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Cross-category trends

Shifting habits, evolving priorities

1.     Confidence is returning

After a year of belt-tightening, things are starting to look up, and consumers are beginning to feel more relaxed about spending again. Necessity forced many households to cut back on little luxuries during a volatile year or two, and those who could still afford to splash out tended not to, concerned about appearing brash while others were finding it tough. Now, not only is the economy picking up and the Rupiah strengthening against the US dollar, inflation is also declining, meaning many people have more money to spend, particularly those in the lower socio-economic groups. They’re still shopping less frequently than they were two years ago, but they’re now spending an average of 9 percent more when they do (2016 v 2015). Growing consumer confidence – the national index in early 2017 was at its highest level since 2000 – is leading people to try new categories of products as well. Now is the time to encourage trial and win loyalty.

 

2. Local meaning wins sales

 

Local relevance goes beyond having a local personality in your ads, or a good translation of your tagline. It’s about making a powerful connection with the reality of people’s lives. In Indonesia, this has usually been done equally well by home-grown brands and some of the biggest international names, which have been able to show how they work with, rather than against, local traditions and aspirations to “feel local”. In fact, global brands such as Sunsilk have achieved such strong relevance in this market over many years that most consumers consider it to be a local brand. What’s happened in the past year, however, has been a subtle shift in what it means to be a modern Indonesian; their world is changing, but not in the same way or at the same pace as their neighbors in the region. The pull of tradition is also intensifying, so as people look to unite their digital lives and their rich heritage, their sense of identity is strengthening. Local Indonesian brands seem to have kept pace with this shift more keenly than global brands, but understanding what it means to be a modern Indonesian is more about agility than country of origin. Brands of all backgrounds can strike the right tone with consumers.

 

3. Social media isn’t just one ‘thing’

Indonesia is well known as a social media hotspot, and Jakarta is widely regarded as the Twitter capital of the world. Social networks are used not just for catching up with old friends but also widely seen as an alternative source of news to more established channels, and as a source of entertainment. But consumers don’t all use social networking in the same way, just as all people who like to watch films don’t necessarily have the same taste in movies. While people aged in their 30s and above tend to broadcast information about themselves on social networks, for instance, teenagers, or Generation Z as they’re known, are more cautious about sharing as they fear judgment from their peers – and fear having their content seen by their parents. Gen Z are therefore seeking a more personalized and even a more private experience from social media. Even on a single platform such as Facebook, which is universally popular, older people are more likely to be posting publicly, and younger users sending private messages.

 

4. E-commerce keeps on growing

 

The pace of growth in e-commerce in Indonesia is outstripping the rise in the number of people with internet smartphones, as consumers become more comfortable with browsing and paying online, and as new, faster delivery options become available. Total spending online in 2017 is forecast to top US$8.2 billion, a 32 percent rise since last year, and more than five times what it was in 2014. This is partly a result of many newly connected consumers making their first online purchases, but also those already shopping online spending more; the average amount spent per person has almost quadrupled in four years. One of the big hurdles to e-commerce growth here has been delivery speeds, but new collaborations between platforms and logistics partners are making one-day delivery a reality. Amazon entered the Indonesian market last year not with its store but with Amazon Prime video services; there are constant rumors that an online store is about to launch. Local players such as Bukalapak and Tokopedia have launched their own mobile shopping apps in the past year, as the switch from laptops and PCs to mobile phones continues. New internet users tend to be fearful of fraud, and often don’t have credit cards for online payment. Flexible payment options are therefore essential to convince new users to shop online.

 

5. Timing is everything

As consumers become less tolerant of interruption in the form of advertising, and as the market becomes more cluttered, many are either tuning out – literally – or simply ignoring messages that come their way. To get noticed means getting the right balance of creative and targeting, and that goes beyond matching the message with the individual. Great communications also reaches people at the right time; at a broad level, research shows that teenagers are more open to hearing from brands between 6am and 9am, while those in their 20s and 30s are more receptive in the early evening. Some people are happy with a funny or informative message, while others want something more valuable in return for their time. Targeting by age, device, location, current weather conditions and time of day is all now possible. The right blend of creativity and data can help brands hit the spot.

 

6. Look beyond the obvious

 

Brands that provide a product that “does what it says on the tin” used to pat themselves on the back. After all, if they had done their job and kept their promise, the consumer would be happy and need never consider switching to a competitor. But consumers aren’t like that anymore. A good product and a catchy slogan are only the first part of building a relationship with people, and that applies in a fast-growth market such as Indonesia as much as it applies in places with a longer history of brand marketing. So while category domination is still about availability and a fair price, it’s also about providing a richer translation of the brand promise for increasingly sophisticated consumers. Focus on experience, innovation and purpose, because it’s these – not just offering a good product – that are needed for consumers to fall in love with a brand.