Bright spots amid overwhelming gloom

Citing various consumer surveys, as well as Thailand's dismal export and economic figures in the fourth quarter of 2008, Dr Lackana Leelayouthayotin, chief executive officer for Thailand and Southeast Asia of Cerebos, the manufacturer of Brand's Essence of Chicken and other foods, described the current global economic crisis as a "wild fire" that could last for as long as three years.

"Consumers worldwide are quite desperate. As many as 62 per cent of consumers [responding to an online survey] do not see good prospects on the job front. In Thailand, 58 per cent of consumers intend to save more money, which is a bad sign [for the market]," Lackana said.

Still, Lackana said, the gloomy outlook meant that "staying at home" was a new trend that offered marketing opportunities for certain industries, including food and beverage, home-delivered foods, home-based entertainment and e-commerce.

"A new trend of consumers spending more time at home is prevailing. Those in the food business that don't have a home-delivery channel can't survive," she said.

"Other businesses should also think of how their products can find their way back to the homes of consumers."

In Cerebos' case, the company recently announced a partnership with Misslilly.com to deliver its products through the online florist's nationwide delivery network.

Meanwhile, a recent ACNielsen survey found that while they are cutting back on energy, out-of-home entertainment, clothing, automobile and phone expenses, Thai consumers are still paying for travel and leisure outings, home decoration and improvement, and technological products. Lackana said this could present an opportunity for do-it-yourself goods.

Late-meal sales at convenience stores are also growing, despite the availability of cheaper foods on every street in Thailand. This is strange, but may be attributable to consumers' perceptions that such meals are more hygienic than street food, said Lackana, who also sits on the board of Tipco F&B, a fruit-juice company 50-per-cent owned by Cerebos' parent firm, Suntory.

Dr Nattakit Tangpoonsinthana, executive vice president for marketing at Central Pattana, Thailand's top department store operator, said the 1997 crisis showed that cosmetics continue to sell well during bad economic times, because fewer people go overseas, and thus have to buy their cosmetics from the local shops.

"There is still room for beauty- and health-related items, because consumers are interested in [products that affect their] health, whether it is stem-cell treatments, Botox, etc.

"Cosmetics represent over 30 per cent of the 'wallet's share' of female consumers. I have seen Chulalongkorn University students wearing 'full make-up' for five or six years now," he said.

Confirming the quick meals trend, Nattakit said he had learned that frozen-food sales at 7-Eleven convenience stores were not declining; nor were sales at well-known shopping mall-based restaurants he surveyed.

"Consumers do not want to take a risk in trying brands they aren't accustomed with. If you happen to be MK, Sizzler or another big brand, sales are not falling much," he said.

Citing an Ogilvy study, Nattakit suggested firms consider which type of consumers was using their products. If they are in the "low-switch" group, they may reduce consumption - as he himself had done, cutting his intake of Starbucks coffee to two cups a day from four. Consumers in this group may occasionally shift to alternative brands, however, such as the Heineken drinker who occasionally tries a Leo beer for a little something different.

If your customers are in the high-switch category, this poses risks, Nattakit said. Take shampoo, for example - these days, many people have many bottles of multiple brands in their bathrooms. And nobody is loyal to just one brand of soap anymore, he said.

The slow-or-substitute group will consume less - or even stop buying altogether. For instance, many people will cease dining out and opt for 7-Eleven or street food instead.

"The C and lower groups [low-income consumers] will 'stop' buying more than other groups," he said.

Lackana and Nattakit were speaking at a seminar titled "Successful Combat Economic Downturn with The New Marketing-Sales-Customer Management Summit 2009" organised by the OmegaWorldClass Research Institute recently.

pichaya@nationgroup.com