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BrandZ Top 50 Most Valuable Indonesian Brands 2015

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Millward Brown and WPP released the first annual BrandZ Top 50 Most Valuable Indonesian Brands report and ranking, Wednesday, August 19. The report identifies the key forces driving brand growth in Indonesia, and is an addition to the BrandZ annual rankings which include the Global Top100 Brands as well as rankings for China, India, and Latin America. - See more at: http://www.millwardbrown.com/mb-global/brand-strategy/brand-equity/brandz/top-indonesian-brands/2015

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BrandZ Top 50 Most Valuable Indonesian Brands 2015

  1. 1. TOP 50 1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17181920212223242527 39 2840 2941 30 42 31 43 32 44 33 45 34 46 35 47 36 48 37 49 38 50 6 TOP10BRANDS Banks comprise 24 percent of the total number of brands in the Top 50 US $6,373 Mil. US $6,153 Mil. US $5,882 Mil. US$2,145 Mil. US$2,042 Mil. US$1,939 Mil. US$1,767 Mil. US$1,669 Mil.US$9,918 Mil. US $8,285 Mil. 24% 11CATEGORIES BIGGEST CATEGORY 12 Brands Banks 8 Brands Real Estate 7 Brands Personal Care 4 Brands 1 Brand 2 Brands Retail Airlines Soft Drinks 7 Brands Tobacco 4 Brands Food & Dairy 3 Brands 1 Brand 1 Brand Telecom Providers Entertainment Home Care 1% 1% <1% 2% 13% 5% 2% 5% 23% 5% 43% % of Total Value of BrandZ™ Top 50 Most Valuable Indonesian Brands FMCGBRANDSLEADBRANDCONTRIBUTION The top names in the ranking for Brand Contribution are led by household names in food, drink and personal care. www.brandz.com 5 4 5 4 55 4 5 5 5 Brand Contribution (BC) measures the influence of brand alone on earnings, on a 1-to-5 scale, 5 highest Compiled by GroupM. Historic sources: eMarketer, Portio Research, comScore, Akamai US$402Mil. US$1,039Mil. US$110Mil. US$659Mil. US$949Mil. US$354Mil. US$1,767Mil. US$5,882Mil. US$267Mil. US$484Mil. The average innovation score for brands in the Indonesian Top 50 is 103. ‘Sets trends’ score 139 120 119 119 116 116 INNOVATION DRIVESSUCCESS The top six brands indexed according to consumer perceptions that they ‘set trends’ are from five different sectors. BRICKS-AND-MORTARRETAILERS MAKESTRONGSHOWING HUGEDIGITALPOTENTIALAS INTERNETPENETRATIONGROWS Brand Value US$2,145Mil. 6 26 Brand Value US$461Mil. 23 Brand Value US$398Mil. 26 Brand Value US$323Mil. 30 Internet Penetration 2012 2013 2014 2015 (est.) 24% 29% 33% 36% 2012 2013 2014 2015 Smartphone Penetration 10.6% 17% 24% 29%
  2. 2. A L M O S T H A L F T H E P O P U L A T I O N I S U N D E R T H E A G E O F 2 5 I N D O N E S I A H A S A N A B U N D A N C E O F Y O U T H F U L E N E R G Y
  3. 3. 6 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015   CONTENTS 7 Overview Key Results Cross-Category Trends Key Take Aways Economy and Demographics History Media Spending Brand Value Brand Age Brand Ownership Brand Contribution Brand Indonesia Indonesian Narratives By Lara-Lee Burn, Head of Firefly Millward Brown Empowered Youth By Daniel B. Siswandi, Chief Strategy Officer, J. Walter Thompson Demanding Consumers By Suresh Subramanian, Managing Director, TNS The Truth About Premium By Nadya Ardianti, Account Director, Kantar Worldpanel From Fragile to Agile By Thomas Sutton, Technical Advisor, Landor E-Commerce By Maneesheel Gautam, Leader, Invention, MindShare Lessons from China By Peter Walshe, BrandZ™ Global Strategy Director, Millward Brown Big Ideals By Katryna Mojica, Chief Executive Officer, Ogilvy & Mather Localization By Richard McLeod, Account Director, Millward Brown Happily Ever After By Avinash Pareek, Strategy and Communications Planning Director, Maxus Creating Complex Brand Personalities By Kris Constantoulas, Head of Strategy, Y&R Diving into Digital By Manoj Damodaran, Head of Digital, MEC Indonesian Top 50 Ranking Our Insights Brand Profiles 1-12 Our Insights Brand Profiles 13-24 Our Insights Brand Profiles 25-36 Our Insights Brand Profiles 37-50 Our Insights BrandZ™ Valuation Methodology BrandZ™ Reports, Apps and iPad Magazine WPP Company Contributors WPP Company Brand Building Experts BrandZ™ Global Top 100 Team 14 18 22 24 34 36 40 42 46 47 48 50 56 58 60 64 66 68 122 124 126 130 132 134 74 78 80 86 90 96 100 106 110 117 140 144 150 158 160 CONTENTS INTRODUCTION THOUGHT LEADERSHIP BRANDBUILDING BESTPRACTICE THEINDONESIAN TOP50 RESOURCES
  4. 4. Growth, stability and consumer confidence create perfect conditions for brand-building 8 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 9 Indonesia is a country whose time has come. Overshadowed somewhat by the headline-grabbing growth of its neighbors China and India, Indonesia has its own story of transformation to tell that is no less extraordinary. The country that is now the economic powerhouse of Southeast Asia is in the midst of change on a massive scale. As the country begins a momentous phase in its development, blending tradition with modernization, we inaugurate the WPP BrandZ™ Top 50 Most Valuable Indonesian Brands 2015. This ground-breaking study ranks the country’s most accomplished brands, analyz es their success, and identifies the key forces that are driving brand growth in this market. It is the first edition of an annual study that will track and anticipate the rapidly evolving environment for brands in Indonesia, and will chart the changing value of the country’s most valuable brands. Indonesia’s quarter-of-a-billion people make it the world’s fourth-most- populous country in the world, and the third-largest democracy. But while these numbers paint a compelling picture of growth and potential in this market, what sets it apart in the region and makes it such an attractive long- term market for brands is its people’s vitality and sense of optimism. Market liberalization and decentralization are not only stimulating economic growth but also bringing unseen levels of consumer spending power. There is a rapidly expanding middle class, and even for those millions of Indonesians who can only yet dream of joining its ranks, there is a strong sense that things are getting better. As Indonesia marks its 70th anniversary of independence, there is positivity, energy, and determination. As President Joko Widodo said when he was elected last year, the time has come to “move together to work, work and work” towards a better future. The Asian Development Bank forecasts GDP growth in Indonesia of 5.5 percent in 2015, and 6 percent for 2016 - strong, but sufficiently modest to be sustainable. The pace of market change being seen in Indonesia is breath-taking, thanks to the speed with which economic restructuring and opening up is being implemented. Such swift change does not come without difficulty and environmental impact. The rush-hour traffic jams on the streets of Jakarta are testament to the challenge of managing the effects of a sudden surge in consumer affluence. But Indonesia is, without doubt, a land of opportunity, both for its people and for the brands that seek their loyalty. Whether you’re an Indonesian or an international company, in this report you’ll find knowledge and insight to help you create and grow brands in Indonesia more effectively. On page 24, Take Aways provide succinct, action-oriented recommendations for brands based on our expert analysis of the market. We’ve also included summaries of Indonesia’s Top 50 most valuable brands. Brand experts from WPP companies across Indonesia share their market wisdom and sharp insights through extensive Thought Leadership and Best Practices essays, and we present all this with stunning photography and a vibrant design that reflects the dynamism and variety of the country itself. At WPP, the global communications services leader, our companies have been engaged in Indonesia for 16 years. Today, 1,500 people work across WPP companies providing advertising, marketing, insight, media, digital, shopper marketing and PR expertise. It’s part of our global presence in 112 countries. By linking all this talent, creativity, wisdom, and horizontality, we amplify global trends and insights that help our clients in useful and unique ways. We invite you to access our unrivalled BrandZ™ resource library. Along with the new BrandZ™ Top 50 Most Valuable Indonesian Brands report, the library includes these annual studies: BrandZ™ Top 100 Most Valuable Global Brands, BrandZ™ Top 100 Most Valuable Chinese Brands, and BrandZ™ Top 50 Most Valuable Latin American Brands. To download these and other reports, please visit www.BrandZ.com. For the interactive BrandZ™ mobile apps go to www.BrandZ.com/mobile. The backbone of all this intelligence remains the WPP proprietary BrandZ™ study. The planet's largest and only consumer-focused source of brand equity knowledge and insight, and the unique and world authoritative BrandZ™ brand valuation methodology by Millward Brown. First we analyze relevant corporate financial data and strip away everything that doesn’t pertain to the branded business. Then we take a critical step that makes BrandZ™ unique and definitive among brand valuation methodologies. We conduct ongoing, in-depth quantitative consumer research with more than 170,000 consumers annually, across more than 50 countries, to assess consumer attitudes about, and relationships with, over 100,000 brands. Our database includes information from over three million consumers. It reveals the power of the brand in the mind of the consumer that creates predisposition to buy and, most importantly, validates a positive correlation with better sales performance. At WPP, we’re passionate about using our creativity to create and build strong, differentiated brands that deliver lasting shareholder value. To learn more about how to apply our experience and expertise to benefit your brand, please contact any of the WPP companies that contributed expertise to this report. Turn to page 150 for summaries of each company and the contact details of key executives. Or feel free to contact me directly. OPTIMISM AND ENERGY DRIVE THIS VIBRANT EMERGINGMARKET WELCOME WELCOME David Roth CEO The Store WPP, EMEA David.Roth@wpp.com Twitter: davidrothlondon Blog: www.davidroth.com Our proprietary BrandZ™ brand valuation methodology makes the Top 50 Most Valuable Indonesian Brands the definitive study of brands in Indonesia. The uniquely consumer- facing BrandZ™ methodology combines extensive and on-going consumer research with rigorous financial analysis. (See page 140 for the full methodology and criteria.) We gathered brand perceptions from consumers across the Indonesian market, in both urban and rural areas, and asked about brands with all kinds of ownership structures: individual private brands, family-owned conglomerates, MNCs (Multinational Corporations), and SOEs (State Owned Enterprises). We selected brands that met either of the two qualifying criteria: The brand was originally created by an Indonesian enterprise and is owned by an enterprise listed on a credible stock exchange; or the brand is owned by an enterprise listed on Jakarta Stock Exchange. This approach produced a carefully conceived ranking of brands in 11 consumer-facing categories, such as home care, personal care, food and dairy, and soft drinks. The ranking does not include any business-to- business brands, regardless of value, because they are outside the scope of this report. To learn more about the BrandZ™ valuation methodology, please contact: Elspeth Cheung Global BrandZ™ Valuation Director, Elspeth.Cheung@millwardbrown.com Brand Selection Criteria
