Bcg google press event. english

BCG_Google_Digital_Consumer_in_Vietnam.pptx 1Draft—for discussion only
Copyright©2016byTheBostonConsultingGroup,Inc.Allrightsreserved.
Agenda
Vietnam's recent economic growth and rise of MAC's
Digital consumer engagement and implications for marketers

Vietnam is defying emerging market slowdown
5.2
6.0
7.3
5.55.4 5.6
2.8
4.7
6.0
5.0
0.9
6.0
6.7
4.7
2.8 2.8
7.3
6.7
8.4
7.1
8.7
6.1
8.5
5.8
0
2
4
6
8
10
IndonesiaMyanmar
Real GDP YoY Growth Rate (%)
Thailand Malaysia PhilippinesVietnam
2012 2014 2015E2013
Note: 2015 GDP Growth figures for Indonesia, Thailand, Malaysia, and Philippines are estimates from World Bank
Source: EIU; World Bank Data

Vietnam experienced consistent growth for the past 20 years
Note: 2015 GDP Growth figures for Thailand and Myanmar are estimates from World Bank
Source: EIU; World Bank data; Press search
(20)
(10)
0
10
20
999897969594 15141312111009080706050403020100
Real GDP Growth (%)
4.7
6.9
9.5
ThailandVietnam Myanmar
ASEAN Economic Community and
Trans-Pacific Partnership
Agreement signed

Consumer economy has high potential
250500
248
66
51
89
Myanmar
Indonesia
Thailand
Vietnam
0.9%
1.0%
0.9%
0.4%
Population
CAGR
('12-'20)
2012
Population
(M)
1. In 2005 USD 2. In 2012 USD 3. Annual disposable income per cap
Note: 2012 Exchange rates used: 1USD=31.09THB; 854.6MMK, 20,862VND; 9645.3761IDR. 1961-2001 Myint (official govt estimates); 2002-2010: IMF; 2011 onwards: EIU. We use IMF estimates for
2002-2010 due to IMF's concerns over the accuracy of reported GDP numbers during that time period Source: BCG CCI models, EIU; Euromonitor
80100
79
14
5
12
8.0%
13%
8.3%
5.2%
MAC
Population
CAGR
('12-'20)
2012 MAC
Population
(M)
5,0000
2,576
3,439
773
1,435
2012 Annual
Income per
capita (USD) 2
7.4%
6.7%
4.6%
6.3%
Income per
capita CAGR
('12-'20)
...with a rapidly
growing MAC
population...
Vietnam: Second
largest country...
...and a growing
wallet size

What you should know about Vietnam's Middle and Affluent
Consumers (MAC)
They will grow 1.7X in
size by 2020
They will drive spending
on comfort and lifestyle
products
They will disperse
rapidly from key
provinces
They will lead evolution
into the digital era
They will lead a shift
towards modern trade

10.2
22.5
16.2
20.8
26.4
4.6
28.0
17.9
25.3
14.1
We expect Vietnam's MAC to grow 1.7x by 2020!
20152020
Poor
Aspirant
Emerging
Established
Affluent
1. MAC (Middle Income & Affluent Consumers) defined as Established + Affluent for Myanmar & Vietnam, and Emerging + Established + Affluent in Indonesia, Thailand, Philippines & Malaysia
Source: BCG CCI models; BCG analysis
= Total MAC1
Poor
Aspirant
Emerging
Established
Affluent
2015-2020
MAC CAGR
110.1
49.1
52.4
31.0
13.2
76.2
50.5
68.2
49.3
23.4
12.5
18.1
16.1
7.2
1.3
16.6
16.8
13.2
4.9
0.9
40.5
26.4
23.8
7.4
2.0
34.3
27.2
31.2
12.1
4.2
12.4
13.1
24.7
7.4
9.2
10.5
28.4
8.2
11.2
10.5
14.7
3.9
5.0
3.4
3.6
3.5
2.7
16.2
6.3
4.3
11.8%
Vietnam
97M
141M
7.8%
Indonesia
7.8%
Myanmar Philippines
33M
47M
7.4%
40M
49M
4.1%
Thailand
19M 6M
33M 9M
Malaysia
23M
27M
3.0%

