The Rising Power of Young Buyers in Southeast Asia.

Along the coast of Laguna in the Philippines, Anna, a 17-year-old student, begins her day long before sunrise to work on her small online business, a venture that started as a hobby but has grown into something promising.

Anna’s family has been farmers for generations. Still, with access to the internet, digital tools, and e-commerce platforms. She has started what was unimaginable to her parents at her age. She represents the new generation of Southeast Asians: ambitious, connected, and eager to make their mark.

In a region where more than a third of the population is aged between 15 and 34, as highlighted in the ASEAN Youth Development Index, Anna is not an outlier. She is part of a growing demographic wave shaping the future of Southeast Asia. This youth population is large, increasingly educated, and tech-savvy, with characteristics that reshape consumer markets and create new business opportunities in the region.

Anna’s small business, which started by selling handmade crafts from local artisans online, has now expanded to a broader market beyond her village, thanks to digital platforms. Her success shows the changing dynamics in the region and the untapped potential that lies within its young population.

Anna’s story mirrors the potential and aspirations of the youth in the Southeast Asian region.

Understanding and engaging with this young demographic is critical to unlocking new opportunities in this diverse and rapidly evolving region.

Understanding the Southeast Asian Youth Demographic

Anna’s story represents a significant and influential demographic shift across Southeast Asia. This shift presents many untapped opportunities for brands looking to expand or establish their presence in this market.

The Southeast Asian region, home to a diverse range of countries with varying cultures, languages, and economic stages, is witnessing a rapid increase in its youth population. According to the ASEAN Youth Development Index (YDI), individuals aged between 15 and 34 constitute a substantial portion of the region’s population. In fact, the median age in the Philippines is 26. This young demographic is growing in numbers and is characteristically different from the previous generations in many vital aspects.

The ASEAN Youth Development Index provides a comprehensive picture of the youth demographic in the Southeast Asian region. In several ASEAN nations, this age group constitutes a substantial percentage of the population, indicating a large market size and a pivotal role in shaping the future socio-economic landscape of these countries.

Characteristics of the Youth Demographic

The growing appeal of next-generation consumers in urban areas is influenced by increasing affluence, a mobile-first mindset, and an eagerness to embrace lifestyle innovations. The influence of popular culture, design, and fashion trends from China, Japan, and Korea is becoming increasingly evident across the region. These trends are often adapted to suit local tastes and preferences.

Savvy brands recognise that young Southeast Asian consumers are not uniform; their browsing and buying habits vary across different markets.

Rising middle class with higher education levels

There has been a significant increase in access to education among the youth in these countries. Higher education levels have resulted in a more knowledgeable and skilled workforce ready to engage in more complex and diverse economic activities.

This youth population is increasingly aware of global issues, including sustainability and social responsibility. Brands and campaigns that resonate with these values are finding a receptive audience among Southeast Asian youth. For instance, we have seen from our studies that young consumers have a growing preference for sustainable and ethical brands, highlighting the importance of corporate social responsibility (CSR) in business strategies.

Technological Adeptness

Asia’s consumption market is significantly influenced by a new generation of digital natives —individuals born between 1980 and 2012, encompassing Generation Z and Millennials. This group, which forms over a third of Asia’s population in terms of consumption, is poised to be a key driver in the region’s economic activity in the upcoming years.

This group is adept at using digital tools and platforms, influencing their consumption patterns, communication styles, and lifestyle choices.

Research by McKinsey on Generation Z in Asia highlights some defining traits of these digital natives.

They actively seek unique experiences and are more inclined than Generation X to purchase brands that distinguish them.

A striking feature of this generation is their financial optimism, with more than 70% expressing confidence in achieving their financial goals.

This optimistic outlook translates into increased consumption, facilitated by easy access to digital platforms and a willingness to use credit facilities. In China, for instance, digital natives are leading the consumer loan segment, with this age group constituting half of the indebted consumers. This borrowing trend fuels additional online spending, particularly in apparel and durable goods.

