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インドネシアにおける消費財市場レポート（Gaining Deeper Understanding and Knowledge towards the Dynamics of the Retail Market in Indonesia）

January 2011

Evaluate both Find powerful Understand dynamics consumer and insights to generate of retail market in the 3 retailer perception marketingTrend means strategy a 2 area of target and attitude towards to entercontrary or tostrengthen what Explore1 consumer consumers, they have adopted Japanese and Korean position in the market needs and promotional activities and believed products and rise through the attitude in retail and standard competition! market – both requirements of modern1 and products traditional

– Needs and expectation towards products (the standard and Explore ideal product) 1 consumer needs – Overall process of decision making in product purchase and attitude in (source of information, source of influencer, steps of actions retail market taken, choice of store, out-of-store and in-store interactions) – Consideration set of product purchase (price, availability, design, durability, guarantee, etc)

Understanding – Target consumers (demographic and psychographic profile) the flow, process – Most and least selling brands; also strength and 2 and dynamic of weaknesses of those brands retail market – Promotional activities happening in the store (and its efficacy to sales) – Standards’ requirements of product Evaluate – Awareness towards Japanese & Korean products / brands 3 perception of – Perceived strength and weakness of Japan & Korea Japanese & products / brands Korean products – SWOT analysis of Japanese & Korean products / brands

. 25 – 30 year old women with monthly earnings classified as: . Above Rp 8,000,000 (equivalent to SEC A1 above) . Range between Rp 4,000,000 – Rp 8,000,000 (equivalent to SEC A2B) . Less than Rp 4,000,000 (equivalent to SEC C1C2) , with children aged 6 – 14 years old

. We had questions on range of income, but overall classification was defined by SEC screening

. Retailers:

. General Manager / Sales Manager / Buyer of 3 Upper Department Stores . General Manager / Sales Manager / Buyer of 3 Hypermarkets . Owners of 3 Traditional Stores

. Shop mostly at Upper Department Store (Sogo, Metro, Centro) for textile and accessories purchase – go there minimum 2 times / month FGD 1 . Purchase monthly household shopping in Hypermarket (Carrefour, Giant, Hypermart) – go there minimum 1 time / month . 5 categories (clothes, household durable, facial care, frozen food, savory snacks) (High Income)  Purchase jeans, underwear, stocking, wristwatch in Upper Department Store (Sogo, Metro, Centro) in the past 6 months  Purchase TV, refrigerator, washing machine (Twin Tub / *Top Load Single Tub), mobile phone in the past 3 months  Purchase facial care products (UV cream, *Kesshousui) in the past 3 months  Purchase frozen food (sardine, corned beef, ready to eat sausage, *curry, *spaghetti sauce) in the past 3 months  Purchase savory snacks (potato chips) in the past 3 months

. Purchase monthly household needs at Hypermarket (Carrefour, Giant, Hypermart)– go there minimum 1 time / month . 4 categories (household durable, facial care, frozen food, savory snacks) FGD 2  Purchase TV, refrigerator, washing machine (Twin Tub / *Top Load Single Tub), mobile phone in the past 3 months  Purchase facial care products (UV cream, *Kesshousui) in the past 3 months (Medium Income)  Purchase frozen food (sardine, corned beef, ready to eat sausage, *curry, *spaghetti sauce) in the past 3 months  Purchase savory snacks (potato chips) in the past 3 months

. Purchase monthly household needs at Traditional Stores – go there minimum 2 times / month FGD 3 . 5 categories (household durable, facial care, frozen food, savory snacks) (Low Income)  Purchase TV, *refrigerator, *washing machine, mobile phone in the past 3 months  Purchase facial care products (UV cream, *Kesshousui) in the past 3 months  Purchase frozen food (sardine, corned beef, ready to eat sausage, *curry, *spaghetti sauce) in the past 3 months  Purchase savory snacks (potato chips) in the past 3 months

Criteria

• 1 IDI – Sales Manager of women’s underwear and stocking Retailers of • 1 IDI – Sales Manager of Wristwatch Upper Department Store • 1 IDI – Sales Manager of Clothing (adult female jeans)

• 1 IDI – General Manager of Kids Equipments (baby goods, maternity goods) Retailers of • 1 IDI – Buyer of Educational Toys (block, puzzle, *handcraft materials) Hypermarket • 1 IDI – Buyer of Frozen Food & Snack

• 1 IDI – Owner of store which sells Electronic (TV), Household Durables, (Refrigerator, Washing Machine), Kitchen Appliance (kitchen knives, frying pan, Owner of pressure cooker) Traditional Stores • 1 IDI – Owner of store which sells Mobile Phone • 1 IDI – Owner of store which sells facial care products (traditional drug & cosmetic store)

