What makes Asean millenials tick
TIME magazine dubbed America's millennial generation (those born after 1980) as "lazy, entitled narcissists who still live with their parents". Apart from living with their parents, it would seem that millennials in South-east Asia share little else in common with their American counterparts. Of course, the cultures of West and East have been shaped by the very different experiences, education and affluence levels of previous generations.
The sudden shift in the fortunes of Asean's millennial generation can be seen in the upswing in average incomes. In the last 10 years, the middle class (defined as having incomes exceeding US$3,500 per annum) has jumped from an average of 37 per cent to 56 per cent of the populations of the largest five member states (except Singapore). Considering the numbers involved, this equates to up to a million new entries per month in the region.
Although most of these newly defined middle classes are a long way from achieving affluence, this still means a huge amount of spending on discretionary consumer goods as well as big-ticket items such as vehicles, apartments, education and investments. This additional spending and investment creates further opportunities within the local economy and helps to bring more aspirants into the region's middle classes.
Urbanisation levels provide another perspective on the recent economic progression of the region. In 1980, most residents in the largest five member states (apart from Singapore) lived in rural areas. Twenty years later, most residents lived in towns and cities. This has happened to a large proportion of the population within a generation, which has produced significant changes in the culture of the young and the old in many of the Asean countries.
LAGGING IN EDUCATION
Economic growth has created a surge in the middle classes, but education is the key to sustained income growth. The phrase that comes to mind here is "could do better". Although education enrolment levels have risen substantially in the region in the last 20 years, they still lag behind rates for other parts of Asia and developed countries in the rest of the world.
The quality of education in many parts of the region is also lagging, with very few Asean universities present on Asia's top 100 lists. In an Ipsos survey this year, Asean-based senior management claimed that the limited skill sets of their workforce was one of the factors hampering their growth plans.
The millennial generation globally are often seen as the digitally connected cohort. Asean millennials are particularly keen on their computers and mobile devices, both for giving them access to information that has not been available to previous generations and as a platform for social discussion.
A 2011 study from the Institute of Policy Studies in Singapore noted that the younger generation were much more likely to use the Internet for alternative news sources than the older generation. These news sources have been identified as the cause of a higher level of engagement from the young in local political matters. Recent elections in Singapore, Malaysia and Indonesia have all seen much higher levels of interest from young voters than in the past.
SENSE OF UNITY
If there are differences with the previous generations, there is also a sense of cultural cohesion within the region. A study from the Asean Studies Centre in 2010 of university students in the region found that respondents generally felt a cultural unity and a sense of being an Asean citizen.
Assuming the Asean Economic Community (AEC) initiatives for greater regional mobility of higher skilled workers move ahead at the end of this year, the feelings of integration and the common culture are likely to increase. This trend towards a more common Asean culture among the young does suggest opportunities for businesses that are looking to roll out pan-Asean marketing plans and for having a consistent product and service offering across the region.
Similar cultural insights can be seen in how millennials in Asean countries think of their relationship with their managers from a study last year by Universum, Insead and The Head Foundation. Whereas United States and European millennials have a strong preference for managers who empower their employees, most Asean millennials (with the exception of Singapore) were not so focused on this issue.
Another big cultural difference between the West and East from this study is seen in the influence of government. Respondents from the US and Western Europe overwhelmingly voted for private-sector business as having the strongest influence on society. Respondents from Asean countries overwhelmingly voted for government as having the strongest influence on their society. This reinforces the idea that, despite some questioning of the status quo, the Asean millennial seems to still have respect for authority figures.
A 2013 survey from MasterCard suggests that affluent Asean millennials are at a more advanced level than their counterparts from other parts of Asia, even including the more developed economies of South Korea and Japan, when it comes to personal financial management. When it comes to dealing with expense accounts and travel expenditure, though, it seems that Asean millennials follow the spending habits of their cohorts from around the world.
According to a 2013 study from Expedia, millennials share a global passion for business and leisure travel and tend to travel more and be bigger consumers of high-end wining and dining than their more conservative elder generations. The region will benefit from this as high-flying Asean millennial executives visit their neighbouring country offices. The largest leisure destinations of Asean millennials (facilitated by visa-free travel agreements and the AEC policy on the mobility of tourism professionals) are also other Asean countries.
Asean millennials are also more likely to use loyalty programmes, which they will access through mobile devices, and they have less inhibitions than their older colleagues about retaining personal information online on booking sites. This will mean growing opportunities for the travel and leisure sector within the region - as well as the other ancillary businesses that provide (Internet) information on destinations and accessories for millennials to showcase their newly affluent lifestyles through social media platforms.
This generation's respect for authority figures and multinational businesses, as well as their openness to revealing personal information, bring huge opportunities for businesses looking to sell to them. The effective integration of big-data analytics into vendors' digital customer interfaces will give them the opportunity to finely segment their databases and offer targeted services with pinpoint accuracy.
Being able to segment the market effectively will be critical to the success of marketers as there will still be significant differences in income levels, aspirations and spending power between the higher-educated citizens working in the big cities in the richer countries and their less affluent counterparts in the newer entries and second- and third-tier locations.
THE BUSINESS TIMES
The writer is director, business development, at Ipsos Business Consulting.