Warc Blog

Brands vital for survival in AEC

28 November 2013
KUALA LUMPUR: Companies across Southeast Asia need to invest in building their brands ahead of the launch of the ASEAN Economic Community (AEC) in 2015 if they are to emerge as regional champions, a new report has said.

JWT, the marketing communications agency, and AT Kearney, the management consultancy, conducted an in-depth survey and interviews with more than 50 key ASEAN corporate leaders to assess the impact of the introduction of a single market, comprising 600m people across ten countries, on their businesses.

Almost two thirds (64%) said their organisations planned to enter new markets in the region with the launch of the AEC. And 60% intended to expand their current portfolio of brands and products, while 24% were going to create completely new brands or product lines to reach more consumers.

"Southeast Asian companies that map out a regional strategy now and start investing in building solid brands are poised to emerge as winners in the AEC," said Chua Soon Ghee, AT Kearney's Southeast Asia Managing Partner.

"Those that don't have a regional game plan risk becoming their competitor's lunch," he added.

Up until now many Southeast Asian companies have tended to focus on products – typically mass-produced low-cost goods – rather than building brands. The report said that big players, those with more than $1bn in revenue, thought their top-selling product had a clear brand proposition.

But 40% of those companies with annual revenues under $100m admitted that their top-selling product did not have a clear brand idea, if it had one at all. These were the businesses that spent most of their marketing budgets, around 70%, on tactical ads to drive sales, rather than brand campaigns to build emotional connections and affinity with consumers.

Among those companies which did have a brand proposition, one third indicated they would be rethinking it in order to connect with consumers in other markets following the introduction of the AEC.

Bob Hekkelman, JWT's Southeast Asia CEO, said the region's growing middle class was developing more sophisticated tastes. "It's time to get out of the commodity game, move up the value curve and form a long-term relationship with consumers through brands," he declared.

Data sourced from JWT; additional content by Warc staff

 
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