For many multinational companies, growth has become more elusive. Market segments at home are becoming increasingly competitive and new types of players are entering the scene. While there are many levers to adjust in the marketing mix to address slower growth at home, geographical expansion to new growth regions is key for long-term success.
Dare to enter the APAC markets
Perhaps the most important market expansion choice is to start doing business in the Asia Pacific region. Yet, many companies seem anxious by the complexity of seizing this opportunity, also reflected in their current performance and low market share in the region. Swedish and many other European companies are missing out on growth and continue to fall behind in future positions.“The Asia Pacific middle class will constitute 66% of the global middle class by 2030”
Middle class consumers are on the rise
The numbers speak for themselves. This region accounts for nearly 60% of the world’s population and more and more people decide to live in urban areas or even megacities. Today, almost half of the population live in urban areas compared to only one third in 2000.
As lifestyles and incomes per capita continue to rise, the middle class will constitute 66% of the global middle class by 2030, up from 45% as per today and only 28% in 2009. That is a remarkable growth and an impressive number of new consumers added every day.
New consumer patterns are evolving
Within this middle-class, a new group of consumers is emerging. It is the young working population; more consumption-oriented and less frugal than its predecessors. Rapid digitalization together with the proliferation of internet and mobile phone penetration have significantly influenced consumption patterns.
Internet access and social media subscription have allowed for swift communication and sharing of information, ideas, and inspiration. It is not surprising that “lifestyle” has become the feature consumers care about, as online communities are increasingly affecting and motivating purchasing decisions.
How to get embraced by the APAC consumers
With this enormous market potential and change in consumer pattern, it is not a question of whether to enter or not, but of how to win the heart of the brand-new Asia Pacific consumer. Where time and visibility are valuable aspects for successful market entries, foreign companies need to consider all aspects of the marketing mix (product, price, place and promotion). The overall weight between the components needs to be taken into highest consideration.
Watch out for the pit falls
Foreign companies tend to fall in an unfavourable position, with value propositions that are not aligned to market needs. They plunge into the bracket high price for a premium product with low brand awareness, ending up offering a product without the extra value needed for consumers to pay a premium price.
Five capabilities to master
There is “no size fits all” marketing mix in this heterogeneous market. While working on your marketing mix is evident and at the core of a successful growth trajectory, there are some important capabilities that are vital to master to increase the likelihood of strong market growth:
1. Embrace digitalisation
Become a master of digital channels. Not only to accelerate sales in terms of sales channel optimisation, but also in relation to promotion efforts. With robust growth in mind, all companies need to provide the new digital consumers with a seamless shopping experience.
2. Target urban clusters rather than countries
Urban clusters and megacities often display more similarities than different regions within a specific country, so consider an unorthodox go-to-market approach in your strategy. Know the numbers and target urban clusters where there is exceptional growth.
3. Nurture local relationships
No matter where in Asia Pacific you operate, ensuring support from key stakeholders in government, civil society, media and other influencers is a must. Fully understanding the culture and way of doing business will make — or break — a company in local markets.
4. Build brands that inspire
Effective marketing efforts should be considered as vital to build brand image and create brand awareness. Foreign companies need to evaluate more marketing channels to be able to make themselves as visibly appealing as possible.
5. Innovate to deliver consumer value
Taking into consideration that despite the trend of individualism, communalism and strong culture in APAC, adapting to local style and needs is fundamental. This makes it even more important to have physical presence in the region and different markets, not only in terms of sales but also for R&D and innovation.
Find out more…
…about how to grow in Asia