TNS GEMs - Insights from Emerging Markets - Issue 1

gems : APRIL 2010 Page No. 1

gemsINSIGHTS FROM EMERGING MARKETS

n Yes we can!

n ThesocialdynamicsofmicrofinanceandentrepreneurshipattheBOP

n EvaluatingsocialmissionprojectsinemergingandBOPmarkets

n AreyoudigitallyawaketoAsia? n LetterfromChina


It gives us great pleasure to bring you the first issue of GEMs – devoted to bring you insights and information from Rapid Growth Emerging Markets.

James FergussonGlobalDirectorRapidGrowthandEmergingMarketsJames.Fergusson@tns-global.com

Ashok SethiConsumerInsightsDirectorRapidGrowthandEmergingMarketsAshok.Sethi@tns-global.com

Welcome to GEMs!

Werealizethatitisdifficulttoprovideyouwithanin-depth analysisofconsumersinthesevastandheterogeneousmarkets.Howeverwedohopeweareabletoprovideyouwithsomefoodforthoughtandalsowhetyourappetitetodigdeeperandlearnmore.

ThisissueisdevotedtoconsumersattheBottomofthe Pyramid(BOP).BottomofthePyramidwasatermfirstpopularizedbyDr.C.K.Prahalad–professorofstrategyattheUniversityofMichigan.Dr.Prahaladsaidthatthisgroupisnotjustworthyofcharitybutcanbeanattractive,albeitavalueconsciousconsumersegment.

Dr.PrahaladproposedthatofferingrelevantandattractivelypricedproductstoBOPconsumersisactuallyanactof engagingthemandbringingthemfromisolation,thereby marryingthetasksofpovertyalleviationandbusinessdevelopment.

Researchingthistargetgroupposesitsownhurdlesand challenges.Thetaskdemandsagreatdealofsensitivityandunderstandingofthetargetgroup.TNShasbeenableto

garneravastamountofexperienceinstudyingBOP consumers.Inthisissuewebringtoyouaglimpseofsomeofthekeythingswehavelearnt.

InadditiontoseveralarticlesfocusingonBOP,thisissue includesanarticledescribingtheinternetrevolutioninAsiaanditsimplicationsformarketers.InternethasgoneonitsowntrajectoryinAsiaandinmanywaysAsiahasembracedWeb2.0morewholeheartedlythantheWest.

Lastly,thewordsofeconomistsandtheirexpectationsofChineseconsumerssavingtheworldbycopyingAmericanconsumers’spendinghabitsprovidesagreatsourceofdebateandevenamusement,andisthesubjectofourfirstregular‘LetterfromChina’column!

Wesincerelyhopeyouenjoyreadingthisissueandlookforwardtoyourcommentsandsuggestions.

PHOTO: INDIA BY ANUJ ROY


yes we can

Inthreedecades,Grameenbankhasempowered40millionpeopleinoneoftheworld’spoorestcountriestosay‘Yeswecan’.AchievedthroughmicroloansoflessthanUSD10each,Grameenhaschangedthefortunesofseveralgenerations.What’smore,unlikethestrugglingbanksofthedevelopedworld,Grameenboastsarecoveryrateofover98%!!

PriortoGrameen’sinitiative,theworld’spoor(overhalftheworld’spopulation)havebeenregardedasunfortunatevictimswhoneedtoberescued.AsaresultofGrameenandothersuc-cesses,thismindsethaschanged.TheBOPconsumerisnowperceivedandexploredasnotjustaneconomicallyproductiveunit,butalsoasapromisingandgrowingmarketwithacollectivebuyingpotentialofUSD5trillion!

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

Witheveryoneeyeingtheopportunity,muchhasalreadybeenwrittenabouttheparadigmshiftsrequiredinthebusinessmodel.Theneedtorevisitprice-product-qualityequations,theneedforinnovation(thatisbuiltfromthegroundupthroughcommunityinvolvement),theneedforcapitalefficiencyandcoarsesegmentation,theneedforaccessibilityandaffordabil-ity,andmostimportantly,theneedforeducation,skilldevelop-mentandcommunitybuildingthatwillempowereventhemosttimidofthemalltosay‘Yeswecan’.

