The Emerging Markets Consumer Today and Tomorrow

Transcription

1 The Emerging Markets Consumer Today and Tomorrow Presentation by Bernd Schmitt

2 2 The middle class around the globe

3 The shift in the economy s center of gravity Danny Quah, Professor at LSE

4 The consumer reference point Throughout the second half of the 20 th century the American shopper was the reference point, the focal point for all marketers. In the 21 st century this is likely to change. 4

5 Shifting the reference point The U.S Consumer Global product launches first in the U.S. Marketing research on U.S. consumers In academia, concepts developed on U.S. consumers The U.S. as the model The Emerging Market Consumer Some new products first launched in emerging markets Research on emerging consumers expanding Non-U.S. theories emerging in academia More differentiated picture 5

6 Example: China Has grown 8% annually since 1979 Fastest growing major economy in the world 1979: Open door policy under Deng Xiao Peng Lifted over 620 million of its people out of extreme poverty In 2010 became the world s second-largest economy, overtaking Germany, the UK, France, and all the rest of Western Europe The Asian Development Bank projects that China will grow at a 5.5 percent average during the two decades to 2030 Nowadays, urbanization is a way to spur additional growth China s recent growth and future growth is closely tied to the middle class 6

7 Importance of the middle class The middle class is the foundation of a modern economy Without it a market-oriented economy cannot thrive The middle class is the most important consumer group The middle class is the key to sustainable economic development in a region and country 7

8 A unified consumption community 8 Unified by what possessions its members strive for, what they buy and how they buy. Consumer packaged goods (shampoos and detergents, cereals and snack foods, soft drinks and coffee), Consumer electronics (televisions, mobile phones) Home items (decors, appliances) Transportation (cars and travel) Services (credit cards and financial products, insurance, health care and education for the next generation)

9 More and more consumption As people enter the middle class, they consume more than before (INCREASED VOLUME) They consume new product categories (NEW PRODUCTS) They differentiate within categories (DIFFERENTIATION) They care about aspirational products (ASPIRATION) They compare consumption (REFERENCE GROUPS) 9 9

10 Upgrading consumption More expensive items Better quality and innovative products International products and brands Shopping in different outlets (shopping malls and e- commerce) Engage in ostentatious consumption 10

11 Middle class and lifestyle "I have read articles that say the middle class are people who drink coffee and like French movies. I like movies and tea, so there's not much difference (in my life) with the lives of the middle class. Hong Kong s Financial Secretary John Tsang 11

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13 Consumer Lifestyle Segmentation (China) Brand Fickle + gender - SOCIALITES Marketing Affected Traditional Functionalists Market Rejectors

14 The market pyramid Luxury goods and prestige brands Affluent consumers Niche marketing Mass market products and brands Middle class Mass marketing Limited consumption Bottom of the pyramid Very little marketing 14 14

15 A model for business in emerging markets GROWTH IN ASIAN MARKETS STRATEGY 15 INSIGHT 15

16 The Latin American Consumer in 2020 More discerning and demanding More likely to make emotion-based decisions More focused on value, convenience, time saving Increased focus on healthier living Increased reliance on social media 16 Source: American Market Intelligence, 2012

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18 The Asian collectivist mind 18 11

19 Asian consumers are Value Shopaholics 19 19

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23 Asian consumers are Functional Hedonists 23 23

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26 The Asian spa 26

27 Asian consumers are Traditional Futurists 27 27

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33 ACI s Pan-Asia Wave Consumer Study One of the most comprehensive and rigorous empirical studies ever done Data collected from April to June 2013 Conducted in 14 languages with translation and back-translation checks Total sample size = 6873 (18 to 64 years). 33

34 Research on Asian consumers MSc educational program Academic conferences Industry events Company projects 34 Asia Business Summit

35 Data markets ASIA DEVELOPED EMERGING JAPAN SOUTH KOREA HONG KONG SINGAPORE CHINA INDIA INDONESIA MALAYSIA THAILAND PHILIPPINES Chubu Seoul Beijing New Delhi Jakarta Kuala Lumpur Bangkok Metro Manila Chugoku Busan Shanghai Mumbai Subaraya Ipoh Chiangmai Cebau Hokkaido Guangzhou Chennai Yogyakarta Penang Khonkean Davao Kanto Chengdu Kolkata Medan Johor Bahru Kinki Wuhan Ahmadabad Kyushu Shenyang Lucknow Shikoku Bangalore Tohoku 35 Patna

36 Conceptual Model FUNCTION LOCAL BRANDS EXPERIENCE FOREIGN BRANDS 36 36

37 Empirical Model FUNCTION LOCAL BRANDS EXPERIENCE FOREIGN BRANDS 37 37

38 Developed Markets FUNCTION LOCAL BRANDS EXPERIENCE FOREIGN BRANDS 38 38

39 Emerging Markets FUNCTION LOCAL BRANDS EXPERIENCE FOREIGN BRANDS 39 39

40 China Tier 21 Cities = emerging developed markets FUNCTION LOCAL BRANDS EXPERIENCE FOREIGN BRANDS 40 40

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42 Investment considerations Invest in businesses that produce categories that are relevant for the growth of the middle class Invest in brands (including luxury) Consider consumer products, services and industrial goods Diversify: Local and global brands Consider regional characteristics 42 42

43 Some attractive categories: The classics Household goods Fast moving consumer goods Beauty products Technology products Cars ` 43 43

44 Think creatively Heath care, insurance, education Environment Real estate Retailing (in store, online, mobile) B2B suppliers 44 44

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