Politicians across the world know that on polling day the vote and the wallet are inextricably linked, with the primary political issue always being the state of the economy. Furthermore, marketers are conscious of what the economy will do to their bottom-line.
Depending on the business, the overall economy's state may have little or a lot to do with the immediate future of a particular brand. Therefore, marketers need to peel the gray away from the black and the white.
The Roy Morgan Consumer Confidence index was at 115 at the year's end, showing four modest quarterly upward crawls in 2007. The work force has obviously been working harder, with some people even working two jobs to pay household expenses.
It was as if Indonesia's battlers had come to terms with the rising prices of essentials and returned to optimism, regardless of the odds.
However, the robust national average of 115 masked the fact that at the top, people earning over Rp 5 million per month, confidence was heading in the opposite direction.
The privileged few, affected by the local repercussions of a looming recession in the United States, "crashed" to 144 from a euphoric 161 in the third quarter of 2007.
At the bottom, the 107 rating reflects the modest hopes of the country's poorest, those earning Rp 600,000 or less per month.
The vast differences in ratings illustrates three different economies, at different speeds. This means different product categories will perform differently.
While global factors impacting the local economy could affect discretionary expenditure across all product and service categories, it is important to remember that the overwhelming majority of Indonesians do not have much discretionary spending by the month's end.
At the top end, car makers recovered lost ground in 2007 and were looking forward to a rosy 2008 with consumer demand for new cars at 320,000 units. But that bullish outlook could wilt amid a bouncy stock market and potential hikes in fuel prices.
Malls catering to luxury brands could similarly see a dip in consumer demand if the buffeting continues as expected.
While modest bank accounts continue to head south, closing or becoming dormant, plastic cards are moving north. At the cusp of the affluent and the middle class, the bank account symbolizes a societal bridge.
Only one in five Indonesians above the age of 14 has a bank account today. While the number of basic transaction accounts is dwindling due to the rising prices of essentials through 2007, the affluent have continued to acquire debit and credit cards with no sign of a slowdown.
As a barometer of middle-class aspirations in Indonesia, demand for new motorcycles is holding strong, for now. Marketers of all products and services would do well to keep an eye on the two-wheeler market. While current intention is running at 9 million units annually, over 7 million units are likely to be sold to fill the gap between hope and reality.
About half that demand is from rural Indonesia, a quarter from the towns and the rest from the big cities.
Bridging the middle and the lower classes today is the cellular phone, which is no longer the symbol of affluence it was only a decade ago.
The demand for SIM cards has leveled but is still robust, with some 22 million planning to buy one for the first time "sometime in the future". The cellular phone is driving small businesses across the country today and e-mail is still the instrument of bigger enterprises.
Then there are the all-weather "bullet-proof" mass-market consumer goods, such as shampoo. Almost everybody in Indonesia uses shampoo nowadays, at varying frequencies, in good times and bad.
The truth is candy sales don't slip in hard times either, because even the poorest need a taste of life's simpler and affordable pleasures. Some amount of trading down will happen among certain product categories, but most mothers will want to give the kids the same brand of milk, no matter what else they may have to sacrifice.
Edible oils and laundry detergent brands are more vulnerable. For people who don't use deodorants every day, it will come off the shopping list.
Across the board, trading to cheaper brands and smaller packet sizes are obvious threats to a brand's performance. Portfolio management should not depend on retail audits and sales reports alone.
These conclusions are based on Roy Morgan Single Source, the country's largest syndicated survey with over 27,000 Indonesian respondents annually, projected to reflect almost 90 percent of the population over the age of 14. That is a universe of 140 million people. The results are updated every 90 days. The opinions expressed are my own.
How do you create a marketing plan for Mandiri personal loans if you do not have a reliable finger on the national pulse? How do you monitor the relaunch of Mandala Airlines if passenger insights are restricted to the big cities only? How do you minimize the effect of a cheaper Lifebuoy shampoo eating into the more expensive Sunsilk across the country? These questions have little to do with the overall state of the economy, the gray area.
They have a lot to do with really understanding consumers, in black and white, against a national landscape.
The writer can be contacted at Debnath.Guharoy@roymorgan.com
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