Empires rise and fall; companies come and go. And all too fast, in the quicksand of commercial conquest so many businesses find themselves in on the silk-road to success. Everything can change in an instant in Asia’s increasingly digitally driven, fast-moving consumer goods (FMCG) market. And it frequently does, dashing and declaring dreams of magnificent scale overnight. According to a recent study published by management consulting firm Bain & Company, Asia’s developing markets are some of the most promising and perilous for FMCGs.
“Fundamental consumer shifts in developing Asia have accelerated in the past few years, making it tougher for brands to survive and win in a region that remains critical for multinationals,” said Paolo Misurale, partner and head of Bain’s Southeast Asia Consumer Products practice. “All of this is altering the rules of the game for consumer products companies, requiring them to rethink their strategies from ‘where to play’ to ‘how to win’. Then they need to deliver the change, building new capabilities and forging alignment across stakeholders and functions. Those that fail to adapt – even large and establish brands – will be left gasping for air.” This new report comes as a welcome wake-up for businesses currently failing to plan and execute export strategies well.
Luckily, where those who walk the road ahead are willing to share their wisdom, Australian businesses are ready to listen. Bain’s latest research reveals five common pitfalls (and their potential):
Pitfall 1: Sailing with out-dated maps: Bain finds that too many brands in developing Asia underinvest in the initial legwork before entering a market – skimping on essential perspectives on the rules of their category, information about the markets with the best opportunities and the most profitable channels for their product, and how they fit in to the scene; all helping to select how and where to compete. To see success in this market, set growth initiatives consistent with your products’ category characteristics and then translate those initiatives to operational metrics to track progress and capture value.
Pitfall 2: Saying it wrong: Many brands’ messaging is completely wrong for the developing Asian market. Where the same brands have established longevity and hold a place in the long-term memories of consumers in the developed world, in Asia their brand’s history doesn’t have hold. To kick this one to the kerb, companies should work intentionally toward creating high-quality brand memorability and memory structures for their consumers over time. This includes connecting with the right buyers and supplier networks, with this messaging.
Pitfall 3: Succumbing to the lure of the new and different: Many brands are unwilling to reduce their product assortments (or tailor their ranges to unique channel needs) in order to focus on their proven and profitable hero SKUs with the highest velocity on the shelf. To defeat this trend, invest in understanding your hero products by brand and SKU, determine their value over non-heroes and look for gaps in your current assortments to strategically focus on top sellers for target consumers and occasions. Decide to grow your brand presence and business revenues instead of just your product range.
Pitfall 4: Losing at the first moment of truth: Many brands lack the requisite data for developing sophisticated account planning in this market. Without such data, it is imperative that FMCG players make their hero SKUs available and visible to repertoire shoppers, while also ensuring their retailers have incentives to push them as well. To see substantial, strategic growth, play by the real category rules – use solid consumer insights to inform your priority in-store execution and activation modes. Get clear about what matters most on a channel-by-channel basis.
Pitfall 5: Failing to build the right route to market: Especially true for the fragmented retail environment of developing Asia, many brands fail to influence consumers’ decisions at the point of sale. To champion the right cause here, use direct distribution (or a high-touch managed distribution model) in high-density areas; and at the same time, build a multi-tiered distribution network and collaborate with a plenitude of wholesalers in low-density rural areas. This is a powerful success strategy to select, connect and grow within the right market for your product.
Consumption patterns are surely changing on Madame Butterfly’s continent, but the high demand for fast-moving consumer goods remains the same. Developing Asia’s cocoon is breaking – and from it emerges a market: fragile and robust, fresh and flitting, and wholly uncaptured.