Profile: High Income Consumers . Higher SEC . Higher education background (up to S2) Who they typically are: . Amongst extroverted personality . More amongst working moms than housewives . Tend to keep a close knit circle around them – usually have closest peer group . Prefer to spend weekends outside home: hanging out in café or restaurants – mostly at upper malls such as Pondok Indah Mall, Plaza Senayan, Senayan City, What they do in spare time: Grand Indonesia, etc . Have a more advanced and sophisticated hobby: yoga exercise, karaoke, retail shopping, watching live music shows, etc . Actively searching for new information . Very open to new types of information, but very critical at the same time too  not Their attitude towards information around easy to made believe them: . Maximize every facility for gaining information, such as: internet, TV, radio . More trust in information from expert information gathered from the internet, magazine or radio . Want to keep up with the current trend  thus, likes everything which is ‘buzzing’

Outlook and aspirations in life: . Feel that the trend is a tool to enable them to be a part of the global society . Aspire to become successful career women – but still great housewives at the same time  looking for an act of balancing in life

Profile: Medium Income Consumers . Medium SEC . Medium education background (up to S1) Who they typically are: . Tend to be extrovert . More amongst working moms than housewives . After work, if they don’t have anything to do during weekday, most of the time they stay at home What they do in spare time: . Prefer to spend weekends outside home: usually going to their friends house to hang around, going to the supermarket / hypermarket OR if they have no other plans, prefer to just stay at home watching TV . Actively search for new information from existing sources around them (TV, people, Their attitude towards information around radio, etc) them: . Rely more on information from trusted source, with credible and proven results and point of view

. Prefer to have a balance outlook in life  thus tend to be quite careful and selective in choosing the trend  will only follow the trend which they feel fits them Outlook and aspirations in life: . Feel that the trend is a tool to enable them to find who they really are – their true character and personality . Aspire to become successful career women – but still great housewives at the same time  looking for an act of balancing in life

Low Income Consumers Profile:

. Lower SEC . Lower education background (to D3) Who they typically are: . Live in homogeneous area with strong local cultural background . More introverted personality . More amongst housewives than working moms . Prefer to spend weekdays and weekends inside home: home is a place where they feel most accepted, where they feel at ease and can do whatever they like to do What they do in spare time: . Usually do not have a certain hobby – common ones such as neighborhood Arisan, hanging out with the neighbors, doing gymnastic in the neighborhood, etc

. More passive in searching for new information Their attitude towards information . More receptive towards information from those she has emotional bond / personal around them: history with – skewed strongly to family members . Do not feel the need to keep up with the current trend, sometimes even avoiding it  does not feel convenient with the trend, feels as if it is something which does not „represents me‟ Outlook and aspirations in life: . Driven by the constant need to simply survive in society  how to provide a good life for themselves and their family . Aspire to become a great housewife – will sacrifice personal needs and desires in order to let the other family members (husband or kid) pursue and achieve success

Copyright (C) 2011 JETRO. All rights reserved. Page 12 Researched by Nielsen Indonesia Part 1 Household Durables and Electronic Products From the Viewpoint of CONSUMERS (High, Medium & Low Income) And RETAILERS

The products discussed are: 1. Television 2. Refrigerator 3. Washing Machine 4. Kitchen Knives 5. Frying Pan 6. Pressure Cooker

Why and when do they Where do they Why do they Type of usually purchase it? usually purchase it? purchase it there? Product

. High income: purchased it after 7 – 8 years . Majority medium and low income: purchased it after more than 10 years  Television to replace the old one . High income: Specialized big-scale . High income: believes that specialized . (some high income consumers): electronic stores such as Electronic City, stores provides wide range of product purchase it as additional product (to be Electronic Solution, Best Denki options and better display and service / placed in children’s or maid’s room) . Most medium income & few low income: consultation . Across all, majority purchased it after a Hypermarket such as Carrefour and Giant . Most medium income & few low income: minimum of 10 years; to replace the old . Majority low income consumers: believes that Hypermarket provides a Refrigerator one  usually experienced quality Traditional electronic store – usually more competitive price than specialized deterioration (leakage of freezer water, located nearby store unavoidable „icicles‟ in the freezer, etc) . Majority low income consumers: prefers this store due to minimum travelling time . Same case with Refrigerator – majority purchased it after a minimum of 10 years Washing  to replace the old one Machine . (Few high income) purchased a different type to upgrade (from Top Loader to Front Loader)

Why and when do they Where do they Why do they Type of usually purchase it? usually purchase it? usually purchase it? Product

. High income: majority purchased it once every 2 – 3 years . Medium and low income: majority . High Income: Department store (some), . High Income and medium income: Kitchen purchased it after more than 5 years  Online TV Shopping (some), Hypermarket believes that Department Store and although kitchen knives is not considered Knives such as Carrefour (some) Hypermarket offers wide range of options, as household durables, it is perceived to . Medium Income: Online TV (some), while Online TV Shopping is chosen due to have high durability  thus no need to buy Hypermarket such as Carrefour, Giant and simplicity and more efficient procedure a new one often due to easy maintenance Hypermarket (some) (just call and the product will be delivered (properly sharpen) . Low Income: Traditional household to your house!) . High and medium income: purchased it 1 - durables store . Low Income: already a habit since before; 2 times per 2 years  perceived that frying feels more comfortable shopping there pan needs to be replaced after a certain since they already have good relationship Frying Pan period of time with store owner . Low income: purchased it 1 – 2 times per 3 years  due to availability of budget

