TNS GEMs Newsletter April

8/6/2019 TNS GEMs Newsletter April

1/11

gems :APRIL 2010 Page No. 1

gemsINSIGHTS FROM EMERGING MARKETS

n Yes we can!

n ThesocialdynamicsofmicronanceandentrepreneurshipattheBOP

n EvaluatingsocialmissionprojectsinemergingandBOPmarkets

n AreyoudigitallyawaketoAsia?

n LetterfromChina


2/11


It gives us great pleasure to bring youthe rst issue of GEMs devoted tobring you insights and informationfrom Rapid Growth EmergingMarkets.

James FergussonGlobalDirectorRapidGrowthandEmergingMarketsJames.Fergusson@tns-global.com

Ashok SethiConsumerInsightsDirectorRapidGrowthandEmergingMarketsAshok.Sethi@tns-global.com

Welcome to GEMs!

Werealizethatitisdifculttoprovideyouwithanin-depthanalysisofconsumersinthesevastandheterogeneousmarkets.Howeverwedohopeweareabletoprovideyouwithsomefoodforthoughtandalsowhetyourappetitetodigdeeperandlearnmore.

ThisissueisdevotedtoconsumersattheBottomofthePyramid(BOP).BottomofthePyramidwasatermrstpopularizedbyDr.C.K.PrahaladprofessorofstrategyattheUniversityofMichigan.Dr.Prahaladsaidthatthisgroupisnotjustworthyofcharitybutcanbeanattractive,albeitavalueconsciousconsumersegment.

Dr.PrahaladproposedthatofferingrelevantandattractivelypricedproductstoBOPconsumersisactuallyanactofengagingthemandbringingthemfromisolation,therebymarryingthetasksofpovertyalleviationandbusinessdevelopment.

Researchingthistargetgroupposesitsownhurdlesandchallenges.Thetaskdemandsagreatdealofsensitivityandunderstandingofthetargetgroup.TNShasbeenableto

garneravastamountofexperienceinstudyingBOPconsumers.Inthisissuewebringtoyouaglimpseofsomeofthekeythingswehavelearnt.

InadditiontoseveralarticlesfocusingonBOP,thisissueincludesanarticledescribingtheinternetrevolutioninAsiaanditsimplicationsformarketers.InternethasgoneonitsowntrajectoryinAsiaandinmanywaysAsiahasembraced

Web2.0morewholeheartedlythantheWest.

Lastly,thewordsofeconomistsandtheirexpectationsofChineseconsumerssavingtheworldbycopyingAmericanconsumersspendinghabitsprovidesagreatsourceofdebateandevenamusement,andisthesubjectofourrstregularLetterfromChinacolumn!

Wesincerelyhopeyouenjoyreadingthisissueandlookforwardtoyourcommentsandsuggestions.

PHOTO: INDIA BY ANUJ ROY


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yes we can

Inthreedecades,Grameenbankhasempowered40millionpeopleinoneoftheworldspoorestcountriestosayYeswecan.AchievedthroughmicroloansoflessthanUSD10each,Grameenhaschangedthefortunesofseveralgenerations.Whatsmore,unlikethestrugglingbanksofthedevelopedworld,Grameenboastsarecoveryrateofover98%!!

PriortoGrameensinitiative,theworldspoor(overhalftheworldspopulation)havebeenregardedasunfortunatevictimswhoneedtoberescued.AsaresultofGrameenandothersuc-

cesses,thismindsethaschanged.TheBOPconsumerisnowperceivedandexploredasnotjustaneconomicallyproductiveunit,butalsoasapromisingandgrowingmarketwithacollectivebuyingpotentialofUSD5trillion!

Theseconsumersrepresentamarketopportunitythattheworldcannotaffordtoignoreorneglectfromaneconomic,socialandhumanperspective.BOPconsumersrepresentovertwothirdsofthepopulationintheemergingmarketsthateve-ryoneishopingwillshowthewayoutofthedownturn.Theyformasignicantpartofthenascentandvirginpotentialthatmustbeunlockedtorealizethepromiseinthesemarketsandareevenmorecriticalforlongtermsocialstabilityandprosper-ity.

