Consumers: Kings, morons or irrelevant?

Debnath Guharoy ,  Consultant   |  Tue, 06/23/2009 1:22 PM  |  Business

If you work in a consumer product or service industry, ask one of your marketing colleagues in the office today this simple question: What percentage of our consumers are from the top 20 cities, other urban areas and rural Indonesia?

You are unlikely to get an immediate answer. The reason is that too many of our marketing folks simply do not know, because they just do not care.

Every day, marketing practioners, young and old, chant mantras like "the customer is king", "she is not a moron, she's your wife" and "we are a consumer-focused company". That life in a city differs from life in a town and a village, is a fact that escapes far too many of them.

They are the same people who listen to celebrity speakers at marketing workshops drum home the need to understand the consumer. They have read all the right books and quoted the quotable quotes.

The unsung heroes of Indonesia's industries are the people working in operations, producing goods and services to a set standard and distributing them effectively across this large and challenging geography.

Those achievements must account for much more than half of the company's commercial success in a country of this size and diversity.

At the other end, too many marketing folk are consumed by the fashionable component of marketing: advertising... And within advertising, the glamorous TV commercial.

That's where the bulk of the marketing budget is inevitably spent and that's where there is little precious knowledge available. The top 20 cities are not even covered by the set-top boxes that serve as a tool for "television audience measurement" in Indonesia.

Even if they did, they would not represent more than 25 percent of Indonesia's population. What about the other 75 percent of consumers?

The marketplace reality is dramatically different to the big city myth. Category after category, people living outside the top 20 cities constitute the overwhelming number of consumers.

Whether they buy toothpaste or shampoo, instant noodles or headache pills, mobile phones or motorcycles, the majority of Indonesian consumers live outside big cities.

The arguments usually put forward for ignoring consumers living outside big cities vary: those non-city people are not part of the 25 percent of consumers called the primary consumers, the influencers, the trendsetters; national television channels broadcast nationwide making targeted programming toward diverse groups impossible; or that blockbuster programs are seen by everyone everywhere anyway. So on and so forth.

With target audience measurement data restricted to demographics within a restricted geography, these arguments justify throwing billions of TV rupiahs at a grey, amorphous mass. In other words, a shotgun approach, with the firm conviction the target audience is out there somewhere, all huddled together.

Even if that assumption was true, why do we need to spend so much time and money on focus groups, need-based segmentation and advertising trackers?

Even if these tools also ignore the 70 percent as usual, how is the knowledge acquired and how are segments defined and transferred seamlessly to a media plan? How are those segments tracked?

Inevitably, demographic surrogates are used to re-create these segments rendering the entire process a meaningless waste of marketing resources. Not many have heard of the sniper's rifle.

On the other hand, Roy Morgan's Single Source syndicated survey consists of more than 25,000 Indonesians aged 14 years and older interviewed each year.

That national database is updated every 90 days, reflecting changes in consumer behavior as they occur. Holistic in its approach, it connects the dots ranging from demographics to psychographics, purchase behavior to media habits.

The insights can be projected to almost 90 percent of consumers, in the top 20 cities, other urban areas, as well as rural Indonesia.

As a shared resource, it is also a common language for over 30 major industries that span the everyday life of the Indonesian consumer.

Here we are in troubled times, looking to cut waste, get bigger bangs for the scarce buck, save jobs and produce returns for shareholders. But how many conversations do we engage in as a collective community of professionals, focused on making those marketing resources more effective?

Today, almost 70 percent of our GDP originates from consumers spending their money, yet we ignore 70 percent of them most of the time.

In stark contrast to most markets, advertising spending in Indonesia grew in double digits during the first quarter of 2009.

Considering the amount of money spent on television alone, there is an obvious need to expand the geography of audiences measured. The money required could be found from cutting back on meaningless, wasteful research that so many businesses engage in.

Today, nobody measures regional TV except Roy Morgan Research, which uses a seven-day diary method. If no one is watching local channels, why are media owners queueing up to buy them or build more?

It is questions like these that need to be considered by Indonesia's marketers. Unless of course 70 percent of most consumers of most things are deemed to be morons, forever.

The writer works for Roy Morgan and can be contacted at Debnath.Guharoy@roymorgan.com

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