Technology has become a part of everyday life for the region’s youth. This affects their consumption patterns, career aspirations, and overall lifestyle choices. Brands looking to engage with this demographic must understand their affinity for digital platforms and their expectations for technology integration in products and services.

According to the latest Digital 2023 report of DataReportal, Filipinos spend an average of nearly 11 hours online daily. Most phones are used for gaming and social media.

In another recent study of Telenor Asia, 8 out of 10 Filipinos have become more engaged online than in real life. This makes them one of the most virtually social across the globe. As a result, the gaming industry has transformed to accommodate more game apps focusing on socialisation as another type of online entertainment.

We launched Project Helmet in partnership with Kadence US to study mobile players who engage or intend to engage in social games in the Philippines. We utilised various qualitative methodologies to explore gamers’ experiences and feedback on social gaming apps —home usage gameplay test, online diary, and in-depth interviews.

Through these studies, we found that customisation of in-game avatars resonates with most gamers who wish to have their unique and creative digital persona. Social games, for them, are an avenue to express themselves freely and with more confidence, as if they are communicating with others in real life. Other features, such as various activities, spaces, and games, help them to start and continue socialising to a certain degree.

In a recent study of digital behaviours across 47 leading economies, the Philippines stands out for its internet usage. Filipinos report spending almost 60% more online time than the global average.

The economies of Southeast Asian countries have also grown massively in recent years. With the growing role of the middle class in the consumer market, it is essential to understand their lifestyle, values, consumption behaviour, and brand preferences. A Japanese Management Consulting firm partnered with us at Kadence Philippines to conduct multiple home visits with Filipinos classified as emerging affluent (EA) to learn more about their opinions and preferences.

Our interviews showed that Filipino EA greatly values building connections and broadening its network. Our study was insightful for brands and marketers as they learned how to focus on people first and the product second to appeal to this growing consumer base of emerging affluents in the country.

Similar trends are noticeable in countries like Thailand and Singapore. The sustainability of this spending pattern by digital natives is contingent on their ability to balance debts with rising incomes and the continued availability of credit.

Entrepreneurial Spirit

The entrepreneurial spirit seen in individuals like Anna is widespread. Fueled by increased access to technology and information, many young individuals are starting businesses, often in the digital and technology sectors. This entrepreneurial mindset creates a solid ecosystem for new business ideas, models, and collaborations.

The region’s youth population will peak at over 220 million by 2038.

The growing youth population in Southeast Asia presents opportunities for brands that range from digital marketing and e-commerce to sustainable products and youth-centric services. When engaging with this demographic, brands must understand their aspirations, values, and the unique cultural context of this region.

Consumption Patterns and Preferences of Southeast Asian Youth.

The Southeast Asian youth demographic, characterised by diverse and evolving consumption patterns, represents a significant market force in the region.

Our insights from market expansion work and market research with clients spanning various industries involving online gaming, vaping, and multi-generational families shed light on this demographic’s unique preferences and behaviours.

The consumption patterns of Southeast Asian youth are not only diverse but also guided by distinct trends that reflect their values and lifestyle choices. Four key trends stand out in shaping consumer behaviour: digital engagement, sustainability, ethical consumption, and the desire for speed and convenience.

Digital Engagement

Online Shopping and E-Commerce: Southeast Asian youth are driving e-commerce growth, favoring the convenience and variety of online shopping. This shift is part of a broader trend of ‘Digital leapfrogging,’ where retail markets are moving directly from traditional formats to e-commerce, creating a unique digital shopping experience in the region.
Social Media Influence: These platforms play a crucial role in the lives of young consumers in this region. Brands that engage effectively through personalised storytelling, influencer partnerships, and interactive content can capture attention. This aligns with the “Segment of one” trend, where personalisation in digital advertising is increasingly important.
Digital Payments and Fintech: The youth lead in adopting digital payment methods and fintech services. The emergence of “Super Apps,” which consolidate various services, including financial, into a single platform, further accelerates this trend. GCash, a mobile wallet and digital payment platform, has seen massive adoption among the youth in the Philippines, offering convenient cashless transactions by emphasising ease of use, security, and a wide range of financial services, from money transfers to online shopping, appealing to tech-savvy youth who value convenience. WeChat, AliPay, Grab, Gojek, and Kakao are other popular super apps in the region.

