Understanding the Mind of the Emerging Market Consumer
Market research started by asking people questions. Initially the questions were simple and researchers asked, for instance, how may sticks of cigarettes the consumers smoked or which brand did they normally buy. Not satisfied with just knowing the behaviour, the researchers started to probe into the consumer mind to understand the factors determining the behaviour. The questionnaires were replete with open-ended as well as close-ended questions, trying to understand the reasons for consumer choice. In qualitative research this developed into what was called as motivational research and over time the quantitative researchers started relying more on observational research and derived statistical methods.
When the cigarette and washing powder companies started researching the consumers in emerging markets (earlier referred by various names including poverty stricken countries, under developed nations or developing markets) they brought the same bag of tools to this part of the world and sari clad women in India were goaded to try to imagine Surf as a person and more recently the Chinese, with their recent discovery of money and what it can do to you, started ticking the top 5 out of the 30 attribute long list of factors which could have led them to make their choice. The question really is whether the tools and techniques developed in the Western world work equally well in the emerging markets or do we need to develop new techniques or at least to modify them to reveal the emerging market consumer's psyche. Of course some will argue that many of the techniques used for decades in the Western world (particularly the few that I alluded to earlier) never actually worked in the Western world also - so they never had a chance in the emerging markets. Setting aside such cynicism here, I give six reasons why marketing research (though hardly any one uses this name any more) needs to work differently in Asia and other emerging markets.
1. The very process of asking pointed questions to try to understand why consumers do what they do, assumes several preconditions. Firstly it assumes that the consumers themselves know the answer. In many cases it may not be true as the process may be subconscious (few will deny that consumer in both the developed and the emerging world have a subconscious!). Secondly it assumes that the consumer is willing to share the underlying reasons for their behaviour, which may not hold water in general, but even more so in emerging markets. Lower income consumers may be reluctant to admit that is was price that played the principal role in their decisions. On the other end of the spectrum (emerging markets seem to be producing more than a fair share of the super rich!), in many Asian cultures sticking out and attracting attention is frowned upon, and decisions are supposed to be rational rather than emotional. Luxury consumers are, therefore, unwilling to admit the extent to which intangible factors such as status and emotions guide their decisions. The true reasons in Asian markets therefore often need to be derived and reliance on direct questioning is inappropriate.
2. Value derived from direct questioning critically hinges on the existence of an adequate level of articulation from the consumers. Of course emerging market consumers in general are not inarticulate, but limited education as well as not being used to air your opinion, particularly on products and brands, can make the consumers feel substantially challenged in articulating their reasons of choice (assuming that they know the reasons). In general the questioning needs to be less open-ended or hypothetical and more based on choice analysis. The best way to understand the consumer mind in the developing markets is to place them in alternative choice scenarios, and analyse the choices through statistical techniques.
3. The shopping context is often different in Asian and other emerging markets as compared to the developed markets. The emerging market consumers do not necessarily shop in the Wal-mart and Carrefour hypermarkets that were the favorite haunts of the consumers from the developed economies (till the economic crisis made them hold tighter to their wallets). In India as in small town and rural China, traditional trade dominates. The traditional trade situation results in a unique dynamic between the shopper and the seller which can strongly influence the choices of the shoppers. This is unique to the developing markets and the researchers in the West never had an opportunity to study this dynamic. The right research tools to study this needs to be specific to the emerging markets.
4. The emerging market consumers, not having the benefit of hefty wallets, show price sensitivity to an extent that the Western consumers will be entirely indifferent to. Additionally the price sensitivities can vary substantially at various price points. The pricing research techniques in emerging markets, therefore, need to be more sophisticated to catch the higher sensitivities and variations - conjoint analysis and discrete choice modeling should find even wider applicability than in the West.
5. In general the experience and interaction of the emerging market consumer with brands is relatively limited. Thirty years ago a Chinese consumer seldom saw an advertisement. Today they are overwhelmed by them. Thirty years ago they had practically no choice and now they have a bewildering array of product options in front of them. This rather rapid change in scenarios has led to the development of choice algorithms which are different from the ones which guide the Western consumers. For example the choice algorithms in certain categories include a rapid screening process and then a detailed evaluation to make the task more manageable. Understanding these choice processes will therefore require a two stage questioning and exclusive reliance on detailed attribute image measurement will not be appropriate.
6. Lastly the consumption context of products is different in Asian and other emerging markets as compared to the developed world. Refrigerator, for instance, may find a place of pride in the living room rather than in the functionally more appropriate position of the kitchen. Food may be consumed on the floor rather than on the dining table. These differences give rise to new attributes of relevance which we do not normally associate with the category. Neglecting these aspects will provide an incomplete picture and fail to fully explain consumer behaviour and choices in these markets.
In sum, researching the consumers in Asian and other emerging markets requires more sensitivity and sophistication than in the developed markets. It is essential that the researchers focus their efforts and energies on this part of the world, sharpen their tools and develop new ones to accurately capture the mind of the emerging market consumer.
