Proliferation of mobile
facilitates market entry
But local competition, media fragmentation add complexity
Marketers view Southeast Asia as an enormous opportunity to build brands in a fast-growing region where national GDP often exceeds 5 percent annually. Most countries in the region are members of the Association of Southeast Asian Nations (ASEAN), a trade organization established in 1967, prior to the European Union.
Member states include: Cambodia, Indonesia, Laos, Malaysia, Myanmar, Singapore, Philippines, Thailand, and Vietnam. While each country is distinctive, they share certain characteristics that are useful for marketers to anticipate:
Mobile first Many countries bypassed stages of telecom development, and consumers rely on mobile devices, certainly in the cities and increasingly in more rural areas.
E-commerce Online purchasing is well developed, but different in payment and delivery from Western models.
Competition Local brands are strengthening and China is the region’s largest trading partner and foreign investor.
Opportunity for local and multinational brands in Southeast Asia exists in many categories. Cosmetics and fast-moving consumer goods (FMCG) brands especially are finding a growing customer base. Telecom providers also are expanding rapidly with the growth of mobile communication and internet use, although carriers vary by country and Singtel is the only brand with regional presence.
In certain categories, the urban consumers of the major Southeast Asian cities, like Bangkok or Saigon, are comparable in their tastes and interests to their peers in the West, sharing an interest in health and wellness, for example. Cultural differences apply in other categories, such as cosmetics, where local practices, including greater attention to male grooming, influence Western trends.
E-commerce has facilitated market entry in Southeast Asia, but market penetration has become more competitive and complex, and media more fragmented. Geographic location can be an important market-entry consideration. The politics and economies of Myanmar, Laos, and Cambodia differ, but the countries share some cultural commonalities—most inhabitants practice Buddhism, for example. And shared national borders facilitate marketing and distribution.
Brands already in Southeast Asia continue to pursue urban consumers. They also penetrate deeper into some countries, like Indonesia, their expansion facilitated by the availability of advanced feature phones or cheaper smartphones and the development of e-commerce. Mobile phones—even smartphones—proliferate in places like Myanmar that lacked fixed-wire infrastructure. Consumers are leapfrogging the desktop computer phase and going directly to mobile. And brands are adept at creating messages specifically for the mobile medium.
Mobile has also shaped entertainment and e-commerce. Lazadam, the e-commerce brand that serves Southeast Asia, transacts a high percentage of its business on mobile. Mobile-first strategies have helped drive the expansion of new brands such as Grab, an Uber competitor based in Singapore which has had an impact in Singapore, Thailand, and Malaysia. An Indonesian brand, Go Jet, has developed both a pick-up and delivery service.
Delivery is different from most places in the West. It is faster and often same-day for e-commerce purchases. And the delivery service takes payment in cash. Cash on Delivery solves the online payment problem in societies that lack a credit infrastructure, where online shoppers cannot supply a form of credit for payment.
At the same time, mobile provides wide access to brands and information from parts of the world to which the people Southeast Asia are culturally receptive and adaptive. These influences shape the urban middle class, which varies by market. In Thailand, for example, the middle class is shrinking as extremes of wealth and poverty are growing.
Reflecting these extremes, Southeast Asia is home to some of the world’s most advanced shopping centers and sophisticated e-commerce operations, as well as to meandering shopping districts with mom-and-pop shops lining narrow streets. The move to modern retail proceeds at varying speeds depending on the local economy. Indonesia is transitioning rapidly into modern retail, while Myanmar relies more on small shops.
Urban consumers, particularly the young, resemble those in Western capitals in many ways, but also retain local characteristics. They are more communal. A young person making a major purchase in Bangkok or Saigon might be more interested in the opinion of his or her parents than a millennial in New York or London would be. For a smaller purchase, an article of apparel, for example, more social shopping, with text and photo messaging, might take place.
The communal mindset affects purchasing motivation. A young Asian woman might desire the latest smartphone as an expression of “collective individualism,” so that everyone in her group of friends has the same phone, and she is part of the group that stands out. In the Western expression of individuality, a young woman more likely would want to stand out from the group. Attitudes are changing, and members of Gen Y (the millennials), are more individualistic than their Gen X predecessors.
In some categories, like FMCG or personal care, brands are more likely to market across entire national populations than target the urban segment. To address the need for affordability, some products are offered in small pack sizes at lower prices. And in some markets the small size of shops influences the need for smaller pack sizes.
Media and messaging
Media use varies by market and category, depending in part on media ownership, as censorship and regulation sometimes dictate what can be done—or not. Understanding how best to use media requires first mapping whether the media is government- or privately owned, consolidated or a monopoly, highly regulated or free. The presence of government media control is one of the factors driving the popularity bloggers and the trust consumers invest in them.
As in most markets, media in Southeast Asia is experiencing a shift to digital. However, TV is still relatively expensive in places like the Philippines and Indonesia, and the growth in digital is coming at the expense of other channels, including print and radio.
And media consumption habits vary by country. For example, media in Thailand is screen-based and includes both TV and digital. In contrast, Myanmar is print-based and outdoor because the electricity supply in Myanmar still is erratic. Similarly, radio has been declining in Thailand where people use their mobile phones for entertainment, but radio is popular in Myanmar because people use battery-operated radios.
Brand Building Action Plans
1. Acknowledge differences
Southeast Asia is a convenient shorthand to describe a group of countries that are relatively close geographically and share some cultural similarities. But each country is distinct and requires individual marketing attention.
2. Expect competition
Forget one-size-fits-all. Not only is each market different, but most include strong local competitors. And being Western, by itself, is not a compelling brand story. Brands need market-specific strategies, particularly for social media.
3. Build relationships
Do not rely only on existing relationships with global social media or messaging services. Build relationships with the local social media players, the media channels, and the telecom providers.
4. Partner with e-commerce leaders
Local partners are set up to conduct e-commerce Southeast Asia-style, which is cash on delivery. Because most consumers lack credit, they order online but they cannot pay online. Prepare to deal with this hybrid approach—clicking to order but paying COD.
5. Modify mobile
Modify mobile to meet local expectations. Consumers are price conscious. They pay for mobile phone data as they use it, not on contract. Consequently, they are not going to watch long videos on their phones. Rethink video content. Short, front-loaded messages best match the consumer’s frugality and limited attention span. Design videos to be viewed vertically, saving time by eliminating the need to turn the phone to landscape orientation.