Sustainability

Eco-Friendly Products and Practices: There’s a growing preference for sustainable products among Southeast Asian youth. This conscious shift aligns with a regional trend toward responsible consumerism, where consumers are willing to pay more for sustainable alternatives.
Support for Green Initiatives: Young consumers favor brands that participate in green initiatives and sustainable practices. Brands that can effectively bridge the gap between consumer willingness to pay and the pricing of sustainable products will find success in this market.

Ethical Consumption

Social Responsibility: The youth are increasingly aware of social issues and ethical consumption. This includes a preference for transparent brands with responsible supply chains and contributions to social causes.
Health and Wellness Focus: This demographic values products that promote health and well-being, reflecting a broader trend toward personalisation in consumer products.
Cultural Sensitivity and Inclusivity: There is a demand for products and services that respect cultural diversity. This ties into the increasing popularity of local and regional brands that understand and cater to these cultural nuances.

Speed, Convenience, and Quality

Brand Consciousness and Quality Awareness: Southeast Asian youth value quality and authenticity. The rise of Asian brands, which align with these expectations, demonstrates a shift in brand preferences.
Demand for Convenience and Speed: The youth’s fast-paced lifestyle has demanded quick and efficient services. Digital technologies enable faster and more convenient consumer experiences.

Emerging Business Models for Southeast Asian Youth

Due to the changes and shifts in consumption patterns of Southeast Asian youth, we are seeing many emerging business models in the region.

Subscription Services: A growing trend in Southeast Asia is the rise of subscription-based models, particularly in entertainment, food delivery, and even fashion. These services cater to the youth’s desire for convenience and variety. Subscription models offer the flexibility and novelty that young consumers seek, providing them with regular updates or access to products and services without the need for constant decision-making.
Customisable Products: The demand for personalisation is shaping the market for customisable products. This trend is evident in sectors ranging from technology and fashion to health and wellness products. Southeast Asian youth, with their high value on individuality and personal expression, are drawn to products they can tailor to their specific needs and preferences. Brands offering customisation options in tech gadgets, apparel, or even personalised skincare routines will resonate strongly with this demographic.
Integrated Digital Platforms: The advent of super apps is transforming the digital ecosystem in Southeast Asia. These platforms integrate services like social media, e-commerce, financial transactions, and even healthcare into a single, user-friendly interface. For the youth, who value efficiency and interconnectedness, these platforms offer a seamless digital experience. Brands that can integrate their services with these platforms or develop complementary digital solutions stand to gain significantly from the widespread adoption and user engagement these platforms enjoy.

Strategies for Engaging with Young Consumers

Successfully engaging with the young consumer market in Southeast Asia involves adapting strategies that resonate with their values, preferences, and lifestyles. Here are key strategies that businesses can adopt:

Digital Marketing

Leverage Social Media: Utilise platforms like Instagram, Facebook, TikTok, and YouTube to engage with young consumers. Create content that is relatable, engaging, and shareable.
Influencer Partnerships: Collaborate with social media influencers who resonate with the youth. Influencers can help in building brand trust and authenticity.
Interactive and Personalised Content: Develop marketing campaigns that are interactive and personalised. Utilise data analytics to understand consumer preferences and tailor content accordingly.
Mobile-First Approach: Ensure all digital content is optimised for mobile devices, considering the high usage of smartphones among the youth.

