What will it take to win over the young Indonesian consumer and find success in the third largest youth market in the world? WARC's Asia Editor, Gabey Goh, introduces a deep-dive into the insights you need to know.

Indonesia’s consumer market has long been the most coveted market in Southeast Asia, thanks to its massive population of 267.7 million. With a median age of 30 years and almost 42% of the population under 24 years of age, it is the third largest youth market in the world after India and China.

Indonesian youth have a reputation for being tech-savvy mobile-only digital natives, eager to spend their money on new products and services. But the country remains a frustrating one for many brands, especially international ones that see the market as a key growth engine but struggle to build meaningful consumer connections.

Native brands still dominate market share across many categories and a McKinsey report noted that consumers trust and take pride in using local brands. As they believe that local companies truly understand them and provide better value for the money when compared with foreign brands.

In addition, Indonesia’s archipelagic geography featuring 17,000 islands, 700 spoken languages, multiple ethnicities, cultures and religions has resulted in many brand efforts being limited to urban hubs in the central island of Java – where 56% of the population resides.

This edition of WARC’s Spotlight series looks at how brands wanting to establish a sizeable presence in Indonesia should approach this lucrative but complex market. Are brands doing enough to connect with the nation’s diverse youth?

Geometry Global’s Voon Tai believes that brands need to be willing to fully adapt products and services to local preferences and look beyond urban hubs when planning marketing outreach.

“The key to unlocking growth in Indonesia is to look at the different social and economic conditions shaping consumers in urban, rurban and rural segments,” she writes. “It presents different opportunities for building connections and engaging the country’s largest base of online consumers – Gen Z.”

Rurban (rural+urban) refers to areas which are rural in nature and has some urban amenities, with more people involved in non-agricultural activities. Rurban consumers make up just under 30% of Indonesia’s population.

In addition, marketers should not be completely focused on the country’s growing digital economy if young rural consumers are a target audience – as poor infrastructure and connectivity means that traditional channels such as TV, radio and OOH still play a crucial role.

“Often, rural youth will not relate to the colloquial phrases used in big cities or smaller towns, and vice versa. Hence, brands should watch out and avoid using one-size fits all approach,” Tai adds.

Tokopedia’s Vincent Tarmudji echoes the need to go on-ground to get a better sense of what motivates young consumers and makes the case for long-term investment in building brand affinity with the younger end of the youth population.

“There are cases of Gen Z who rarely purchase online but she can browse through e-commerce sites for 1 to 2 hours. She would place around 200 products in her cart, even though she could not afford them now,” he writes. “They will always do price comparisons across e-commerce sites, but they are still relatively loyal to the original site. Thus, brands that invest in messaging targeted at this younger age group will benefit in the future as Gen Z comes of age.”

Ogilvy’s Bening Rara breaks down the motivations and value systems of online Gen Z shoppers, who are promotion-savvy and actively seek incentives such as cashback programmes but ultimately demand more from brands when it comes to the consumer experience.

“What really captures young Indonesians are more personalised experiences, using surprise and delight tactics to capture their loyalty,” she writes. “Businesses must rethink how they deliver value to the consumer and demonstrate their value in every touchpoint that matters.”

But given how diverse people within the same age group can be – is it even worth thinking in generational terms? That’s the question posed by TBWA’s Henry Manampiring, who asks: What if there is more commonality across generations in Indonesia than marketers were made to believe?

The agency’s analysis of GlobalWebIndex data found that across three generations in Indonesia, there is no marked difference in social media usage, use of search engine, visiting online retail or sharing video. Additional analysis found more commonalities than differences along attitudinal parameters.

“It turns out that being Indonesian may not differ that much whether you are a 40-something or a fresh graduate, at least at heart,” he writes. “This means many products and services can appeal to broad target consumer.”