NEWSFLASH

UNDERSTANDING THE FILIPINO CONSUMER
(Star, by Girlie Navarro)

Manila, June 18, 2000 - The average urban Filipino consumer is a true survivor. Unsustainable structures, unsound policies, booms and busts, whatever -- the Filipino consumer has seen them all. Amid all that, the Filipinos' happiness index remains one of the highest in the Asia Pacific region. Like his rural cousin who watches the coming and going of good and bad weather, the urban Filipino consumer has learned to adapt to the uncertain and the inevitable with good-natured humor.

Despite his resilience, the unstable economic environment has helped shape the evolution of his needs and his buying behavior. To the marketer, several challenges have risen but so have opportunities. Understanding the trends and the changing profile of the Filipino consumer is key to future market success.

Time, income and the Filipino family

Previous known but minor trends are now becoming integrated into the market mainstream. In his speech at the Philippine Marketing Association convention, Bienvenido Niles of AC Nielsen reports that two-income homes have risen from 30 percent in 1996 to 34 percent in 1999. The working wives' segment rose even more from 29 percent to 37 percent during the same period. In some cases, the strain on time has resulted in reversal of house roles. There is an increasing trend among males to become the "housebands" as the women work.

The overseas phenomenon is a fact but the numbers continue to rise. To date, there are half a million Filipino overseas workers -- dramatically improving their income potential but subsequently fracturing the Filipino household. Urban migration will continue, as well. Overall, the long-term repercussions in Filipino society are downsizing of households and solo parenting.

Being essentially a laid back culture does not spell out the entire picture with regards to time with the family. The need to make ends meet and the trend towards more cosmopolitan and mobile lifestyles mean that Filipinos are spending less time with their loved ones.

More and more consumers are spending more time "malling" and hanging out in bars and cafes to avoid traffic. These activities have significantly expanded well into the night or early morning. Industrious ones or "workaholics" utilize the time spent away from home to do more overtime or engage in "sidelines."

In addition, the advent of new technologies and the receptivity of a dominantly young market have accelerated the exchange of ideas and trade -- consequently, providing Filipinos more choices and enkindling "subdued fancies." Overall, Niles observes that traditional patterns of how Filipinos spend their time are being altered by what Niles calls a "Gratification Right Here and Right Now" attitude.

What drives the Filipino consumer

Given a huge mass-market base, it has almost been a knee-jerk reaction for marketers to believe that a price strategy alone will drive sales in the local market. From the successes of certain brands and product sectors, however, AC Nielsen lists several factors, which singly or in combination, ensures product success in the local market, these being:

* Value for money and product differentiation. As Niles puts it, affordability takes precedence. Competitive pricing, however, should be coupled with a perceived unique benefit to satisfy the Filipino consumer's urge for a truly good bargain.

AC Nielsen cites the case of dishwashing aids as a good example. In 1997, the paste formula held a 74-percent share of the market while the liquid format only had 20 percent. By the following year, the paste market dipped to 64 percent while the liquid form escalated to 32 percent. As of March this year, the liquid form has risen to 49 percent. Assuming that both forms have the same price, the research group's qualitative studies showed that buyers believe they get better value from liquid because it is easier to control and has the same cleaning efficiency.

Coffee creamers, once differentiated from milk and packaged in smaller sizes of 50 to 75 grams, also worked well with the market. Price powered by unique benefits, therefore, can help a product's search for market leadership.

* Labor-saving factors. The strains of time on households have had a telling effect on the sales performance of labor-saving devices. Niles reports that there is a huge uptrend in the sales of washing machines from 47 percent in 1996 to 62 percent in 1999. Sales of disposable diapers in 1998, on the other hand, have posted a 50-percent growth from the previous year.

* Engineered packaging. The aesthetics of packaging has always been a primary concern but from a consumer's point of view, convenience is a more unique benefit. Hence, Niles cites the success of products with easy-to-open caps and lips, no-slip grips and unbreakable bottles.

* One-stop destinations or transactions. The sharp increase of product deliveries to the home have also risen dramatically from 32 percent in 1995 to 44 percent in 1998 -- another revealing data that shows the Filipinos' need to avoid hassle and to save time. Integrated malls, ATMs, vending machines, and similar time saving one-stop destinations or transaction outlets will be the hallmark of how most future transactions will be completed.

* Communication lifelines. Despite limits on time, the Filipinos' clannishness and sense of community has not diminished -- hence, the popularity of cellphones and texting. Devices that promote community-building capacities and autonomous control over communication will provide endless opportunities to the creative marketer.

The future challenge: The youth market

More than 21 percent of the country's population are within the ages of 10 to 19. The age segment of 20 to 39 years old is even bigger at 32 percent. Bottomline is, more than half of the population is composed of young people. Trade influx, faster communications, tight budgets and the youth's preference for novelty all point to a challenging sophisticated market.

In this context, Niles states that the challenge to local manufacturers and advertisers is to generate better alternatives for the Filipino consumer. These options, however, should be evaluated in the context of competitive pricing, product quality and performance and timely promotions and advertising.