  5. 5. W H E R E E U R O P E A N C L I P P E R S O N C E D O C K E D I N S E A R C H O F S P I C E S IN T E R NAT IONA L BR A N DS SE E K A SH A R E OF GROW ING CONSU ME R W E A LT H
  6. 6. INTRODUCTION SECTION
  7. 7. Modern Indonesia is being shaped by sizeable forces – some old, some new – and to understand their effects is to begin to appreciate the changing expectations and opportunities of the Indonesian consumer market. SECTION 01 INTRODUCTION 14 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 This is a land of contrasts and contradictions. There is tension between young and old, modernity and tradition, aspiration and risk-aversion. Overwhelmingly, though, this is a market being driven forward by the youth of its population – among the youngest in the region – and by the energy of its people. There is growing wealth in Indonesia; many millions of people are enjoying their first taste of discretionary spending, as they move from subsistence living to stability and the ability to plan. The ranks of the middle classes, meanwhile, are expanding apace, and are forecast to represent between 130 and 140 million people by 2030. At the top end of the income spectrum, a small but significant group of super- rich are living truly luxurious lives. This contrast, not just between rich and poor but also between the country’s rich heritage and the onslaught of modern life, is evident all over the country. Cybercafés, designer boutiques and traffic jams are juxtaposed with the simplicity of life for those who remain reliant on the land and the sea for their livelihoods. Tiny street-side warungs – family-run shops often crafted from wood – still have a place in a retail landscape that runs from wet markets to gleaming malls. Urbanization is intensifying, as Indonesia’s cities act as beacons of opportunity; the number of Indonesians living in urban areas is expected to reach 71 percent of the total population, or 209 million people, by 2030. And while city- dwellers have much in common, there are still significant distinctions between the country’s urban centers. Jakarta is the country’s financial powerhouse, a cosmopolitan center with a worldly population, while the city of Yogyakarta, just an hour’s flight away, has a distinctly different flavor, retaining greater closeness to Javanese heritage and traditional values. NEW ERA OF GROWTH AND TRANSFORMATION Introduction OVERVIEW OVERVIEW
  8. 8. SECTION 01 INTRODUCTION 16 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 17 But differences such as these have always been synonymous with Indonesia. Diversity runs deep through this nation, which unites 17,000 islands, 700 languages and dialects, and 300 ethnicities. What’s exciting now is the sense that Indonesia is entering a new, pivotal stage in its development, and that the consumer and brand landscape is, therefore, on the cusp of tremendous change. Just five years ago, building a brand in Indonesia tended to involve two steps: first, ensuring national distribution of the product, and second, achieving widespread visibility on television. Those days are gone, and a very different dynamic is at work. Consumers are now far more sophisticated and selective; they expect a more complex relationship with the brands they make part of their lives, and they are being influenced by an ever greater range of media – often using several at the same time. For the businesses seeking to build brands here, these winds of change signal a great opportunity. Not only do people have more money to spend, they are buying a greater range of products and are increasingly interested in brands. They’re also increasingly likely to become brand advocates; research shows that consumers are 29 percent more likely to recommend a brand to family and friends than they were just three years ago. Kantar Worldpanel data shows that consumers are shopping less frequently than before, but for a more varied range of goods. In 2013, the average Indonesian family bought from 45 different product categories over the course of the year – up from 43 just a year earlier. To many international brand managers, and to the most successful and nimble brands in Indonesia, these are questions they are already addressing, but they are especially important to appreciate now. Indonesian people are seeking out the brands that help them embrace modernity, progress and technology - but without having to sacrifice their heritage and spiritualism. Just four years ago, a BrandZ™ study into what was setting the strongest brands apart from the competition found that saliency played the dominant role in consumer choice – essentially, the ease with which a brand name sprang to mind was the key to its success. Now, however, the role of saliency has declined significantly, and it is a brand’s ability to make a meaningful connection with a consumer that matters most. It is no longer enough to be visible; brands must have something relevant to say after they get noticed. Advertising has tremendous power to help consumers identify the brands and products that can enrich their lives. But to advertise successfully in Indonesia means achieving a delicate balance between reflecting cultural values that resonate across a diverse nation, and at the same time being sufficiently creative to stand out in a cluttered advertising environment. Successful brands – both local and international – are telling stories that reach across the diversity of modern Indonesia, and are helping people navigate the tensions they manage as their lives change. Few Indonesian brands have established a global presence, but those pioneering names expanding across the region are doing so from a strong position in this complex and demanding home market. More local brands will, in the coming years, start to realize their regional and global aspirations. There remains a sizeable, long-term opportunity for brands to grow in Indonesia. While personal wealth is greater and more widely distributed than it’s ever been before, affluence is still a relative concept, and much potential remains unmined. Introduction OVERVIEW WHAT’SEXCITINGNOW ISTHESENSETHAT INDONESIAISENTERING ANEW,PIVOTALSTAGE INITSDEVELOPMENT With an increasingly alluring consumer market, however, also comes more intense competition from newcomers. In 2013 alone, there were 173 new food brands launched in the country, 61 new drinks brands, and 26 new names in personal care. This all makes the task of a brand owner more challenging, as they seek to be heard above the growing chorus, but it is also more complicated. Brands need to ask a new set of questions: How well does the brand meet the functional needs of consumers? Are they communicating the brand’s story in a meaningful way? And how does this combination of story and function make people feel?
  9. 9. SECTION 01 INTRODUCTION 18 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 19 INDONESIA TOP 50 TOGETHER WORTH US$65 BILLION The combined value of the BrandZ™ Top 50 Most Valuable Indonesian Brands hit US$64.6 billion, not far behind the total value of the Top 50 brands in India in 2014 (US$69.6 billion), but just one-seventh of the value of the Most Valuable 50 Chinese brands this year. BRAND EQUITY IS STRONG Indonesian brands are proving effective at creating a consumer predisposition to purchase – on a par with the most valuable Chinese brands and performing better in this area than many leading global brands. In the BrandZ™ Power Index, a brand equity measurement, the Indonesian Top 50 scored 210, compared with 212 in China, 222 in India and 161 in Brazil; the average of all brands worldwide is 100, so a score of 150 indicates that a brand is performing 50 percent better than the average brand. BANKS AND TOBACCO ARE BIGGEST PERFORMERS Financial services brands occupy 24 percent of the Top 50 brands in Indonesia by number of brands, and banks take four of the top 10 places in the rankings, including first and second. Tobacco brands are unique in Indonesia across the BrandZ™ rankings in having such a strong presence among leading brands, with six tobacco brands featuring in the top 12, and seven making the Top 50. SPOTLIGHT ON OPPORTUNITIES FOR BRANDS Introduction KEY RESULTS KEY RESULTS BCA IS INDONESIA’S MOST VALUABLE BRAND BCA, or Bank Central Asia, tops the inaugural BrandZ™ Indonesia rankings, having built its reputation over more than 50 years in this market, during which time it has established a network of more than 1,000 branches around the country. Its innovations in the provision of card services have helped make it one of the most widely used consumer banks in the country. The bank’s private-label BCA card is now widely accepted in Singapore. BCA’s brand value places it just outside the Global Top 100 Most Valuable Brands; the bank is on track to become the first Indonesian brand to make the global ranking. MEGA BRANDS DOMINATE The Top 5 brands account for 57 percent of the total value of the BrandZ™ Indonesia Top 50, or US$37 billion. This concentration of value at the top of the ranking is similar to India, China and Brazil. In contrast, the Top 5 brands in the Global Top 50 account for only about a quarter of the ranking’s total value.
