Observations on the market fragmentation in Indonesia and how it affects your market strategy

Having been in Indonesia for over 12 years now I think it’s safe for me to say that I have some insight about market consumption and how the consumer thought process is before they decide on a purchase.

First some observations on our clients.

Companies from Singapore (looking to grow overseas) that we brought over to Indonesia 10 years ago and now display a significant positive mindset shift in that companies are more malleable and adaptable to the market as compared to 10 years ago when Singapore companies used to adopt a mindset that they were the best in everything and thus product and pricing were non-negotiable.

However the enigma regardless of flexibility is how to present their products or services across different classes.

Indonesia is a geographically, socio-economically fragmented country which presents both challenges and opportunities for businesses. This is not a cliché but if you can solve the issue of selling your product and service over these sectors I would say you deserve a Nobel prize.

Some companies locally have successfully done this of course. Musitka Ratu a local cosmetics brand is a giant that sells its products across all classes. Tolak Angin, a herbal remedy that cures just almost anything is consumed by both the rich and poor alike. Nabati, a cheese snack that costs about 50 cents (SGD), is widely found in “lower class” supermarkets and upmarket places as well.

If you really are considering to go big and have a vision on ending on the same high road, here are a few observations that we have seen amongst these companies.

Being there

Because Indonesia is huge, you have to be there. Visit and eventually set up key offices to take care of North, East and West Indonesia.

Culture and language in each province is highly localized. I can’t count the times where we have had the blessing of our client’s head office in Jakarta to execute a project in a far off province only to realise that we need the blessing of the local provincial head. This just translates to relationship building and spending time with the local head.

The unavoidable influence

As much as I do not understand the life choices of influencers, influencers hold the market across different segments and geographical locations. Indonesian statistically trust influencers and will purchase from their recommendations more than they would if family or friend recommended.

That’s right influencers are more trusted than family or friends in a purchase decision.

Repacking your product and price

Some clients of ours have only 1 standard size for their products and we recommend them to repack. Meaning still maintain their initial product size for the affluent market and repack a smaller sized product for the mass market.

For clients who are in service, just reduce the amount of service time so you can lower your price. For example in education, instead of an hour, they can reduce lessons to 30 minutes and lower their pricing.

These are some examples of how your product, service and most importantly your company can cut across different sections of the market.

This is not an easy task and will require time. How much you ask ? Well if I can provide a standard guide I think you would have to stay in a country for a good 2 years, market your product and service and meet people constantly to get a good understanding of how your product will fit.

It’s akin to sharpening an arrow. You need time and it’s a process that cannot be rushed. I hope you will enjoy the journey as I did and find meaning and success to your endeavour.

Regards

Ryan Chai About Us

Curt & Co. is a business consulting company focused on the South East Asian region.

We complement our clients through extensive market research and due diligence, providing thorough, feasible and financially efficient growth methods for our clients in the region.

We provide 3 main pillars of services including

· Overseas Business Expansion Consulting

· Marketing

· Business Operations Outsource

Clients have the advantage in ​accessing our network in our help whether to meet partners, set terms for franchisees or licensees or negotiate with direct clients in closing a deal.

Our offices are located in Singapore, Indonesia, Vietnam and Philippines.

Find out more on us : www.Curtconsult.com

Contact Us : marcus@curtconsult.com