. High and medium income: purchased it 1 Pressure time every 3 – 4 years Cooker . Low income: purchased it every 6 to 7 years  due to budget availability

Copyright (C) 2011 JETRO. All rights reserved. Page 16 Researched by Nielsen Indonesia Key Influencer in Brand Selection Who or what influences them to choose a certain brand? Note: the more  = stronger influence Washing Kitchen Pressure Type Description Television Refrigerator Machine Knives Frying Pan Cooker WOM (Word of Mouth) from trusted     recommender Modeling Behavior – sees Out of significant other       Store using it Influencer Strong Brand Awareness / Heritage brand    Advertising – the intriguing ones      

In Store Promotion   

In Store Salesman Influencer Recommendation    

Others

Copyright (C) 2011 JETRO. All rights reserved. Page 17 Researched by Nielsen Indonesia Considerations in Purchase What factors are important prior to making a purchase? More Important Television Refrigerator Washing Machine Kitchen Knives Frying Pan Pressure Cooker

1. Brand 1. Brand 1.Brand 1.Utility/Function 1. Quality – 1. Brand 2. Affordability 2. Durability 2.Durability 2.Sturdy look and stainless or 2. Durability 3. Durability 3. Affordability 3.Affordability design not 3. Sturdy look 4. Design and 4. Warranty 4.Warranty 3.Quantity in a 2. Sturdy look and design color 5. Design and 5.Design and set and design 4. Affordability 5. Availability of color color 4.Affordability 3. Durability 5. Availability of promotion 6. Availability of 6.Availability of 5.Availability of 4. Affordability promotion 6. Warranty promotion promotion promotion 5. Brand 6. Warranty 7. After service 7. After service 7.After service 6.Warranty 6. Availability of 7. After service 7.Brand promotion 8.After service 7. Warranty 8. After service

Less Important

Copyright (C) 2011 JETRO. All rights reserved. Page 18 Researched by Nielsen Indonesia Switching Behavior What makes them switch to (or try) another brand? Note: the more  = stronger influence Type of Washing Kitchen Pressure Trigger Trigger Television Refrigerator Machine Knives Frying Pan Cooker WOM from trusted recommender   Modeling Behavior – Product sees significant     Related other using it Triggers Advertising – the intriguing ones   

Others

In Store Promotion     Non Salesman Product Recommendati Related on  Triggers

Others

Copyright (C) 2011 JETRO. All rights reserved. Page 19 Researched by Nielsen Indonesia Standard Expectations of Product What should the standard product have? More Important Television Refrigerator Washing Machine Kitchen Knives Frying Pan Pressure Cooker 1.Well known brands 1.Well known brands 1.Well known brands 1.High durability  1.High durability  1.Well known brands which have been in – famous for – famous for perceived from outer perceived from – famous for market for long household durable household durable appearance (sturdy material quality household durable (Toshiba, Samsung, products such as LG, products such as LG, and hard looking) (Teflon) and products such as LG, LG, Sharp, Sony) Sharp, Toshiba Sharp, Toshiba 2.Affordability  Not appearance (sturdy Sharp, Toshiba 2.Durability  from 5 2.Durability  from 5 2.Durability  from 5 too expensive, not and hard looking) 2.High durability  to 10 years to 10 years to 10 years too cheap 2.Affordability  Not determined by brand 3.Affordability  Not 3.Standard electricity 3.Friendly Usage – 3.Warranty  official too expensive, not 3.Affordability  Not too expensive, not usage  similar to not requiring from brand – not too cheap too expensive, not too cheap most brands in complicated store, up to 1 year 3.Warranty  official too cheap 4.Attractive design & market procedures from brand – not 4.Warranty  official color  black and 4.Affordability  Not 4.Affordability  Not store, up to 1 year from brand – not curved edges are too expensive, not too expensive, not store, up to 1 year preferred too cheap too cheap 5.Warranty  official 5.Warranty  official 5.Warranty  official from brand, not store, from brand – not from brand – not up to 1 year store, up to 1 year store, up to 1 year 6.After service  affordable spare parts and widely spread service center Less Important

Copyright (C) 2011 JETRO. All rights reserved. Page 20 Researched by Nielsen Indonesia Ideal Expectations of Product What should the ideal product have? More Important Television Refrigerator Washing Machine Kitchen Knives Frying Pan Pressure Cooker

