Focus on consumers in smaller Southeast Asia cities – Nielsen

MANILA, Philippines – Southeast Asia has a significant population that lives outside its megacities, and firms should adopt differentiated strategies to realize the opportunities that consumers from those areas represent, said Global information and measurement company Nielsen.

The population in the region’s large towns and small cities of less than 500,000 will increase by 18% to 231.8 million people over the coming decade, and account for 80% of the region’s population, based on Nielsen research.

This forms the basis for Nielsen’s recommendation to its clients to target consumers from outside the main megacities as well.

“If there’s one call to action for our clients, it’s that they need to start establishing differentiated strategies to realize not just the opportunities that are obvious in our big cities … but the new opportunities within our smaller cities and our rural areas as well,” said Regan Leggett, Nielsen regional Director for Southeast Asia, North Asia and the Pacific.

Leggett added that if firms don’t have a differentiated strategy to target both markets, it is essential that they develop one in the next two to 3 years.

New waves of growth

The shift of rural populations to urban areas, Leggett said, is happening all across the world, but Southeast Asia is an unusual case wherein a different population story is emerging.

Nielsen sees a few different aspects creating this difference, chief among them is the new waves of growth happening outside the biggest cities in Southeast Asia where conditions are changing.

This has been enabled by organizations attracted to smaller cities due to cheaper land, labor and productions costs.

“Infrastructure is coming into play, and there’s more employment opportunities through business and investment,“ Leggett said.

The new consumption creates a knock-on effect to other parts of the economy as well, helping to drive growth.

Consumer stratification

These new waves of growth have created continued stratification across consumer groups where there are huge gaps emerging between consumers where historically there wasn’t such a big difference.

This stratification is readily apparent in a few areas; the gap between educational attainment, and the wealth gap between rich and poor and people’s access to technology.

This is happening all in the same consumer groups in many instances, so what firms need to do is find commonalities among consumers by looking at the environment they are living in, and identifying key challenges or key lifestyle elements, Leggett said.

That way when a firm looks at product innovation, marketing and sales strategies, they can start to establish the commonalities that give a far wider reach.

The key point is that firms shouldn’t ignore smaller city or rural consumer demographic changes in other parts of the region have already caught experts by surprise.

“There have been too many instances where commentators have been very surprised at the very quick growth in consumption power from rural Indian consumers and also the lower tier consumers from China who have found new ways of meeting limited supply,” Leggett said. – Rappler.com