  10. 10. SECTION 01 INTRODUCTION 20 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 21 RETAILERS PROVE SOLID PERFORMERS Four retail brands feature in the Indonesian Top 50; this is not unusual in itself, but what is interesting about the retailers that make the rankings here is that they are all bricks-and- mortar stores, whether department stores as in the case of Matahari Department Store, or grocery outlets such as Alfa, Ace and Hypermart. The top performing retail brands globally, and in China however, tend to be those focused on e-commerce. The rate of e-commerce is growing in Indonesia, as smartphone penetration and the use of credit and debit cards grows, but is still nascent by world standards. FAST-MOVING CONSUMER GOODS WELL REPRESENTED Fast-moving consumer goods brands make up 28 percent of brands in the BrandZ™ Indonesia Top 50 – a very high proportion when compared to other countries’ rankings. Well- loved and highly successful home- grown noodle, water and tea brands extra value that is worth paying for. In categories where there is one dominant player, this premium factor is often seen; in Indonesia, it applies to brands such as Matahari Department Store, Rinso, and Garuda Indonesia. STRONG AND DIFFERENT – BUT LACKING LOVE AND INNOVATION Indonesia’s most valuable brands are doing as good a job as the strongest global brands when it comes to being meaningfully different, and salient; where they lag is in being lovable and innovative. The Top 50 Global Brands average an innovation score among consumers of 120, while Indonesia’s Top 50 manage just 103; likewise, global brands achieve 131 on the love scale, while Indonesia’s Top 50 only get to 108. The importance of these measures to a brand’s overall value is clear when the Top 50 is split in half and ranked according to their innovation score. The top half then are collectively worth US$51.9 billion, while the bottom half, those seen as less innovative, are valued at just US$12.7 billion. feature strongly in the Top 50. Brand strength for names such as Indomie, Pepsodent, SariWangi, and Bimoli has helped these brands punch above their financial weight in the rankings. The personal care category’s success reflects investment by multinational corporations, which have introduced and developed their brands in Indonesia. CATEGORY LEADERS PROVE PREMIUM VALUE Leading Indonesian brands have strength enabling them to command a premium price that is well above that seen among leading brands in other markets. The BrandZ™ Premium Index, one of several measures that count towards brand value, is 120 among the Top 50 brands in Indonesia, which compares to 111 in the Global Top 50, 104 in India’s Top 50, and 109 for the leading 50 brands in China. The average among all brands worldwide is 100. This does not necessarily mean that the top brands are more expensive than the competition, but does mean consumers see them as providing Introduction KEY RESULTS Make branding a priority and reap the rewards Now is the time to focus on branding; Indonesian consumers are more aware of and engaged with brands than ever. They talk about brands and recommend the ones they love. The BrandZ™ ranking shows that businesses in Indonesia that nurture the power of their brands are four times more valuable than those that don’t. CEOs should see a clearly articulated and communicated brand mission as essential to growth. Safety in numbers – the value of trust The value of being a trusted brand is underlined by analysis of the Indonesia Top 50. Among banking brands, for instance, almost 90 percent of the brand value in the ranking is concentrated at the top, among just three brands. These three banks far outperform other banks on measures of fairness, responsibility, and trust in the eyes of consumers. Economic crises have shaken this market, and wary consumers seek out brands they feel are safe. Emphasize scale, a long history, and popularity to foster consumer trust. Emotional connections take brands to new heights Brands that focus on making meaningful connections with consumers can punch above their financial weight in the BrandZ™ rankings. These connections must be about more than simply being well-known or delivering quality and value. They must be built on emotion, and the most successful brands deliver meaning not just through their products but through their communications, creating emotional, memorable links that connect with consumers’ lives. Local relevance helps consumers straddle two worlds Local brands dominate the Top 50, and Indonesians take tremendous pride in home-grown success stories. But the BrandZ™ rankings also show that multinational brands can succeed in this market by tailoring their attributes to the Indonesian market - not just with a local look, but by making a locally relevant connection with consumers. Multinational brands can help consumers resolve the tension they feel between wanting to maintain traditional values and their desire to be worldly and modern. Innovate and prosper Innovation in digital services and digital media investment drives up a brand’s value. The Top 5 most valuable brands in the Indonesia ranking invest significantly more in digital compared to the lowest-ranked brands. Technology can make service brands more accessible, and digital communication in this mobile-driven market is essential. Brands should exploit multi-screen behavior by consumers to build layers of meaning – but should still remember the value of TV, which is immensely popular and remains an effective driver of reach. TOP 5 LEARNINGS FOR MARKETERS
  11. 11. SECTION 01 INTRODUCTION 22 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 23 THE SEARCH FOR VALUE Robust economic growth is putting more money in people’s pockets, but demand is no less intense for great value for money. Consumers are not necessarily buying the cheapest products available, but they are looking for more efficient ways to buy, and want to strike the right balance between quality and price. Kantar Worldpanel Indonesia has tracked increasing demand for large pack sizes on FMCG products ranging from biscuits to shampoo, which deliver better overall value for money. Even relatively affluent consumers are on the lookout for great value, and are increasingly buying budget brands. In fact, urban households are more likely than those in rural areas to buy brands that position themselves as economical, and top-tier households (A or B on the SES socio-economic scale) are almost twice as likely to buy these brands as are those shoppers at the lower end of the scale. CONVENIENCE People are leading increasingly complex and busy lives, so are keen to buy products that help them free up time, either for time with family and friends at home, or for the pursuit of hobbies, entertainment and socializing. Many city-dwelling couples now both go out to work, and commute times can be long, so ready-to-heat and ready-to-eat meals, canned and frozen food and disposable nappies are all enjoying growth. At retail, shoppers are drawn to services that help them save time in store or make the experience simpler. While urbanization is behind some of the drive for convenience, consumers outside major centers are also seeking out time-saving products and services, as they seek an improved balance between work life and their personal lives. NEW SPHERES OF INFLUENCE Television remains the cornerstone of national campaigns for mainstream products and brands, providing unparalleled reach across Indonesia. But increasingly, particularly among young consumers, digital media is providing new sources of information and inspiration. Given the near- ubiquity of mobile phones and the popularity of social media, online forums are alive with opinion, and the sources of influence are many and varied. More than 62 million Indonesian consumers are on Facebook, and local social networking site Kaskus has nearly 6 million. While only about one in four mobile phone users currently has a smartphone, that figure is rising rapidly, and with it, so will the effect of online word-of- mouth and digital advertising. E-COMMERCE This is still a nascent area of retailing in Indonesia, and is far from a mainstream activity, but it is one that is rapidly growing as smartphone penetration and trust in buying online increase. KADIN Indonesia, the country’s Chamber of Commerce, expects that by the end of 2015, 10 percent of internet users in Indonesia will be buying online, as consumers do banking online and buy groceries and big-ticket items via e-commerce. One of the biggest hurdles to growth is the fear of being duped, along with a lack of clarity over e-commerce regulations, the complexity of delivering items across a sprawling network of islands, and the fact that many consumers don’t have a payment card they can use online to complete a transaction. However, there is a sense that a tipping point for e-commerce is near, as individual brands launch e-commerce ventures and as B2C e-commerce companies such as Lazada Indonesia, Rakuten, and eBay gain users. PREMIUMIZATION Demand for aspirational brands and products are fuelling the growth of premium goods across categories, from cars and fashion, to soap and chocolate. Consumers are willing to pay for the brands they see as providing something that goes beyond simply meeting their needs. Those who can afford it are buying top-end BMWs and premium Samsung mobile phones, while others are treating themselves to little luxuries. Kantar Worldpanel found sales of premium liquid soap, for instance, were up 39 percent in a year (2013), while premium chocolate sales rose 35 percent and top-end mouthwash saw a 15 percent surge in sales in the same period. Premium instant coffee, toothpaste and baby products are also on the rise. This is not simply about consumers splashing out; premium products must prove they deliver something extra that justifies their premium pricing. A DESIRE FOR LOCAL MEANING Across every aspect of their lives, Indonesian consumers tend to be drawn to products and brands that they perceive to be aligned with their own lives and beliefs. While this puts local brands in a strong position to make meaningful connections with consumers, it also provides opportunities for international brands that can provide a locally relevant expression of their brand – and, in some cases, a localized version of their product – that feels at home in this market. McDonald’s has localized its offering with rice-based meals, British American Tobacco makes hand-made kretek clove cigarettes for this market, and to many people, Kit-Kat and Oreo are fondly regarded because they have generated a sense of familiarity that has a local ‘feel’ to it. PROGRESS AND TRADITION IN MODERN BLEND Introduction CROSS-CATEGORY TRENDS CROSS-CATEGORY TRENDS
  12. 12. SECTION 01 INTRODUCTION 24 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 25 BUILDING VALUABLE BRANDS IN TODAY'S INDONESIA Introduction KEY TAKE AWAYS KEY TAKE AWAYS MATCH ASPIRATION WITH AFFORDABILITY Consider how different levels of affluence affect consumer preferences; there’s being rich, and then there’s being really rich. For huge numbers of Indonesians, owning a motorcycle is no more a badge of wealth than owning a pair of shoes – it’s simply essential. Having a car, however, means someone has reached a new level of economic success, but it’s having a car with your own driver that shows you’ve really arrived. Consumers right across the income spectrum may have similar desires, but need different ways of realizing them. Mobile phones, personal care products, innovative food items, and even cars are just a few of the categories that span a broad range of budgets, from economy to premium, so tailor your range, pricing, and emotional benefits accordingly. HELP CONSUMERS MAKE SMART DECISIONS Indonesian consumers are extremely value-conscious, and while traditional price discounts and sale periods may help attract buyers, what consumers appreciate more are brands that they feel are providing an honest product or service at the right price. Consumers in some of the poorer, more remote areas buy low-cost products out of necessity, but are looking beyond headline prices for the bundle or deal that provides the best value. More affluent consumers are just as keen on buying economy brands when they feel they are not sacrificing quality for a good deal. Marketers need to understand what is perceived as good value in a given category, align with that definition and deliver it. MAKE PROMISES, NURTURE TRUST Trust, reliability, and authenticity are essential credentials for a successful brand to possess in Indonesia. Brands need to ensure that the promise of their brand is aligned with what is actually delivered, as only then will trust be established. Brands such as Garuda Indonesia, Sunsilk and Indomie have done this over many years; Oreo and Milo have achieved high levels of trust more recently by finding a locally relevant expression of their international DNA, making a promise that speaks directly to Indonesian consumers, and delivering on that promise. STUDY THE YOUNG, VIEW THE FUTURE Indonesia has one of the youngest populations in the region, with a median age of 29 – far younger than China (36) and the U.S. (median age 38). Young people have grown up with democracy, freedom, and access to information in a way that the older generations, who lived under a dictatorship, could only have dreamed of. They have a taste for the newest products, from food to technology, and are prepared to pay for them. They have, however, inherited something of their parents’ and grandparents’ sense of frugality – of being prepared for a rainy day. So, while they are less risk-averse than older people, there is little ostentatious spending when it could be construed as wasteful indulgence. Help young Indonesians balance their desire for the new with their fondness for tradition.
