Tapping the opportunity for top-end brands
Sridhar Reddy, Technical Advisor, TNS Indonesia
Clear differences are opening up between consumers depending on where they are in the country and their levels of income and spending power, and these differences are key drivers in determining which brands people want to buy. The Indonesian upper middle class and upper class is now a sizeable segment of the national market, commanding immense spending potential. The segment that seeks premium, best-in-class products and services, is 24 percent of the population, but accounts for 76 percent of income being generated, and 54 percent of expenditure.
However, many packaged goods and services brands seem only to offer mass propositions that primarily communicate a promise of affordability or value. TNS Needscope analysis of brands in Indonesia shows there is a dearth of brands that are seen to offer a premium product or service.
LANDSCAPE OF BRANDS’ POSITIONING IN INDONESIA
So far, most brands have created a personality tailored to resonate with consumers’ need to feel part of a community. However, with rapid urbanization and the growth of the middle class, affluent consumers are aspiring to have unique, special experiences in their interactions with brands. This is an un-leveraged opportunity for many Indonesian brands today, especially in the packaged goods sector.
Moving upmarket is not a straight-forward proposition, however, and several brands that have tried to position themselves as premium or super-premium have recently struggled to differentiate themselves in a credible way.
Consumers seeking best-in-class products tend to be more prudent in making a brand selection; they often seek a stronger rationale for buying, and deeper emotional reassurances. Being ‘a bit better’ does not appeal to these discerning consumers, and in many cases, for a product to contain one superior ingredient or just to have higher-quality packaging is not enough, on its own, to make a brand feel premium.
To be able to get their share of play in this segment, brands must be ready to offer several of the following attributes as a starting point:
- A specialized or differentiated offering highly relevant to judicious consumers’ needs
- New or specialized ingredients that together provide a unique and desirable benefit
- The ability to customize or personalize a product or service
- Badge value, whether that’s external, to signal something to society, or internal, to lift self-image
- Exclusivity through a special product or retail experience
- In the case of a strong, mass umbrella or parent brand, a premium offering should be distinct from that, with a product brand as a champion
The opportunity for brands to move into premium territory in this market is significant, but only those brands that invest in offering a holistic premium experience are equipped to seize it.