Brandsuccesses,likeeverythingelseintheBOPsegment,defythepowerofdominantlogic.Overlookedandignoredbymostmarketersasacommoditymarket,theBOPconsumerdemonstratesasurprisingandstrongpreferencetobuyabrandoveracommodity,aslongasthepropositionismadeaccessible and affordable.

Brandsarevalued,evenloved,astheyofferreassuranceandcertaintyintheseconsumers’uncertainlives.Andoncewonover,BOPconsumersrewardthebrandswithunshakeableloyaltygivingearlymoversastrongcompetitiveadvantage.TNS’accumulatedknowledgeandunderstandingofBOPconsumershasresultedintheidentificationof9pertinenttipstobuildingbrandpropositionsthatwillsucceedamongBOPconsumers.

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 segment and 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


one9 tips to building brand propositions that succeed in BOP markets

Thebrandmustbeanchoredonstrongfunctionalitythatmakesatangible,measurabledifferenceintheconsumer’slife.Thisimpliesthatinformation,educationandreasonstobelievearecoretoreassuringthattheirmoneyiswiselyspent,tobuildingtrustandarelationship.

twoItisequallyimportantthatthebrandservesasanemotionalanchor–asourceofhope,optimismandprotection.

three

four five six

seven eight

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

Pricingmustbeempathetictotheconsumer’sbudget,butthisdoesnotmeanthattheBOPconsumeralwaysbuysthecheap-estbrandavailable.Theyrespondfavourablytoademonstrationofvalueandarewillingtopayincrementallymoreforit.Familycarepropositionsalsograntpermissiontospendalittlemore.

Expertisecredentialsareasessentialasindevelopedmarkets.Theroleofexpertisehoweverdiffers–theneedisnotforinnovationandnewnews,butexpertiseisrequiredtobuildtrust,visibilityandreassurancethattheyaregettingthebestthattheirmoneycanbuy.

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

ProtectionandFortificationpositioningthemes–bothphysicalandmental–resonate.Enablingcleanclothesthatgetrecogni-tionandapproval,teathatboostsmentalandphysicalenergydirectedateitherselforfamilyenhancethebrand’sappeal.Whateverthepositioningtheme,simplicity,inclusivenessandaccessibilitymustbeintegraltotheproposition.

Thepropositiondoesnotalwayshavetobeaboutthebarenecessities.Despite,orperhapsbecauseof,themanypress-inglifeconcerns,abrandthatpromisesfun,surprise,sensorialpleasureoraspecialmomentbringscheerandiswelcomedintotheconsumer’slife.Thisisespeciallyneededfornon-essentialconsumption,butcanaddvalueinallcategories.

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

THE TIME HAS COME FOR US TO NOW CONSIDER A DIFFERENT PYRAMID – ONE THAT IS INVERTED – BASED NOT ON INCOME, BUT ON OPPORTUNITY AND GROWTH.

And… yes, we can!

Yes we can!Continued from previous page

FORMOREINFORMATIONCONTACT:

[email protected]


social dynamicsThere has been a huge collective action involving millions of 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.

Inthisarticleweanalysethelinkbetweenentrepreneurshipandmicrofinance,takingArgentinaasacasestudy.ResearchconductedbyTNSinArgentinashowsthat:a.Entrepreneurshipisaclearneedamongthepoorandalsohasagreatpotentialfortheirfinancialprogress.b.Whenthatneedisfulfilledthroughmicrocredits,itgeneratesimportantchangesintermsofmaterialprogress,developmentofsocialcapitalandempowermenttothemostvulnerableandpowerlesssectorsofsocieties.

Entrepreneurship and its constraintsEntrepreneurshiptothepooroffersawaytoimprovetheirliveli-hoodandhenceonepossiblepathformaterialsurvival.Afairlysignificantproportionofthepoorarealreadyengagedinentre-preneurialactivities.ResultsfromaTNSArgentinanationwidesurveymeasuringbehaviourandperceptionstowardsentrepre-neurshipandfinancialservicesamongArgentinecitizensatthebaseoftheincomepyramidshowsthat2outof10personslivinginpovertysaythattheyhavedevelopedproductivebusi-nessesontheirowninthepast.

