Strategy for Developing the Indonesian Consumer Goods Market: Study for Steam Iron

Abstract

As the market leader in the garment care industry, Philips Domestic Appliances aims to drive the global conversions of the iron industry from dry iron to steam iron. However, Indonesia is the only nation that does not engage dominantly in conventional trade but still has dry iron dominating the market. With the largest economy in Southeast Asia and the world's fourth most populous nation, and a total of €41 million market value for the iron market in 2021 (GFK, 2022), Indonesia is regarded as an important market for Philips Domestic Appliances. New low-end steam irons are being prepared by Philips Domestic Appliances to help with the conversion, but the Indonesian market is reluctant and there is not much understanding of Indonesian consumer behaviour. To convert Indonesian consumers from dry iron to steam iron, Philips Domestic Appliances must first understand the consumer behaviour and then develop a strategy to develop the market. Therefore, the aim of this study is to give insights about the consumer goods market in Indonesia and to create a strategy to develop the market.

This research objective is captured by the study's main research question:

What are the key factors for defining a company’s strategy when developing the Indonesian consumer goods market?

In order to answer the research question, a number of sub-research questions have been formulated and addressed. This study employs exploratory research methods to investigate how consumer goods companies in Indonesia can develop the market. By conducting semi-structured interviews with seven experts from the Indonesian market and analysing market research, a qualitative research approach is performed. Consumption values are used to identify consumers' reasons for buying a certain good, and the 4A framework is utilised to assess the current marketing strategy of Philips Domestic Appliances and to develop a strategy for developing the market, as the 4A framework is best suited for emerging markets like Indonesia.

The answer to the main research question is that a company can define a strategy to develop the market after first understanding the market. The researcher contributed by establishing a step-by-step process for developing the market by identifying the key factors, which are the main actors and factors influencing the consumer goods in Indonesia, key partners, consumption values of Indonesian consumers, main barriers and opportunities in Indonesia, and then evaluating the current marketing strategy using the 4A framework. The A's that need to be improved, combined with market insights, served as the foundation for creating a strategy.

The study reveals that consumers are the main actors in the Indonesian consumer goods market, with price and market trends being the most significant factors. The company's key partners are retailers, and the three most essential consumption values are functional, emotional, and conditional. High wattage is a significant barrier for consumers, and having a good partnership with a creative agency would be beneficial for communicating the product value to consumers. Indonesians generally prefer low-priced products, but they are willing to pay a higher price for products that they think offer great value for money. Lastly, there is considerable growth potential in the market as long as the company contributes not only with innovation on products but also by educating the market to raise awareness of them.

Philips Domestic Appliances has the potential to launch a new steam iron product, but with several requirements based on the 4A framework and market insights. To increase Acceptance, they should educate the market about the benefits of the product and suggested creating a low-wattage steam iron with a spray and a clear watertank. For Philips Domestic Appliances, a 400-650W steam iron is advised to improve affordability. To ensure Availability, they must maintain their current, effective distribution strategy. Finally, to raise awareness, Philips Domestic Appliances could benefit from word-of-mouth marketing, identifying group opinion leaders, and having demo products in offline stores.