1.Durability up to 10 – 1.Up to date design 1. Provides efficient 1.Good affordability 1.Good affordability 1.Good affordability 15 years  thus  curvy edge features which  Not too  Not too  Not too serves as long term 2.Glossy and shiny makes life easier expensive, not too expensive, not too expensive, not too investment color  looks more (such as Quick Dry, cheap cheap cheap 2.Glossy and shiny elegant and usage feature for 2.Official warranty up 2.Easy maintenance 2.High durability  color  looks more appealing soft type of clothes to 3 years  easy to be up to 5 years elegant and appealing 3.Durability up to 15 for instance silk, etc) cleaned and wiped 3.Official Warranty up 3.Slim design  the years  thus serves 2. Low electricity 3.Official Warranty up to 3 years slimmer, the better as long term usage to 3 years 4.Official warranty up to investment 3. Minimum noise 5 years 4.Low electricity during usage 5.Quick warranty usage 4. Durability up to 15 service  1 to 2 days 5.Official warranty up years  thus for reparation to 5 years serves as long term 6.Good after sales 6.Quick warranty investment price  only falls service  1 to 2 5. Official warranty down to 75% after 1 – days for reparation up to 5 years 2 years of usage 7.Good after sale 6. Quick warranty price  only falls service  1 to 2 down to 75% after 1 days for reparation – 2 years of usage Less Important

Television Refrigerator Washing Machine Kitchen Knives Frying Pan Pressure Cooker 1. Samsung 1.LG 1.LG 1.Ginsu 1.Tefal 1.Sharp 2. LG 2.Sharp 2.Sharp 2.Double 2.Sanken 3. Toshiba 3.Toshiba 3.Sanyo 4. Sony 4.Sanyo 4.Panasonic 5. Panasonic 5.Toshiba

Less Mentioned

• For Television, a majority of consumers bought either Samsung or LG • Only few High Income consumers buys Sony • As for Refrigerator and Washing Machine, generally all consumers buys LG or Sharp. • No major difference between high, medium or low income • This is also the case for Pressure Cooker, as majority uses either Sharp or Sanken  no major difference amongst different income class

Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• Advanced, up-to-date technology • High durability The Pioneer and Sony • Highly innovative (in regards to •Expensive price Very High Heritage brand design and features e.g 3D TV) •Expensive spare parts • Good after service (widely spread service centre) •High durability The First Class •Good product technology Samsung •Expensive price High brand •Attractive product design (slim, dark glossy colour) • Offers a variety of product features The Household Product • Less advanced Medium LG • Offers a variety of design brand technology • Quite durable • Quite affordable price The Highly Endorsed •Less attractive product •High durability brand (mostly by design (rigid, less flexible, Toshiba •Good product technology Medium celebrity) less casual)

The (recently) • Less product quality Panasonic •Affordable price Low Nationalized brand and technology

Copyright (C) 2011 JETRO. All rights reserved. Page 23 Researched by Nielsen Indonesia Brand Evaluation – for Washing Machine, Refrigerator & Pressure Cooker From the consumer perception.. Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• Eco-friendly • Efficient usage of electricity  lower than other brands in The Household market LG Product brand •Expensive price Very High • Specializes in household products, thus more reliable and trusted • High durability •Good product technology The Local Reliable Sharp •Quite high durability •Expensive price High Household brand •Affordable price The Highly • Less attractive Endorsed brand product design (rigid, •High durability Toshiba (mostly by less flexible, less Medium •Good product technology celebrity) casual) • Less affordable price •Affordable price The Mainstream •Medium durability Sanyo •High availability (both in Low brand •Low product quality modern or traditional store) •Low durable Sanken The Local brand •Affordable price Low •Low product quality Copyright (C) 2011 JETRO. All rights reserved. Page 24 Researched by Nielsen Indonesia Brand Evaluation – for Kitchen Knives From the consumer perception..

Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• High durability  if under good maintenance effort, it usually lasts for years • High resistance  does not get broken easily (even after being accidentally dropped Ginsu The Japanese brand •Expensive price Very High down to the floor) • Very sharp  supports quick and easy meat cut • Good appearance – looks sturdy and tough even on eye level

• Note: • Need to be careful on consumer really high perception of Ginsu – as it is not evaluated against other brands • However, we found no negative gross image associated with the brand

Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• High durability • Available in many colour Tefal and design  gives The Pioneer brand •None mentioned High consumers a variety of options • Easy maintenance

• Affordable price • Usually offers attractive •Less durable design  not just basic •Rather hard to The Mainstream colour like black, but also Double maintenance (after a Medium brand red and blue while, it gets black • Tone of colour is usually stains on the surface) glossy  thus it looks shiny on eye level

More Selling What Do The Retailers Say? . Sony (Tube TV – SZ Series Wega CRT - 21 inch – IDR 2.450.000) is known as the •Sony most expensive brand amongst all, thus guarantees high product credibility  consumers feel assured of the quality •Toshiba . Toshiba (Tube TV – 410PC W89FKL - 32 inch – IDR 3.900.000) is the third most selling brand – though rather expensive it has guaranteed product quality •LG . LG (LCD TV SCD 26 HD TV - 26 inch – IDR 3.000.000) is perceived as the most selling brand due to a perfect balance between affordable price and good product quality

•Panasonic What Do The Retailers Say? •Samsung . Panasonic offers highly affordable price – considered as the cheapest amongst all TV brands •Sharp . Samsung is known for its attractive design and up-to-date features, thus sought after by medium income consumers

. Sharp offers price rather similar to LG, but the product quality is seen as less than LG

Less Selling

•Sony 21 inch •LG 26 inch

•Toshiba 32 inch

More Selling What Do The Retailers Say?

