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Nothing reflects the truth more than someone's home. A look
inside the home speaks volumes about the family. When looked at
collectively, homes and families personify the nation.
Everybody involved with the marketing of products and services in
Indonesia would do well to pause, and get a reality check.
Here are some obvious realities. Only three percent of working
Indonesians earn over Rp 2 million per month. Of all the people in the
country, 83 percent have kerosene-fired stoves. Only two percent have a
microwave oven. Yet, 95 percent have a TV set in the home, color or
B&W, bought new, used, or handed down.
To state what should be obvious to everyone (but often isn't),
Singapore is a bigger market for most big-ticket products and high-end
services than all of Indonesia put together.
That's because this is a very large country, with great disparities in
income and a sizable 40 million people living below the poverty line.
But even veteran marketers are dazzled into false conclusions by
looking at the same Mercedes Benzes and Jaguars every day,
going up and down the same main street in the metros of Indonesia. On
the other hand, there are very few markets this big for fast moving
consumer goods. Or public services and infrastructure. Or even domestic
appliances. These observations are based on Roy Morgan Single Source,
Indonesia's largest syndicated survey now expanding to include over
27,000 respondents annually, projected to reflect 90 percent of the
population over the age of 14.
Consumer confidence continues to crawl upward after the crash of
September 2005, influenced also by people's intentions to purchase
major domestic appliances in the near term.
While one in three people may have a refrigerator at home, nine percent
would like to buy one this year. That's many times more than in
Singapore, or Malaysia, or Australia.
Equally significant is the nine percent who have a washing machine, the
six percent of Indonesians intending to buy a gas-fired stove or even
the 1 percent who'd like to buy a microwave oven. If marketers are
wondering why conversion doesn't necessarily match demand, they need to
look again at the consumer financing that will help make the sale. This
is another obvious opportunity for banks, finance companies and
credit-card providers.
Good times or bad times, Indonesia is glued to the TV set. It's the
primary source of entertainment for both rich and poor alike. No
wonder, two out of three families today have some form of video player,
VCR, VCD, or DVD, bought new, used or handed down. Pirated movies are
as cheap as chocolate bars, but they last longer. This phenomenon also
explains the popularity of personal music players, like the old Walkman
and the new MP3 or iPod.
First-time buyers and replacements put together, demand across the
spectrum of entertainment systems remains high when percentages are
converted into actual numbers.
That brings me back to reality checks. Telkom's recent estimate of 62
million current mobile subscribers in Indonesia doesn't add up, even if
their stated rate of 22 percent conversion today included every man,
woman and toddler in their definition of "population". My calculator
says 22 percent of 220 million people is 48 million people, not 62
million. It also says that 20
percent of the 158 million Indonesians above the age of 14 add up to 32
million people. Last week, I made the point that there are just 30
million people who are "regular" subscribers to a cellular network, and
that about 3 million people are planning to join up in the next 12
months, all of whom are above the age of 14.
Current indicators of consumer demand make Telkom's forecast of 138
million "cellular subscribers" by 2011 seem like wishful thinking too
when you pause to remind yourself that the entire population of people
above the age of 14 at that time will only be around 165 million.
Not only will that population include tens of millions living below the
poverty line at that time, but growth rates today are slowing down as
saturation sets in among those who can afford cellular services. You
could argue that those wishful targets could be achieved if services
and handsets were provided free of charge in the future. In which case,
embarrassing profits of a billion dollars or aspirations to join the
Fortune 500 club will turn to dust.
While it's necessary to have a dream, a vision, common sense will
always remain at the heart of good marketing.
The contributor is an advertising professional turned researcher and
consultant, based in Melbourne. He has lived and worked across the Asia
Pacific region, including Indonesia. He remains a regular visitor.
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