Reaching Indonesia’s Affluent and Lucrative Consumer Segment

Reaching Indonesia’s Affluent and Lucrative Consumer Segment

The affluent segment in Indonesia may be underserved, primarily due to the scarcity of insights into its needs and what makes the segment tick. Karmelia Nurdjalim, Executive Director for Consumer Research at Nielsen Indonesia, warned of the pitfalls for marketers if they dilute the purity of this segment at Nielsen’s inaugural Consumer 360 Conference in Jakarta, Indonesia on October 19, 2010. These and other insights into the affluent segment from recent studies by Nielsen were presented to conference delegates to provide a better understanding of this segment.

Approximately 1.2 percent of the population (about 10 million people) in the capital city Jakarta belong to an affluent segment of consumers. These consumers spend upwards of 15 million rupiah (about US$1,700) or more on routine monthly household expenditures. While this segment is a relatively small, it presents a wealth of opportunities for marketers to gain higher margins, achieve stronger brand loyalty and powerful word-of-mouth endorsements.

Ms. Nurdjalim highlighted some of the changing/emerging values of the affluent consumer segment in Indonesia, which include:

  • Affluent consumers are developing a holistic view of health and well-being.

    “They now want it all – look good, feel good, be spiritually fulfilled and are also looking at healthy eating options such as organic rice,” she said.  In addition, these consumers will not be deterred by the significantly higher prices of products and services that they feel will enable them to achieve their health and well-being objectives.

  • Affluent consumers are starting to invest more in their children’s future prospects.

    These investments include sending their children for overseas education.  More than 50,000 Indonesian students travel abroad annual for studies, with the majority going to Singapore and Australia. “This trend has not gone unnoticed by financial services firms, some of which are already offering global financial services that facilitate overseas education,” she added.

Five Guiding Principals for How to Reach the Rich:

  1. Up close and personal: The affluent segment wants to be perceived as a distinctive and privileged group.  “Privileges extended to a bigger group or the ‘mass affluent’ are not privileges in the eyes of the affluent segment,” she said.
  2. Power of gimmicks: Indonesians as a whole love marketing promotions and the affluent segment is no exception to this passion.  However, this segment wants promotions that reflect their lifestyles and project a real privilege.
  3. Power play: Because of their relatively stronger spending power, the affluent segment demands to be given special treatment and attention. For example, when choosing between platinum credit card offerings, the majority of affluent consumers cite flexibility as the main decision factor. If the consumer is king, then the affluent consumer should be treated even more royally, said Ms. Nurdjalim.
  4. Exclusiveness: Ms. Nurdjalim emphasized the need to maintain “purity” of the affluent segment by carefully defining the target market. If the affluent consumer feels that exclusivity is compromised, they are very likely to seek out other providers who can provide the level of exclusivity they feel they deserve.
  5. Recognition: The desire to show prominent evidence that they can afford luxury goods or are able to engage in luxury activities are factors that drive affluent consumers to engage in conspicuous consumption behaviour. These activities reinforce the recognition they demand for having upgraded their social status or continuing to belong to this “select” community.

Nielsen’s inaugural Consumer 360 Conference in Jakarta Indonesia brought together industry and Nielsen experts to share the most innovative and insightful views of the consumer. The conference in Jakarta was themed “Capturing the Consumers’ Minds”. More than 300 guests from a broad range of industries including Fast-Moving Consumer Goods (FMCG), Retail, Media, Telecommunications, Pharmaceutical and Social Media participated in the full-day proceedings.

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