SOURCE: The Boston Consulting Group

The Boston Consulting Group

October 22, 2015 08:00 ET

Bangladesh Emerging as One of the World's Next Great Growth Markets for Consumer Products

South Asian Nation's Population of Middle-Income and Affluent Consumers Is Projected to Triple to 34 Million by 2025; While Wary of Debt, These Consumers Are Optimistic About the Future and Value Foreign Brands, New BCG Report Finds

DHAKA, BANGLADESH--(Marketwired - Oct 22, 2015) - Bangladesh is emerging as one of the world's next great growth opportunities for companies with a keen understanding of the nation's rising consumer class. Every year, 2 million Bangladeshis join the ranks of middle-class and affluent consumers, and they are highly optimistic about the future, value foreign brands, and are jumping onto the digital bandwagon. These are among the findings in a new report by The Boston Consulting Group (BCG).

The report, titled Bangladesh: The Surging Consumer Market Nobody Saw Coming, is being released today. The findings, by BCG's Center for Customer Insight (CCI), are based on CCI research that included a survey of more than 2,000 Bangladeshi consumers and analysis of their consumption patterns.

"Bangladesh is one of the greatest untapped growth markets in Asia, yet it has been off the radar of most major consumer-product companies," said Zarif Munir, a BCG partner and coauthor of the report. "Companies that move now to get into position have an opportunity to build a lasting competitive advantage."

The report focuses on Bangladesh's middle and affluent class (MAC), which the firm defines as individuals whose annual household income is $5,000 or more. That means that these consumers earn enough to afford goods that offer convenience and luxury, such as air conditioners, imported shampoos, and cosmetics.

Although only 7 percent of Bangladesh's population of 160 million is currently classified as middle-income or affluent -- compared with 21 percent in Vietnam and 38 percent in Indonesia -- their ranks are growing rapidly due to a decade of stable economic growth, a growing working-age population, and strong upward mobility. Bangladesh's MAC population is projected to triple by 2025, to about 34 million. Consumer wealth is also dispersing beyond the major cities of Dhaka and Chittagong: within the next decade, 63 cities are projected to have MAC populations of at least 100,000, compared with 36 now.

The BCG survey of Bangladesh consumers found evidence of huge potential demand for branded consumer products -- but also revealed that a willingness to spend is tempered by a wariness of taking on debt. Sixty percent of consumers surveyed said that they expect their incomes to rise over the next 12 months, and 69 percent said that there are more things they want to buy. What's more, most Bangladeshis -- 80 percent in the case of consumer durables -- cited brand as a top factor influencing their buying decisions. The majority of respondents also placed a high priority on quality.

This enthusiasm is tempered by financial concerns, however. Around half of Bangladeshi consumers reported that they are concerned about their ability to repay debts, and around two-thirds said that they believe that uncertainty about Bangladesh's economy could affect their financial health. As a result, the majority of those surveyed also cited price as a top priority.

"These findings indicate that while Bangladesh's growing consumer class is eager to trade up to higher-end brands, goods, and services, they are also budget conscious," said Olivier Muehlstein, a BCG partner and another coauthor. "Companies must create a strong value-for-money proposition to win over Bangladeshi households."

The BCG research also uncovered several distinct attitudes and cultural traits in Bangladesh that companies must take into account if they are to succeed in this market. Bangladeshis focus more attention on the immediate needs of their large households than do consumers in many other large Asian emerging markets, for example. Households still purchase most of their goods with cash and at traditional mom-and-pop retail outlets, rather than at more modern channels, such as convenience stores and supermarkets.

Yet Bangladeshis are also rapidly adopting advanced mobile Internet technologies. Forty-one percent of consumers surveyed -- and 68 percent of MAC consumers -- own Internet-enabled smartphones. Around 14 percent of online purchases -- almost as many as those done with credit cards and debit cards -- are conducted through Payza, an online payment service. Eighty-one percent of consumers said that they trust what they read online, and 66 percent search for product information online.

"Many more Bangladeshi consumers will be making the leap from cash transitions and mom-and-pop outlets directly to mobile payment and online shopping," said Vivek Nauhbar, a BCG consultant and another coauthor. "Companies should start building robust e-commerce platforms designed for interacting with consumers through small digital screens to meet growing mobile-enabled demand."

To win for the long term in the still underdeveloped Bangladesh market, the authors recommend that companies factor these consumer attitudes and consumption traits into their product and marketing strategies. Companies should start fighting now to win brand loyalty among consumers by stressing high quality for money. Companies selling big-ticket products such as cars and major appliances can unlock significant growth opportunities if they can ease consumer anxieties related to personal debt, by, for example, introducing credit at affordable interest rates and educating consumers on how to manage debt. Companies should also develop distribution networks capable of selling products through small local shops. And they should build robust, mobile-centric digital e-commerce platforms.

"For most companies, winning in Bangladesh's rapidly growing consumer market will require not only a ramped-up presence," Munir said. "It will also require an entirely new approach based on deep insights into MAC consumers."

A copy of the report can be downloaded at www.bcgperspectives.com.

To arrange an interview with one of the authors, please contact Shima Reza at reza.shima@bcg.com.

About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world's leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 82 offices in 46 countries. For more information, please visit bcg.com.

About BCG's Center for Customer Insight
The Boston Consulting Group's Center for Customer Insight (CCI) applies a unique, integrated approach that combines quantitative and qualitative consumer research with a deep understanding of business strategy and competitive dynamics. The center works closely with BCG's various practices to translate its insights into actionable strategies that lead to tangible economic impact for our clients. In the course of its work, the center has amassed a rich set of proprietary data on consumers from around the world, in both emerging and developed markets. The CCI is sponsored by BCG's Marketing & Sales and Global Advantage practices. For more information, please visit http://www.bcg.com/expertise/institutes/center-customer-insight.

About bcgperspectives.com
Bcgperspectives.com features the latest thinking from BCG experts as well as from CEOs, academics, and other leaders. It covers issues at the top of senior management's agenda. It also provides unprecedented access to BCG's extensive archive of thought leadership stretching back 50 years to the days of Bruce Henderson, the firm's founder and one of the architects of modern management consulting. All of our content -- including videos, podcasts, commentaries, and reports -- can be accessed by PC, mobile, iPad, Facebook, Twitter, and LinkedIn.

Contact Information