Witheveryoneeyeingtheopportunity,muchhasalreadybeenwrittenabouttheparadigmshiftsrequiredinthebusinessmodel.Theneedtorevisitprice-product-qualityequations,theneedforinnovation(thatisbuiltfromthegroundupthroughcommunityinvolvement),theneedforcapitalefciencyandcoarsesegmentation,theneedforaccessibilityandaffordabil-ity,andmostimportantly,theneedforeducation,skilldevelop-mentandcommunitybuildingthatwillempowereventhemosttimidofthemalltosayYeswecan.

Brandsuccesses,likeeverythingelseintheBOPsegment,defythepowerofdominantlogic.Overlookedandignoredbymostmarketersasacommoditymarket,theBOPconsumerdemonstratesasurprisingandstrongpreferencetobuya

brandoveracommodity,aslongasthepropositionismadeaccessible and affordable.

Brandsarevalued,evenloved,astheyofferreassuranceandcertaintyintheseconsumersuncertainlives.Andoncewonover,BOPconsumersrewardthebrandswithunshakeableloyaltygivingearlymoversastrongcompetitiveadvantage.TNSaccumulatedknowledgeandunderstandingofBOPconsumershasresultedintheidenticationof9pertinenttipstobuildingbrandpropositionsthatwillsucceedamongBOPconsumers.

Yes we can!Bottom of the Pyramid (BOP) was a term first popularized by Dr. C.K. Prahalad professor of strat-egy at University of Michigan, who wrote a book called The Fortune at the Bottom of the Pyramid.

In this article Poonam shares her experience in developing marketing strategies for this segmentand explains that branding is as important for this group as any other segment.

Poonam Kumar, Director of Brand Strategy of Emerging Markets, TNS AP MEA

PHOTO: CHINA BY SHAWN WANG PHOTO: EGYPT BY STEVE HAMILTON-CLARK


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one9 tips to building brand propositions that succeed in BOP markets

Thebrandmustbeanchoredonstrongfunctionalitythatmakesatangible,measurabledifferenceintheconsumerslife.Thisimpliesthatinformation,educationandreasonstobelievearecoretoreassuringthattheirmoneyiswiselyspent,tobuildingtrustandarelationship.

twoItisequallyimportantthatthebrandservesasanemotionalanchorasourceofhope,optimismandprotection.

three

four five six

seven eight

Pricingandqualityarenottangentialvectors.Thebrandmustcombineworldclassqualitytocounterhostileinfra-structurewithaffordablepricing.Theentirebrandproposi-tionthereforerequiresreengineeringthroughinnovationonproduct,packaginganddeliverymechanisms.

Pricingmustbeempathetictotheconsumersbudget,butthisdoesnotmeanthattheBOPconsumeralwaysbuysthecheap-estbrandavailable.Theyrespondfavourablytoademonstrationofvalueandarewillingtopayincrementallymoreforit.Family

carepropositionsalsograntpermissiontospendalittlemore.

Expertisecredentialsareasessentialasindevelopedmarkets.Theroleofexpertisehoweverdifferstheneedisnotforinnovationandnewnews,butexpertiseisrequiredtobuildtrust,visibilityandreassurancethattheyaregetting

thebestthattheirmoneycanbuy.

Internationalpedigree,aspirationalamongtheemergingmid-dleclass,islessrelevantandcannotbethesolemotivatingproposition.InmarketsofChina,IndiaandAfrica,localbrandsthriveamongtheseconsumersandareoftenlookedatfor

inspirationandlearningbyMNCs.

ProtectionandForticationpositioningthemesbothphysicalandmentalresonate.Enablingcleanclothesthatgetrecogni-tionandapproval,teathatboostsmentalandphysicalenergydirectedateitherselforfamilyenhancethebrandsappeal.Whateverthepositioningtheme,simplicity,inclusivenessandaccessibilitymustbeintegraltotheproposition.

