|Illustration photo/ freepik.com
At the same time, brands are also facing obstacles as a result of commodity price increases, raw material shortages, and shipping/port capacity shocks that are beginning to impact their top line and margins.
Savvy brands are building strategies around post-pandemic readiness. To reach these 350 million consumers in Southeast Asia, we see six crucial strategies. These ‘Six Rs’ can help maximise brand success.
First is rewriting a digital-first agenda. Most consumers are set in their online buying and browsing habits. Digital channels are increasingly playing a role in how consumers hear about products, evaluate products against competition, and make purchases.
Digital is now the foundation for how the internal engine functions: core themes are supply chain, customers, consumer connection, employees, and workplace. Savvy brands are setting their digital ambitions for the coming 3-5 years, including a realistic ambition for the digital domain.
The second factor is rewiring the supply chain/business model. Consumer product companies are experiencing inflation and supply chain challenges that are expected to increase. The top two issues are inflation and supply chain resiliency. Savvy companies are addressing these issues pragmatically.
Regarding inflation, brands are exploring immediate opportunities to realise more net revenue per unit through a combination of revenue growth management levers, including price pack architecture, strategic pricing, trade terms, promo optimisation, and channel mix. Brands are also exploring more structural and transformational change through design to value.
Regarding supply chains, brands are solving the immediate problem of freight and logistics by creating innovative mobility solutions while establishing greater transparency through control towers. Brands are also thinking about breaking the value chain by exploring local contract manufacturing operations by shipping in bulk, if that is more feasible compared to container freight.
Next up is reimagining consumer engagement. E-commerce platforms are increasingly used for searches; social channels are increasingly used as points of sale. While for digital consumers, end sales are still split between offline and online, we see digital channels far outpacing offline channels for brand discovery and consideration.
Given this phenomenon, common pitfalls for brands around commercial spending include lack of visibility on how much is spent; not being driven by return on investment; democratically allocating commercial spending across different subfunctions; and various other issues.
Brands must reevaluate commercial activities and reorient marketing and trade spending to mirror this multi-platform path to purchase. They must also create brand loyalty and differentiation with a unique, consistent, and engaging experience across their offline presence, social channels, website, and app.
Refreshing product offerings is the next strategy. On average, digital consumers shop across 7.9 online websites or platforms, a 52 per cent increase from 2020. Fifty-one per cent of consumers say they switched from their most purchased brands in the past three months. Price was not the only reason they switched: better product quality, better availability, and faster delivery times all contributed to switching brands.
Consumers increasingly demand ‘right for me, right now’ products, services, and experiences. But this contrasts with how the pandemic drove the need for affordability. Brands need to manage the growing gulf between consumer price inflation and product cost inflation simultaneously. Brands must manage this contrast while keeping their range simple with easy-to-understand propositions and price points.
The penultimate of the ‘Six Rs’ is re-envisioning sustainability. Right now, 80 per cent of Southeast Asian consumers will pay up to a 10 per cent premium for eco-friendly and socially conscious products, according to the research conducted by Bain & Company and Meta. A sustainable approach can guide all aspects of business, from product design to supply chain and operations.
Ensure that your brand has adequate options in your product range and proposition. It is possible to make the supply chain more sustainable without compromising on cost efficiencies. And since many of your consumers are willing to bankroll your environmentally and socially friendly practices, promote your sustainable initiatives.
The final factor is realigning to consumers’ new hybrid lifestyles. Consumers want shopping options that are closer to home, especially in regional countries with challenging transportation issues. Your product offerings, marketing, and delivery options should cater to this new wave of homebodies.
The Southeast Asian market has jumped to the top of the digital-first priority list. Existing digital consumer trends are ready for immediate action, along with new trends created during the pandemic. In addition, brands need to combat supply chain-related headwinds. The time is right to implement the ‘Six Rs’ to gain traction with these Southeast Asian consumers.
*Praneeth Yendamuri - Partner, and Tyrone Almeida Expert associate partner Bain & Company