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Indonesia 2016 | Highlights | Cross-category trends

New priorities, traditional values

The value of value
Consumers in Indonesia have always been hungry for a bargain, and even when rapid economic growth was putting more money in their pockets, they were looking to make smart purchases, finding the ideal balance between price and quality. The slower pace of economic growth in the past year, however, means the value equation has become more complex, with consumers weighing up not just rival shampoos, cooking oils or TV sets but also looking across categories to assess their purchasing priorities. Savings in one category permit spending in another, so the pleasure of a trip to the cinema, for instance, is weighed up against the pleasure provided by new shoes or money towards a mobile phone. Even for the wealthy, there is little ostentatious spending that could be seen by others as wasteful indulgence.
Making local connections
This is not a fast-growing market where there is a clamour for all things foreign. Indonesians take pride in their heritage and their country, and while this can give local brands a helping hand in this market, it does not preclude smart international brands from making similarly strong connections. What matters is aligning a brand with people’s lives and beliefs, presenting a locally relevant and resonant expression of international or regional values. Sunsilk shampoo is a brand that for many Indonesians feels local; it has long presented local models and solutions to problems unique to this market. Likewise, KFC has generated a sense of familiarity and closeness with consumers’ tastes by including a range of rice-based meals on its menu.
Time is increasingly precious to people living complex and busy lives, and products and services that help people free up time to do the things they really value are highly prized. It’s often the case, especially for people living in cities, that every adult in a household goes out to work full-time, so there’s strong demand for time-saving products such as ready meals, along with online banking and online bill-payment, that eliminates the need to queue – or can be done while stuck in a traffic jam. As leisure time becomes a luxury for many people, they welcome opportunities to share time with friends and family and brands that help them strike a healthy balance between work time and down time.
A word in your ear
This is one of the biggest social media markets in the world and one that’s almost entirely on mobile phones. Three-quarters of all mobile users are on Facebook alone, and other networks have large penetration as well. The potential influence of bloggers, YouTubers and Facebookers is therefore immense, and will only grow as more users of feature phones upgrade to smartphones. President Joko Widodo has more than five million Twitter followers and thousands of YouTube fans. Smart brands are not only using television, which still delivers massive reach, but also social channels to influence consumers. Body Shop Indonesia, for example, has 100,000 fans on Instagram, and OLX, the online marketplace, has nearly 8 million Facebook fans.
The rise of e-commerce
It’s rare that traffic in Jakarta is reason to cheer, but with the Asian Development Bank linking urban road congestion to the potential for growth in e-commerce, for Indonesia that could mean a surge in sales is on the way. Consumers in Indonesia are rapidly overcoming their concerns about security and online payment, and the e-commerce market is expected to grow from IDR18 trillion (US$1.3 billion) in 2015 to IDR 25 trillion (US$1.8 billion) in 2016. The number of people shopping online, meanwhile, is tipped to rise from 37 million to 49 million. This is fast growth, but clear potential still remains: while e-commerce in China now accounts for close to 10 percent of GDP, in Indonesia that figure is so far barely 1 percent.
Thinking beyond borders
International brands moving into Indonesia with marketing campaigns borrowed from other markets have found to their peril that they can easily miss their mark. Regional brands looking to expand from other ASEAN markets should recognize the need to draw on their international credentials, particularly if they reflect good quality, but also to have a local flavor. This must not feel tacked on, achieved by switching models to present a local face, but by identifying with local sentiment and customs. Likewise, Indonesian brands seeking to grow beyond their home country should recognize that their products and communications have probably been a domestic success because they clearly reflect the values and views of Indonesians, and this may not translate directly into other markets.
20 take-aways
1. Be within reach
The boom times of recent years have improved the living standards of most Indonesians, but some much more than others. Being newly wealthy to some now means owning a car or an apartment; for others it’s their first mobile phone, or the luxury of being able to shop weekly rather than daily. Consumers across all income levels have strong aspirations and may have similar desires, but need different ways of realizing them. Consider how different levels of wealth determine consumer preferences, particularly in categories that have widespread appeal, such as personal care, technology and food. Craft a range, communicate product benefits and set pricing in such a way that consumers can link their dreams with reality.