  13. 13. T H E A P P E T I T E F O R S O C I A L M E D I A I S I N T E N S E R E F L E C T I N G T H E S O C I A L N A T U R E O F I N D O N E S I A N S O C I E T Y
  14. 14. SECTION 01 INTRODUCTION 28 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 29 Introduction KEY TAKE AWAYS KEY TAKE AWAYS BE MINDFUL OF REGIONAL VARIATION IN ATTITUDES While Jakarta is the center of commerce and is where trends are set for many other cities, it’s important to remember that only 4 percent of the country’s population calls the capital ‘home’. Businesses seeking to build national brands need to look to other major cities and beyond, and consider the differences between each. While Jakarta is a very modern city and is quite westernized, the central Javanese city of Yogyakarta – another major center on the same island – has a more traditional feel to it, and is a place where politeness, hierarchical structures, and respect for one’s elders is more apparent. Cynicism regarding advertising is growing in the capital, while in places such as Medan, Padang, Pontianak and Bodetabek, consumers are enthusiastic about ads generally and are inclined to find them entertaining. EMPHASIZE RELATIONSHIPS, NOT INDIVIDUALITY, IN COMMUNICATIONS For many Indonesians, there is an emphasis on collective achievement and smooth interpersonal relationships, ahead of individual success. People feel more confident when they’re part of a group. There is also a great deal of respect for authority, which means people appreciate being given clear guidance on how to do something, and will avoid uncertainty and ambiguity when they can. Accepted wisdom has it, therefore, that the best way to make a great Indonesian ad is to feature a harmonious family around the dinner table. DON’T RELY SOLELY ON FUNCTION TO SELL Function is an important and powerful part of the story for Indonesian consumers, but brands risk falling behind if they rely solely on a compelling expression of their functional benefits in their advertising. Ultimately, the most powerful communication in Indonesia has a balance of associations, both practical and emotional – rooting an emotionally compelling brand story in a core product truth. In Indonesia, half of the most persuasive advertising strikes this balance between function and emotion, compared to 43 percent globally. A great example of this in action is chocolate milk brand Milo, which shows mothers supporting their children’s sporting achievements by giving them the nutritious energy of Milo. MIND THE CLUTTER, WATCH FOR GAPS Indonesia is a market that is now crammed with advertising, to the extent that Maxus Indonesia report that TV audiences are now subjected to an average of 13 to 14 ads in a typical prime-time ad break. While the color and dynamism of advertising is welcomed as novel entertainment in some of the more remote parts of the country, in the cities, especially in the capital, there’s weariness among consumers who feel they are bombarded by advertising that has become so ubiquitous it is no more effective than wallpaper. The importance of creating advertising that can cut through this clutter is, therefore, vital to appreciate, particularly as the overall investment being made in advertising continues to rise, and is forecast by GroupM to grow a further 13.5 percent in 2015. ALIGN WITH LOCAL VALUES AND ‘FEEL’ LOCAL Give your brand a local identity – even if it’s a global success – by offering something new and aspirational that works with, rather than in opposition to, respected traditions. Millward Brown Link™ data shows that Indonesia has the lowest receptivity of any Southeast Asian market to ads coming from other markets in the region, with only 39 percent of high-performing regional ads also performing well here. But adding a local face to an international campaign is only getting localization half-right. Making a real connection means relating to consumers with a human truth that feels relevant and familiar – but without using tired national stereotypes. International brands can achieve this just as well as local brands; global shampoo brand Sunsilk, for instance, is fondly regarded as an Indonesian favorite because it ‘feels’ local. HELP CONSUMERS AVOID AMBIGUITY – PROVIDE PRAGMATIC SOLUTIONS There are few places where it matters more than in Indonesia that a product “does what it says on the tin”. Consumers here are widely perceived to be rational shoppers, making decisions about products and brands based on information about what that item can do for them – and at what price. Millward Brown’s Link™ research in Indonesia reveals that the most persuasive ads are characterized by a demonstration of the product benefits and composition. In fact, 82 percent of the most persuasive ads demonstrate the benefits of a product, compared to only 66 percent of the lowest performers. Marketers must demonstrate that their brand delivers clear benefits – and, of course, great value. PREPARE FOR E-COMMERCE, BUT DON'T LOSE FOCUS ON PHYSICAL RETAILING E-commerce is the shopping mode of the moment, but it is only practised by a tiny proportion of the population despite gradual progress being made in delivery services, the ability to pay online, and in overall consumer trust that shoppers will receive the goods they’re paying for. Physical stores remain where the action is, and while a shift from wet markets and neighborhood warungs towards the modern trade is well under way, independently owned general stores, cafés, restaurants and clothing shops are where many people spend the majority of their money. The appeal of the modern trade to marketers is the ease of gaining scale and consistency of display in an efficient way, but distribution and promotion through more traditional retailers remains important.
  15. 15. SECTION 01 INTRODUCTION 30 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 31 Introduction KEY TAKE AWAYS KEY TAKE AWAYS LOOK BEYOND THE FAMILY DINING TABLE The propensity for Indonesian people to identify with groups has grown beyond the family group, and marketers should consider the new ways in which individuals think about togetherness with other groups of people. Friends, work colleagues and wider communities have become a second family for many, especially young people who have moved away from their family home to study or to work. For them, togetherness can mean hang-out time at a cinema or shopping mall, or time playing sport or pursuing another shared interest. For older people and couples without children, social gatherings with workmates are a little-acknowledged opportunity to identify with a group. At the same time as Indonesians are forming groups outside the family, dynamics within family homes are changing, with spaces and devices becoming more personal rather than communal. RESPECT RELIGION, BUT DON’T PREACH Indonesia is home to the largest Muslim population in the world, and brands need to be mindful of this in their communications. Local cosmetics brand Wardah, for instance, has successfully reshaped the Indonesian cosmetics category with strong halal claims about its products, providing women with the chance to express themselves and feel beautiful without compromising on their values. But this is a delicate path to tread, and in most categories, consumers like brands to acknowledge their religious views in a subtle way, but don’t like the idea of religion being used as a sales platform. Financial services is perhaps one of the few exceptions to this, as many banks offer Islamic products, though, even then, the most successful brands steer clear of overtly religious messages. USE TELEVISION WISELY – THEN STOP SPENDING Television attracts the lion’s share of advertising investment for a very good reason: it helps brands to achieve national reach in an efficient way. And, despite the rise of digital media, TV will continue to be the cornerstone of great national ad campaigns in Indonesia for quite some time. But a bigger TV investment does not guarantee a bigger impact; while the optimal number of exposures to an ad required to affect brand KPIs is high by global standards, once that frequency has been reached, there is very little additional lift for any additional exposure. So, establish what the ideal level of TV exposure is for your brand, and then look to other media to complement that investment. For many large brands, anything from 10-50 percent of their TV campaign budgets can end up as wastage; resulting in no incremental impact on brand or sales measures. USE MULTI-SCREENING TO YOUR ADVANTAGE The scale of the ‘multi-screen’ opportunity in Indonesia is huge; of 26 countries in Millward Brown’s AdReaction study in 2014, Indonesia was found to have the fifth-highest level of multi-screening behavior. In fact, one in five multi-screen minutes in Indonesia is spent 'meshing' – simultaneously looking up content related to their activity on another screen – which equates to over an hour a day. Ambitious brands must invest in building a layered relationship with consumers across multiple touch-points simultaneously if they are to keep pace with changing consumer habits. TV remains an unparalleled driver of reach and, therefore, saliency, but non-TV screens such as mobile can be the perfect vehicle for a more layered and meaningful conversation with consumers. GO DIGITAL, BUT ON INDONESIAN TIME Everyone is getting connected, but internet speeds in Indonesia remain among the slowest in the world. Broadband outside Jakarta is rare, and average connection speeds across the country are just 1.9Mbps, slower than India, China, the Philippines, and Vietnam, and just 10 percent of the average speed achieved in Singapore, and an even smaller fraction of the world-leading connections achieved in South Korea (22.2Mbps in Q4 2014). In designing web sites and e-commerce solutions, focus on functional elements and provide easy navigation to save users loading unnecessary pages by mistake. Use images sparingly and in lower-resolution formats than you might otherwise, and be even more judicious about using video. It is possible to run attractive and effective sites that work over low-bandwidth connections. BUILD OPPORTUNITIES FOR CO-CREATION Indonesians see their digital devices as tools for creation, not just consumption. Brands seeking true engagement with consumers – especially those with a young and tech-savvy target market – should encourage that creativity to find a voice that is linked to their offering. Coca-Cola Indonesia is a leader in this field, and has shown that by providing brand advocates with the tools to create their own content, a proliferation of brand- centric communication online results. The volume of user-created, brand-related content often far outweighs that generated by a brand itself, and has a different level of stickiness and credibility when shared because it is the work of a friend.
  16. 16. SECTION 01 INTRODUCTION 32 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 Introduction KEY TAKE AWAYS KEY TAKE AWAYS THINK SOCIAL – CONSUMERS DO This is a country that is social by nature, and Indonesians with access to the internet are seizing upon the opportunity to socialize digitally. More than 62 million Indonesian consumers are on Facebook, local social networking site Kaskus has nearly 6 million, and Twitter and LinkedIn are also widely used. These sites operate freely in Indonesia, in marked contrast to China, and are becoming increasingly popular as the number of people upgrading to smartphones continues to climb. Social networking can be a key tool for improving brand engagement, and these platforms, which provide not just reach but precision targeting by demographics, preferences, social connections and behavior, provide an attractive proposition for advertisers. GET MOBILE Indonesians spend, on average, a remarkable three hours a day using their mobile phone – more time than they spend watching TV. Among young people, the role of mobiles in people’s lives is even stronger, with 16 to 24-year-olds spending an average of four hours a day on their phones, often while doing something else at the same time, such as watching TV. As in other fast-growing markets such as China and India, many people’s first experience of the internet in Indonesia is via mobile, and often using a feature phone rather than a smartphone. The vast majority of social media users are connecting via mobile, rather than a desktop or laptop. The power of mobile marketing, especially when linked to television, is not to be overlooked. THINK LONG-TERM There are millions of Indonesians who won’t be in the market for brands for several years. Strong economic growth in Indonesia has helped reduce poverty from 24 percent of the population in 1999 to 11.3 percent in 2014, as defined by the World Bank, but there remain an estimated 68 million Indonesians living just above the poverty line, generating just over the Rp 11,000 (US$1) per person per day baseline income. These people are vulnerable to small shocks, such as illness or job loss, which can very quickly put them in poverty. Others, who are safely within the consuming class, will upgrade from basic to premium goods as their wealth grows. Now is the time for brands to build familiarity and trust. They should sow the seeds of aspiration, and meet that aspiration with the products and services that fit consumers’ needs as their lives change, whether it be with shampoo, biscuits, a restaurant meal, a scooter or a flat.
