grass roots

ConsumerLoop #2, January 1997

New Geographies

In the first ConsumerLoop, we outlined how understanding new geographies would be an essential part of the marketer's focus for the future. To date, many companies have concentrated on the significant operational problems in market entry rather than focusing on the consumer. Yet, the consumer decision process in emerging countries like India and China is fundamentally different and so far only ad hoc resources/ tools have been available.

Through the Loop is now bringing both India SCAN™ and China SCAN™ to the European Market. These are produced and interpreted in Asia by a consortium of research consultancies including Infoplan in Japan, AMR Quantum-Harris in Australia, Standard Research Systems of India and Harris Research of Hong Kong. These are two important multi-dimensional studies/resources to benchmark the consumer in these key emerging economies.

The Hare and the Tortoise

It has been forecast that by the year 2000, about a billion people of the 3.6 billion in Asia will be living in households with some consumer spending power. They will be able to buy basic goods such as colour televisions, motor bikes and refrigerators. Perhaps 400 million will have disposable income at least equal to the rich world average. Jim Rohwer wrote in "Asia Rising" "well before the social transformation occurs, the rise of the Asian consuming classes will transform world markets for almost every product and service." This process will also change consumer expectation at all levels of the population.

Within Asia, there is currently at least one hare and one distinct tortoise, China and India respectively. According to the World Bank, by the year 2020, the Chinese economy will be greater than that of America. However, although substantially behind China in population terms, India will play rapid catch-up in terms of population potential to be just behind China by the end of the second decade into the millennium. Furthermore, the soundness, although heavily regulated, of some of the elements of Indian institutional infrastructure could take the tortoise ahead of the hare, should China become substantially distracted.

The sheer surge of consumer power and energy that these markets will give the world will be enormous. It should be noted that many European marketers are substantially behind their US and Asian counterparts in terms of their prospection and direct investment.

Introducing India SCAN™

This is a syndicated quantitative study designed to probe not only the behaviour of Indian consumers, but also the attitudes and the fundamental values that provide structure to people's daily lives and drive their consumption decisions. General attitudinal data is supplemented by using searching questions in specific product and service categories, linking purchasing and usage patterns with the underlying reasons for those choices and the brands involved. The categories explored in-depth include computers/ electronics, soft drinks, sports, fashions, cigarettes, travel, retail, health, financial services, fast foods, media consumption and alcoholic beverages. For each category, it is possible to undertake a tailored segmentation analysis.

The India SCAN™ sample is based on 3,500 consumers which are proportionately representative of the population by age. Effectively, covering 5% of the total population and 21% of the urban population, the India SCAN fieldwork was conducted in 1995 and interpreted during the course of 1996.

There are critical findings for understanding which target groups look forwards into the future and those who are more conservative. There is a significant proportion of people who are demanding change, who welcome new technologies, new brands, new products and attitudes that improve the quality of life. They are the modern Indian consumers and they are the future.

Introducing China SCAN™

China SCAN™ is a little older than its counterpart and has been successfully sold to many international marketers throughout the world. The sample was based on 2,500 people in five major cities. The fieldwork was conducted at the end of 1994 and considerable interpretation was made during the course of 1995. A similar range of categories is covered in the same way as India SCAN™ such as many consumer product fields, durable items and services.

Again, the same schism is shown in the Chinese population between those who wish to be guardians of traditional attitudes and those who lean into the future. 92% of the sample claim to be excited by the possibilities represented by new technologies but there is also a strong perception about new technologies causing problems.

Facing the Future

It should be emphasised that both India SCAN™ and China SCAN™ these studies are not just the result of imposing a western-style values, attitudes and behaviour questionnaire. They have been rigorously adapted to the cultural contexts in both countries with specific allowance made to approach sensitive issues. Using both these studies enables the marketer to successfully approach new contexts where the consumer decision process must be better understood to maximise marketing success. Even research & development has to be more appropriately focused to meet different consumer demands.

It will become more difficult to approach these countries as consumers become more demanding. There are signs too that Indian and Chinese brands are competing more toughly than before in the marketplace. As seen in various emerging countries, consumers always retain affection for products and brands that they grew up with. For this reason, market share will be harder to gain in the future.

Consumer wealth and the most developed social values and attitudes will be formed first in cities. It is for this reason that city marketing will progressively take over from country/ national marketing. In Asia, it is projected that the region will contain 16 out of 25 of the world's largest cities in 2015. Among the top 10, there will be Tokyo, Bombay, Shanghai, Jakarta, Karachi, Beijing, and Dacca. Consumer presence in these areas will be essential to build substantial volume. Just one example of this has been the gradual expansion of the Hong Kong economy into Shenzhen and other areas of the Pearl River Delta. This follows the trend of blurring national boundaries and the flowering of regions seen elsewhere.

Nor should it be assumed that Asia will become more western as it develops. There is a need to interpret Asia through Asian axioms.

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