. Both LG (WP 1460 R Twin Tub – 7 kg – IDR 1.850.000) and Sharp (ES T70 CL-B Twin Tub Super 7 kg – IDR 1.700.000) products are widely liked by consumers  affordable •LG •Sharp price, good durability, sturdy and tough design

. Toshiba (Twin tub 6,6 kg – IDR 1.350.000) products are known for high durability, but due •Toshiba to expensive price, it is less favored compared to LG or Sharp

•Samsung What Do The Retailers Say? •Sanyo . Samsung (Twin tub 7,5 kg – IDR 1.550.000) is perceived to have similar quality to •National Toshiba, but with better looking design

. Sanyo is seen as offering medium product quality and medium durability, but affordable •Sanken . National is perceived as one of the best local brand – quite affordable, offers a variety of products, good product design

. Sanken is perceived to offer the cheapest price amongst other brands – BUT not really Less Selling supported by good quality product (less durable), thus attracts the smallest portion of consumer

•Sharp (Twin Tub Super 7kg) •Toshiba (Twin Tub 6,6 kg) •LG (Twin Tub 7 kg)

More Selling What Do The Retailers Say?

. Both LG (IDR 2.600.000 – GL 201CM – One Door - 200 litre) and Sharp (IDR 2.800.000 – SJPT640RS – Two Door - 200 litre) are products are widely liked by •LG •Sharp consumers  affordable price, good durability, sturdy and tough design . Toshiba (IDR 3.000.000 – Glacio Grh260 – Two Door - 200 litre) products are known for high durability, but due to expensive price, it is less favored compared to LG or Sharp •Toshiba

•Samsung What Do The Retailers Say? •Sanyo . Samsung (IDR 2.750.000 – 200 litre) is perceived to have similar quality to Toshiba, •National but with better looking design . Sanyo is seen as offering medium product quality and medium durability, but •Sanken affordable . National is perceived as one of the best local brand – quite affordable, offers a variety of products, good product design . Sanken is perceived to offer the cheapest price amongst other brands – BUT not really supported by good quality product (less durable), thus attracts the smallest Less Selling portion of consumer

•LG (200 litre) •Sharp (200 litre) •Toshiba (200 litre)

More Selling What Do The Retailers Say? . Ginsu (IDR 100,000 – 300,000 / piece) is very strong in brand awareness (perceived as a reputable brand) and high durability (most consumers •Ginsu claimed it is highly resistance to shock / fall) •Wushof . Wushof (IDR 100,000 – 150,000 / piece) .Emphasizes more on attractive design - thus mostly liked by housewives .Germany manufactured – thus high credibility

What Do The Retailers Say? •Victorinox

. Victorinox (IDR 175,000 – 250,000 / piece) is well-known for its sharpness thus creates a more professional image  only purchased by ‘kitchen master’ housewives

Less Selling

•Ginsu

•Wushof

•Victorinox

More Selling What Do The Retailers Say?

. Tefal frying pan (IDR 200.000 – 280.000 for 24 – 28 cm) is seen to offer high durability level (consumers admit usually lasts for up to 5 years) and •Tefal better cooking quality

. Double frying pan (IDR 395.000 for 32 cm) offers price which is more •Double expensive than Tefal (more IDR 100,000 – 200,000) but still come up with a wide variety of products (many designs and types of frying pan)

Less Selling

•Tefal Frying Pan •Double Frying Pan

More Selling What Do The Retailers Say? . Sharp (KS A18TTR – IDR 335.000) is perceived as an international product which offers: .Good durability (product last up to 4 – 5 years) .Good after service (widely spread service center and affordable spare part)

. Cosmos (325 / 326 – IDR 259.900) is perceived as a ‘good local brand’ .Meaning: it offers good quality (durable and not easily broken) BUT with affordable price .Also supported by good service center (widely spread and less expensive spare parts)

What Do The Retailers Say?

. Miyako (MCM 508 – IDR 215.000) is perceived more as a low class brand – thus only trusted by lower income consumers

Less Selling

•Miyako •Sharp •Cosmos

More Often Description Quotes

• Discount is applied to certain products, “I usually give discount to attract mostly: TV, refrigerator, washing machine, Air customers. Every time I have a Discount Conditioner, Microwave, Oven. • Discount usually ranges from 10 – 15 % discount scheme in my store, sales • Promotion period is usually during festive would go up to 25 – 30 %. I find it very seasons, such as Idul Fitri, Christmas, New effective” - Retailer Year “Besides discount, I also have Gift • Usually applied 2 – 3 times per year  promotion scheme. Usually the Gifts promotion period only lasts 2 weeks younger customers don‟t really like it, • Gifts are usually small household durables they are more excited with discount. such as: spatula spoon, glass / cups, bowl, etc The older customers enjoy it more” - Retailer

“Sometimes I also have lottery prizes Point Collection • After purchasing a certain product, consumers get a certain number of points, which entitles at my store. But my customers don‟t them to get a lottery coupon. really like it, they say they prefer direct • This lottery coupon is filled and put into a box, gifts. But I still apply it just for the sake and after a certain period of time, the store of attracting customers into my store. will pick 1 to 10 winners Usually, they feel curious when they Less Often • Prizes range from bicycle, toaster, oven, ironing, until TV. see the promotional sign” - Retailer

