Asia’s future megacities are attracting significant attention in the trends shaping the region’s future landscape, but the projections for ASEAN (the Association of Southeast Asian Nations) tell a different story with close to two thirds of the region’s urban population (62.6 percent) forecast to live in cities and urban centers of under 500,000 by 2025, according to a new report from global performance management company, Nielsen.
“The Age of ASEAN Cities: From Migrant Consumers to Megacities,” which examines the influences that will shape development in the ASEAN region in the coming decade, identifies increasing business activity, cross-border trading and demographic shifts as some of the key forces driving population growth in smaller cities, emerging towns and rural areas which are the ‘sleeping giants’ of the next decade.
Many consumers will continue to gravitate to mega and super cities (32 percent growth in the next 10 years. But the biggest population growth will occur in cities with populations between one million and five million, according to the report released on Monday.
Across ASEAN, the combined population of these cities will increase by 51 percent between now and 2025, from 34.9 million to 52.6 million.
The population in large towns and small cities of less than 500,000 will increase by 18 percent to 231.8 million which, when combined with the estimated 324.3 million rural population, will account for around 80 percent of the ASEAN population.
For marketers and brand managers, the smaller population centers throughout the region are important growth markets with healthy demographics and an emerging middle class.
Looking beyond ASEAN’s megacities to understand future consumer ‘hotspots’ was the most powerful starting point in identifying emerging economic opportunities and the strategic approaches and segmentations needed to approach new markets, said Regan Leggett, Nielsen Southeast Asia, North Asia and Pacific regional director for Client Services.
He cited Johor Bahru and Kota Kinabalu in Malaysia and Cebu in the Philippines as examples of regional cities with burgeoning potential.
“New consumption hotspots are emerging across Southeast Asia, such as clusters of industrial estates where manufacturers are leveraging cheaper land and labor,” Leggett noted. “This in turn is having a knock-on effect of attracting migrants and stimulating local economies.”
‘Cater to challenges’
The report highlighted the conditions prevalent in local areas, such as infrastructure and transport and access to technology and education, have a significant influence on consumer behavior and patterns.
“As ASEAN’s smaller cities and rural areas continue to become more developed, their populations are increasingly well-educated, have higher levels of disposable income and are more aware of trends outside of their local marketplace,” the report read.
“There are considerable rewards on offer across ASEAN’s rural populations as spending power increases,” Leggett said.
“Many of these consumers are at the very beginning of their relationships with packaged and branded goods, and even a modest growth in spending power among such a large population equates to notable revenue potential,” he added.
“To tap into these markets brands should focus on product innovations which cater to the challenges, lifestyles and requirements of rural and small city consumers,” Leggett noted.
“Smaller product sizes or single-use portions appeal to shoppers with growing purchasing power and traditional trade retailers who are challenged with storage space,” he added.
Leggett recommends five key actions for companies looking to leverage ASEAN’s up-and-coming rural areas and small towns:
For companies looking to enter these markets for the first time, develop a strategy to identify and enter smaller secondary cities and rural areas within an appropriate timeframe. Identifying regional capitals as an entry point can provide an “early mover” advantage.
Develop innovation that is driven by the unique needs, challenges and lifestyles of rural and small city consumers rather than adjusting offerings generated primarily for big city consumers.
Consider how e-commerce, distribution hubs and third parties might change the way you reach new consumers in new regions.
Generate differentiated innovation, marketing, sales and distribution strategies to create focused and successful consumer relationships.
Understand how existing efforts in primary cities may be adjusted in light of increasing time and space constraints, pollution, health and congestion issues that may be unique in high-density environments.
– VS, GMA News
More from: http://www.gmanetwork.com/news/story/476974/economy/business/80-of-asean-population-to-live-in-rural-areas-and-small-cities-by-2025-nielsen
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