Thepropositiondoesnotalwayshavetobeaboutthebarenecessities.Despite,orperhapsbecauseof,themanypress-inglifeconcerns,abrandthatpromisesfun,surprise,sensorialpleasureoraspecialmomentbringscheerandiswelcomedintotheconsumerslife.Thisisespeciallyneededfornon-essentialconsumption,butcanaddvalueinallcategories.

nineFinally,itisnecessarytorecognizethatalthoughmostsuccessesareonafliativepositioningthemes,BOPneedstospantheentirehumanneedsspectrum.Themesaboutexcellenceandsuccesshavealsobeenleveragedsuccessfully.Brandsventur-ingintotheassertiveneedsdomainhavedoneiteffectivelythroughpromisesofmasteryoverbudget,admirationandenvyofsuperiorhomemakingskills,andparentalprideandambition.Rebelliousnessandexclusivityhoweverhavenoplacehere.Inclu-sionisimportantasismeaningandpurpose.Thepromisehastobeaboutempowermentratherthanexclusivity;challengeshavetobeaboutchangingunfairpracticesratherthanedgyurbanrebelliousness,superiorityshownwithagoalratherthanegosatisfaction.

THE TIME HAS COME FORUS TO NOW CONSIDER ADIFFERENT PYRAMID ONETHAT IS INVERTED BASEDNOT ON INCOME, BUTON OPPORTUNITY ANDGROWTH.

And yes, we can!

Yes we can!Continued from previous page

FORMOREINFORMATIONCONTACT:

[email protected]


5/11


social dynamicsThere has been a huge collective action involving millionsof poor people and thousands of NGOs, activists, inter-

governmental organization officials, scholars and other

development experts around the issue of microfinancing

in developing markets. Figures provided by the report

State of the Microcredit Summit Campaign constitute an

impressive snapshot that portrays a several fold growth in

the level of microfinancing: from 2000 to 2006.

Inthisarticleweanalysethelinkbetweenentrepreneurshipandmicronance,takingArgentinaasacasestudy.ResearchconductedbyTNSinArgentinashowsthat:a.Entrepreneurshipisaclearneedamongthepoorandalsohasagreatpotentialfortheirnancialprogress.b.Whenthatneedisfullledthroughmicrocredits,itgeneratesimportantchangesintermsofmaterialprogress,developmentofsocialcapitalandempowermenttothemostvulnerableandpowerlesssectorsofsocieties.

Entrepreneurship and its constraints

Entrepreneurshiptothepooroffersawaytoimprovetheirliveli-hoodandhenceonepossiblepathformaterialsurvival.Afairlysignicantproportionofthepoorarealreadyengagedinentre-preneurialactivities.ResultsfromaTNSArgentinanationwidesurveymeasuringbehaviourandperceptionstowardsentrepre-neurshipandnancialservicesamongArgentinecitizensatthebaseoftheincomepyramidshowsthat2outof10persons

livinginpovertysaythattheyhavedevelopedproductivebusi-nessesontheirowninthepast.

Thesurveyalsoshowsthattheproportionofpotentialentre-preneursishugeandamountstoalmosthalfofArgentinepoor.Fiveoutoftenpeoplelivinginpovertysaythattheyarewillingtobeentrepreneursandtodevelopaprojectoftheirowninthefuture.

Whydoesthisentrepreneurialspiritremainlatentanddoesitnottranslateintobusiness?TheanswersobtainedbyTNS

The social dynamics of micronance andentrepreneurship at the BOPConstanza Cilley, General Manager, TNS Argentina

Microcredits are a critical tool againstpoverty and a wise investment inhuman capital

KoAnnan,formerUNSecretary-General

Gladys, a participant of the microcredit programme, washes cars for a living. She has been able to buy a professional vaccum cleaner.

PHOTO: ARGENTINA BY DELFINA ROSELL


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The social dynamics of micronance and entrepreneurship at the BOPContinued from previous page

FORMOREINFORMATIONCONTACT:[email protected]

Argentinapointtostructural-systemicconstraints:Almosthalfof

poorArgentines(47%)saythatlackofnancingisthemainob-

stacletheyfacetodevelopproductiveprojects.Moreover,74%thinkthatobtainingacreditoraloanisdifcult.Only3%report

havingtriedtoobtainanancialserviceasthereisastrongperceptionthattheireffortsareunlikelytoberewarded.

Almost8outof10individualsexpressthatthemainbarriersforaccessarebankstermsandconditions.Accessibilityto

theformalnancialmarketisrareforthepoor.Theyvoicetheirdiscontenttowardsthehighlevelofincomerequirementsetby

thebanks,andalsotowardsguarantorrequirementsandinter-

estrates.

