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If managing a portfolio of brands requires the constant
untangling of different elements, as in a mystery tale, how do you stay
on top of the continuing mystery tale that is the consumer marketplace?
That's a question I've been asked because of a remark I made in this
column last week.
More than anything else, common sense is advisable. Regardless of the
product, whether it's instant noodles or a 4WD, a good starting point
is to recognize the context, the marketplace, in its entirety.
Just because cola drink sales in general or a particular brand of
mosquito coils are not doing as well as they were in 2005 doesn't mean
the entire economy is sagging. That kind of jumping to conclusions is
infantile and I've heard it too many times.
It could simply mean that some erstwhile consumers may have made
sacrifices, others may have down-traded, some may have found better
alternatives or value-equations. Many brand managers unknowingly fall
prey to tunnel vision, with access to limited information focussed on
their product categories alone.
A finger on the pulse of the marketplace as a whole may offer a
different diagnosis of the product category or brand in question.
Consumer Confidence is a good place to begin putting that finger.
In Indonesia, the consumer confidence index continues to creep upward
and currently stands at a healthy 113, well above the neutral 100 mark.
That's a national average, with the middle and lower classes the most
confident, and the affluent and the poor respectively at the top and
bottom ends of society less so.
But the most appropriate use of the index is to see it through the
prism of the category in question, say Cellular Phone Intenders or
Grocery Buyers, for example. When one does this, a different picture
may well emerge.
Before rushing to that tailor-made cluster or CRM database, another
useful asset is a societal segmentation tool, like Values Segments, to
evaluate the performance of a category or a particular brand. Last
week, I used it to demonstrate the fact that very different users of
shampoo "Brand Used Most Often" can patronize the same brand from
across the diverse sections of society, or switch between brands within
the same product category.
Another capability to cross-check assumptions is to understand how
different consumers within the same product category have different
attitudes or opinions that affect the brand. Under normal
circumstances, these trends don't fluctuate much over each quarter of a
given year.
External circumstances, such as fuel-price hikes, inflationary
pressures or even natural disasters, can create temporary volatility.
This seems to be a part of life in developing economies, where large
swathes of society are financially fragile.
While almost every other business has recovered, the industry that
continues to be most affected by the twin fuel price hikes of 2005 is
the new car trade. The easiest thing to do in tough times is to drop
prices. Any fool can sell cheap. Looking beyond the obvious and at the
different layers that make up the changed "mystery" is the only way to
find an appropriate way forward for the brand.
These observations are based on trends continuously measured by Roy
Morgan Single Source, Indonesia's largest syndicated survey, which is
now expanding to include over 27,000 respondents this year, projected
to reflect the behavior of 90 percent of the population over the age of
14.
In the relatively small market for cars in Indonesia, the demand in
rural areas is difficult to read with certainty. Even in urban areas,
the demand for use as mikrolet by individual owners also needs to be
untangled.
But a look at the way the urban market has behaved over the last two
years reveals the volatile fortunes of consumer demand for cars. The
chart does not reflect demand from government, institutional or
corporate bodies.
The first petrol price hike in March 2005 triggered a dip, the second
caused a nose-dive from which recovery has only just begun more than
twelve months later. I would expect greater fragmentation to continue
as more manufacturers make their mark, taking advantage of changing
attitudes.
The demand for used cars overtook the demand for new cars in September
2005, and attitudes to cars changed as regards priorities. But I have
yet to see a fundamental change in the way cars are marketed in
Indonesia.
In most dealerships, the carmaker's new models remain idling on
display. Trade-ins aren't as encouraged as you would expect in these
changed circumstances, nor do I see car loans being advertised in the
media, screaming out attractive weekly repayment terms to nudge
customers into swapping their old cars for new ones.
To point out the obvious, the two segments can be catered to by the
same dealership, with trade-ins and on-the-spot financing meeting the
needs of both types of customer, one feeding the other. Two sales
opportunities instead of one, both making money, both satisfying the
customer.
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