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Indonesia’s Rising Middle-Class and Affluent Consumers: Boston Consulting Group

posted Apr 29, 2013, 8:48 PM by Unknown user
Indonesia’s economy is growing rapidly, and a large portion of the population is entering the middle-class and affluent consumer (MAC) socioeconomic category. As those in this group begin to ramp up their spending in key segments—such as home goods, vehicles, consumer durables, and financial services—this is a critical window of opportunity for companies that sell consumer goods.

Demographic trends show the size of the opportunity. There are currently about 74 million MACs in Indonesia, and this number will double by 2020, to roughly 141 million people. During that period, some 8 million to 9 million people will enter the middle class each year. Perhaps because of this rising economic tide, Indonesians are extremely optimistic about their financial futures—more so than people in any other country, including both emerging and developed markets. They expect to make more money next year than this year, and they believe that their children’s lives will be better than their own.

The growth of the MAC population is occurring throughout the country. There are now 25 locations in Indonesia (both cities and regencies) with MAC populations in excess of 500,000, and there will be 54 by 2020. As a result, companies that wish to keep reaching the same proportion of the MAC population will need to double their presence in the country. This has huge implications for the way businesses operate—for example, how a company organizes its sales force, structures its supply-chain network, and expands its distribution footprint.

If companies are to capture this opportunity, they will need to understand the country’s demographic and regional trends, and they must tailor the right product mix and go-to-market strategy. In addition, they must customize their value proposition, marketing message, use of media, and the shopping experience they offer in order to meet the needs and preferences of the growing consumer base.