Clearlythissegmentofconsumersfeelintimidatedandalien-atedbythetraditionalbanks-infactsomebanks,consciousof

thedistance,havetriedtocreateanenvironmentthataimsto

differentiatethemfromtraditionalbanks(anexampleofthisisFiegranpoder,whereveryloudmusicwelcomescustomersand

staffdonotweartiesbutinformalt-shirts).

Microcredit in action

Clearlymicrocreditsforthepoorprovideaninnovativesolutionbylinkingpotentialentrepreneurswithnancialresources.While

severalimportantbarriersneedtobeovercometomakethishappen,whenitdoesmaterialise,theresultsareverygratifying.

TNSArgentinaconductedanexploratorysatisfactionstudy*onfemalebeneciariesofmicrocredit,livinginpoorneighbour-

hoodsinGreaterBuenosAires.RespondentswerereceivingmicrocreditsfromMujeres2000**-anNGO.Mujeres2000**

fosterscommunitydevelopment,placingthefocusontechnical

assistanceandhumansupport.

Satisfactionamongrecipientsishigh-96%aresomewhator

verysatised,94%wouldrecommendtheserviceprovidedand96%wouldrenewit.Thedirectbenetsofthecreditareclearly

drivingthesatisfactionallowingthewomentodeveloptheirbusinessprojectandasaresultattainacertainlevelofeconom-

icstability.Almostallsaidthattheynowhaveabetterqualityof

lifethanbefore.

Apartfromthedirecttangiblebenet,thebroaderandpsycho-

logicalbenetsaresignicantandmostwomensaidthatthey

nowenjoymoreprominenceandrespectinhouseholddeci-sionmakingthantheydidbefore.Microcreditnotonlyprovides

nancialcapitalbutalsobuildssocialcapital(whichreferstothenetworks,normsofreciprocityandtrustthatfacilitatecoordina-

tionandcooperationformutualbenet-Putnam1995)forthebeneciaries.

Microcredit opportunity

Theworldwidegrowthofmicrocreditsshouldbeseenwithopti-

mism.Theygeneratematerial,psychologicalandsocialbenets

forthepoor.Butmuchmorecanbedonebythedevelopmentcommunity,donorsandcompaniestotranslatemicrocredits

intomacrochanges.Companiesneedtolookatthisareanotascharitybutasaviablewaytogenerateprotswhilefacilitat-

ingeconomicprogressfortheconsumersatthebaseofthepyramid.However,approachingthistargetgroupanddesigning

aproductwhichmeetstheirneedsrequiresacarefulunder-

standingoftheirneedsandovercomingthebarriersandcurrent

perceptionsofbankingandnancialinstitutions.

*Intheyear2006inArgentina,therewere98microcreditorganisations,18bigand80small,with30,400clients/beneciariescorrespondingtoanover-allportfolioof$40,100,000.Thesegmentationlinebetweenthetwogroupsororganisationswas$200,000and400clients.

**Youcanhaveaavouroftheirworkathttp://www.mujeres2000.org.ar

Almost 8 out of 10 individualsexpress that the main barriers for

access are banks terms andconditions. Accessibility to the formal finan-cial market is rare for the poor.

Family is a key role in Emerging Markets. Maria (back row) also participates in themicrocredit programme. Her husband, grandson and friend have helped her notonly to maintain the credit but also to build their house.PHOTO: ARGENTINA BY DELFINA ROSELL

Weekend groceries fair

PHOTO: ARGENTINA BY DELFINA ROSELL


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i i

StudyingBOPmarketsrequiresaspecialsensitivitytothetargetgroupaswellastheissuesinvolved.Inthisarticle,RagsandAstitidemonstratehowasimpledeviceofaninnovativestickerbaseddiaryhelpedincapturingaccurateinformationonbrush-ingbehaviourinchildren.ThisarticlehasbeenadoptedfromthepaperpresentedattheESOMARCongress2009,whichwontheawardfortheBestMethodologicalPaper.

Behaviour change in social mission projects

SocialdevelopmentprojectsinBOPmarketsfocusonengineer-ingbehaviourchangeinsomeformoranotherastheirultimategoal.Thebehaviourtobechangedvariesacrossprojectsfromchangingfoodhabitstowashinghandsbeforeeating,andfrombrushingatnighttocondomusageforAIDSprevention.Thetargetgroupalsovariesfromgeneralpublictospecialistslikedoctorsorbusinessleaders.

