Social Machinery

Indonesia economy’s strong growth has propelled a growing middle class eager to spend in more sophisticated telecommunication services. At least this is the conclusion from several research companies that have deeply studied this market. The establishment of a growing and sophisticated young professional segment, highly-educated and well employed will represent the next growing consumption-engine, but will also set the stage for other segments to follow.

Indonesian middle class is growing rapidly; Synovate market research estimates that half of Indonesia’s population spends between 1 million and 2 million rupiah (US$112 to US$224) a month, often going through their wages soon after collecting them. Even do this is far below other middle class segment in western countries their marginal spending behavior is much higher than other countries.

In Asia, as urbanization accelerates, a middle class consisting of more than 100 million people with annual per capita income exceeding US$5,000 will join the market this year. In this post-financial crisis era, Asia’s newest economic stars are poised to take off.

Within this emerging middle class, the Indonesian “yuppie” segment; below 30 years old professionals who have university or higher education, stands out. They reside in an apartment or a middle-up housing complex located in the city or suburbs.  They work as professionals, typically at the managerial level, in fields such as banking and finance, energy, consulting or marketing, and are focused on their careers.  They are more connected to the world than average Indonesian consumers, with at least 15% traveled overseas in the past two years and 67% access news online.

Indonesian yuppies way of life can be defined as “work hard, play hard”, meaning to have a busy social agenda including happy hours, meeting friends and colleagues in cafes, restaurants or at the mall. They don’t have any fear to spend on expensive fashion brands or with trendy electronic gadgets.  For instance most Indonesian yuppies visit a mall twice a week and spend an average of Rp. 120,000 for food during their visit.

As Nielsen study pointed out Indonesian yuppies believe hard work to be personally meaningful, emotionally satisfying, and a vehicle for self-expression. Several of these yuppies couples have even postponed having children for the sake of their careers, and have discretionary income which they can use for future investment. This is a trend fairly common in western European economies, but was not usual in emerging Asian markets.

Yuppie segment are less conservative in terms of their values. They like the concept of a modern family where there is a space for “Me Time” for doing hobbies, activities or vacation with friends or colleagues without the presence of their partner.

Is interesting to analyze Indonesian yuppies and their relationship with electronic gadgets; ownership levels are much higher than average Indonesian consumer. For instance, 100% own refrigerators, air conditioners and washing machines,  63% own cars, with penetration even higher among those living in suburbia, 60% own a Smartphone and 70% have more than one mobile handset. Their average spending on mobile communication is in average Rp. 127.000 per phone. This is five times higher than average mobile phone user in Indonesia.

This is one of the reasons why Blackberry’s fastest growing market in the world is Indonesia, with the number of units sold growing four-fold in 2009 and doubling during 2010 period. Analysts estimate that approximately 50% of Indonesian Smartphone users had downloaded applications with their phones while 39% with regular phones with data connections.

Consumption drivers

Indonesian yuppies are quite influenced by their community. When deciding what to buy, these young professionals place the greatest importance on the quality of the product, recommendations of friends, online reviews, as well as influencing each other according to analysts.

Compared to other segments yuppie consumers are extremely sensitivity to the image of a product or a service. If a product or service fails to deliver or perform well, the yuppie will never use those products or services again – and they do not hesitate to let their friends, colleagues and family know about their disappointing experiences. In the other hand, this segment is willing to pay a premium for convenience and better services like VIP lounges, Valet parking, preference service, etc.

Indonesia young professional are a key segment to address in communication services.  They have discretionary income to spend, and they are eager to do so.  But they are discerning consumers, and marketers need to know precisely how to reach them.