Segmentation in the crisis era

Segmentation in the crisis era

In June 1997, MasterCard conducted a consumer survey at a time
when confidence in the Indonesian economy was extremely high.

Only six months later, that optimism was replaced by deep
pessimism. The sudden shift in market mood was a tremendous jolt
to the activities of business enterprises.

In December 1998, MarkPlus, in an effort to assist the
business community in Indonesia, unveiled a strategic marketing
guide for the crisis, replete with projections on changes in
consumer marketing behavior and also market segmentation during
the crisis.

Projections were based on findings from both developed and
other countries which have experienced recessions, with social
and cultural change taken into account.

MarkPlus also conducted a consumer marketing survey in
February 1998, in eight major Indonesian cities on the four main
islands -- Sumatra, Java, Kalimantan and Sulawesi. Respondents
were 2,500 middle-class housewives (from class A+ to class B).
Random sampling was used.

The findings bore out the projections of a crisis-induced
segmented market. Most consumers searched for quality goods at
reasonable prices. The value-oriented customers accounted for
83.5 percent.

Those who searched for inexpensive products -- price-oriented
customers -- accounted for 12.1 percent. Consumers who searched
for quality goods with no concern for price -- composed the
remaining 4.4 percent.

In other words, the results of the survey bucked assumptions
that a drop in consumer purchasing power would lead to a rise in
price-oriented customers.

These findings were presented by MarkPlus Leading Service
Officer Hermawan Kartajaya at the Summer Marketing Educators'
Conference of the American Marketing Association with the theme
Segmentation in the Crisis Era: An Indonesian Experience. The
conference was held from Aug. 15 to Aug. 18, 1998.

It must be acknowledged the survey findings were not shocking.
For the precrisis consumers already persistent in their demands
for quality products, it only followed that despite their reduced
spending power, quality labels were not deserted.

Like consumers in other crisis-hit countries, Indonesians are
also learning to love domestically produced products. The survey
showed that 91.8 percent of respondents would choose domestic
products, with 51.5 percent selecting high quality goods and 40.3
percent willing to accept satisfactory quality products.

Again, this was no surprise, especially when it is taken into
account that Indonesia has suffered the greatest decline in the
value of its currency of any crisis-hit country. Prices of
imported goods have skyrocketed.

Quality-conscious Indonesian consumers are not blind
nationalists. They choose quality products, and account for the
8.2 percent of respondents seeking imported products. From that
number, 6.1 percent would purchase imported products at
reasonable prices, but 2.1 percent vouched that cost was not an
issue.