Thesurveyalsoshowsthattheproportionof‘potential’entre-preneursishugeandamountstoalmosthalfofArgentinepoor.Fiveoutoftenpeoplelivinginpovertysaythattheyarewillingtobeentrepreneursandtodevelopaprojectoftheirowninthefuture.

Whydoesthisentrepreneurialspiritremainlatentanddoesitnottranslateintobusiness?TheanswersobtainedbyTNS

The social dynamics of microfinance and entrepreneurship at the BOPConstanza Cilley, General Manager, TNS Argentina

“Microcredits are a critical tool against poverty and a wise investment in human capital”

KofiAnnan,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


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

FORMOREINFORMATIONCONTACT:[email protected]

Argentinapointtostructural-systemicconstraints:AlmosthalfofpoorArgentines(47%)saythatlackoffinancingisthemainob-stacletheyfacetodevelopproductiveprojects.Moreover,74%thinkthatobtainingacreditoraloanisdifficult.Only3%reporthavingtriedtoobtainafinancialserviceasthereisastrongperceptionthattheireffortsareunlikelytoberewarded.

Almost8outof10individualsexpressthatthemainbarriersforaccessarebanks’termsandconditions.Accessibilitytotheformalfinancialmarketisrareforthepoor.Theyvoicetheirdiscontenttowardsthehighlevelofincomerequirementsetbythebanks,andalsotowardsguarantorrequirementsandinter-estrates.

Clearlythissegmentofconsumersfeelintimidatedandalien-atedbythetraditionalbanks-infactsomebanks,consciousofthedistance,havetriedtocreateanenvironmentthataimstodifferentiatethemfromtraditionalbanks(anexampleofthisisFiegranpoder,whereveryloudmusicwelcomescustomersandstaffdonotweartiesbutinformalt-shirts).

Microcredit in actionClearlymicrocreditsforthepoorprovideaninnovativesolutionbylinkingpotentialentrepreneurswithfinancialresources.Whileseveralimportantbarriersneedtobeovercometomakethishappen,whenitdoesmaterialise,theresultsareverygratifying.

TNSArgentinaconductedanexploratorysatisfactionstudy*onfemalebeneficiariesofmicrocredit,livinginpoorneighbour-hoodsinGreaterBuenosAires.RespondentswerereceivingmicrocreditsfromMujeres2000**-anNGO.Mujeres2000**fosterscommunitydevelopment,placingthefocusontechnicalassistanceandhumansupport.

Satisfactionamongrecipientsishigh-96%aresomewhatorverysatisfied,94%wouldrecommendtheserviceprovidedand96%wouldrenewit.Thedirectbenefitsofthecreditareclearlydrivingthesatisfaction–allowingthewomentodeveloptheirbusinessprojectandasaresultattainacertainlevelofeconom-icstability.Almostallsaidthattheynowhaveabetterqualityoflifethanbefore.

Apartfromthedirecttangiblebenefit,thebroaderandpsycho-logicalbenefitsaresignificantandmostwomensaidthattheynowenjoymoreprominenceandrespectinhouseholddeci-sionmakingthantheydidbefore.Microcreditnotonlyprovidesfinancialcapitalbutalsobuildssocialcapital(whichreferstothenetworks,normsofreciprocityandtrustthatfacilitatecoordina-tionandcooperationformutualbenefit-Putnam1995)forthebeneficiaries.

Microcredit opportunityTheworldwidegrowthofmicrocreditsshouldbeseenwithopti-mism.Theygeneratematerial,psychologicalandsocialbenefitsforthepoor.Butmuchmorecanbedonebythedevelopmentcommunity,donorsandcompaniestotranslatemicrocredits

intomacrochanges.Companiesneedtolookatthisareanotascharitybutasaviablewaytogenerateprofitswhilefacilitat-ingeconomicprogressfortheconsumersatthebaseofthepyramid.However,approachingthistargetgroupanddesigningaproductwhichmeetstheirneedsrequiresacarefulunder-standingoftheirneedsandovercomingthebarriersandcurrentperceptionsofbankingandfinancialinstitutions.

