When the luxury goods company Prada announced disappointing earnings for the first quarter of 2015, the company singled out one critical challenge: the Asian market. Reporting a 44 percent decrease in profits, company CEO Patrizio Bertelli blamed "the continuing difficult market conditions in the Asia Pacific area, especially in Hong Kong and Macau.”
The company’s recent troubles in Asia Pacific is in stark contrast to just a few years ago, when it was enjoying 23 percent year-over-year growth in the region. At a time when the global economy is soaring, Prada, as a luxury company, should be soaring as well.
The struggles these companies face highlight the fact that thriving in the Asia-Pacific market isn’t easy. While the Asia-Pacific market continues to grow, success in the region is far from guaranteed even for companies with wide brand recognition.
Ultimately, the companies that make a meaningful connection with customers in Asia Pacific are positioned to win. Making that connection begins with a deep understanding of the values of the customers in this market—an understanding that’s not rooted in stereotypes but one based on continuous and ongoing engagement with customers.
To gain that understanding, companies need to prioritize customer intelligence. Here are three critical steps companies need to gain valuable insight about customers in this region.
- Customize your approach for different countries.
Asia Pacific is not one homogeneous region. Many companies underestimate the subtle differences between the countries in Asia Pacific. The region is extremely diverse: geography, culture, religion, language and economic development all vary across the region.
Companies need to build a more nuanced understanding of each country. Doing that requires multi-language research and sensitivity to the cultural differences in the region. Most importantly, companies need to engage directly with customers in this market and build a relationship with them in order to understand their evolving motivations, attitudes and behaviors.
"Companies need to build a more nuanced understanding of each country in Asia Pacific." (CLICK TO TWEET)
- Rethink your Western-centric tools and approaches.
Many companies recognize the importance of customer intelligence when entering Asia Pacific, but these brands often simply duplicate their tactics from Western countries. Given the complexity of the market, understanding customers in Asia Pacific requires a more surgical approach.
The tactics companies use in Asia-Pacific—focus groups, ad hoc surveys and telephone surveys—are Western-centric. These traditional methods of gaining customer intelligence have their drawbacks, but as they are transported to the Asian market, their weaknesses become more pronounced. For instance, the quality of focus groups vary across the region and are often different to what North American companies are used to.
Given these significant barriers, it’s not hard to see why companies have a hard time understanding the Asian market. But with better customer intelligence tools and more effective approaches, there’s an opportunity to better understand customers within different Asian markets.
- Focus on strategic work.
In the research world, there has been a tendency for companies to do tactical—and less strategic—work in Asia. Companies focus their research on how they can tactically modify existing Western products and advertising messages for the Asian market. There’s a missed opportunity to use the voice of the customer to drive innovation and the wider marketing strategy.
Some companies—including many Vision Critical customers in the region—are starting to rethink this approach. These brands are thinking more broadly and are using the insight of Asian customers to shape strategic decisions. They recognize that to become customer-centric, they need to meet the expectations of the empowered Asian customer.
Asia Pacific is no longer just a place where companies outsource manufacturing and customer support. Today, it is an important source of services and technology, and an investment market. Add to that the fact that the middle class in many Asian countries is becoming more wealthy, and what you have is a market with a potential that’s still largely untapped. Companies that are serious about going global can’t ignore Asia Pacific. More crucially, they can’t afford to enter this market without complete, accurate and useful intelligence about customers in this region.
To learn more about thriving in this part of the world, join me and Scott Lee, managing director of ABN Impact Hong Kong, in Going Global: How to Make a Meaningful Connection with Customers in Asia Pacific, a free webinar on July 16.