Digital strategies critical to capturing the
loyalty of 100 million new, wealthier customers
Robust consumption fueled by a rapidly growing consumer class,
rising incomes and urbanization will generate $770 billion in new
consumer spending in the ASEAN region over the next few years,
according to a new report from Accenture. This is creating
tremendous new business potential for consumer packaged goods (CPG)
companies if they can tap into burgeoning consumer demand by
applying digitally-driven strategies to reach the increasingly
connected ASEAN consumers.
The ASEAN economy, one of the fastest growing in the world, is
expected to reach $3 trillion by 2020, and Accenture Strategy
forecasts that over the next five years, 60 million people will
become part of the region’s consuming class, with the means to
purchase goods beyond subsistence for the first time.
According to the report, “ASEAN’s Limited Time Offer: 100
Million New Consumers to Win and a $770 Billion Reason to Move
Now,” rising disposable income will propel an additional 40 million
people into higher income tiers by 2017, enabling them to trade up
to premium products.
The report notes that the CPG industry’s growth in the region,
forecast to increase by nine percent annually to $220 billion in
2017, will be enhanced by the formation of the ASEAN Economic
Community (AEC), which is scheduled to take effect this
year. One of the expected benefits of the AEC is to enhance
the region’s appeal as one of the world’s most attractive consumer
markets by making it easier for companies to do business across
country borders within the region.
“The spectacular growth of the ASEAN economy represents one of
the biggest opportunities on the planet for consumer goods
companies today,” said Dwight Hutchins, a managing director, in
Accenture Strategy, Asia Pacific. “All that growth, however, means
that markets are changing very quickly while digital technologies
lift expectations for more tailored and engaging consumer
experiences. Companies that hope to compete for new consumers must
be bold and move fast if they are to take advantage. The best
advice for CPG companies entering or expanding in the region can be
summed up in four words – be aggressive, move now.”
According to the report, while CPG companies have a singular
opportunity to turn millions of ASEAN consumers into loyal
customers over the next few years, these business face distinct
challenges, from delivering products across a physically fragmented
landscape, to winning the loyalty of rapidly changing
consumers.
Delivering products across the physical diaspora
The region’s highly fragmented market – comprised of big cities
with wealthier consumers, newly urbanizing areas, diverse cultures
and multi-layered distribution networks with minimal reliable
market data – makes it very challenging for CPG companies to reach
consumers efficiently.
For example, while the region’s Tier One cities have networks of
retail outlets knitted together by convenience stores, supermarkets
and hypermarkets, five million “mom and pop” operators handle 75
percent of the region’s grocery sales. Additionally, a relatively
poor transportation infrastructure outside of the region’s major
cities often necessitates the use of several modes of transport to
move goods, which creates additional business challenges and
greater cost.
Reaching and winning the loyalty of rapidly changing
consumers
The report reveals that the region’s highly connected consumers
have a growing tendency to switch brands and products – as well as
rely on digital technologies for all stages of the purchasing
process. CPG companies need to go beyond traditional media channels
to engage them and sustain their interest by providing a more
personal customer experience. According to Accenture Strategy’s
consumer survey findings, only 34 percent of ASEAN consumers are
loyal to specific brands, an indicator that two-thirds of consumers
are potentially up for grabs and vulnerable to switching to
competitor products. Additionally, 70 percent of survey respondents
said they expected more from companies, and 80 percent said they
evaluated brands more closely than ever before.
Competition in the region is coming from all directions
across product categories
In the food and beverage product categories, for example, local
brands remain strong, usually ranking among the top five in the
market by retail sales and have expanded aggressively beyond their
traditional markets and country borders. At the same time, foreign
multinationals are expanding their ASEAN footprints, total inbound
investment for the CPG and retail industries has grown
significantly in recent years, while mergers and acquisitions have
intensified, particularly among Japanese multinationals that are
targeting the region.
ASEAN’s Limited Time Offer: Strategies for Customer
Success
“In order to overcome the hurdles to achieving success in
maintaining and expanding customer loyalty in the ASEAN region, CPG
companies must take the steps right now that will help them lock in
consumer demand, ensure that their products are within easy reach
of the markets they serve and build an operating model that
balances regional efficiency with local agility and data-driven
insight,” said Rajat Agarwal, managing director in Accenture’s
Asia-Pacific Consumer Goods and Services practice. “By 2020, we
expect that the ASEAN economy will be the sixth largest in the
world at $3 trillion.”
Accenture’s report recommends three strategies to CPG companies
seeking to cement customer loyalty in the region:
Lock in demand from new and more affluent consumers
- Move fast, spot trends and act on
opportunities first
- Speak directly to consumers and their
needs
- Engage consumers through digital
channels
Ensure supply is only a fingertip away
- Invest in relationships with reliable
retailers, distributors and wholesalers by creating a network
to reach markets of every size
- Optimize in-store execution
- Use analytics to predict demand and
plan supply
Build an effective operating model
- Adopt a regional model focused on
capability and value
- Balance regional efficiency with demand
for local agility and data-driven insight
“With so much at stake, leaders of consumer products companies
must view the ASEAN market opportunity as a limited time offer and
do all they can now to secure their standing in the region,” said
Agarwal. “Both multinational corporations and local companies will
need to continually invest in the right strategies and capabilities
to expand their presence and increase consumer engagement. Winning
consumer loyalty demands fast execution of a clear plan while
having the flexibility to contend with the region’s enormous
diversity, fragmented geography, and rapidly changing consumer
behaviour.”
Methodology
To gain insights into new opportunities for CPG companies and to
better understand the changing market dynamics and preferences of
consumers in the ASEAN region, Accenture conducted a survey of
1,800 consumers across Indonesia, Malaysia, the Philippines,
Singapore, Thailand and Vietnam as well as in-depth country
research and analysis on market, regulatory, consumer and retails
trends, based on data from sources including IHS Global Insights
Inc. and Euromonitor International.
About Accenture
Accenture (NYSE:ACN) is a global management consulting,
technology services and outsourcing company, with approximately
319,000 people serving clients in more than 120 countries.
Combining unparalleled experience, comprehensive capabilities
across all industries and business functions, and extensive
research on the world’s most successful companies, Accenture
collaborates with clients to help them become high-performance
businesses and governments. The company generated net revenues of
US $30.0 billion for the fiscal year ended Aug. 31, 2014. Its home
page is www.accenture.com.
Accenture Strategy operates at the intersection of business and
technology. We bring together our capabilities in business,
technology, operations and function strategy to help our clients
envision and execute industry-specific strategies that support
enterprise wide transformation. Our focus on issues related to
digital disruption, competitiveness, global operating models,
talent and leadership help drive both efficiencies and growth. For
more information, follow @AccentureStrat or visit
www.accenture.com/strategy.
AccentureNiki Whang, + 65 6410
8473niki.j.whang@accenture.comorAnthony Hatter, + 44 207 844
5525anthony.hatter@accenture.com
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