  17. 17. SECTION 01 INTRODUCTION 34 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 35 Introduction ECONOMY AND DEMOGRAPHICS ECONOMY AND DEMOGRAPHICS POPULATION ECONOMY Total population Urban population (% of total population) Productive Age 66% Below 30 55% Working Age 51% Kids and Teens 37% Millennials 34% The national population is forecast by the United Nations to exceed 322 million by the year 2050. 253.6 Mil. Rate of urbanization (annual rate of change (2010-15 est.) 2.69% 53% Population by age Literacy rate (% of population over 15 years who can read and write) 6.5%65 years and over 7.9%55-64 years 42.3%25-54 years 17.1%15-24 years 26.2%0-14 years Median age Foreign Direct Investment (US $ Bil.) 29.2yrs Indonesia 18.4 Indonesia 36.7yrs China 258.2 China 27yrs India 28.2 India 27.7yrs Malaysia 92.8% Indonesia 95.1% China 93.1% Malaysia 37.6yrs US 40.4yrs UK 46.1yrs Japan JAKARTA Bandung Surabaya Makassar Semarang Medan CENTERS OF POPULATION Palembang Balikpapan Samarinda 10.176 Million 2.513 Million 2.834 Million 1.429 Million 1.614 Million 2.182 Million 1.454 Million 706,000 806,000 LANDAREA or approximately 735,000 square miles (about the same as the UK, France, Germany, and Spain combined – or slightly smaller than the US.) 1,904,569 Sq. km GDP (2014 est.) about the same as the Netherlands Ease of doing business Indonesia ranks 114th out of 189 countries, with 1 being the most business-friendly $856.1 Billion GDP growth rate (2014 est.) 5.2% GDP per capita (2014 est.) $10,200 12.2 S.Korea Indonesian smartphone users (% of mobile users in 2015) Sources: GroupM, World Bank, CIA Factbook, OECD, Statista TECHNOLOGY 15.8 Indonesia 125 Indonesia 45.851.6 China 89 ChinaBrazil 15.1 India 71 India 67.0 Malaysia 84.2 US 96 US Internet users per 100 people Mobile subscriptions per 100 people 125 UK 118 Japan 111 S.Korea 29%
  18. 18. SECTION 01 INTRODUCTION 36 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 37 Introduction HISTORY HISTORY CENTURIES OF TRADING DELIVERDIVERSITY OF MODERN INDONESIA Strong economy emerges after years of upheaval The 17,000-plus islands that make up the Indonesian archipelago have been a center of trade in the region since the 7th century, delivering not just immigration from around the region, but also an exchange of culture and ideas. Present-day Indonesia brings together hundreds of distinct ethnic groups, with a range of languages and religious beliefs. Recent years have seen economic volatility, terrorism and political unrest – but the fourth-most-populous country in the world is emerging from this period of hardship a vibrant, youthful nation, and is now Southeast Asia’s biggest economy. Spice trade brings new influences 7th century to 17th century The islands of what is now called Indonesia have been a center of commerce for many centuries, thanks to their proximity to India and China. Traders brought new settlers and new ideas to the area, all gradually absorbed by the islands’ residents. Muslim traders’ legacy makes Indonesia home to the world’s largest Muslim population today. Hindu and Buddhist communities from around Asia have also flourished on the islands, and Christianity was brought by European explorers attracted by the islands’ exotic spices, particularly nutmeg, which was once one of the world’s most valuable commodities. Road to independence 1942 to 1967 At the height of World War Two in Asia, Japan occupied the islands of Indonesia, bringing Dutch rule to an abrupt end and giving rise to a push for independence that had previously been suppressed. Immediately after the surrender of Japan in 1945, nationalist leader Sukarno declared independence and became president. The Dutch were reluctant to relinquish their hold on the islands, however, and it was only after four years of at-times brutal fighting and international diplomatic pressure that the Netherlands agreed to transfer sovereignty. Indonesia became an independent nation with Sukarno at the helm. The Suharto years 1967 to 1998 General Suharto became Indonesia’s president in March 1967, with his New Order administration supported by the USA. Years of significant economic growth followed, encouraged by a newly outward approach to foreign relations and efforts to build relationships with other countries in the region. Indonesia is a founding member of the ASEAN economic alliance, and restored links with China in 1990 after a lengthy freeze. New Order was, however, widely accused of corruption and the suppression of political dissent, and when the country was battered by the Asian financial crisis of the late 1990s, popular protest erupted and forced Suharto to resign, in May 1998. Shortly afterwards, East Timor voted to secede from Indonesia, ending 25 years of military occupation there. A new path 1999 to present day Legislative elections were held in 1999, and the democratic process has gradually been strengthened in the years since then, with the first direct presidential election held in 2004. Political instability and corruption have waned, and the Indonesian economy has rallied. Freedom of speech and freedom of the media have increased significantly, though the country has had to contend with terrorism – most notably the 2002 Bali bombings, and natural disaster. The Boxing Day tsunami in 2004 is widely thought to have killed more people in Indonesia than any other country – about 170,000 – and to have displaced many more. Separatist movements in the provinces Aceh and Papua have also led to armed conflict. Modern Indonesia is now, however, largely peaceful, prosperous and, thanks to mobile and web technology – informed and connected. Dutch colonization 17th century to 1942 While Portuguese traders are thought to have been the first Europeans to have regular contact with the people of Indonesia, it was the Dutch who began to colonize the islands in the early 17th century, gradually consolidating their rule over the next 200 years. The United East India Company amalgamated the many Dutch businesses competing for trade through the islands, and established the city that is now Jakarta as the capital of its Asian trading network. When the company collapsed, the Dutch national government took control, uniting the archipelago as one country, named the Dutch East Indies, in 1900. Many areas of modern Indonesia remained independent of Dutch rule, however, and the colonial era was punctuated by unrest due to areas of strong local resistance to foreign rule.
  19. 19. I N D O N E S I A’ S N A T U R A L R I C H E S F U E L E X P O R T S A N D A C T A S A M A G N E T F O R I N T E R N A T I O N A L T O U R I S M
  20. 20. SECTION 01 INTRODUCTION 40 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 41 Television has always been the media darling of Indonesian advertisers, consistently accounting for about 65 percent of total budgets. But it’s digital media that is enjoying the strongest growth in this rising market. Digital media spending is forecast to rise by 39.7 percent in 2015, giving digital 8 percent of the total advertising market – still well behind the share enjoyed by television and newspapers, but ahead of magazines, radio, outdoor and cinema. Investment in digital has been rising at rates of up to 200 percent a year over the past decade, as internet penetration intensifies and as more people upgrade to smartphones. More than 62 million Indonesian consumers are on Facebook, and local social networking site Kaskus, Twitter and LinkedIn are also widely used. While the growth of digital has come, to some extent, at the expense of magazines and outdoor, which have seen declines in their share of the advertising pie, the amount of investment in all media has still been rising every year, thanks to double- digit growth in the overall ad market. Total media investment is forecast to grow by 13.5 percent in 2015, reaching 31.8 billion Rupiah (US$2.6 billion). DIGITAL WINNING LARGER SLICE OF GROWING MEDIA PIE Introduction MEDIA SPENDING MEDIA SPENDING Innovation in digital services and digital media investment drives up a brand’s value. The Top 5 most valuable brands in the Indonesia ranking invest significantly more in digital compared to the lowest-ranked brands. Banks, especially, are using digital technology to innovate, and about a quarter of all bank transactions are already carried out digitally. The importance of digital innovation and communication is set to rise. Indonesian digital ad spend is now only 8 percent, but we can look to China for signs of what is to come. In China, digital represented 8 percent of all ad spend in 2009, a figure that had risen to 31 percent by 2014. Brands in Indonesia should plan for greater investment in digital media, exploiting multi-screening behavior by consumers to build layers of meaning – but not abandoning television, which is still widely viewed and remains an effective driver of reach. Media spend by sector (2013) Communications Auto Pharmaceutical Leisure Household Care Household Equipment 7% 7% 6% 4% 4% 3% Personal Care Clothing Consumer Services Education 16% 1% 2% 2% Beverages Food Public 14% 13% 12% Finance Retail Real Estate 3% 3% 3% THEORY IN ACTION The top-ranking brand in the Indonesia Top 50 is the bank BCA, which has been a pioneer in mobile banking in Indonesia. BCA’s ad spend in recent years has been increasingly focused on digital, both for building brand awareness and for lead generation. BCA uses social media platforms to help it understand consumers’ needs, especially young people, and combines social learning with other data to drive new service development. Ad spending by media % shares of media Source: GroupM 2005 TV 68.9% Radio 2.1% Newspapers 20.6% Magazines 4.1% Cinema 1% Outdoor 2.9% Internet 0.5% 2015 TV 65.5% Radio 2.4% Newspapers 17.8% Magazines 2.9% Cinema 0.4% Outdoor 3% Internet 8% Internet Penetration Smartphone penetration Tablet penetration Adult population 249,000 Adult internet users 59,600 2012 1.1% 10.6% 24% Adult population 252,000 Adult internet users 72,700 2013 2% 17% 29% Adult population 254,000 Adult internet users 83,600 2014 4% 24% 33% Adult population 256,000 Adult internet users 93,400 2015 Estimated 5% 29% 36% (000s) (000s) Average time spent on social media per day 3 HOURS AND 54 MINUTES
  21. 21. SECTION 01 INTRODUCTION 42 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 43 The value of the BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 is concentrated at the top of the ranking and among just two dominant categories. The Top 5 brands in the ranking together account for 57 percent of the value of the Top 50 brands, and three of those five brands are banks. The Top 5 brands are BCA, BRI, Telkomsel, Mandiri and A Mild. Banks and other consumer finance brands together account for US$27.5 billion of the US$64.6 billion value of the Top 50, while tobacco brands account for a further US$14.8 billion. Telkomsel is the only telecom brand to appear in the Top 10. Outside the Top 5, the brands in the Top 50 represent a broad range of industry sectors, with strong performances from real estate, food and dairy, soft drinks, personal care, retail, and entertainment brands. This diversity of brands is not dissimilar to the range that performs well in other countries’ BrandZ™ rankings. Together, the brands represented paint a life-like picture of present-day Indonesia. The banking and real estate sectors are essential to how the country and its economy are developing – telecoms and entertainment indicate consumers’ appetite for technology and being connected, while the prominence of tobacco, food and dairy, soft drinks, and personal care brands help illustrate everyday life in this market. Such a high concentration of brand value at the top of the ranking is consistent with other markets. In the BrandZ™ India Top 50, the Top 5 brands accounted for 45 percent of the value of all of the brands ranked, and it is a similar picture in China (the Top 5 account for 56 percent of the Top 50’s value) and Brazil (52 percent). In contrast, only 28 percent of total brand value is concentrated in the Top 5 brands in the BrandZ™ Global Top 50. The dominance of banks in the Indonesia Top 50 is consistent with BrandZ™ rankings in other fast-growing markets. VALUE IS CONCENTRATED AT THE TOP OF THE LIST Introduction BRAND VALUE BRAND VALUE Category by Brand Value $M Brand Value % of Total by Number of brands Number of Brands % of Total Airlines 354 1% 1 2% Banks 27,521 43% 12 24% Entertainment 249 0% 1 2% Food and Dairy 1,461 2% 4 8% Home Care 949 1% 1 2% Personal Care 3,344 5% 7 14% Real Estate 3,098 5% 8 16% Retail 3,327 5% 4 8% Soft Drinks 1,061 2% 2 4% Telecom Providers 8,417 13% 3 6% Tobacco 14,794 23% 7 14% Indonesia Top 50 breakdown The Top 5 brands account for 57 percent of the total value of the Indonesia BrandZ™ Top 50. TOP 5 BRANDS COMBINED VALUE: US$ 36.6 BIL. Brands 6-25 Combined Value: US$ 22.4 Bil. Brands 26-50 Combined Value: US$ 5.5 Bil. US$ 9,918 