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

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

“Almost 8 out of 10 individuals express that the main barriers for access are banks’ terms and conditions. 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 the microcredit programme. Her husband, grandson and friend have helped her not only to maintain the credit but also to build their house.PHOTO: ARGENTINA BY DELFINA ROSELL

Weekend groceries fairPHOTO: ARGENTINA BY DELFINA ROSELL

gems : APRIL 2010 Page No. 7innovation

StudyingBOPmarketsrequiresaspecialsensitivitytothetargetgroupaswellastheissuesinvolved.Inthisarticle,RagsandAstitidemonstratehowasimpledeviceofaninnovativestickerbaseddiaryhelpedincapturingaccurateinformationonbrush-ingbehaviourinchildren.ThisarticlehasbeenadoptedfromthepaperpresentedattheESOMARCongress2009,whichwontheawardforthe“BestMethodologicalPaper.”

Behaviour change in social mission projectsSocialdevelopmentprojectsinBOPmarketsfocusonengineer-ingbehaviourchangeinsomeformoranotherastheirultimategoal.The‘behaviour’tobechangedvariesacrossprojects–fromchangingfoodhabitstowashinghandsbeforeeating,andfrombrushingatnighttocondomusageforAIDSprevention.Thetargetgroupalsovariesfromgeneralpublictospecialistslikedoctorsorbusinessleaders.

TheincreasingdirectengagementoftheprivatesectorandlargeMNCsintheseprojectsisbringingwithitmorestringentaccountabilityandrigorousevaluationofrealROIintermsofthe‘endbehaviour’tobechanged(theequivalentofsalesormarketshareincommercialworld).

Unilever Oral Care social mission projectUnileverOralCareisinvestingsubstantiallyinsocialprojectstopromotenightbrushingbehaviouramongchildreninthe4-8yearsagegroup,inIndonesiaandotherBOPmarkets.Thesuccessofthisprojectwouldtrulybea‘win-win’solutionforallstakeholders–individuals,societyandtheprivatesector.UnileverhadwantedtocomprehensivelyevaluatetheirsocialmissionprojectinIndonesiaintermsoflongtermbenefitsduetoincreaseinnightbrushingandforoptimizingthecommunica-tionstrategy.Theresearchchallengeinaccomplishingthiswas:

n Innovatingareliablebehaviourpredictiontoolto measurebrushingfrequencyandnightbrushing–withoutthe‘claimed’responsebiases.

Evaluating social mission projects in emerging and BOP markets

n TakingintoconsiderationBOPmarketrealities(lowerSESandliteracy)andthechildrentargetgroup.

Theissuestoaddressindevelopingthemethodologywere:

n Whatshouldwedotoenableourrespondentstoproviderealbehaviourinformation?

n Whatshouldwedotoensurethatthemothershadknowl-edgeofchildren’sbehaviour?

n WhatshouldwedotoensurethatitissimpleandrelevantforBOPmarketrealities?

Basedonthese,theguidingprincipleswesetoutwere:

n Wemusthavearecordofthe‘interestbehaviour’ (brushing,brushingatnight)overaperiodoftime (oneortwoweeks)–toensurethatweare measuring‘regular’behaviour.

n Consumerswilltellorrecordactualbehaviourif wemakeiteasierforthemtodosowithoutbiases. Itistheresearchers’responsibilitytoeliminate biasesarisingoutof‘focusedmeasurementof interestbehaviour’–wheretherespondentknows whatisbeingmeasuredandhencebiasescome tooperate.

n Measurementmethodologyandtoolsmust involveboththemotherandthechild.

n The‘behaviourrecording’shouldideallynot involveanywriting.

n Itshouldnotplaceundueburdensorspecial trainingrequirementsforanyofthestakeholders intheprojects–therespondent,thefield interviewerandthedatadigitizer.

n Lastbutnottheleast,itshouldbeeconomical and affordable.

Raghavan Srinivasan, Managing Director, TNS Indonesia Astiti Suhirman, Business Director Indonesia

PHOTO: INDONESIA BY QUINNY CHAN


“Even in these high technology times we all live in, it’s possible to develop simple solutions to complex problems that work well in practice in emerging and BOP markets.”