2. Get the price right
Headline-grabbing discounts and seasonal sales do generate excitement, and this is a market where shoppers love a bargain, but there’s a strong sense here of the need for fair play, and many consumers value more deeply the ability to get the products they love at a fair price all year round, rather the thrill of stocking up in a sale. A bargain doesn’t always mean low prices, either. Indonesian consumers of all income levels are weighing up cost against quality and buying the brand that represents a smarter purchase. Brands need to understand what consumers see as a good deal in their category and position themselves in a way that chimes with that definition, especially during times when personal budgets are being reined in.
3. Nurture trust, play the long game
Some of the brands that Indonesians regard most fondly – both local and international – have earned their place in consumers’ hearts over many years. Indomie, Garuda Indonesia, Sunsilk and Milo are brands people feel have always been with them, and they have consistently provided a positive experience. This kind of bond cannot be hurried, but building reliability now is a great investment in a brand’s future. There are millions of Indonesians whose incomes mean they are not yet in the market for most of the consumer products they see; with around 10 percent living in poverty, according to World Bank definitions, plus millions who are just above the poverty line. As their wealth grows, these consumers will seek out the brands they learned to trust long before their products became affordable.
4. Think young, but don’t forget the old
Indonesia is a vibrant and very young market by world standards, with a median age of just 29.6, compared to 36.8 in China, 37.8 in the US and 46.5 in Japan. Many brands therefore focus their efforts, justifiably, on the country’s young consumers, who have grown up knowing only democracy, digital technology and who have an outward looking approach that differs significantly to the views of their parents and grandparents. But older consumers are not to be overlooked. They are not just consuming but are also moving with the times; about 8 million of the over-45s are online and these middle-aged Indonesians are among the most active on social media of anyone in their age group worldwide.
5. Share consumers’ diverse tastes
In their down time, consumers are seeking out information and entertainment that reflect a broad spectrum of interests. Online video viewing, for instance, spans movie trailers, music videos, football highlights, humor and religious sermons; modern Indonesians like all of these things, and brands should consider the whole person, not just the individual roles of mother, student or football fan that consumers assume. While Indonesia is home to the world’s biggest Muslim population, brands need to be mindful of this fact rather than make it the heart of their brand communications. Consumers like brands to acknowledge their beliefs, but not to preach to them or use overtly religious messaging to sell to them. Cosmetics brand Wardah is a stand-out example of how this fine line can be walked; its products are all halal, but its focus goes beyond that into helping women feel beautiful and express themselves.
6. Look beyond a single target
Brands don’t have to define themselves as either an entry-level name or a luxury marque; agile brands that can flex their offer can resonate with different groups of consumers at different points along the income scale. Samsung is a prime example of how this can be done well, with its S-Series products aimed at affluent professionals with busy social lives, and promoted on the strength of innovative features and exclusivity. The less-expensive J range is aimed at younger people who cannot afford a premium phone but who value reliability and high-speed connectivity for digital socializing. Messages and pricing that complement one another can broaden a brand’s target audience and at the same time set out clearly how consumers can upgrade to a more upmarket offering.
7. Different places mean varied values
In this market of a quarter of a billion people, it is important to remember that while Jakarta is the centre of commerce and politics, it is still only home to about 4 percent of the population. There are about 6,000 inhabited islands across Indonesia, and brands need to think not only of the differences between urban and rural consumers, but also the differences between cities and regions, which can affect everything from taste in tea to receptivity to advertising. The capital has a far more international, westernized feel to it, and consumers there are more cynical about brand messaging, while the other major Javan city, Yogyakarta, has a slower pace and is more traditional in its respect for hierarchy.