TheincreasingdirectengagementoftheprivatesectorandlargeMNCsintheseprojectsisbringingwithitmorestringentaccountabilityandrigorousevaluationofrealROIintermsoftheendbehaviourtobechanged(theequivalentofsalesormarketshareincommercialworld).

Unilever Oral Care social mission project

UnileverOralCareisinvestingsubstantiallyinsocialprojectstopromotenightbrushingbehaviouramongchildreninthe4-8yearsagegroup,inIndonesiaandotherBOPmarkets.The

successofthisprojectwouldtrulybeawin-winsolutionforallstakeholdersindividuals,societyandtheprivatesector.UnileverhadwantedtocomprehensivelyevaluatetheirsocialmissionprojectinIndonesiaintermsoflongtermbenetsduetoincreaseinnightbrushingandforoptimizingthecommunica-tionstrategy.Theresearchchallengeinaccomplishingthiswas:

n Innovatingareliablebehaviourpredictiontooltomeasurebrushingfrequencyandnightbrushingwithouttheclaimedresponsebiases.

Evaluating social mission projects in emerging andBOP markets

n TakingintoconsiderationBOPmarketrealities(lowerSESandliteracy)andthechildrentargetgroup.

Theissuestoaddressindevelopingthemethodologywere:

n Whatshouldwedotoenableourrespondentstoproviderealbehaviourinformation?

n Whatshouldwedotoensurethatthemothershadknowl-edgeofchildrensbehaviour?

n WhatshouldwedotoensurethatitissimpleandrelevantforBOPmarketrealities?

Basedonthese,theguidingprincipleswesetoutwere:

n Wemusthavearecordoftheinterestbehaviour(brushing,brushingatnight)overaperiodoftime(oneortwoweeks)toensurethatwearemeasuringregularbehaviour.

n Consumerswilltellorrecordactualbehaviourifwemakeiteasierforthemtodosowithoutbiases.Itistheresearchersresponsibilitytoeliminatebiasesarisingoutoffocusedmeasurementofinterestbehaviourwheretherespondentknowswhatisbeingmeasuredandhencebiasescometooperate.

n Measurementmethodologyandtoolsmustinvolveboththemotherandthechild.

n Thebehaviourrecordingshouldideallynotinvolveanywriting.

n Itshouldnotplaceundueburdensorspecialtrainingrequirementsforanyofthestakeholdersintheprojectstherespondent,theeldinterviewerandthedatadigitizer.

n Lastbutnottheleast,itshouldbeeconomicaland affordable.

Raghavan Srinivasan, Managing Director, TNS Indonesia

Astiti Suhirman, Business Director Indonesia

PHOTO: INDONESIABY QUINNY CHAN


8/11gems :APRIL 2010 Page No. 8

Even in these high technology timeswe all live in, its possible to developsimple solutions to complex problemsthat work well in practice in emergingand BOP markets.

Evaluating social mission projects in emerging and BOP markets

Continued from previous page


[email protected] [email protected]

Theguidingprinciplessetoutnaturallyledustotheinnovativebehaviourmeasurementmethodology-DailyActivityStickerDiary

n Wherechildrenandmothertogetherrecordalldailyactivitiesoftheirchildinourtargetgroup.

n Bytakingouttheappropriatepictorialsticker(fromastickersheet)andpastingitinthedailyactivitydiary.

n Foroneortwoweeks.

Thenaldiaryusedforthestudywasco-createdwithconsumersinaniterativelaboratoryconsideringthemanydetails,suchas:whattimeslots,whatactivities,howmanystickersforeachtoprovidefor,andinwhatformatshoulditbetoensureeasyusage.OurnalDailyActivityStickerDiarywasinadailysheetcalendarformattobehunginthemainliving area.