Product Japanese brands Korean brands

Awareness Sony, Toshiba, Panasonic Samsung, LG

• More durable • Lots of experience – high expertise • High technology •Cheaper than Japanese brands (usually IDR 200,000 - 300,000 less) Positive Image • Highly innovative – come up with new variant of products (in terms of design, •Offers more variety of model technology, utility, etc) • Pride  consumers feel confident when seeing using these brands by others

•Newcomer - just recently entered the market •More expensive price •Less prestigious Negative Image •Not offering many models •Less durable than Japanese brands (only 5 to 6 years) •Model usually follows other brands – often copies the design from other brands

.Purchase for household durables is usually never spontaneous  follow a certain systematic pattern which involves: information gathering, consultation with significant others (husband, partner, friends), and experiencing in-store dynamics (promotions, interaction with Sales Promotion man) What have we .The common trigger to make a purchase is strong Brand Awareness (usually learned? purchase the brand which they already know, or has good reputation in the market) and Modelling Behaviour (thus, a new brand might be introduced into their life, if only their closest surroundings are using the brand) .Familiarity of Japanese brands is high in this category, very positive evaluation from consumers .We need to establish a strong brand awareness in the consumers minds – through heavy product communication  making our brand as the ‘buzzing trend’’ What is our .BUT at the same time, we need to highlight the strong features of our product opportunity? compared to products from other countries – in the areas of high durability, high technology and expertise .And still offering competitive price in regards to other brands

• The products discussed include: 1. Fish Sardines 2. Corned Beef 3. Ready-to-Eat (RTE) Sausages 4. Ready-to-Eat (RTE) Curry 5. Spaghetti Sauce 6. Cup Noodles

. Majority purchased once a month during monthly . Most high income and most medium income: get it household shopping in Hypermarket such as Carrefour, Giant or Fish Sardines . Most purchase 1 to 2 cans per month hypermarket  if they run out of stock, they would purchase it in the nearest mini market . Most low income: purchase it in mini market . Across all, majority purchased it once a month during . Few low income: purchase it in traditional stores Corned Beef monthly household shopping . Most purchase 2 to 3 cans per month . Majority purchased it once a month during monthly RTE household shopping . Most high income and most medium income: Sausages . Most purchase 3 to 4 packages per month purchase it in Hypermarket such as Carrefour, Giant or hypermarket  when out of stock, they would purchase it in the nearest mini market RTE Curry . Only few consumers purchase this product . All low income: purchase it in mini market  not sold in traditional stores . Purchase is also limited – not every month  more Spaghetti Sauce into occasional rather than routine

. Across all, majority purchase it once a month during . Most high income and most medium income: monthly household shopping purchase it in Hypermarket such as Carrefour, Giant Cup Noodles . (some low income) purchase it weekly or hypermarket  if out of stock, they would purchase it in the nearest mini market . All low income: purchase it in traditional stores Copyright (C) 2011 JETRO. All rights reserved. Page 46 Researched by Nielsen Indonesia Key Influencer in Brand Selection Who or what influences them to make a purchase? Note: the more  = stronger influence Fish RTE Spaghetti Type Influencer Sardine Corned Beef Sausage RTE Curry Sauce Cup Noodle WOM from trusted    recommender

Heritage Out of brand    Store Influencer Advertising – the intriguing ones  

Others

In Store Promotion   

Salesman In Store Recommendat Influencer ion

Others

More Important Cup Noodles Fish Sardines Corned Beef RTE Sausage RTE Curry Spaghetti Sauce 1.Well known 1.Well known 1.Good taste 1.Good taste 1.Well known 1.Well known and established and established 2.Affordability 2.Thickness of and established and established brand brand curry texture brand brand 2.Good flavor 2.Good flavor 3.Affordability 2.Affordability 2.Variety of flavor 3.Variety of taste 3.Good meat (types of and form quality  hard Indonesian (sweet tomato, texture, rather dishes) spicy, extra lumpy 3.Affordability spicy 4.Affordability 4.Affordability

Less Important

Copyright (C) 2011 JETRO. All rights reserved. Page 48 Researched by Nielsen Indonesia Switching Behavior What makes them switch to (or try) another brand? Note: the more  = stronger influence Type of Fish RTD Spaghetti Trigger Trigger Sardine Corned Beef Sausage RTE Curry Sauce Cup Noodle WOM from trusted recommender   Modeling Behavior – sees Product significant other   Related using it Triggers Advertising – the Not intriguing ones applicable    (only 1 brand Others AVAILABLE in the market) In Store Promotion    Non Product Salesman Related Recommendation Triggers

Others

Copyright (C) 2011 JETRO. All rights reserved. Page 49 Researched by Nielsen Indonesia Standard Expectations of Product What should the standard product have? More Mentioned Cup Noodles Fish Sardines Corned Beef RTD Sausage RTE Curry Spaghetti Sauce