Written by Ashok Sethi
Published in Research World, March/April, 2011
Market research started by asking people questions. Initially the questions were simple and researchers asked, for instance, how may sticks of cigarettes the consumers smoked or which brand did they normally buy. Not satisfied with just knowing the behaviour, the researchers started to probe into the consumer mind to understand the factors determining the behaviour. The questionnaires were replete with open-ended as well as close-ended questions, trying to understand the reasons for consumer choice. In qualitative research this developed into what was called as motivational research and over time the quantitative researchers started relying more on observational research and derived statistical methods.
When the cigarette and washing powder companies started researching the consumers in emerging markets (earlier referred by various names including poverty stricken countries, under developed nations or developing markets) they brought the same bag of tools to this part of the world and sari clad women in India were goaded to try to imagine Surf as a person and more recently the Chinese, with their recent discovery of money and what it can do to you, started ticking the top 5 out of the 30 attribute long list of factors which could have led them to make their choice. The question really is whether the tools and techniques developed in the Western world work equally well in the emerging markets or do we need to develop new techniques or at least to modify them to reveal the emerging market consumer's psyche. Of course some will argue that many of the techniques used for decades in the Western world (particularly the few that I alluded to earlier) never actually worked in the Western world also - so they never had a chance in the emerging markets. Setting aside such cynicism here, I give six reasons why marketing research (though hardly any one uses this name any more) needs to work differently in Asia and other emerging markets.
1. The very process of asking pointed questions to try to understand why consumers do what they do, assumes several preconditions. Firstly it assumes that the consumers themselves know the answer. In many cases it may not be true as the process may be subconscious (few will deny that consumer in both the developed and the emerging world have a subconscious!). Secondly it assumes that the consumer is willing to share the underlying reasons for their behaviour, which may not hold water in general, but even more so in emerging markets. Lower income consumers may be reluctant to admit that is was price that played the principal role in their decisions. On the other end of the spectrum (emerging markets seem to be producing more than a fair share of the super rich!), in many Asian cultures sticking out and attracting attention is frowned upon, and decisions are supposed to be rational rather than emotional. Luxury consumers are, therefore, unwilling to admit the extent to which intangible factors such as status and emotions guide their decisions. The true reasons in Asian markets therefore often need to be derived and reliance on direct questioning is inappropriate.
2. Value derived from direct questioning critically hinges on the existence of an adequate level of articulation from the consumers. Of course emerging market consumers in general are not inarticulate, but limited education as well as not being used to air your opinion, particularly on products and brands, can make the consumers feel substantially challenged in articulating their reasons of choice (assuming that they know the reasons). In general the questioning needs to be less open-ended or hypothetical and more based on choice analysis. The best way to understand the consumer mind in the developing markets is to place them in alternative choice scenarios, and analyse the choices through statistical techniques.
3. The shopping context is often different in Asian and other emerging markets as compared to the developed markets. The emerging market consumers do not necessarily shop in the Wal-mart and Carrefour hypermarkets that were the favorite haunts of the consumers from the developed economies (till the economic crisis made them hold tighter to their wallets). In India as in small town and rural China, traditional trade dominates. The traditional trade situation results in a unique dynamic between the shopper and the seller which can strongly influence the choices of the shoppers. This is unique to the developing markets and the researchers in the West never had an opportunity to study this dynamic. The right research tools to study this needs to be specific to the emerging markets.
4. The emerging market consumers, not having the benefit of hefty wallets, show price sensitivity to an extent that the Western consumers will be entirely indifferent to. Additionally the price sensitivities can vary substantially at various price points. The pricing research techniques in emerging markets, therefore, need to be more sophisticated to catch the higher sensitivities and variations - conjoint analysis and discrete choice modeling should find even wider applicability than in the West.
5. In general the experience and interaction of the emerging market consumer with brands is relatively limited. Thirty years ago a Chinese consumer seldom saw an advertisement. Today they are overwhelmed by them. Thirty years ago they had practically no choice and now they have a bewildering array of product options in front of them. This rather rapid change in scenarios has led to the development of choice algorithms which are different from the ones which guide the Western consumers. For example the choice algorithms in certain categories include a rapid screening process and then a detailed evaluation to make the task more manageable. Understanding these choice processes will therefore require a two stage questioning and exclusive reliance on detailed attribute image measurement will not be appropriate.
6. Lastly the consumption context of products is different in Asian and other emerging markets as compared to the developed world. Refrigerator, for instance, may find a place of pride in the living room rather than in the functionally more appropriate position of the kitchen. Food may be consumed on the floor rather than on the dining table. These differences give rise to new attributes of relevance which we do not normally associate with the category. Neglecting these aspects will provide an incomplete picture and fail to fully explain consumer behaviour and choices in these markets.
In sum, researching the consumers in Asian and other emerging markets requires more sensitivity and sophistication than in the developed markets. It is essential that the researchers focus their efforts and energies on this part of the world, sharpen their tools and develop new ones to accurately capture the mind of the emerging market consumer.
Written by Ashok Sethi
Published in Research World, March/April, 2011
Labels: choice algorithms, choice scenarios, discrete choice modeling, emerging markets, image measurement, price sensitivity, traditional trade
posted by Ashok Sethi at 4:12 AM
0 comments
