Contact Us Who We Are What We Do Our Work Our Thoughts Innovation Meaningful Brands® Press Blog Home | Our Thoughts | Blog | Meaningful Brands BLOG May 18, 2016 Building brand trust in Asia during an economic slowdown By Josh Gallagher, Chief Strategy Officer, Havas Media Asia Pacific In recent months, the state of the Chinese economy has been a subject of constant speculation, as the country's downturn begins to hit brands across the region. The ripple effect of China's slowdown across major markets has raised some concern for brands. Consumer sentiment is plunging in many Asian countries, and data indicates that shoppers in many markets are spending less on 'non-essential' items as purse strings tighten. A focus on maintaining brand trust and the growing sector of e-commerce are two ways for brands to get through Asia's economic slowdown and maintain their customer base in difficult times. High end markets are most impacted The real story of China's slowdown is how it will affect consumer behaviour in the rest of Asia – markets that have pinned their economic hopes on China's continued growth and are now bearing the brunt of slowdown. Tougher economic times means that for consumers, price point becomes even more influential. In developed Asia-Pacific markets like Australia and Singapore, price and product quality are important factors in driving purchase. 75% of consumers declare they look for the best deals/special offers, while more than half strongly agree that they give little attention to the brand name of the product. (Source: Havas Media Meaningful Brands 2015). No wonder across both markets, low-priced hypermarkets like Coles or Woolworths in Australia, or NTUC FairPrice and Giant in Singapore, feature highly on the Most Meaningful Brands list. In Asia's developing markets, it's a more complicated story. The Meaningful Brands research indicates that during tough economic times, communities pull together in developing markets and a surge of parochialism could actually see local brand loyalty increase. Local 'pride' is a common driver for the most Meaningful Brands in Asia's emerging markets. It is the ability of these brands to connect personally on daily issues that sets them apart. Local brands hold significant loyalty in their home markets. Seven local brands appear among the top 10 brands in Indonesia. Similarly, in India, research indicated that consumers would care about the disappearance of 75% of local brands in India – double the global percentage. Brand must work harder to differentiate themselves As the economy becomes more uncertain, consumers are more 'brand agnostic'. Brands that take their loyal customer base for granted can be found out. By becoming too functional, brands also run the risk of commoditization and losing their unique differentiators. The effects of the Japanese economic slowdown may provide clues as to what challenges lie ahead for brands. The Japanese people continued to look to categories to provide positive social and community benefits, but how brands themselves contributed to their lives became less important and customers were less engaged with individual brands. This change in behaviour as a result of economic uncertainty can have a big impact on customer retention and loyalty, and many brands may not notice a change in strategy is needed until they have already lost customers. Brand trust is critical to success in Asia As the economic downturn tests consumer budgets, brand trust plays a key role in maintaining customers. In emerging Asia, 83% of brands are trusted by consumers (Havas Media Meaningful Brands Survey 2015) – considerably higher than other regions. Though the Chinese economy is slowing, the Chinese shopper's love affair with global brands – built largely on the perception of a more trustworthy product – remains resilient. The popularity of global brands in China stems from three pillars: 1. The certainty of quality products 2. An expectation of a great experience 3. The overwhelming instinct to preserve status China's consumers are also more connected than ever, with smartphone penetration, internet connectivity and e-commerce opening up new consumer markets for brands even as economic growth slows. This embrace of global brands will probably continue to grow as China moves towards a 'New Normal'. China's much admired manufacturing sector has shown signs of weakness and growth has slowed – due largely to rising labor costs, the fruits of a growth economy – but the service sector has expanded considerably and further growth is expected. Value-add services and e-commerce may provide a way through Pressured economic conditions in Asia will see an even greater migration toward services as people try to do more with less. Services that have e-commerce as the backbone of what they do will have an advantage. To encourage loyalty, brands should consider more integrated service offerings to add value to their products. This will be make or break for brands wanting to be a stand out for customers, while also building brand trust. It is no secret that e-commerce has great potential in Asia, and it is growing hugely year on year. 46% of all internet users in the world come from Asia-Pacific markets, and the region is the fastest growing for online shopping uptake. For brands active in China and other Asian markets, e-commerce provides an important opportunity as the bricks-and-mortar retail sector sags. But hurdles remain: despite the opportunity e-commerce offers in South East Asia, the supporting infrastructure around online shopping is weak in many areas. Logistical hurdles which hamper delivery times and low credit card use makes cash on delivery the only option. So how can e-commerce flourish in a region where it is fraught with barriers? The solution will be two-fold. Connecting on the right platform Messaging apps and social media are huge across developing Asia. While social media platforms such as WeChat have been a lot more proactive in developing e-commerce solutions, messaging services have two clear advantages for brands. 1. Messaging services are more personal The ability for merchants to introduce a virtual messenger assistant, to help people buy products and aid in customer service, could transform brands into e-commerce powerhouses. 2. Messaging services are able to localize more effectively The success of the shared economy has been the connection with local people, through global platforms. To solve logistics issues in e-commerce, brands must have local distribution – offering prices in local currency, local payment methods and local returns. Only messaging apps have the ability to do this, while connecting directly with the person dropping off your purchase. Developing a path to more meaningful connections For brands that cannot compete on price or rely on ubiquity, it is important to discover not only what equity your brand drives out of its product, but determine what effect the marketplace has, what personal benefits are important to consumers and the pull of the community in uncertain times. Brands must make every connection count to gain trust as economic conditions throw up more functional challenges. While 68% of those in the Meaningful Brands survey want rewards and incentives, 57% want educational experiences and 53% want tools, services or apps that give them solutions. The reward for brands as they look to survive in a new 'local' world where having a personal connection is key, will be stronger business results. As the research indicates, more trusted brands receive a higher share of wallet. This article first appeared on Warc. Josh Gallagher Asia Pacific, economy, Havas, Havas Media, Josh Gallagher, Meaningful Brands, Trust Comments: This post has no comments Post a comment name (*) comment (*) Please enter the validation code shown above (*) Post this comment Global Media Trends Insights Thought Leadership Reading Room Blog Recent posts Content is the new pop culture Digitised directors and social CE ... Building brand trust in Asia duri ... Polish advertising honours Małgor ... Highlights from the Guardian Chan ... 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