The Asian-Pacific region (APAC) presents some of the best opportunities for businesses looking to expand internationally. According to data from emarketer, retail e-commerce sales in Asia-Pacific grew 31.1% in 2017 to $1.349 trillion and is projected to grow to U.S. $1.6 trillion in 2021.
Additionally, the growth of the middle class across APAC underscores an ongoing global transition of economic might. Statistics from a 2017 study by the Brookings Institution, states that 88% of the next 1 billion people entering the middle class will be Asian and they’ll account for over 50% of the total middle-class consumption market.
But with promising opportunities come several challenges for marketers. In this article, we’ll take a look at the issues marketers could face in APAC and how to solve them.
The Linguistic Landscape
Whether it’s picking a name for your brand or translating your campaign, finding the balance between brand identity and linguistic standards can be difficult in APAC languages. And one language where marketers have historically endured gaffes is Chinese.
Culturally and philosophically, the Chinese language is vastly different from English and other western languages. Certain words and concepts that seem conventional in English are difficult to express in Chinese. Many companies entering the Chinese market use transliteration strategies to localize their English marketing messages and the results are not always pleasant.
For instance, when Pepsi first launched its campaign in China, the translation of their slogan “Pepsi Brings you Back to Life” was more literal than the company intended. In Chinese, the slogan read, ‘Pepsi Brings Your Ancestors Back from the Grave.’ In a country where worshiping ancestors is an important part of the culture, this wasn’t well received.
Localizing a brand name into another language can be also be problematic for marketers. For example, Best Buy picked a name that sounded like “Best Buy,” but the meaning wasn’t consumer friendly. Baisimai could be translated to “think it over 100 times before buying,” which certainly isn’t the message any retailer or e-tailer wishes to send to consumers.
Native speakers will notice the slightest nuances and it’ll lead to a greater misunderstanding, so remember that when it comes to translations, ‘good enough’ won’t pass.
Standardization Doesn’t Work
While standardization is a cost saving strategy that develops a consistent and strong brand across all markets, it often fails to address some of the differences associated with individual APAC markets. Walmart knows this challenge well.
Walmart entered South Korea in the late 1990s, but failed to capture the country’s market. The retailer failed to provide value to Korean consumers, as they had significantly different tastes and preferences compared to Americans. Although Walmart’s Every Day Low Price (EDLP) strategy was successful in America, Korean consumers felt it lacked value. Even the store locations became a glaring cultural misstep. Walmart stores were built in distant areas replicating the brand’s U.S. strategy of placing stores in smaller cities, outside of major metropolitan areas. As convenience and store location are major determinants of where Koreans choose to shop, the foot traffic in Walmart stores was low.
In May 2006, Walmart sold its 16 stores to major local discount chain, Shinsegae Co., at $882 million U.S. dollars. Walmart’s stores in Korea lost approximately $10 million in 2005 on sales of $720 million.
On the other hand, using the adaptation strategy, Starbucks has thrived in China due to the coffee chain’s flexible, localized product offerings. Their strategy allows Starbucks to bridge the gap between the tea drinking culture and the coffee drinking culture, while enjoying a 58.6 % share of the market in China.
Customer Loyalty is Fickle
According to a recent research from Accenture, 75% of Chinese consumers have switched providers in the past year and almost 24% say their expectations around loyalty have completely changed. Similarly, 62% of Singapore consumers have switched providers in the past year and nearly a quarter of those shoppers confirm their expectations around brand loyalty have completely changed.
As seen from the statistics above, customer loyalty is a huge problem in the APAC region. If you’re banking on loyalty programs for customer retention, you need to look beyond discounts or points and focus on providing unique rewards and experiences. One way to do this is to create a community around the values your brand shares with consumers. Here’s a lesson from The North Face: To improve customer loyalty in China, the outdoor clothing brand created a customer loyalty program centered on the collectivism of Asian consumers. Specifically, the brand set up an online community linking amateurs with clubs devoted to outdoor pursuits. The website offered points for activity and loyalty, redeemable for products. This led to higher sales and a detailed database of over half a million keen customers.
In the world’s fastest-growing region, achieving customer loyalty is a challenge, but one that can drive your business growth.
The Market Is Not Homogenous
Despite popular belief, APAC is not a homogenous region, but rather a diverse marketplace. From developed countries like Australia, Korea and Japan, to emerging markets such as China and India, the region is a mixed bag of cultures. For instance, research by Millward Brown found that chances of having an ad score high on basic metrics like ‘enjoyment’ in any two Chinese cities is only 52%. Between Shanghai and Beijing, it’s 38%.
Similarly, e-commerce behaviors in the region vary. Southeast Asian nations are the most engaged on online. In Thailand, consumers spend a daily average of 9 hours, 38 minutes online. While in Japan, the average time spent is 4 hours, 12 minutes. Southeast Asia countries spend more time on e-commerce platforms compared to consumers in other regions who spend on average 140 minutes per month. Also, 74% of South Koreans shop online, compared to 26% in India according to a joint report by We Are Social and Hootsuite.
Based on the above, a cut and paste marketing approach is likely to fail in the APAC region. Spotify is one brand that has navigated APAC’s waters.
Taking note of varying consumer segments in Asia, Spotify offers different pricing based on the average incomes of its various Asian markets. Spotify Premium currently runs for USD $7.10 per month in Singapore, $6.20 in Hong Kong, around $5 for Taiwan, and less than $4 in the Philippines and Indonesia. All these are adjusted from the $10 rate for listeners in the U.S. Although Spotify doesn’t report its subscribers by country, along with Africa and Australia, Asia accounts for 10% of the company’s user base.
The Asian-Pacific region holds a lot of promise. To see a positive ROI on your marketing investments, you need to rethink your marketing strategies and banish any preconceived notions you have about Asian Pacific consumers. Despite the diversity of the APAC market, placing customer experience at the core of your marketing strategy is necessary if you want to succeed in the region.