hours a day on their phones, often while doing something else at the same time, such as watching TV. As in other fast-growing markets such as China and India, many people’s first experience of the internet in Indonesia is via mobile, and often using a feature phone rather than a smartphone. The vast majority of social media users are connecting via mobile, rather than a desktop or laptop. The power of mobile marketing, especially when linked to television, is not to be overlooked.
20. Think long-term
There are millions of Indonesians who won’t be in the market for brands for several years.
Strong economic growth in Indonesia has helped reduce poverty from 24 percent of the population in 1999 to 11.3 percent in 2014, as defined by the World Bank, but there remain an estimated 68 million Indonesians living just above the poverty line, generating just over the Rp 11,000 (US$1) per person per day baseline income for one to be considered poor. These people are vulnerable to small shocks, such as illness or job loss, which can very quickly put them in poverty. Others, who are safely within the consuming class, will upgrade from basic to premium goods as their wealth grows. Now is the time for brands to build familiarity and trust. They should sow the seeds of aspiration, and meet that aspiration with the products and services that fit consumers’ needs as their lives change, whether it be with shampoo, biscuits, a restaurant meal, a scooter or a flat.