1.Freshness  looks 1.Freshness  1.Freshness  1.Good flavor 1.Good flavor 1.Good flavor fresh and smells meat looks since it is ready 2.Strong smell 2.Thick and 2.Durability  3 naturally fresh naturally red to eat, thus 3.Durability  3 creamy texture months’ expiry 2.Good texture of and smells like should smell months’ expiry 3.Durability  3 period fish  not meshed fresh meat and look fresh period months’ expiry 3.Good or crushed 2.Durability  3 (light pink) period packaging – not 3.Durability  3 months’ expiry 2.Durability  1 thin and easy to months expiry period month expiry be crushed period 3.Good sturdy period 4.Good sturdy can can 5.Affordability: IDR 7000 – 10,000 for 125 gr

Less Mentioned

Copyright (C) 2011 JETRO. All rights reserved. Page 50 Researched by Nielsen Indonesia Ideal Expectations of Product What should the ideal product have? More Mentioned Cup Noodles Fish Sardines Corned Beef RTD Sausage Curry Spaghetti Sauce

1.Available in variety 1. Durability  1.Less preservatives 1.Strong smell – 1.Meaty texture (not 1.Delicious flavor of flavor – at least prefer 6 months’ or other chemical must resemble the just sauce but 2.Offers a variety of up to 5 types expiry period substances original curry should have visible flavors under one 2.Durability  prefer 2. Can is easy to be 2.Durability  3 2.Durability  6 bits of meat in it) brand – at least up 6 months’ expiry opened (do not months’ expiry months’ expiry 2.Durability  6 to 5 types period need the help of period period months’ expiry 3.Packaging is not 3.Can is easy to be additional tool) 3.More durable 3.Highly affordable period made of plastic / opened (do not 3. Available in packaging – 4.Air-free/vacuum 3.Highly affordable Styrofoam  due need the help of smaller SKU – current one is packaging 4.Air-free/vacuum to the perceived additional tool) less than 125 gr perceived as too packaging danger of hot 4.Available in 4. Less thin water mixing with smaller SKU – less preservatives or plastic (= result in than 125 gr other chemical toxic) 5.Less preservatives substances 4.Less preservatives or other chemical or other chemical substances substances

Less Mentioned

Copyright (C) 2011 JETRO. All rights reserved. Page 51 Researched by Nielsen Indonesia Brand Purchase What brands did they purchase in past 3 months? More Mentioned Cup Noodles Fish Sardines Corned Beef RTD Sausage Curry Spaghetti Sauce 1. Gaga 1. Pronas 1. Sozzis 1. Karage 1. La Fonte 1. Pop Mie 2. ABC 2. Gaga 3. Botan 2. Nissin Mas

Less Mentioned

Brand Perceived Perceived Favourability Key Image Name Strengths Weaknesses Level

• Flavour is perceived as • Widely consumed by less delicious than ABC many, thus highly reliable • The most expensive • Instant – no need to make amongst the brands in Gaga The Famous brand High own seasoning the market • Offers a variety of flavours • Less accessible – not • Highly available available in mini market or traditional stores

• Mostly known for the • Offers the most ABC The Premium brand delicious taste  yummy High expensive price sauce • Widely available

• Has been in market for a • Not Instant – still need long time, thus highly to make own seasoning Botan The Heritage brand trusted and reliable • Consumed by limited Medium • Big fish people, mostly elderly people

Perceived Perceived Favourability Brand Name Key Image Strengths Weaknesses Level

• Has been in market for a long time, thus highly trusted and reliable • Consumed by limited • No fishy smell people, mostly elderly • Taste really salty and people savoury after being Pronas The Heritage brand •Perceived as old- Medium cooked fashioned, not up to • Highly accessible – date available in hypermarket, supermarket, mini market, even traditional stores • Consumed by many, thus highly reliable • Offers a variety of flavours •Flavour is perceived as Cip The Famous brand • Highly accessible - less delicious than High available in hypermarket, Pronas supermarket, mini market, even traditional stores Copyright (C) 2011 JETRO. All rights reserved. Page 54 Researched by Nielsen Indonesia Brand Evaluation – for RTE Sausages From the consumer perception..

Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• Pioneer brand  the first RTE sausage brand in the market • Highly affordable price • Highly accessible  makes some consumers The Newcomer available in hypermarket, Sozzis (mostly high income) Medium brand mini market and questions product supermarket quality • Widely advertised (in TV, magazine, or radio), thus strong brand awareness

Perceived Perceived Favourability Brand Name Key Image Strength Weakness Level

• Manufactured by • Rather expensive price foreign company  – compared to other thus reassures local brands in market The international quality • Not widely available  La Fonte International • Strong brand High only certain variants awareness brand are available in • Delicious product supermarket / flavour hypermarket • Good product quality

Brand Perceived Perceived Favourability Key Image Name Strength Weakness Level

• Old player – has been in market for a very long time, thus highly credible brand • Widely known as a product from • Offers limited taste  only 2 Indomie – the perceived best local to 3 flavours (Chicken, Beef, The Heritage brand for noodles Pop Mie Curry) brand • Good product quality High • Only offer one packaging size: • Delicious flavour medium • When moved into a bowl, the flavour does not change • Strong product communication – lots of TVC

• Too salty • Less visibility – no product The Daring • Offers variety of unique taste: hot, Nissin communication on TV or brand extra hot, extra spicy Medium other media • More expensive than Pop Mie

More Selling What Do The Retailers Say?