Sustainable Practices

Eco-friendly Products and Services: Develop and promote products or services that are environmentally friendly, highlighting the sustainability aspect in marketing campaigns.
Transparency: Be transparent about production processes, sourcing, and corporate practices. Young consumers value honesty and integrity.
Sustainability Campaigns: Participate in or initiate sustainability campaigns or events, demonstrating a commitment to environmental stewardship.

Community Involvement

Support Local Initiatives: Engage with local communities and support initiatives that resonate with the youth, such as cultural events, environmental conservation, or social causes.
Create a Sense of Community: Build a community around your brand by encouraging user-generated content, hosting events, or creating forums for discussion and interaction.
Corporate Social Responsibility (CSR): Implement CSR programs that align with the interests and values of young consumers. Focus on areas like education, health, and community development.

Additional Considerations

Adapt to Technological Trends: Stay updated with the latest technology trends, such as augmented reality (AR), virtual reality (VR), or AI, to create unique and immersive experiences.
Ethical Business Practices: Ensure your business practices align with social responsibility and fairness values.
Feedback and Engagement: Actively seek input from young consumers and engage with them on various platforms to better understand their needs and preferences.

Preparing and Adapting to Changing Demographics and Consumer Behaviours in Southeast Asia

As the Southeast Asian market continues to evolve, mainly driven by its forward-looking youth population, brands must adapt and prepare for the shifting trends. Here are strategies for brands to remain competitive and responsive:

Invest in Market Research:

Continuously gather and analyse data on changing consumer trends, preferences, and behaviours in the region. Understand the nuances and diversity within the youth demographic. This will enable brands to anticipate market shifts and adapt their products, services, and marketing strategies accordingly.

Embrace Technological Advancements:

Leverage new technologies like AI, big data, and blockchain to enhance customer experiences, optimise operations, and create innovative products or services. Staying ahead in technology adoption can help businesses cater to a tech-savvy youth market and streamline processes for efficiency and cost-effectiveness.

Foster Agility and Flexibility:

Develop an agile business model that can quickly respond to market changes. This includes pivoting strategies, exploring new markets, and adjusting product lines. An agile company can capitalise on emerging trends and address challenges promptly.

Prioritise Digital and Mobile Marketing:

Focus on digital and mobile-first marketing strategies, using social media, influencer collaborations, and personalised online content to engage young consumers. This approach aligns with the digital habits of the youth, enhancing brand visibility and engagement.

Commit to Sustainability and Social Responsibility:

Integrate sustainable practices into business operations and support social causes that resonate with the youth demographic. This builds brand loyalty and trust among young consumers who value ethical and eco-friendly practices.

Cultivate a Strong Online Presence:

Establish and maintain a strong, interactive online presence. This includes having an engaging website, active social media channels, and a robust e-commerce platform. An effective online presence is critical to connecting with the digitally connected youth market.

Offer Personalised Experiences:

Utilise data analytics to provide personalised products, services, and customer experiences. Personalisation increases customer satisfaction and loyalty, resonating more with individual preferences and needs. Take, for instance, LINE, a popular messaging app that has become integral to daily communication in Thailand. It offers various services beyond messaging, including payment and social media features, through customisation to local preferences, such as providing locally relevant stickers and integrating services that cater to the Thai market’s specific needs. Other popular apps in the region include Viber, Telegram, and WhatsApp.

Build a Collaborative Ecosystem:

Collaborate with other businesses, local communities, and stakeholders to explore new opportunities. Collaboration can lead to innovative solutions, expanded markets, and shared resources.

Develop a Culturally Sensitive Approach:

Be mindful of the cultural diversity in Southeast Asia. Develop marketing and business strategies that are culturally sensitive and locally relevant. This enhances the brand appeal and avoids cultural missteps.

Focus on Talent Development:

Invest in training and development to equip the workforce with skills relevant to the evolving market, such as digital literacy, cultural competency, and innovation. A skilled and adaptable workforce is crucial for businesses to navigate and capitalise on the changing market dynamics effectively.