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Nielsen to local firms: Expand intelligently

CEBU, Philippines — While it is recommendable for local companies to expand their markets specifically within the ASEAN region, research firm Nielsen warned companies to do their expansion intelligently.

In a study, Nielsen warned that regional or even global expansion should be planned accordingly, with proper market intelligence distinctive to every target market.

This means that, marketing campaigns, product presentation and packaging should be fashioned according to the country's culture and market preference.

According to Nielsen, regional expansion requires a detailed understanding of the “take off” points for different products across regions in ASEAN. This approach facilitates market-specific innovation to meet consumers’ evolving needs and purchasing power.

In the ASEAN alone, Nielsen warned companies to be sensitive in the incredible diversity of ASEAN culture, in terms of average income, language, culture, and religion.

The study also cited the importance of moving beyond national averages to understand regional differences.

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“Focus should be placed on establishing granular plans targeting specific customer segments and regions,” it said.

Identifying appropriate products for different income points is also crucial.

Business model innovation is crucial, it further suggested.

Given the diversity of regions in ASEAN and the fragmented distribution channels, it will be important for companies to think about innovative, low-cost approaches to building market presence.

Establishing early networks with local distributors and monitoring market developments in regions that are in the “warm-up” phase can help to prepare for the “take-off” phase.

For more advanced regions, the business model could evolve to establishing a greater “on the ground” presence. And finally, for regions in the “cooldown” phase, focus should be placed on lowering cost to drive efficiencies in the supply chain.

Likewise, economist Gilberto M. Llanto, of the Philippine Institute of Development Studies (PIDS) warned that if the Philippine businesses won’t be given proper information on the diverse culture of consumers of the ASEAN member countries, it could be one of the pitfalls in taking advantage of the 650 million market.

The different religions, traditions, and cultural affiliations made up of the entire ASEAN market, is seen as one of the serious risks, that the government should look at, make an extensive information dissemination, especially for companies which are planning to make presence in every corner in the ASEAN.

Llanto said the next step the government should do now, is to provide information to Filipino entrepreneurs on how to enter each country in the ASEAN, reiterating that this market although huge in consumer value, but highly diverse and market approaches should be country-specific.

The obvious failure now, in addressing the readiness of entrepreneurs to face the ASEAN integration, Llanto said is the absence of providing information externalities, and there should be a symmetry of (market) information, alongside with the giving awareness of the rules and regulations in ASEAN trading.

Market intelligence, per culture or per country is highly critical now, and very "expensive." (FREEMAN)

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