. Botan (IDR 14,200 - 425 grams – Tomato sauce flavor) . Perceived as heritage brand – has been consumed by Indonesians for a long time . Most housewives consume Botan as a result of recommendation by their mothers . Gaga (IDR 11,000 - 425 grams – Tomato and Chili flavor) high availability combined with variety of flavors . ABC (IDR 15,000 - 425 grams – Chili Sauce flavor)  the most expensive amongst the brands in the market

Least Selling •Botan •Gaga •ABC

More Selling What Do The Retailers Say?

. Pronas (IDR 18.350 - 340 grams – Plain flavor) is perceived as heritage brand – has been consumed by Indonesians for a long time .Most housewives use Pronas as a result of recommendation by their mothers

. Cip (IDR 18.000 - 340 grams – Plain flavor)  good product quality combined with affordable price

•Pronas •Cip Least Selling

More Selling What Do The Retailers Say?

. Sozzis (IDR 5200 - 75 grams - Beef flavor) Is the only brand of RTE sausage in the market . Perceived to: . Offer affordable price . Heavy communication on TV  thus supports strong brand awareness amongst consumers even in a brief period of time

Least Selling •Sozzis

More Selling What Do The Retailers Say?

. La Fonte (IDR 13.600 - 350 grams - Tomato Bolognese flavor) .Perceived as an international brand  gives reassurance on product quality and flavor .Known to offer delicious taste . Heinz (IDR 21.600 - 350 grams - Tomato Bolognese flavor) .Known for its first class quality  specializing in the field of seasoning .Have been in the market for long .BUT, significantly more expensive than La Fonte – thus only available in modern channel and import supermarket (Ranch Market)

Least Selling •La Fonte •Heinz

More Selling What Do The Retailers Say?

. Pop Mie (IDR 2550 – Boiled type – Chicken Flavor – 60 grams) . Pioneer brand in the market of cup noodles  thus high product credibility . Widely known manufacturer: Indofood  already have strong image in society . Widely available, from hypermarket, supermarket, mini market, even up to small scale traditional stores . Delicious taste

. Nissin (IDR 2490 – Boiled type – Beef Flavor – 65 grams) . More ‘daring’ flavor than Pop Mie – more spicy, more hot, more salty

Least Selling •Pop Mie •Nissin

More Often Description Quotes

Discount • Discount is applied for most brands “We usually hold promotion during the • Usually during festive season, such as festive seasons. These types of Idul Fitri, Christmas, New Year product are not the types to get much • Discount up to 15 – 20% discount, perhaps due to the small margin we take from these products” - Retailer

Gifts • Usually applied for fish sardines or “Promotion by providing gifts to corned beef  buy 1 product gets a consumers is quite effective in making spoon, fork or glass customers add their purchase amount. • Only applied at certain time  to get rid of They usually add 1 or 2 more quantity old stocks than their regular purchase” - Retailer

Less Often

Copyright (C) 2011 JETRO. All rights reserved. Page 64 Researched by Nielsen Indonesia Perception of Japanese vs Korean brands •Voice of Retailers of Hypermarket Product Description Japanese brands Korean brands Awareness level No awareness No awareness Fish Sardines Perceived Strength Not relevant Not relevant

Awareness level No awareness No awareness Corned Beef Perceived Strength Not relevant Not relevant

Awareness level No awareness No awareness RTE Sausages Perceived Strength Not relevant Not relevant

Awareness level Medium awareness: Karage No awareness RTE Curry Strong flavor and thick sauce Perceived Strength Not relevant texture

Awareness level No awareness No awareness Spaghetti Sauce Perceived Strength Not relevant Not relevant

Medium awareness: although Medium awareness: although Awareness level cannot recall the brand name cannot recall the brand name Cup Noodles Available in variety of flavors Perceived Strength Available in variety of flavor Available in big packaging size

.Purchase of this type of product is not something which is carefully thought through – tend to be automatic, with little chance of switching .Basic trigger for a purchase is usually due to heritage / long standing brand – a brand used by their own parents, the brand they have used since they were little  What have we thus, familiarity of product (not necessarily product strength compared to other brand) learned? is very important in this matter .However, taste is an important aspect in driving consumer’s interest to try a new brand – they are willing to try a new product if it is offering them something new, something unique .Awareness of Japanese product is low in this category .We need to introduce our product through the offering of variety of new, fresh and unique taste in an affordable price – supported by heavy product communication (just to make our brand stays on their head) What is our .Also give them reassurance of Halal product – drives confidence to consume opportunity? .Might want to consider to highlight Japanese technology into the important side- aspects of the product: packaging (safety), and processing way (safety, less chemical ingredients, less preservatives)