Evaluating social mission projects in emerging and BOP marketsContinued from previous page


[email protected] [email protected]

Theguidingprinciplessetoutnaturallyledustotheinnovativebehaviourmeasurementmethodology-“DailyActivityStickerDiary”

n Wherechildrenandmothertogetherrecordalldaily activitiesoftheirchildinourtargetgroup.

n Bytakingouttheappropriatepictorialsticker (fromastickersheet)andpastingitinthedaily activitydiary.

n Foroneortwoweeks.

Thefinaldiaryusedforthestudywasco-createdwith consumersinaniterativelaboratoryconsideringthemany ‘details’,suchas:whattimeslots,whatactivities,howmanystickersforeachtoprovidefor,andinwhatformatshouldit betoensureeasyusage.Ourfinal“DailyActivityStickerDiary”wasinadailysheetcalendarformattobehunginthemain living area.

Study findings and learningsWenowhaveover3,000weeksofbehaviourmeasurementdatausingthismethodologyandthesalientfindingsare:

n Themethodologyprovidesreliablebehaviourdata- brushingfrequencyandtheproportionofthepopulation‘brushingatnightregularly’obtainedfromthisstudywasmuchlowerthanestimatesorassessmentsfromotherstudiesbasedon‘claimed’behaviour.Itwasalsomoreinlinewiththe‘toothpastemarketsize’inIndonesia.

n Thissocialmissionprojectwouldinthelonghaulleadtomarketdevelopmentaswell-regularnightbrushingcomeswithanincreaseinbrushingfrequency.

n Realisticbehaviourdatalinkedwithattitudescan powerfullyguideinterventionsoptimization–itledto identificationofdeterrentstonightbrushingnotyet exploredincommunication.

Summary and suggestionsEveninthehightechnologytimeswealllivein,itispossibletodevelopsimplesolutionstocomplexproblemsthatworkwellinpracticeinemergingandBOPmarkets.Inthefinalanalysisitisallaboutstartingoutwiththefirstprinciplesofgooddatacol-lectionandpatientlyaddressingalltheissues.The“DailyActivityStickerDiary”basedbehaviourmeasurementmethodologywehaddevelopedcaneasilybeextendedtobehaviourmeasure-mentinothersocialmissionprojects(suchasgeneralhygiene,nutrition,sexualbehaviour)andtocommercialmarketingissueswherereliablebehaviourmeasurementisimportant.h


The rest of the world is lagging far behind Asia in digital consumer engagement. 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 Reviewpredictedonlineworldsasoneofits‘breakthroughideas’oftheyear.InAsia,they’veknownaboutthisforsometime.Whenitcomestodevelopmentofthedigitalspace,WesternassumptionsaboutAsiahavebeenslowtoformatbest,and,atworst,plainwrong.Intheonlineworld,AsiahastakendifferenttrajectoriestoactuallygobeyondbothEuropeandNorthAmerica.ThishasprofoundimplicationsnotonlyforWesternunder-standingofAsia’sdevelopingeconomiesandcultures,butforhowitdoesbusinesswiththem.

What’s happened?HowdoweknowthattheUSandEurocentricvisionoftheInternetislosingsignificance?Here’saclue.384millionChineseinternetusers.TherearenowmoreinternetusersinChinathanintheUS,andAsiaisalreadyaccountingforover40%oftheworld’sglobalonlinepopulation.AnditisnotjustaboutthenumberofpeoplegoingonlineinAsia,itisalsowhattheydowhentheyareonline.

InAsia,socialnetworkingparticipantshavetakensuchwebsitestoadif-ferentlevel.InstantmessaginghasneverbeensuchahitinEuropeandNorthAmericathatithasbeeninAsia.Confinedbytheirownlanguagesandusingtheirownculturalpreferencesforcommunicating,Japan,Ko-reaandChinahavecreatedtheirownversionsofthesocialweb.Thesethreenationsareevolvingindifferentwaystogainandkeeptheirowninternalmarketadvantages.ComparedtotheUSandEuropeansocialmedia,companiesstruggletomonetizetheirsocialmediaapplications;inKoreaandChina,QQandCyworldarealreadyprofitable.ThismakesitdifficultfortheUSandEurocentricglobalplayerstoseeawayin.