Study findings and learnings

Wenowhaveover3,000weeksofbehaviourmeasurementdatausingthismethodologyandthesalientndingsare:

n Themethodologyprovidesreliablebehaviourdata-brushingfrequencyandtheproportionofthepopulation

brushingatnightregularlyobtainedfromthisstudywasmuchlowerthanestimatesorassessmentsfromotherstudiesbasedonclaimedbehaviour.ItwasalsomoreinlinewiththetoothpastemarketsizeinIndonesia.

n Thissocialmissionprojectwouldinthelonghaulleadtomarketdevelopmentaswell-regularnightbrushingcomeswithanincreaseinbrushingfrequency.

n Realisticbehaviourdatalinkedwithattitudescanpowerfullyguideinterventionsoptimizationitledtoidenticationofdeterrentstonightbrushingnotyetexploredincommunication.

Summary and suggestionsEveninthehightechnologytimeswealllivein,itispossibletodevelopsimplesolutionstocomplexproblemsthatworkwellinpracticeinemergingandBOPmarkets.Inthenalanalysisitisallaboutstartingoutwiththerstprinciplesofgooddatacol-lectionandpatientlyaddressingalltheissues.TheDailyActivityStickerDiarybasedbehaviourmeasurementmethodologywehaddevelopedcaneasilybeextendedtobehaviourmeasure-mentinothersocialmissionprojects(suchasgeneralhygiene,nutrition,sexualbehaviour)andtocommercialmarketingissueswherereliablebehaviourmeasurementisimportant.h



The rest of the world is lagging far behind Asia in digital consumerengagement. LEE RYAN and BERNICE KLAASSEN are not sur-

prised. Western organizations seeking a future in Asia need to find

the right approach to research if they want to get off first base.

Guesswhat?Emergingmarketsdonotevolveinthesamewayaswest-ernmarkets.InFebruary2008,Harvard Business Reviewpredictedonlineworldsasoneofitsbreakthroughideasoftheyear.InAsia,theyveknownaboutthisforsometime.Whenitcomestodevelopmentofthedigitalspace,WesternassumptionsaboutAsiahavebeenslowtoformatbest,and,atworst,plainwrong.Intheonlineworld,AsiahastakendifferenttrajectoriestoactuallygobeyondbothEuropeandNorthAmerica.ThishasprofoundimplicationsnotonlyforWesternunder-standingofAsiasdevelopingeconomiesandcultures,butforhowitdoesbusinesswiththem.

Whats happened?

HowdoweknowthattheUSandEurocentricvisionoftheInternetislosingsignicance?Heresaclue.384millionChineseinternetusers.TherearenowmoreinternetusersinChinathanintheUS,andAsiaisalreadyaccountingforover40%oftheworldsglobalonlinepopulation.AnditisnotjustaboutthenumberofpeoplegoingonlineinAsia,itisalsowhattheydowhentheyareonline.

InAsia,socialnetworkingparticipantshavetakensuchwebsitestoadif-ferentlevel.InstantmessaginghasneverbeensuchahitinEuropeandNorthAmericathatithasbeeninAsia.Connedbytheirownlanguages

andusingtheirownculturalpreferencesforcommunicating,Japan,Ko-reaandChinahavecreatedtheirownversionsofthesocialweb.Thesethreenationsareevolvingindifferentwaystogainandkeeptheirowninternalmarketadvantages.ComparedtotheUSandEuropeansocialmedia,companiesstruggletomonetizetheirsocialmediaapplications;inKoreaandChina,QQandCyworldarealreadyprotable.ThismakesitdifcultfortheUSandEurocentricglobalplayerstoseeawayin.

Cultural constraints, online openness

Whatarethereasonsforthesedifferences?Technologyisovercominglocalconstraints.Everybodywasawareofthesocialandculturalcodes

Are you digitally awake to Asia?Using research to engage Asia on Asias terms

There is the notion that othercountries and cultures are just

playing catch-up sometimes leap-frogging particular technologies, butalways developing along a trajectory

set here about the right ideas andproducts. It is refreshing to haveAmerican engineers return fromJapan or China or India and say,Oh my God! You will not believe

what I saw.

GenevieveBell,Intel.

Lee Ryan, Regional Qualitative Research Director, TNS AP MEA

Bernice Klaassen, Head of Interactive Research, Singapore and Hong Kong



onlinespaceswherepeoplecongregateastheiravatarsoronlinepersonatochat,createand

trade.ItisapredictionofwhatweareonlyjustbeginningtoseeinEuropeandtheUS.GartnerConsultingpredictsthatby2011,80%ofactiveInternetuserswillhaveanavatar.

