The route to regional expansion
Consumers around the region have had little experience of Indonesian brands so far, but that could soon be changing. Strong domestic brands are well positioned to become strong regional and global brands; their potency is reflected in their brand value in the BrandZ rankings, which show that Indonesia’s most valuable brand, the bank BCA, is fast closing in on a place in the Global Top 100 Brands.
Southeast Asia is the first frontier for Indonesia’s power brands, and the ASEAN trade agreement should remove some of the practical barriers to geographical expansion. Despite being the fourth most populous nation in the world, Indonesia has a relatively low global profile. Beyond the national airline, Garuda Indonesia, and Indomie instant noodles, few brands have yet made an impression on consumers in other markets.
The nation’s strongest brands now have an opportunity to expand and take Indonesia to the world, but they will only succeed if they balance their home-grown strengths with refined propositions that resonate with new groups of consumers. Just as there is diversity within the Indonesian market, consumers in different neighboring countries can have very different needs and desires. There are hundreds of languages to factor into expansion plans, along with multiple religions and huge disparity in wealth. Research shows that only 49 percent of ads that have performed well in other Southeast Asian markets do well in Vietnam, and that figure drops to 39 percent in Indonesia. The flip-side of this is that marketing messages that have been a hit at home for Indonesian brands are unlikely to be the perfect fit for other markets.
Ways to Win
Indonesian companies looking to take to the regional or global stage need to look beyond building distribution channels and at how their brands can expand and adapt to individual markets. This involves gaining a deep understanding of the consumer and their motivations, generally as well as in a particular category. Brands may have to meet different consumer needs and new tensions to resolve as they expand. In Indonesia, for instance BrandZ research has shown that a meaningful connection is more important than awareness in driving growth for banking brands. In Malaysia, however, the dynamics of the banking category are different and it is saliency, not meaning, that is the biggest driver of brand growth for banks. Brands should seek to strike a balance between core brand strengths and localized propositions; the most successful regional brands protect their core strengths and proposition in new markets, but also develop locally relevant expressions, content and activities to compete with trusted domestic players. KFC is a leading brand in many Southeast Asian markets, and has expanded by providing a localized menu everywhere it goes.
Lessons from China
Brands in Indonesia can learn from the success of some of China’s biggest brands and their trail-blazing expansion. Typically, Chinese brands have launched in neighboring countries and other emerging markets, and have then grown to the point that many of the technology brands are now challenging their western competitors. In 2006, China only had one brand in the Top 100 Most Valuable Global Brands; this year, that figure is 15, and these brands are worth a combined US$402.4 billion. Telecom equipment maker Huawei has quickly established itself as a potential competitor to Apple and Samsung by offering high quality smartphones at a more affordable price than its rivals. The core values that gave it domestic success – reliability and value – have helped it in other markets, along with a commitment to innovation, which is a key ingredient in Brand Power.
What Made in Indonesia Means
BrandZ data can be used to generate a personality profile for brands from different countries, which gives some insight into the way consumers view products and services from different markets.
Businesses can use a country’s brand personality to understand how their own brand fits in to consumers’ general view of brands across a category. For those brands looking to explore new markets, they identify the areas where Indonesian brands may have an advantage or potential disadvantage, and times when close alignment with Brand Indonesia can help propel or hinder international expansion.
This data, from 2015-16, shows that brands in Indonesia are seen as trustworthy and desirable to about the same extent as brands in other developing markets. Indonesian brands generally excel, however, at being friendly, fun, kind and brave. When a score of 100 is the average of all brands in India, Indonesia, China and Brazil, Indonesian brands score 207 for kindness and 170 for friendliness. Indonesian brands are not, however, seen as adventurous; that crown belongs to Indian brands. Nor are they seen as sexy – China wins on that measure. In Indonesian brands’ favour is that they are seen as the least arrogant of brands in any of these four fast-growth markets.
Theory in Action
The airline Garuda Indonesia has led the way in taking Indonesia to the world. Ranked 35th in this year’s Top 50, with a brand value of US$275 million, Garuda promises to deliver the “Garuda Indonesia Experience” across all five senses, and promotes Indonesian culture and hospitality as an ambassadorial brand for the country. Traditional food and drinks are served and aircraft interiors feature Indonesian materials. It has made strategic partnerships over the years with brands such as the UK’s Liverpool Football Club to give it international prominence, and has expanded its network and improved its service through world-class innovations. Garuda was named one of the “Top Ten Airlines” in the prestigious global Skytrax industry awards in 2015.