Cultural constraints, online opennessWhatarethereasonsforthesedifferences?Technologyisovercominglocalconstraints.Everybodywasawareofthesocialandculturalcodes

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

“There is the notion that other countries and cultures are just

playing catch-up – sometimes leap-frogging particular technologies, but always developing along a trajectory

set here about the right ideas and products. It is refreshing to have American engineers return from Japan 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 MEABernice Klaassen, Head of Interactive Research, Singapore and Hong Kong


onlinespaceswherepeoplecongregateastheiravatarsoronlinepersonatochat,createandtrade.ItisapredictionofwhatweareonlyjustbeginningtoseeinEuropeandtheUS.GartnerConsultingpredictsthatby2011,80%ofactiveInternetuserswillhaveanavatar.

JustbecausetheonlineworldisfollowinganevolutionarypaththatWesternmarketersdidnotpredict,thisisnotimetobeaversetothemetaverse.Fearnot.Therightkindofapproachtoresearchwillprovidetheentitlementtosomeoftheanswers.

“So how do we keep up with this fast-paced digital environment, both from a research and business perspective? It calls for a careful, three-pronged approach: 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 consumerFirst,Observation.Thisisabout‘listening’,gettingclosetowhatpeoplearesayinganddoingonlinethroughresearch:creatinga‘virtualcloseness’throughbuzz-monitoringsoftwarethatcananalyseusergeneratedcontentsemantically.TNSCymfonyallowsclientstotrackconsumergeneratedcontentinrealtime. Second,Conversation.InAsia,duetoculturalconstraints,thetraditionalfocusgroupisnoteffectiveonline.TNSIncubatorisaweb2.0researchtoolthatenablesclientstohavedifferenttypesofconversationsandengageconsumersdifferently.DevelopedinAsia,ithasimmediaterelevancetowhatconsumersaredoinghere,online,today. Third,Interaction.Participationcannothappenwithoutthefirsttwostages.Thismeansgoingfurtherthanaclassicagencyrelationship;clientsandresearchagenciesarenowcollaboratingandco-creat-ingwiththenewconsumers.Toengageconsumers,clientsneedtoensurereciprocity.Consumers’timeandattentionmustbeearnedandrewarded.Activitiessuchascontestsandcompetitionshelptochangethetypeofinteractionbetweenbrandsandconsumers.

The new realityTruthis,WesternmarketershavenotimetocometotermswiththeInternetastheythinkitis.ThenextversionisalreadyborninAsiawhereconsumersaremakingthe‘metaverse’areality:multiple


The magic eightEightisaluckynumberinChina.TheopeningceremonyofBeijingOlympicscommencedontheeighthdayoftheeighthmonthof2008at8.08.08pm.Thecarnumberplateswithafeweightsgoforthousandsofdollarsinauctionsandtheconsumerwillwillinglycoughupasignificantpremiumtoacquireamobilephonenumberwhichisfestoonedwithacoupleofeights.

Eightisalsothepercentagebywhich,theeconomistsbelieve,theChineseeconomymustgrowtoprovidejobstothemillionsofstudentsgraduatingfromUniversities,ortheruralfolksmigratingtothecitiesinsearchofabetterlife.Thefirsttwoquartersof2009weredifficult–Chinacouldonlymusterupa6.1%GDPgrowthinQ1of2009andjustmissedthemagicmarkofeightinQ2witha7.95growth.HowevertheQ4figurescameat10.7%andthewholeofChinaheavedacollectivesighofreliefwhenoverallgrowthof8.7%wasannouncedfor2009.

Clearlythemagichasbeenachievedwithalotofstimulus-theChinesegovernmentistryingtospendfourtrillionyuaninstimulatingtheeconomy.Moneyisbeingpouredintobuildingroads,bridgesandsomeincomegeneratingactivities.Exportscontinuetobeachallenge,thoughtheEconomistspredictthatChina’sexportswillreturntogrowththisyear–butareunlikelytotouch2007levelsinthenearfuture.AcontributingfactoristheAmericanconsumerwhomayneverreturntothefrenziedshoppingtheypreviouslyexhibitedtothedelightandeconomicgrowthofthewholeworld.