MACNon-MAC
0
20
40
60
80
100
% of respondents
MACNon-MAC
MACNon-MAC
0
20
40
60
80
100
% of respondents
0
20
40
60
80
100
% of respondents
MAC consumers will upgrade to adopt comfort and lifestyle
consumer durables
From basic needs... ...to comfort... ...to lifestyle
Refrigerator
Washing machine
Motorcycle
Air conditioner
Laptop/PC
Smartphone
Microwave
Car
Note: Urban data
Source: BCG Indochina consumer survey, BCG analysis

Agenda
Vietnam's recent economic growth and rise of MAC's
Digital consumer engagement and implications for marketers

The Vietnamese consumer goods market is attractive and
offers significant future promise
•  Vietnamese are the
most optimistic people
in the world and most
willing to spend
•  Annual GDP growth of
6%+ put Vietnam among
the leaders in
developing nations
•  Personal wealth is
growing rapidly

Vietnam is becoming an online nation, internet penetration is
already at 53 percent and is rising fast
•  Vietnamese are taking
advantage of low data
prices and highly
competitive smart
phone markets
•  3/4G mobile broadband
targeted to cover 95% of
households by 2020
•  Speed of mobile internet
already 1.5 to 3 times
faster than those in
some regional peers
25
61
36
71
3435
39
69
56
84
59
53
0
20
40
60
80
100
Number of internet users per 100 population
Philippi
nes
Singap
ore
Indone
sia
Vietn
am
Thaila
nd
Malay
sia
2011 2015

Digital eco-system driven by videos, social media, and music
continuous to drive engagement and screen time
•  Local media creators
flourish on YouTube
and local websites
•  Vietnamese publishers
like VTV, THVL, Yeah1,
and others have made
huge strides over the
last year
•  Slow but steady shift
from network TV
observed

Vietnam experiencing disruptive growth in e-commerce sales
•  Recent E-conomy report
from Temasek and
Google shows Vietnam
e-commerce sales
moving from 0.4 Bn
USD to 7.5 Bn by 2025
•  Digital sales are still low,
but digitally influenced
sales are high and
growing
•  Vietnamese consumers
are increasingly turning
online to find ideas for
purchases, research
products and brands,
check product
availability, etc.

Online households account for almost 70% of all FMCG
spends in Vietnam
•  Connected households
are younger, larger,
and more affluent
•  Digitally connected
households are not
restricted to urban
centers – close to half
of rural households
are already connected
•  Total spend on digital
ranges from 0-25%
across everyday
categories, 2.5-3x
lower than the value of
contribution from
online households
0%
20%
40%
60%
80%
100%
Population FMCG $ Diapers $
Offline HH
Online HH
53%
47%
33%
67%
83%
17%

Consumer companies that believe digital media is "for the
future" will see dwindling returns on their marketing investment
•  Marketers should see
the leveraging of digital
as the only way to
survive the market
changes we are
experiencing
•  We expect digital
advertising spend to
triple by 2021
•  Moderating spend
growth with a scientific
basis will be critical –
e.g. online investment
needed in a noodles
brand vs. diapers is
quite different

As companies adapt to digital reality we believe there is a set
of questions that should guide them
•  Is there a scientific basis for how much of your spend is online versus offline? Is
it tailored to the category and consumer?
•  Do you have a deep understanding of the path to purchase for the consumer
(where they research, what influences their preferences and ultimate choices)?
•  Does focus on digital allow significantly higher reach in your most valued
segments?
•  What skills do we need to build within our functional teams to support this change?
•  How do you operationalize these choices – How would you approach a media plan
today if you had never engaged in such planning in the past?
Reaching fact based answers to questions like that will help to build a foundation for a digital
marketing strategy that takes full advantage of Vietnam's digital revolution

Thank you
bcg.com | bcgperspectives.com

Bcg google press event. english

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