SOURCE: The Boston Consulting Group

The Boston Consulting Group

December 03, 2015 22:00 ET

Despite Economic Bumps, Indonesians' Rising Incomes and Living Standards Create New Opportunities

Southeast Asian Economies Have Slowed, Yet Consumer and Financial Services Companies in Indonesia Can Still Profit Through a Deep Understanding of Shopper Behavior, According to New Research by The Boston Consulting Group

JAKARTA, INDONESIA--(Marketwired - Dec 3, 2015) - Economic growth in most Southeast Asian economies, including Indonesia, has slowed recently owing to a number of factors. But in the medium and long term, Indonesia remains highly attractive to companies operating in emerging markets, for one principal reason: increasing affluence and urbanization are leading to an upwardly mobile base of consumers. To capture this opportunity in a volatile economy, companies need a detailed understanding of the brand preferences, shopping behaviors, and purchasing decisions of Indonesian consumers across demographic segments. A series of research reports being released today by The Boston Consulting Group (BCG) provides in-depth findings that can guide companies in three industries: consumer durables, fast-moving consumer goods (FMCGs), and financial services.

The three publications summarize the findings of an extensive quantitative and qualitative survey of more than 3,000 consumers across all socioeconomic groups in 19 locations throughout Indonesia. A central element of all three reports is identifying the key demographic groups within the country -- including "young professionals" and "modern housewives" -- which each have unique habits, preferences, and needs.

"Companies need a targeted approach that understands each group in order to apply the right points of influence for their brands," said Edwin Utama, a BCG partner and a coauthor of the reports. "Those that try to apply a one-size-fits-all approach will struggle."

Vaishali Rastogi, a senior partner at BCG and another coauthor, added, "Indonesia's economic expansion has clearly hit some turbulence lately. Despite these bumps, Indonesia is still a growth story, with a consumer base that is growing larger and more economically empowered each year. But growth will not be straightforward for companies. That makes it even more important to use a targeted approach and to rely on deep insights into the behavior of shoppers in key demographic segments. "

Critical Insights in Three High-Growth Industries
Key insights of BCG's research for durable goods manufacturers include the following:

  • Durable goods are a rising priority of Indonesian consumers, who increasingly buy such products on credit (a 50 percent increase over the past two years).
  • First-time buyers are crucial. As living standards in the country rise, these consumers will represent two-thirds of the total sales volume of durables goods by 2017. Winning over these potential new customers is critical for manufacturers.
  • Young professionals and modern housewives represent 10 percent of Indonesia's consumer base. In addition to buying products, these individuals strongly influence the purchasing decisions of their friends and family members.

Key insights for FMCG manufacturers, in categories such as food, beverages, personal care, and household products, include the following:

  • Consumers buy multiple brands within a well-defined repertoire of options. Companies that cannot break into the consideration set for a given category will fail.
  • Consumers are increasingly omnichannel, buying products within a given product category at different store formats.
  • Digital is increasingly influencing purchasing decisions, particularly for categories in which consumers like to compare products.
  • Middle-class and affluent consumers (MACs) are more willing to upgrade to "affordable premium" products, including small indulgences.

For financial services companies, key insights include the following:

  • Lower-income consumers need to be persuaded that banks are worth their time. Because these consumers tend to choose on the basis of a bank's overall image rather its strength in any particular offering, banks need to focus on their brand image, as well as on providing convenient, secure, and simple products, all in the right locations.
  • MACs will need more advanced financial services. Financial service companies must get better at targeting MACs at key transitions in their professional and personal lives, which are prime opportunities to cross-sell new offerings.
  • Digital banking is still gathering momentum. Among MACs, 29 percent use digital banking services. However, usage among all groups is likely to increase quickly as digital technology becomes more prevalent in the country.

While emerging markets in Southeast Asia have hit some bumps, Indonesia is still a growth story, with a consumer base that is growing larger and more economically empowered each year. As BCG's research shows, companies that identify the right demographic segments, understand the shopping habits of those consumers at a deep level, and design targeted interventions to win them over along the path to purchase will set themselves up to capitalize.

A copy of the report can be downloaded at

To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or

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

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

About 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

  • The Boston Consulting Group
    Eric Gregoire
    Global Media Relations Manager

    Tel +1 617 850 3783
    Fax +1 617 850 3701