Mil. US$ 8,285 Mil. US$ 6,373 Mil. US$ 6,153 Mil. US$ 5,882 Mil. 57% 35% 9% 15% 13% 10% 10% 9% Businesses in Indonesia that nurture the power of their brands are four times more valuable than those that don’t. Branding affects the bottom line: the 25 brands with the strongest Brand Power scores in this ranking are together worth US$51 billion, while the remaining 25 have a combined brand value of US$13.6 billion. Brand Power is a BrandZ™ metric of brand equity – a brand's ability to predispose a consumer to select a brand and pay a premium for it. However many Indonesian brands are yet to recognize the importance of building a brand beyond establishing a reputation for price and availability. Now is the time to focus on branding; Indonesian consumers are more aware of and engaged with brands than ever. BrandZ™ research shows that 75 percent of people now recommend brands to family and friends. That figure was 45 percent just four years ago. In this new landscape, CEOs should be asking themselves a new set of questions: how central is brand building to my business growth strategy in Indonesia, do we clearly articulate our brand mission, and are we communicating that mission clearly? THEORY IN ACTION Telkomsel is ranked number three among Indonesia’s most valuable brands. It dominates the Indonesian telecoms category with a strong commitment to brand-led growth. Its “Go Discover” mantra gives the brand a compelling and unifying purpose – one that is communicated and amplified through consistent messaging across multiple touchpoints. Financial services brands make an extremely strong showing in the Indonesian rankings, with 12 brands making the Top 50, and three banks featuring in the Top 5. Financial services brands together account for 24 percent of the Indonesian Top 50 by number of brands – exactly the same proportion as was seen in India, while in Brazil the figure was 12 percent and in the China Top 100, they comprised 15 percent of the index. Unlike other markets, tobacco brands feature heavily in the Indonesian rankings, with seven brands in the index – six of them in the top 12. In no other country’s BrandZ™ rankings have tobacco brands featured, and only one has made the Global Top 100. There are two factors at play here: first, in common with many other markets in Southeast Asia, the incidence of smoking is extremely high. Second, Indonesia is one of the very few markets in the world where television advertising for cigarette brands is still allowed – albeit at limited times of day and with restrictions on what can be shown. Fast-moving consumer goods brands comprise 28 percent of brands ranked in the BrandZ™ Indonesian Top 50, led by food and dairy, soft drinks, home care and personal care brands. This is broadly comparable to what we see in other fast-growing markets (40 percent in India, 9 percent in China and 14 percent in Brazil). The strong presence of property developers in the Top 50, with eight real estate brands in the Top 50, reflects the strong growth of this sector and its role in the Indonesian economy. As in India, the technology sector does not figure prominently in the Indonesian Top 50; major global technology players such as Google, Facebook, Twitter, and LinkedIn operate freely in Indonesia, and home-grown technology companies have not so far emerged with anything more compelling. Tech- related brands that do make the Top 50 are providing telecom services. Categories and brands
  22. 22. E - C O M M E R C E I S T I N Y B U T FA S T- G R O W I N G W H I L E O N L I N E R E S E A R C H I S F U E L L I N G O F F L I N E S A L E S
  23. 23. SECTION 01 INTRODUCTION 46 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 47 The average age of Indonesian brands in the Top 50 is 45 years old, though there are some very old brands whose heritage is not reflected in this average. The second-highest ranked brand, the bank BRI, for instance, is more than a century old, and Dji Sam Soe, the brand of clove or kretek cigarettes that ranks ninth in the Top 50, dates back to 1913. To be eligible for inclusion in the Top 50, brands must be owned by a publicly listed company. In other markets, particularly China, the brands that have achieved such scale in just a few years have been fast-growing technology companies. The scarcity of young brands in the Indonesian Top 50 brands reflects the fact that technology brands in Indonesia have yet to achieve significant scale. Those few Top 50 brands launched since 2004 include two cigarette brands launched by a parent company with decades of heritage and several older brands in their stable, along with a property developer. The only relatively new brand to reflect a real shift in the consumer market is Hypermart (ranked 23rd and launched in 2004). Hypermarkets began to launch in Indonesia in the 1990s, but it was only in the 2000s that this way of shopping became the phenomenon it is now. The younger half of brands in the Indonesia Top 50 are together worth US$29.9 billion, and the older half are worth slightly more, US$34.7 billion. All brands in the Indonesia Top 50 are publicly listed, but the ownership of their shares varies; in some cases, a portion of shares is owned by the Indonesian government, and in others, there is a multinational parent company that owns a stake in the listed company. The Indonesian Top 50 brands are dominated, in both number and value, by private brands – those with neither a government nor multinational parent. There is also a strong showing by multinational brands. Most of the state-owned brands in the ranking are older brands, and tend to be in the banking sector. Brands owned by multinationals outperform the rest of the Top 50 on measures of saliency and how loved they are – but this is likely to be a reflection of the categories in which multinational brands have launched, primarily FMCG categories, rather than the fact they are owned by a multinational parent. The strong performance of private and multinational brands in this market shows that for international brands with hopes of expansion into Indonesia, there is ample opportunity for success. While home-grown brands dominate the Top 50, those that have been imported and have done well have proved popular because they have adapted to reflect local needs and values. The older brands in the index reflect the early stages of Indonesia’s economic development; they are predominantly banks, while the FMCG brands that have made the Top 50 came later. The relative youth of Chinese brands can be explained by the reforms and opening up of the Chinese economy, a process that began in 1978. BRAND AGE BRAND OWNERSHIP Introduction BRANDZ™ ANALYSIS BRANDZ™ ANALYSIS Launch Date Number of Brands Total Value Average Value Before 1967 17 $30.1 Bil. $1.8 Bil. 1967-1998 29 $31.8 Bil. $1.1 Bil. 1999-2015 4 $2.6 Bil. $0.7 Bil. The age of brands in the Top 50 is relatively young by global standards, if not quite as young as the China index, which includes many technology-focused brands, which are inherently young. Indonesia Year brand formed (average) Average brand age 1970 45 Global Year brand formed (average) Average brand age 1950 65 China Year brand formed (average) Average brand age 1977 38 Indonesia Top 50 Brands launch dates Ownership of Top 50 Indonesian brands 34 10 6 Privately Owned Multinational Corporation State Owned
  24. 24. SECTION 01 INTRODUCTION 48 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 49 To measure brand contribution, we focus on the three aspects of brands that we know make people buy more and pay more for brands: being Meaningful (a combination of emotional and rational affinity), being Different (or at least feeling that way to consumers), and being Salient (coming to mind quickly and easily when people are making category purchases). We identify the purchase volume and any extra price premium delivered by these brand associations. The brand contribution measure is what helps make BrandZ™ such a unique and important ranking. BrandZ™ is the only brand valuation methodology that obtains this customer view through in-depth quantitative consumer research, both online and face-to-face, building up a global picture of brands on a category-by-category and market-by-market basis. There are many factors that give a brand Power and Premium, the two contributors to a Brand Contribution score. One of these factors is love – a genuine fondness that consumers feel for a brand and that helps it command a premium over the competition and achieve higher volume sales. While top Indonesian brands score well on most other measures compared to leading global brands, one area where there remains potential for improvement is on the love score. The average love score for all brands worldwide is 100; the most valuable 50 global brands achieve 131 on the love scale, but the Top 50 in Indonesia generate just 108. In Indonesia, many of the brands that punch above their financial weight in the Top 50 perform so well because they are loved. The most loved brand in the ranking was Indomie noodles, achieving a love score of 145, followed by Pepsodent toothpaste (138), and SariWangi tea (137). Love is not just a ‘nice to have’ factor for brands; it makes a real difference to the bottom line. When the strongest global brands are tracked over 10 years, the value of love becomes clear. Those with the best love scores registered 227 percent growth in brand value globally in the past decade, while those with the lowest love scores grew their brand value just 22 percent over the same period. Indonesia’s Top 10 brand contribution marques are much-loved names from FMCG categories, many of which have been store-cupboard staples in people’s homes for decades. SariWangi tea has been served for more than 40 years in this market, as have Indomie noodles, with Bimoli cooking oil offering more than 30 years of heritage. In personal care, Pepsodent has a decades-long presence in Indonesia, Rinso has clocked up nearly half a century of service, and Dji Sam Soe cigarettes have been around for more than a century. All of these brands registered a five on the brand contribution scale, along with Garuda Indonesia, the national airline, which was formed in 1949. Ciputra, A Mild and Agung Podomoro were among the brands achieving a four on this scale. Top 50 Indonesian brands Top 50 average Brand Contribution 3 Top 5 Brand Contribution 4 Brands 6-25 4 Brands 26-50 2 FMCG LEAD BRAND CONTRIBUTION Brand romance – the little things that make a difference Introduction BRAND CONTRIBUTION BRAND CONTRIBUTION Brand contribution measures the impact of brand alone, without financials or other factors, in the mind of the consumer. It is the intangible asset of the brand itself, which exists in the minds of consumers. A high brand contribution score – on a scale of one to five, with five being the highest – suggests that a brand is resilient and is able to increase sales volume and charge a premium. Rank Top 50 Rank Category Brand Brand Value 2015 $M Brand Contribution Index 1 25 Soft Drinks SariWangi 402 5 2 14 Food and Dairy Indomie 1,039 5 3 50 Food and Dairy Bimoli 110 5 4 18 Personal Care Pepsodent 659 5 5 17 Home Care Rinso 949 5 6 27 Airlines Garuda Indonesia 354 5 7 9 Tobacco Dji Sam Soe 1,767 5 8 20 Real Estate Ciputra 484 4 9 5 Tobacco A Mild 5,882 4 10 35 Real Estate Agung Podomoro 267 4 Top 10 Brands by Brand Contribution Average Brand Contribution 4.4 Top third Average Value $2.6bn 3.2 Middle third Average Value $1.0bn 1.4 Bottom third Average Value $0.2bn Average Value $1.3bn All TOP 50 3.0 Brands can punch above their financial weight in the BrandZ™ rankings by focusing on making meaningful connections with consumers. These connections must be about more than simply being top of mind, or delivering good quality and value. They must be built on emotion, and the most successful brands deliver meaning not just through their products but through their communications, creating emotional, memorable links with consumers’ lives. FMCG brands find it easier to build meaning as they have more frequent connections with consumers, but the strongest of them find ways to deepen their role in consumers’ lives. Service brands can build meaning by looking beyond the traditional role their category plays and develop new experiences for people to interact with them and experience their values. THEORY IN ACTION Indonesia’s leading bottled water brand, Aqua, is using its Ada Aqua campaign to give consumers reasons to consume water more frequently by linking good hydration with feeling alert and ready to focus on important tasks. Aqua has a BrandZ™ score on the meaningful index of 242 – a huge premium compared to the average of all brands globally, which is 100. The instant noodle brand Indomie (222 on the meaningful index) continuously refreshes its range with new variants, often in typically Indonesian flavors, and appeals to the masses with its highly emotional advertising.
