Capturing Thai Gen Y consumers

ผู้เขียน: Sutapa Amornvivat, Ph.D.

It is quite unique for Thailand to be caught in the middle of two demographic megatrends. At the top of the age pyramid we have a fast expanding "grey" population of 55+ year-olds nearing a third of the total population. This structural shift is typically seen in developed nations such as Japan and Singapore. But like many developing countries, we also face the rise of young Generation Y or "Gen Y" who were born between 1981 and 2000 and are now aged 15-34. Gen Y, too, account for almost a third of the country. Both these two megatrends offer consumer business opportunities.

And many would find that Gen Y are not easy to crack, simply because they are vastly different from previous generations-Gen X and Baby Boomers-to whom we have been selling products for the past 50 years.

The main reason is the Internet. Gen Y came of age during the rise of the World Wide Web and social networking. This big influence of the Internet has contributed to Gen Y's strong preference towards online information instead of information through traditional media. They also prefer online interaction rather than face-to-face. Hence, traditional style of doing business no longer works. Business digitalization, as well as business model transformation, is in order to capture Gen Y's attention.

Are these young consumers worth the investment? For Thailand, the answer is definitely. Thai Gen Y are quite well-to-do despite their young age. In fact, if we take consumers with income above national average as the target consumer group, the average monthly income of THB 30,000 for Gen Y can easily rival THB 35,000 of Gen X and THB 32,000 of Baby Boomers who have been in the workforce many decades longer. Plus, Thai Gen Y hardly had to endure the 2008 sub-prime debt crisis like their Western counterparts. Such financial freedom has allowed Thai Gen Y to spend without much restraint.

With this high income and high spending potential, combined with its sheer size, Thai Gen Y consumer market is certainly not to be ignored for decades to come.

But to capture this Gen Y potential, you will have to fully understand the group's thoughts, interests, attitudes, values, and ways of life in order to adapt your Gen Y-focused business models accordingly.

So, what are some of the key Gen Y characteristics that have implications for business?

In-depth market research will become crucial if you want to succeed with Gen Y. SCB Economic Intelligence Center (EIC) has recently conducted research with consumers in Thailand and found a number of key traits of Thai Gen Y that could serve as a guide for revamping your Gen Y-focused business models.

First and foremost, Gen Y are "tech-savvy". They depend on the Internet and gadgets to interact with others and access information. Firms will have to modernize their sales efforts such as by investing in online portals and mobile apps, in order to keep pace with these consumers' behaviors.

We also found that Gen Y are highly "social". They exploit social media as an outlet to share information and establish identity. Businesses therefore must devise world-of-mouth marketing strategies to get Gen Y involved in positive online sharing of product offerings. Of course, the other side of the coin is a bad review. It is therefore imperative to also set up a monitoring system to comb through complaints posted on social media and respond quickly. Attention span in this social media platform is so short that one has to shout to be heard; thus, your communication will have to adapt in order to get noticed on this noisy platform.

Gen Y are "information-driven" with instant access to a wealth of information shared online, and  highly "selective" because of many product options available at their fingertips. This means you can no longer skimp on information especially about how your product differs from competing products or substitutes. Online product endorsements could help fast-track purchase decisions when Gen Y have too many options available.

Finally, we discovered that Gen Y are "financially literate" beyond their age. They utilize online financial advice and tools to make diverse and sophisticated investments to keep up with their high spending tendency. This is likely to benefit the financial services sector. Yet, those who can offer mobile payment, flexible financial terms and around-the-clock service will especially appeal to tech-savvy and highly selective Gen Y, and stand to gain immensely.

These key characteristics of Thai Gen Y that we found are likely to stay with this generation as they grow older. This represents a good case for investment in business transformation to capture these consumers throughout their evolving life stages.

At minimum, we urge that Thai firms consider these three recommended actions to target Gen Y:

First, invest in killer product designs. Technological edge and unique customization that induce online sharing are key selling points. Yes, it will be a tall order for any company to design a product that wows Gen Y and to also ensure that they can afford it. But for many businesses targeting Gen Y, offering service at a lower price while providing just enough of the Gen Y "must-haves" such as free Wi-Fi, USB charging ports, and mobile check-in or app would already be many steps ahead of competitors.

Second, aggressively use new media channels, such as social media, online advertising and blogs, to complement traditional media. Not only are these new media channels much cheaper, they are also the channels that Thai Gen Y are most familiar with and have the most exposure to. TV ads can be used to generate initial interest with Gen Y who still spend time on TV. Then, blogs and online reviews must also be used to substantiate claims made on TV. This will ensure that Gen Y can validate information online when making purchase decisions.

Third, offer convenience beyond expectations that will hook and retain Gen Y customers. Gen Y customers are highly selective, yet overwhelmed by having too many choices. This perhaps makes Gen Y among the least loyal of customers. Firms will need to "wow" Gen Y from the moment their interest is piqued up until during product usage to ensure they keep on buying the product and tell others how awesome it is. An "Amazon.com" business model such as "1-click" ordering, customized product recommendations and frequent purchase anticipation can enhance Gen Y satisfaction and loyalty.

Remodeling business to capture Gen Y consumers is just one step towards formulating a truly customer-centric business strategy to survive in a cut-throat consumer business environment. While Gen Y are shaping consumer expectations today, other generations will eventually follow suit. The next generation - Gen Z - will pose perhaps even greater challenges for consumer businesses. Newer generations with unique characteristics will continue to succeed older ones, making a customer-centric business model more and more relevant.

As a result, we will see shorter business life-cycles. Business survival will depend on a new management discipline capable of leading an organization through an ongoing process of transformation and renewal. To thrive in today's marketplace, to be "built to last" may no longer apply. Every business must now be "built to transform."