In 1983 the late Harvard Business School Professor, Ted Levitt, published an article "The globalization of markets". He prophesized that "ancient differences in national states or modes of doing business will disappear. The commonality of preferences will lead inescapably to the standardization of products, manufacturing and facilitate the institutions of trade and commerce".
Coupled with other influential works such as "The Borderless World" and "The World is Flat", these authors made the very concept of globalization extremely appealing. But it has been 33 years since its publication in HBR, and Professor Lewis Lim, Deputy Director of the Institute on Asian Consumer Insight asks an audience at the Think Big Summit,
The hard truth he states, is that following 3 years of deep intensive research markets around the world interviewing and polling 6873 respondents across 10 Asian markets, our Consumers in each market are stubbornly different… and they are even more different today than ever before.
The Institute of Asian Consumer Insight was established to assist companies to better understand and adapt their strategies to these Asian markets. His Institute encourages companies to explore differences for exploitation in Asian markets and better strategize to support their needs.
In his presentation, he shared 8 facts that all companies should consider when seeking to capitalize on the growth of South East Asia.
ASEAN Source: IE Singapore / China Source: Statista
2. The new Asian Consumer is buying CONFIDENCE and super experiences
Now that Asian consumers have fulfilled their basic human needs, they are buying to fulfill their self-esteem needs. In their relentless pursuit of upward mobility, they are purchasing goods and services to express to the world their identity. Even the man who has a low family income buys his luxury watch in instalments. While the rest of his external appearance might remain simple, he wears his watch with great pride as an expression to the world of who he is.
It is not about the simple act of shopping and purchasing an item. This is about the experience of bonding with their family, of relaxing together while shopping, spending time with friends and enjoying the experience - even if it occurs online or offline.
3. Asian Consumers are fast to adapt to new technology
Now there are restaurants that use drones or robots to serve food, or humanoids that serve on a hotel's front desk. Hyperconnected customers need to be "constantly connected" and are always checking social media.
4. Asian consumers are seeking digital wealth
They are trying to live a fuller life in their digital space. They have constructed their own identities in a digital world - blogs, social channels, instant messaging private groups. They are constantly sharing the experiences through these channels so they can display their identity and associated lifestyle. The likes and followers on Facebook and Instagram all contribute to their self-esteem – it's a new form of digital wealth.
5. Health is a new status symbol.
For Asian Consumers you need to look good as well as own things. Asian Consumers are not afraid to tell people how good looking they are. Sharing their diets, telling the whole world what they eat, showing off their 6 pack abdomen. This also contributes to their social status as a healthy person. Particularly for men, there is a new level of excitement and consumption with male grooming products, especially in locations like Indonesia, Thailand and increasingly in Vietnam. Consumers are no longer secretly beautifying themselves, they are also sharing the effects of this beautification online e.g. before and after shots.
6. Sociocultural factors have existed for thousands of years
If the world had become a globalized village, one might assume that Barbie as a company should be able to do well in any market. Mattel opened a store in Shanghai in 2009. That was at the time the world’s largest Barbie store, occupying 36,000sq feet and it opened with great optimism and fanfare because according to Levitt the world was homogenizing.
But what happened to Barbie in China? By March 2011 the store had to close. The concept just did not work in China. Chinese Consumers had very different notions of beauty and what their toy idols should look like and Barbie was not it.
Kellogg went to India and tried to promote cold cereal as a breakfast option in India. They promoted it as a healthy and nutritious option and recommended all Indian consumers should start eating it. They failed.
What Indian consumers prefer to eat for breakfast is entirely different. Who is Kellogg to tell Indians that what they are eating is not healthy?
7. Understand and acknowledge National aspirations
Emerging market Consumers grow up wanting to be different in character from Western industrialized nations. They have deep-seated cultural and values-based differences that are not about to disappear, and cannot be dismissed as being transient.
8. Adapt Products to each markets Tastes and Preferences
Customers want Brands to acknowledge that they have their own character and system and demands that Companies fulfill consumer needs by understanding their own specific tastes and preferences. Therefore, to penetrate Asian markets, companies need to deeply understand the needs, preferences, and aspirations of Asian consumers.
Rather than offer standardized global products, Professor Lim recommends having an R&D and marketing strategy for each specific Asian market.
It is consumer insights, not free trade he says that will help Companies to sell to Asian consumers and seize opportunities in the Asian markets.
About the Nanyang Technological University Institute on Asian Consumer Insight
The Institute on Asian Consumer Insight (ACI) is a one of its kind national-level research institute focused on Asian Consumers.
Started as an initiative of the Singapore Economic Development Board in 2011, ACI is a unique world-class institute dedicated to helping international brands respond to the needs of Asian Consumers. They work to bridge the gap between academia and business, providing the deep understanding required to break into diverse Asian Markets.
ACI's flagship Possible Future Worlds Initiative addresses how Asians might live, shop, commute, and play over the next 5-20 years, and how technology will shape their lives and lifestyles of Asian consumrs. Their aim is to help businesses to envisage new consumer worlds by assessing the impact of disruptive technologies and changing socioeconomic landscapes.
A key thrust of the Possible Future Worlds initiative is on understanding the changing face of Asian consumers at a deeper and emotional level. The research will uncover the real and immediate challenges facing Asian consumers as well as their expectations for the future. For more information head to http://www.aci-institute.com
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