  25. 25. SECTION 01 INTRODUCTION 50 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 51 Yet within Indonesia, there is tremendous pride in the country, its people, and its successful brands. At home, to be 'Made in Indonesia' is a highly positive attribute for a brand or product to have. It suggests artisanal quality, a richness of culture, and a connection with the country’s history. Indonesian people living or travelling abroad often take typically Indonesian goods with them – Indomie noodles, kretek cigarettes, or batik fabric – and see themselves as ambassadors for the country and its brands. For Indonesia, developing a strong reputation and building the desirability of its brands is especially important at the moment, with the ASEAN single trading bloc for Southeast Asian nations due to come into being in late 2015, simplifying regional commerce. MIND THE GAP The divergence of opinion inside the country and abroad about what Brand Indonesia stands for is illustrated in the Personality Atlas, a J. Walter Thompson study of the stereotypes and perceptions of 27 markets across the globe. The Personality Atlas study, based on interviews with more than 6,000 adults, highlights a ‘positivity gap’ in Indonesia and other developing countries; essentially, people feel more positive about their own country than people in other markets do. The research found that in Indonesia, 36 percent of people feel very positively about the country. In countries in the region excluding Indonesia, only 9 percent feel that way about Indonesia, and globally, 11 percent feel very positively. This global score puts Indonesia level with India (11 percent globally view it very positively) and not far behind Singapore (13 percent), South Korea (13 percent), Thailand (16 percent), and China (22 percent). The U.S., for comparison, is regarded very positively by 31 percent of people worldwide, and the highest ranked country in the world is Canada, which has 46 percent of people around the world feeling very positively about it. Globally, people feel most positive about the people and culture of Indonesia, slightly less so about its brands, and even less positive about its government. The country is most likely to be described as religious and content – similar words used to describe India – and is least likely to be called cultured or charismatic. The country is seen as welcoming, family- focused, polite, and religious. Locals, however, describe their country as fun, humorous, welcoming and polite. Regionally, there are concerns about corruption in Indonesia. PEOPLE POWER Perceptions globally about Indonesian- made products are similar to those from other Southeast Asian nations; products are seen as cheap, but of questionable quality and subject to poor safety standards. Indonesian people have a much more positive view about made-in-Indonesia goods – about 35 percent feel very positively about home-made products, while globally just over 10 percent of people feel the same about Indonesian products. As is the case with most countries, people who have actually been to Indonesia have a higher opinion of the country than those who have never visited. And people aged under 35 feel significantly more positively towards Indonesia than those aged 35-plus – a difference of 10 percentage points. When asked about the culture of a country, people rank Indonesia above South Korea and not far below Hong Kong and Singapore. When asked about the people, the world ranks Indonesians at about the same level as people from Egypt, Russia, Saudi Arabia, and South Africa. These findings chime with the BrandZ™ country personality profile for Indonesia, compiled from the descriptions local consumers form of the country’s most valuable brands, using a vocabulary of 20 personality characteristics. Brand Indonesia, the cumulative impression that consumers have of the country’s Top 50 most valuable brands, emerges as trustworthy, wise, and friendly. Indonesian brands are rarely seen as playful or rebellious. A country brand personality helps brand owners understand how a particular brand fits into consumers’ general view of brands across categories. For exporters, country brand comparisons identify the potential areas of advantage or disadvantage, where a country brand can help propel or slow international expansion. Brand Indonesia has much in common with Brand India and Brand China; all are seen as trustworthy and wise. Indonesia is seen as more generous and more fun. EMERGINGFROM THE SHADOWS Introduction BRAND INDONESIA BRAND INDONESIA Indonesia’s image around the world yet to live up to the strength of positive feeling at home Indonesia has a relatively low profile on the international stage compared to its larger neighbors to the north. Indonesian brands are little-known outside Southeast Asia, and the term ‘Made in Indonesia’ is not something that instantly conjures up a particularly strong mental image for consumers living outside the region. Trustworthy Brave Wise CaringIn Control Playful Friendly DesirableAssertive Rebellious Kind CreativeIdealistic Innocent Fun DifferentStraightforward Adventurous GenerousSexy Indonesia India Brazil China Global LatAm Be locally relevant. Local brands dominate the Top 50, and Indonesians take tremendous pride in home-grown success stories. But the rankings also show that multinational brands can succeed in this market by tailoring their attributes to the Indonesian market. Being locally relevant is not just about looking local – perhaps by remaking a global communications campaign with local talent. It is about making a locally relevant connection with consumers. The 10 multinationals in the Top 50 have an average score on the meaningful index of 156 (compared to 100 for all brands), while that for the 10 most meaningful local brands in the ranking is 163 – an almost insignificant difference. Multinational brands can help consumers resolve the tension they feel between traditional values and being worldly and modern. They can offer something new, different and aspirational, while at the same time respecting tradition. THEORY IN ACTION Pond’s skincare range focuses on whitening, an important beauty benefit for Indonesian women. This is amplified through advertising featuring everyday Indonesian women and through endorsement by local celebrities. Sunsilk, meanwhile, communicates the shine it can give naturally black hair, with local celebrity backing. It is so locally relevant that many consumers regard it as an Indonesian brand.
  26. 26. D I S T R I B U T I O N R E M A I N S U N I Q U E LY C H A L L E N G I N G C O N S U M E R S L I V E A C R O S S 6 , 0 0 0 I S L A N D S I N T H E I N D I A N O C E A N
  27. 27. SECTION THOUGHT LEADERSHIP
  28. 28. OUT OF THE SHADOWS A new perspective on Indonesian narratives It would be easy to imagine that the transformation taking place in the Indonesian consumer landscape is a simple story of progression – from old to new, from developing to developed and, to some extent, from local to global. SECTION 02 THOUGHT LEADERSHIP 56 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 57 Thought Leadership INDONESIAN NARRATIVES Yet to see progress in this way would be to underestimate the complexity of what is going on. For brands in Indonesia, it is essential that when they are building a narrative, they reflect the reality of how people feel about the change that’s taking place around them – and within themselves. We have found that for many people, the economic opportunities that modern Indonesia offers are exciting, but also have led to a pervading sense that Indonesia is at a precipice. There is nostalgia for old Indonesia, a longing for the familiar, and a fear that tradition is at risk of being lost as new values gain ground. “Everybody acts with less shame … branded clothes and goods, high tech, everything is like glass and identity seems lost; increasingly you feel like you are no longer Indonesian”, one woman, Diah, said during a recent Firefly research project, reflecting the anxiety that many Indonesians now feel. MELDING OF WORLDS Indonesians are experiencing a change in how they see themselves and they perceive others to view them, and this is more complex than simply to conclude that individualism is supplanting traditional collectivism. “Previously, wearing hijab was perceived as only for a very straight and solehah (pious) girl, but nowadays everyone can wear it. Expectations have changed – we can still be sociable and hang out, even though we wear hijab”, said Christina, a student in her late teens. Consumers want to move with the times, but they do not want to abandon their past. The tensions driving consumer decision-making were explored in a recent Firefly Millward Brown research project carried out in conversation with Indonesians formally, and informally, across Indonesia, using discussion groups, digital conversations and ethnographic diaries. We called this study Project Wayang, after the traditional Javanese shadow puppet shows that tell ancient stories from 2,000 years ago, and that remain popular today. The findings tell us much about what resonates with consumers as they manage the various cultural pressures in their lives, and underline the importance of brands reflecting those consumer truths if they are to be truly relevant. HOME TRUTHS There are three consumer truths we have identified as being especially important. Indonesians want to feel uplifted and uplifting. This can look like individualism, but is actually about managing the desire for personal success with the desire to support the success of others. The traditional value of gotong royong – providing mutual care within a community – is just as relevant today as ever – as is the sense of togetherness and the desire for cohesion. Consumers want to feel good about focusing on themselves without feeling selfish; a truly Indonesian success story unites personal success with the success of others. For brands, this means steering clear of the clichéd messages of a conforming collective without moving too far towards the self- serving benefits of a product or service. Bango cooking sauce has managed this well, showing mothers making smart choices that benefit their families. Mothers feel pride in their decisions, and in their ability to pass on their expertise. Social recommendation is something that links old and new Indonesia. People aspire to have the wisdom traditionally associated with their elders. We see consumers express a real desire to be ‘in the know’ and champion the brands they love. Brand recommendations are highly valued by Indonesian consumers, and have a strong influence on decisions to try and buy new brands. There is a real call to action for brand owners to explore how successfully brand messages are being understood, internalized, and translated into social recommendation. Brand owners can build relationships through social recommendation and validation beyond above-the-line messaging. There is great pride in Indonesia, its people, and its brands, and many people feel unapologetically Indonesian. As more Indonesians move abroad, they want to feel they are taking the spirit of Indonesia with them, spreading what it means to be Indonesian, rather than leaving it behind. They want to see Indonesian brands and products do well internationally. Makers of traditional clove cigarettes, kretek, are among the brands that celebrate their own success – and are celebrated by consumers as a result. Dji Sam Soe is a great example of where we see this working through the message of Mahakarya (Masterpiece), a message that consumers feel easily speaks for them, and feels as contemporary today as it ever has. Just as the performances of Wayang puppeteers evolve as stories are told and retold, so too do the narratives that engage Indonesian consumers. Lara-Lee Burn Head of Firefly Firefly Millward Brown Lara.Burn@fireflymb.com Firefly Millward Brown uses in-depth understanding of marketing and consumer behavior to identify true brand opportunities that inspire strategic recommendations to drive brand success. www.fireflymb.com