8. Adjust to the new normal
Think about how the current economic conditions are affecting your category and your consumers. Are people buying less frequently, looking for different bundles of services or perhaps smaller pack sizes? Is your category a shopping-list essential, or is it something that might be seen as an indulgence. It’s somewhat counter-intuitive, but some non-essential products can actually benefit from a tightening of consumer belts; when people cut back on big-ticket items, forego a holiday or hang on to their clothes for longer than they normally would, a smaller treat – be it a bar of chocolate, a trip to the cinema or a new lipstick – can become a little indulgent moment of luxury.
9. Physical retail is still what people call ‘shopping’
The rise of e-commerce in Indonesia is a huge phenomenon, with a 39 percent increase in the past year alone in online spending. The e-shopping market and, more specifically, the m-commerce market, is a place all brands should be, but it’s still the case that for the vast majority of purchases, going shopping means physically going to a retailer. There is a shift under way from shopping at wet markets and neighborhood, family-owned warungs in favor of the modern trade, but most people still spend the bulk of their money at independently owned general stores, cafes, restaurants and clothing outlets. The modern trade gives marketers the ability to scale fast and in an efficient way, but more traditional traders often have the ear of their customers and remain important both for promotion and distribution.
10. Provide practical help
Consumers in Indonesia are highly pragmatic, and brands that provide useful information in their communications and packaging can help people make informed decisions about the products that are right for them. This explains why four-fifths of the most persuasive advertisements in the market as measured by Millward Brown show the product and the experience of consumption, compared with just two-thirds of the least-persuasive ads. Marketers must provide consumers with the information they are seeking not just to ensure they are buying the product that’s just right for their needs, but also to provide them with a clear rationale for purchase, a justification for their spending, whether that is based on quality, a premium ingredient or a more emotional reason.
11. Engage with emotion
While facts are important, they are not the whole story. Neuroscience testing on the most effective ads in Indonesia shows that long, fact-packed messages lose viewers’ attention after a while, and more information doesn’t always result in a better consumer understanding. Information works best when integrated into an emotional story; the story is memorable, and the facts that are part of it are remembered, too. The dairy brand Dancow last year told a charming story of a child managing to pour himself a glass of milk without his mother’s help. The link between the FortiGro product and the independence that parents and children want to see was clear and highly memorable because it made an emotional connection.
12. Watch out for happy families
In the quest for emotion in Indonesia, the easiest bet is to portray a family around the dinner table in a ‘slice of life’ vision of harmony. They are inoffensive, certainly, but how effective or memorable they are is now debatable. Relationships and collective achievement are emphasized over individual success, but togetherness and community no longer has to mean only a nuclear family. Togetherness can mean time spent with friends, couples going out together without children, and workmates sharing experiences. As family life changes, with more people going out to work and moving away for job or study opportunities, people are changing the way they think of community, and giving brands new ways to express shared values.
13. Seize the moment
Consumers have different motivations depending on what’s happening around them, and as the time of day and time of year changes, the occasions they’re experiencing means they are open to being drawn to different brands and their values. Brands that advertise around Lebaran, also known as Eid, the end of the fasting month, Ramadan, understand this well. Advertising investment tends to soar at this time, so while it’s a good time to reach out to consumers with a timely message, it’s also easy to get lost in the crowd. To stand out, an idea has to be strong and relevant. But brands should think beyond Lebaran to other key moments on the national calendar and in individuals’ lives; the Java Jazz Music Festival is one such occasion, and this year’s Olympic Games – events people are already talking about that brands can tap into. The soap brand Lifebuoy has done this well, sending hygiene messages and alerts via mobile to people in flood-prone areas, and by talking about cleanliness at prayer time.
14. Be bold and run with a big idea
In a crowded advertising market, it takes a genuinely big idea to stand out from the crowd and give consumers a new reason to engage with a brand – something that goes beyond the product, the category or the brand. And it takes a big splash to get some noise around it.  Nike Indonesia, for instance, launched what has become an iconic campaign for them, called #bajakjkt. The brand recognized that Jakarta’s traffic, pollution and infrastructure can make it difficult for people to run in the city, and used social content and installations across the capital to inspire and help Jakartans to “bajak” (take back) the city, reaching more than 25 million Indonesians.
