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.