  29. 29. THE YOUTH OF TODAY The power behind your brand tomorrow What is youth? Is youth about freedom? Self-expression? A search for identity? There are many definitions of youth, but in Indonesia, youth is power. SECTION 02 THOUGHT LEADERSHIP 58 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 59 Thought Leadership EMPOWERED YOUTH With an average age of 29, Indonesia is a nation of millennials. Throughout Indonesia’s history, young people have played an important role in all the nation’s milestones, including Indonesia’s independence back in the 1950s, and the uprising that led to the restoration of democracy in 1998. As our first president, Sukarno, said, “Seribu orang tua hanya dapat bermimpi, satu orang pemuda dapat mengubah dunia.” A thousand old people can only dream; one young person can change the world. Young Indonesians are at the heart of the digital media explosion taking place. The TNS Connected Life study, which looks at the habits of internet users, found that 99.4 percent of 16- to 34-year-olds in the study use social networks. In this connected era, young people have the power to play an even greater role in the development of their country than in the past. In 1928, young Indonesian nationalists made what has become known as the Youth Pledge. They proclaimed three ideals: one motherland, one nation, and one language. Their declaration is marked each year on October 28th, the anniversary of the day it was first made. Now, the technologically empowered youth of Indonesia can make a digital Youth Pledge, announcing their allegiance to the nation through Twitter and Facebook. In 2010, the passion young people have both for digital communication and for their country came together in a project called Indonesia Optimis. This was an effort to modernize the traditional August 17th Independence Day flag raising that most Indonesians attend during their school years, but never bother going to again. The campaign worked across Twitter, Foursquare, and YouTube to spread enthusiasm for a flag-raising ceremony that was streamed online – taking the event to the screens young people held in their hands. In one week, the site was visited by 54,000 people. In another example of young people wielding their tremendous digital power, a campaign to help a housewife fight a legal battle raised four times the amount of money she needed. The woman at the center of the case was being sued for the equivalent of US$20 million by a hospital over claims she made about her treatment there. The case was dropped, and the US$80 million that was raised has funded a foundation to help people in similarly difficult legal situations. There is a danger, however, that once marketers realize the power of Indonesia’s youth, authenticity is lost. Some brands have exploited young people and their social media habits to pursue their own agendas, and as a result, young Indonesians have grown cynical about involvement in branded social media projects. This has happened to such an extent that some brands have given payment or gifts in return for social media endorsement. People with a large enough social media following have been able to turn their buzz into a revenue stream as lucrative as having a 9-5 job. But while campaigns built on this basis build ‘likes’ for brands, they deliver little else. In our experience helping brands create movements online, there are several rules of engagement: The cause. We needed to stay away from carrot and stick, and instead rely on a strong, motivating cause that rewards ’purpose’. Daniel Pink, the author of Drive, defined this as people’s natural desire to contribute to a cause greater and more enduring than themselves. Be organic. The movement needs to behave less like marketing activity and more like organic growth. This requires careful consideration of how the movement will start, the way influencers get involved, and the way the brand makes its entrance. Encourage participation. The examples above all demonstrate how an important aspect of sustaining a campaign is making it easy for people to get involved and participate on their own terms. Perhaps the most important of all, be a brand that seeks to build a genuine relationship with the target audience. No number of pseudo movements will ever replace a genuine relationship based on mutual respect and love. Daniel B. Siswandi Chief Strategy Officer J. Walter Thompson Daniel.Siswandi@jwt.com J. Walter Thompson Worldwide, the world’s best-known marketing communications brand, has been creating pioneering solutions that build enduring brands and business for more than 150 years. www.jwt.com
  30. 30. The economic winds of change, through their impact on both the demand side, and the supply side, have led to a fundamental transformation of consumer behavior in Indonesia. SECTION 02 THOUGHT LEADERSHIP 60 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 61 There are more consumers in a position to be more demanding than ever before of the products and brands they choose. Rising affluence fuelled by rising incomes means consumers can afford to consider a greater range of brands, and be more demanding when they do. They want products that offer more, and brands that make them feel special. The growth of new markets within Indonesia is also expanding the ranks of the consumer class. Residents of urban centers in Sumatra, Kalimantan, Sulawesi, and in burgeoning small towns in Java, are now in a better position than ever to buy. The increasing number of women in the workforce, in part due to the new business opportunities the internet offers, is giving women greater individual spending and decision- making power, and boosting overall household incomes. There is a rise in both drive and personal ambition, particularly among millennials and Generation Y – people born from the 1980s onwards. They want to achieve more, be it at work or through rising entrepreneurial ambitions. While consumers’ list of wants has been growing and changing, the supply side of the consumer equation has been, too. The rise of mini-markets across the country means many more people have access to a greater range of goods, and for manufacturers, it is becoming easier to achieve national distribution. As more people live within reach of self-service mini- markets, there is a new pressure to contend with: the agony of choice. People now have to stand in front of an aisle or wall of goods and decide what they want to buy. This is becoming a bigger issue for consumers by the day, as the appeal of Indonesia’s lucrative market attracts new companies with new brands and there are more new product launches. In the food and beverage category in particular, the explosion of choice in recent years has been tremendous. Further, increasing internet access provides greater access to a whole new world of opportunities. So, consumers want more, and there are more ways for them to get it. But they don’t just want more of the same. With plentiful choice and heightened demands, here are three ways brands can help consumers find what they really, really want. 1. CELEBRATE DIFFERENCE People want to feel special, and are drawn to products and brands they feel are specifically targeting them. Specialization can cater for people in different demographics, people pursuing different lifestyles, for men and women, or for consumers with differing budgets. The power of specialization is already evident in rising sales of milk powder developed specifically for children, at the expense of standard milk sales. Likewise, there has been growth in personal care products marketed specifically at men, and there is a rise in price tiering across categories. 2. EXCEL IN SPECIALIZED NEEDS Good for everything will become good for nothing. More need- specialized brands will be the order of the day as consumers become more informed and bored of the old. By focusing on sensitive teeth, Sensodyne is making inroads into a mature category. The SIM card brand 3, from Hutch, has focused almost exclusively on its data advantage, and this single-mindedness has enabled the brand to outgrow others in a highly competitive category. 3. TARGET OCCASIONS Consumers are already shopping across a range of brands and price bands within a category, using different brands for different consumption occasions, particularly in the food and beverage category. Occasion-focused marketing is a way to inspire more frequent consumption and drive growth. The macro-economic winds of change have already caused significant differences in the behavior of Indonesian consumers. These winds of change are only going to get stronger. Specialization is imperative in this environment if brands are not to get left behind. GIVE ME MORE The rise of the demanding Indonesian consumer Suresh Subramanian Managing Director TNS Suresh.Subramanian@tnsglobal.com Thought Leadership DEMANDING CONSUMERS TNS is one of the largest research agencies worldwide. We provide actionable insights that help companies make impactful marketing decisions that drive growth. www.tnsglobal.com
  31. 31. U R B A N P O P U L A T I O N S A R E S W E L L I N G A S P E O P L E S E E K A B R I G H T E R F U T U R E
  32. 32. THE TRUTH ABOUT PREMIUM PRODUCTS They’re not as exclusive as you think Why appealing to the masses is essential to growing the market for top-end goods SECTION 02 THOUGHT LEADERSHIP 64 BrandZ™ Top 50 Most Valuable Indonesian Brands 2015 65 The international consumer goods manufacturers who strode into Indonesia on the promise of fast-paced economic growth and a surge in consumer spending are probably a little worried about the current slowdown. GDP growth is now at its slowest rate for five years, and it would be logical to think that for those brands with premium price tags, the newly affluent consumers whose business they were counting on may be thinning out. But consider this; although the pace of economic growth has slowed, Indonesia’s GDP is still outpacing growth in developed countries, and remains a leader among developing markets. The World Bank expects 5.2 percent growth in Indonesia this year; this compares to a 2.2 percent average for developed markets, and 4.8 percent for developing countries. In addition, Indonesia’s young, working-age population is expanding, providing huge scope for wage growth and consumption. The outlook, then, is positive for brands providing luxury or premium products in Indonesia, and we are seeing premium brands’ sales increase despite the slowdown. But the buyers of high-end products are not necessarily the people you might expect. ADD TO BASKET In other markets, it’s usually the case that growing a premium market means convincing people to switch from mid-range brands to more prestigious or luxurious labels. What we’re seeing in Indonesia, however, is that growth in premium sales comes not from consumers switching a cheaper item for a more expensive one, but rather from the adding brands to their shopping repertoire, and buying both cheaper and more expensive items. Kantar Worldpanel data shows that, in categories such as detergent, soap, and personal care, where there are budget, mid-range, and premium options, consumers don’t buy just one product or the other - they buy several products across the price range. In fact, only 5 percent of value growth in premium products is coming from consumers who have switched from a basic item to a top-end one. In 92 percent of cases, the growth comes from people who keep buying their mid-range goods, and buy premium items in addition. The remainder are newcomers to the category. MYTH-BUSTING As brands look to build value and grow sales in this market, it is important to better understand the buyers of premium products – and dispel a few myths. First, most people expect that the buyers of premium products are more affluent than those who are not. This is not the case. The practice of ‘repertoire purchasing’ across price brackets means that people in the middle and at the lower end of the Socio-Economic Classification are well represented among buyers of premium products. In fact, 65 percent of buyers of liquid soap – a premium product compared to bar soap – come from CDE households, and 54 percent of premium detergent buyers are also classified as CDE. Even premium baby milk powder, which carries a high price tag of 60 percent above the standard range, attracts 33 percent of sales from CDE households. Premium selling, therefore, is about not just one income bracket but desire, and creating premium occasions. Secondly, it is assumed that premium products command high consumer loyalty. This is false in Indonesia today. Our data shows mass-market goods actually generate stronger loyalty. Consumers who exclusively buy premium goods are almost non-existent; usually, premium and mid-range goods are bought by the same people. Brands should, therefore, ensure their portfolio architecture reflects the repertoire that shoppers select from. Thirdly, it is assumed that promotions are not an appropriate or effective mechanism for premium goods. Again, this is a misunderstanding. Kantar Worldpanel research in China has shown that small packs encourage trial of premium products for a small outlay, but in their small size also emphasize their luxury offering – a little indulgence, perhaps – so improve both sales and brand image. LOOK BEYOND WALLET SIZE Sustainable growth in the trend towards premiumization will come not only from targeting specific consumer groups, but by encouraging a range of people to purchase more frequently. As such, some practical advice for manufacturers: Be accessible yet aspirational, to appeal to all social classes Market smaller pack sizes in an aspirational way, as an affordable luxury In communications, emphasize the benefits and quality of goods to justify the premium pricing Consider emphasizing other features, such as the health benefits of a premium brand Think about the consumer experience – make it feel premium Point beyond the product itself and inspire a broader consumer lifestyle Nadya Ardianti Account Director Kantar Worldpanel Nadya.Ardianti@kantarworldpanel.com Thought Leadership TRUTH ABOUT PREMIUM Kantar Worldpanel is the world leader in consumer knowledge and insights based on continuous consumer panels. Combining market monitoring, advanced analytics and tailored market research solutions we deliver High Definition Inspiration™ in fields as diverse as FMCG, impulse products, fashion, baby, telecommunications and entertainment, among many others. www.kantarworldpanel.com/id

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