Consumer Economistsay(softlyinChinaandmoreshrillyintheWest)thattheChi-neseconsumermustspendmoretocompensateforthelossofexportsandredresstheglobalimbalance.ReplacingAmericanconsumerswhopreviouslysustainedtheglobaleconomywiththeirprofligateconsump-tionofChinesegoods-enablingChineseConsumerstosaveasmuchasone-quarteroftheirincomes.HencethecriticalquestionnowiswhethertheChineseconsumerwillspendmoreandsavetheglobaleconomy.

ThetraditionalreasongivenfortheChineseconsumertosavealargepro-portionoftheirincomeisthatmanydonotenjoysocialsecurityandneedtosetasidefortheirretirementandpossiblemedicalexpenses.Secondly,culturallyChineseareconsideredtobethriftyandsavingsdriven.Whilethesefactors–whetherculturalorstructural–docontributetotheChi-nesehouseholdsstashingawayalargeproportionoftheirincomethereareothersocialandemotionalreasonsdrivingthisbehaviour.

The other barriers to consumptionOwningahouseranksamongthemostimportantdesiresforaChinese.Theideaoflivinginrentedaccommodationisalienandunacceptable.TraditionallyChinesehavelikedtheideaofstabilityandthestateprovidedthatbyallottinglifelongaccommodation,whichyoukeepevenafterretirement.Withstatehousinggoneformost,theChinesearerushingtobuyapartments.Thestrongdemandcoupledwitharelativelycontrolledsupplyhasmadethecostofhousingdisproportionatetotheconsumers’income.TodaytheaveragepercapitaannualurbandisposableincomeinShanghaiwillbuytwosquaremetersofanapartment.AdditionallyChineseneedtocoughup30%ofthepriceasdownpayment.

Ontheotherhandsocialnormstodaymaketheideaofcontinuingtolivewiththeparentsaftermarriageasnearlyinconceivable(nopunintended)andnoself-respectingwomanwillacceptaman’shandinmarriageun-lessthehandholdsthekeystoanapartment(accordingtoarecentpollonly18%ofmothersarewillingtolettheirdaughtersmarryamanwhorentshishome!).WithlowstartingsalariesevenforUniversitygraduates,parentsneedtobeartheburdenofsavingforthedownpayment.Highmortgagepaymentsinrelationtotheincomefurtherreducesthespend-ingabilityoftheconsumers.

Secondly,whileimpendingmarriageofthechildbringsasubstantialfinancialburdenforthefamily,theuniversityeducationbeforethatisalsoaformidableexpense.AsChinamovestowardsbecomingamarketeconomy,thecostofeducationhasbeenincreasingsteadily.Todayforanaveragefamilythecostofprovidingauniversityeducationmaytakeupasmuchasone-thirdtohalfthedisposableincomeofthefamily.EvenschooleducationcostsaregoingupasmoreChineseconsidertheideaofsendingtheirchildtoexpensiveprivateschools.

ThirdlytheaverageChineseconsumerisvaluedriven.Productsreceiveamicroscopicscrutinyandintensivecomparisonandvaluation.Pricesarecomparedthoroughlyandpromotionsanddealswelcomedenthusi-astically.Whilethereisatrendofpremiumisation,itisnotuniversalandappliesmoretoproductsofvisibleconsumptionwhichcanmaketheconsumerlookgoodandsuccessful. HencewhiletheChineseconsumerwillgraduallyspendmore,andconsumptionasaproportionoftheChineseGDPwillmoveupfromitsuniquelylowleveltoday,themovementisgoingtobegradualunlesssignificantchangesaremadetomakehousingandeducationmoreaccessibleandaffordableandtheconsumerregainstheconfidenceofcontinuedprosperity.

Why Chinese consumers spend less and save moreLETTER FROM CHINA

Ashok Sethi explores the challenges confronting China’s consumers as the developed world looks to them to drive demand required for a return to economic growth.

PHOTO: CHINA BY HOLLY ZHANG

TNS GEMs - Insights from Emerging Markets - Issue 1

News & Politics

Transcript of TNS GEMs - Insights from Emerging Markets - Issue 1