Meeting the specific needs of prime customers

Meeting the specific needs of prime customers

Andi M. Sadat, Contributor, Jakarta

Although the country is still reeling from the effects of the
economic crisis that hit in 1997, a certain segment of consumers
is unaffected, as indicated by its very high purchasing power --
prime customers who buy and consume premium products.

Their willingness to buy and their ability to pay certainly
defy classic economic theory. This highly segmented and
unpredictable cluster -- in the midst of the worst situations
faced by any country, including Indonesia -- creates a paradox or
a phenomenon of its own.

Almost every product line has premium brands that target this
prime group. The least of these customers' worries is the price,
as they purchase products not for the functional benefits, but
more for their own prestige, lifestyle image or even just as a
hobby. Although they may not be many in number, their tremendous
purchasing power promises huge profits.

The automotive industry certainly has a lot to offer to this
segment. Take, for example, the Association of Indonesian
Automotive Industries (Gaikindo) Expo 2003 held recently in
Jakarta. A number of car makers took the opportunity to offer up
their premium brands. The Audi A4 Cabriolet, with its sporty
design and superior features, for instance, targeted young
professionals of the prime customer segment.

"In Indonesia, the demand for fully assembled cars equipped
with state-of-the-art technology is growing fast. Such cars match
the lifestyle of prime customers here," said Wiwi Ho, CEO of PT
Garuda Mataram, the authorized distributor for Audi cars in
Indonesia.

Meanwhile, PT Honda Prospect Motor introduced the seventh
generation Accord, the All New Accord. "All New Accord
incorporates the most dramatic improvements in the history of
Accord. Aside from its luxurious and dynamic look, it also comes
with enhanced engine performance, interior and a wide range of
sophisticated features," said vice president Kenji Otaka.

Marketers in the automotive industry acknowledge that
Indonesia is one of Asia's most promising markets for luxury and
premium vehicles. The 2003 sales volume data released by Gaikindo
further confirms this fact. In the first two months of 2003, 101
Mercedes Benz, 37 Jaguars and four Land Rovers were sold.

To match the specific needs of prime customers, manufacturers
often have to customize their products. Daimler-Chrysler, for
example, which introduced its CLK 320 at the Geneva Motor Show in
May 2003, did not take long in launching the right-hand drive
version at the expo. This Rp 1.6 billion car was one of the
expo's main attractions, drawing great interest from a number of
attendees.

Although this premium segment looks lucrative, marketers are
advised to manage it carefully. A publication on world markets,
the U.S.-based Global Insight, indicated that luxury car sales
between 1993 and 2001 had doubled compared to the previous seven
years. However, besides predicting healthy growth for some years
to come, it also warned marketers to be cautious and not to be
lulled by the current happy situation.

Marketing intelligence to detect any developments is
recommended, along with developing the appropriate marketing
strategy. External factors, like a slump in the economy or
recession, and internal factors affecting the industry and
consumer trends should always be monitored carefully.

Marketers are also advised to learn a lesson from the decrease
in sales -- down by 39 percent in 2003 -- of the classic Porsche
911 along with its Boxster, due to external factors affecting its
sales performance in the U.S. and several other countries. The
marketing managers of Volkswagen in Germany also warned investors
of negative signals for automotive industry investments for 2003.

Karl Ludvigsen, president of Euromotor Consultants,
headquartered in England, attributed the decline of luxury car
sales to aggressive marketing efforts executed much too
simultaneously, leading to conflicts among manufacturers.

The Jaguar X also did not do so well, because the desire to
dominate the market was not complemented with a sharp focus on
its intended target.

Noted marketing expert Thomas J. Stanley said marketers should
be able to pinpoint on their target market, because not all
consumers who purchased luxury goods or had a classy lifestyle
belonged to the prime niche. In order to measure a consumer's
wealth, it is not enough to research their monthly income -- the
consumer's accumulation of wealth and its management is a better
indicator.

Generally speaking, he said, there were two categories of
prime customers. The first is Income Statement Affluent, which
comprises customers who have a large income and assets, but also
carry the burden of large debts. These customers have "little net
worth", as many who fall into this category are after short-term
self-enrichment.

The second category is Balance Sheet Affluent. These customers
are not too concerned about appearances, and are focused on long-
term wealth, their assets far exceeding their liabilities. CEOs,
high-income professionals, entrepreneurs, government officials,
mid-level managers and the retired rich are some of those who
belong to this category. Among the various target markets, they
should be the main focus of any premium product manufacturer.

It is also recommended that marketers fully understand the
personality of prime customers, including their characteristics,
lifestyle, mind-sets, trends and so forth, as they are not a
large mass of look-alikes.

They need more than superior features incorporated in
sophisticated products. To them, "personalization and
customization" is most vital. This, Stanley concluded, was one
way to make premium margins from prime customers.