JustbecausetheonlineworldisfollowinganevolutionarypaththatWesternmarketersdidnotpredict,thisisnotimetobeaversetothemetaverse.Fearnot.Therightkindofapproachtoresearchwillprovidetheentitlementtosomeoftheanswers.

So how do we keep upwith this fast-paced digitalenvironment, both from a

research and businessperspective? It calls fora careful, three-prongedapproach: observation;conversation; interaction.

Are you digitally awake to Asia?Continued from previous page


[email protected] [email protected]

thatinhibitbehaviourinAsia.Nobodypredictedthattheadventofonlineworldswouldtapintoadesireforexpressionthatliesbeneath.

Intheirpersonallives,AsianonlineusershavegraspedthefreedomandanonymityofferedbytheinternetandtakenitwaybeyondtheexperienceofWesterncultures.Today,40-50%ofonlineAsiansareinvolvedinuser-generatedcontent,comparedtojust10%intheWest.Thewholedevelopmentofweb2.0ismuchfasterinthispartoftheworld.ThereissubstantialevidencethatAsianconsumersaremorecomfortableexpressingthemselvesonline.

Sohowdowekeepupwiththisfast-paceddigitalenvironment,bothfromaresearchandbusinessperspective?Itcallsforacare-ful,three-prongedapproach:observation;conversation;interaction.

Engaging the new consumer

First,Observation.Thisisaboutlistening,gettingclosetowhatpeoplearesayinganddoingonlinethroughresearch:creating

avirtualclosenessthroughbuzz-monitoringsoftwarethatcananalyseusergeneratedcontentsemantically.TNSCymfonyallowsclientstotrackconsumergeneratedcontentinrealtime.

Second,Conversation.InAsia,duetoculturalconstraints,thetraditionalfocusgroupisnoteffectiveonline.TNSIncubatorisaweb2.0researchtoolthatenablesclientstohavedifferenttypesofconversationsandengageconsumersdifferently.DevelopedinAsia,ithasimmediaterelevancetowhatconsumersaredoinghere,online,today.

Third,Interaction.Participationcannothappenwithoutthersttwostages.Thismeansgoingfurtherthanaclassicagencyrelationship;

clientsandresearchagenciesarenowcollaboratingandco-creat-ingwiththenewconsumers.Toengageconsumers,clientsneedtoensurereciprocity.Consumerstimeandattentionmustbeearnedandrewarded.Activitiessuchascontestsandcompetitionshelptochangethetypeofinteractionbetweenbrandsandconsumers.

The new reality

Truthis,WesternmarketershavenotimetocometotermswiththeInternetastheythinkitis.ThenextversionisalreadyborninAsiawhereconsumersaremakingthemetaverseareality:multiple


11/11gems :APRIL 2010Page No. 11

The magic eight

EightisaluckynumberinChina.TheopeningceremonyofBeijingOlympicscommencedontheeighthdayoftheeighthmonthof2008at

8.08.08pm.Thecarnumberplateswithafeweightsgoforthousandsofdollarsinauctionsandtheconsumerwillwillinglycoughupasignicant

premiumtoacquireamobilephonenumberwhichisfestoonedwitha

coupleofeights.

Eightisalsothepercentagebywhich,theeconomistsbelieve,theChineseeconomymustgrowtoprovidejobstothemillionsofstudents

graduatingfromUniversities,ortheruralfolksmigratingtothecitiesinsearchofabetterlife.Thersttwoquartersof2009weredifcultChina

couldonlymusterupa6.1%GDPgrowthinQ1of2009andjustmissed

themagicmarkofeightinQ2witha7.95growth.HowevertheQ4gurescameat10.7%andthewholeofChinaheavedacollectivesighofrelief

whenoverallgrowthof8.7%wasannouncedfor2009.

Clearlythemagichasbeenachievedwithalotofstimulus-theChinesegovernmentistryingtospendfourtrillionyuaninstimulatingtheeconomy.

Moneyisbeingpouredintobuildingroads,bridgesandsomeincome

generatingactivities.Exportscontinuetobeachallenge,thoughtheEconomistspredictthatChinasexportswillreturntogrowththisyear

butareunlikelytotouch2007levelsinthenearfuture.AcontributingfactoristheAmericanconsumerwhomayneverreturntothefrenzied

shoppingtheypreviouslyexhibitedtothedelightandeconomicgrowthofthewholeworld.