15.  TV still works
Television still captures by far the majority of advertising spend in Indonesia – 65 percent of all ad investment – and that’s because it still helps brands achieve national reach quickly and effectively. It also carries with it a certain amount of credibility; video advertising on live TV is considered favourable by 36 percent of Indonesians, according to the Millward Brown AdReaction study, compared to a global approval rating of just 29 percent. Video ads on live television are more popular than on any other screen in Indonesia; video ads on mobiles and laptops have approval ratings in the mid-20s, and ads on on-demand TV are viewed like those on other screens rather than as live TV. There is something about being part of what large numbers of people are sharing at the same time that is compelling, both for program creators and advertisers.
16. Digital is where the growth is
As internet penetration increases, so too does digital advertising spend. We have seen similar patterns in other fast-growth markets and can expect a similar trajectory in Indonesia, if not a sharper curve, given that the pace of technological change is happening faster. In China back in 2009, digital represented 8 percent of total advertising spend; within five years, that figure had rocketed to 31 percent. Digital ad spend is now about 9 percent in Indonesia, and with the China growth path in mind, we can reasonably expect to see a third of media spend in Indonesia going into digital by 2020. Already, smartphones are a close second to TV when it comes to Indonesians’ preferred screen for viewing video, especially among the under-25s.
17. Go mobile, Indonesian style
In this market, being where the consumers are means not just being online but being mobile, and many marketers are yet to adjust their investment accordingly. While 32 percent of average daily screen time among smartphone owners is spent on their phone, a hugely disproportionate 92 percent of screen-based advertising investment goes on traditional TV, with the remaining 8 percent divided between all digital screens. Bear in mind, though, that connection speeds are not fast by world standards, and easy-loading content is required, particularly outside major cities, as 4G networks are still being rolled out. Peak mobile connection speeds average 8.2Mbps, which compares to just 1.3 in Vietnam, but 149.3 in Australia. When consumers connect to WiFi, they are used to far slower speeds even than India, the Philippines, Sri Lanka and China broadband speeds; the average is 2.2Mbps.
18. Mix media for the best of all worlds
The real power of both old and new media is not just in deciding how best to split the budget, but in determining distinct objectives for each medium in the mix to get the best out of them all. TV’s starring role in Indonesia is in building brand salience, while digital channels are a powerful way to establish what sets a brand apart from its competitors. New digital channels such as Spotify allow brands to tailor brand messages to certain audiences, and mean campaigns can be more agile. While many brands have been putting TV at the heart of a campaign and using digital as support for the TV work, smart brands are using different media to achieve different objectives. The mobile app launched for Bango soy sauce, for instance, helped customers find and share great local dishes near them, celebrating local cuisine and encouraging sharing.
19. Harness the power of multi-screening
Consumers with a choice of screens aren’t making a choice at all – they’re using all of their screens at once. Indonesians are multi-screening more than almost anyone else in the region, and 70 percent of the time spent on any screen is spent using two or more screens simultaneously. This activity peaks between 6pm and 9pm each day, when people are both watching TV and using their mobile or tablet. More often than not, viewers are doing something on their second screen that’s unrelated to the TV content they’re watching, but one in five minutes of multi-screen time is spent looking at content that does link to the TV. This is a clear opportunity for brands to continue a conversation with consumers as they look from one screen to another.

20. Be social first
Indonesians are a highly sociable people in the physical world, and they have taken their sociability into the online world – and then added to it. Social media is a massive phenomenon in this market, and being online to many people simply means being on social networks. Young Indonesians have grown up sharing their ideas online, and are equipped with the skills to be able not just to consume content but also to create their own. Smart, brave brands are giving consumers the tools and encouragement to create brand-related, highly shareable content. There’s less control, but a far more authentic conversation between friends that brands can be part of.