Consumer

Economistsay(softlyinChinaandmoreshrillyintheWest)thattheChi-

neseconsumermustspendmoretocompensateforthelossofexportsandredresstheglobalimbalance.ReplacingAmericanconsumerswho

previouslysustainedtheglobaleconomywiththeirproigateconsump-

tionofChinesegoods-enablingChineseConsumerstosaveasmuchasone-quarteroftheirincomes.HencethecriticalquestionnowiswhethertheChineseconsumerwillspendmoreandsavetheglobaleconomy.

ThetraditionalreasongivenfortheChineseconsumertosavealargepro-portionoftheirincomeisthatmanydonotenjoysocialsecurityandneed

tosetasidefortheirretirementandpossiblemedicalexpenses.Secondly,culturallyChineseareconsideredtobethriftyandsavingsdriven.While

thesefactorswhetherculturalorstructuraldocontributetotheChi-nesehouseholdsstashingawayalargeproportionoftheirincomethere

areothersocialandemotionalreasonsdrivingthisbehaviour.

The other barriers to consumption

OwningahouseranksamongthemostimportantdesiresforaChinese.Theideaoflivinginrentedaccommodationisalienandunacceptable.

TraditionallyChinesehavelikedtheideaofstabilityandthestateprovidedthatbyallottinglifelongaccommodation,whichyoukeepevenafter

retirement.Withstatehousinggoneformost,theChinesearerushingto

buyapartments.Thestrongdemandcoupledwitharelativelycontrolledsupplyhasmadethecostofhousingdisproportionatetotheconsumers

income.TodaytheaveragepercapitaannualurbandisposableincomeinShanghaiwillbuytwosquaremetersofanapartment.Additionally

Chineseneedtocoughup30%ofthepriceasdownpayment.

Ontheotherhandsocialnormstodaymaketheideaofcontinuingtolive

withtheparentsaftermarriageasnearlyinconceivable(nopunintended)andnoself-respectingwomanwillacceptamanshandinmarriageun-

lessthehandholdsthekeystoanapartment(accordingtoarecentpollonly18%ofmothersarewillingtolettheirdaughtersmarryamanwho

rentshishome!).WithlowstartingsalariesevenforUniversitygraduates,parentsneedtobeartheburdenofsavingforthedownpayment.High

mortgagepaymentsinrelationtotheincomefurtherreducesthespend-

ingabilityoftheconsumers.

Secondly,whileimpendingmarriageofthechildbringsasubstantialnancialburdenforthefamily,theuniversityeducationbeforethatisalso

aformidableexpense.AsChinamovestowardsbecomingamarketeconomy,thecostofeducationhasbeenincreasingsteadily.Todayfor

anaveragefamilythecostofprovidingauniversityeducationmaytakeupasmuchasone-thirdtohalfthedisposableincomeofthefamily.Even

schooleducationcostsaregoingupasmoreChineseconsidertheidea

ofsendingtheirchildtoexpensiveprivateschools.

ThirdlytheaverageChineseconsumerisvaluedriven.Productsreceive

amicroscopicscrutinyandintensivecomparisonandvaluation.Pricesarecomparedthoroughlyandpromotionsanddealswelcomedenthusi-astically.Whilethereisatrendofpremiumisation,itisnotuniversaland

appliesmoretoproductsofvisibleconsumptionwhichcanmakethe

consumerlookgoodandsuccessful.

HencewhiletheChineseconsumerwillgraduallyspendmore,andconsumptionasaproportionoftheChineseGDPwillmoveupfromits

uniquelylowleveltoday,themovementisgoingtobegradualunlesssignicantchangesaremadetomakehousingandeducationmore

accessibleandaffordableandtheconsumerregainsthecondenceof

continuedprosperity.

Why Chinese consumers spend less and save moreLETTER FROM CHINA

Ashok Sethi explores the challenges confronting Chinas consumers as the developed world looks to them to

drive demand required for a return to economic growth.

PHOTO: CHINA BY HOLLY ZHANG

Documents

TNS GEMs Newsletter April