Thailand, a key player in the global automotive industry and the 10th largest auto manufacturing economy, is making significant strides in its electric vehicle (EV) sector. 

Thailand’s EV market is expected to experience an annual growth rate (CAGR 2024-2028) of 5.06%, resulting in a projected market volume of US$1,344.0m by 2028.

Based on a Reuters report, Chinese automakers dominated Southeast Asia’s fast-growing electric vehicle market, selling three out of every four EVs in the first quarter of 2023. Thailand, recognised as the primary automotive hub in the region, has been driving this growth, contributing to nearly 79% of the total EV sales in Southeast Asia during the same period, making it a regional leader in EV adoption. 

In terms of international comparisons, China is projected to generate the most revenue in the Electric Vehicles market, amounting to US$319 billion in 2024. However, Thailand is rapidly emerging as a significant player in the electric vehicle market, with government incentives and a growing charging infrastructure driving significant adoption.

What’s driving this growth?

Governmental support has catalysed significant growth in Thailand’s EV industry. The country has seen a dramatic increase in EV adoption over the past three years, partly thanks to these subsidies. The growing consciousness among Thai consumers toward eco-friendly transportation options has also significantly propelled the expansion of the market.

Most recently, in November 2023, the National Electric Vehicle Policy Committee approved a new subsidy package, signalling the government’s commitment to sustaining the burgeoning EV market while balancing budgetary considerations.

The newly announced package, effective from this year through 2027, includes a subsidy of up to 100,000 baht ($2,764) per EV car. Additionally, the scheme encompasses reduced import duty and excise taxes, further bolstering the EV market’s attractiveness.

Looking toward the future, Thailand has set ambitious goals. By 2030, the nation aims to transform 30% of its annual production of 2.5 million vehicles into EVs. This target is part of a broader government plan to position Thailand as the region’s top production base for EVs.

The total number of 100% electric vehicle registrations in Thailand in 2023 was 75,049, accounting for 11.82% of the total 634,948 vehicle registrations nationwide.

Tax incentives and subsidies have already attracted significant investments from Chinese carmakers, including BYD and Great Wall Motor, who have committed to investing $1.44 billion in Southeast Asia’s second-largest economy. 

The Kingdom is also focused on becoming a hub for EV research and development (R&D), offering incentives and tax breaks to carmakers establishing R&D centres. This multifaceted approach highlights Thailand’s vision to promote the EV industry and maintain and accelerate the growth momentum, solidifying its status as a regional leader in the EV market.

With these developments, Thailand is poised to play a pivotal role in shaping the future of sustainable transportation regionally and globally.

Six decades to unprecedented growth in the automotive sector.  

The Thai automotive sector, primarily driven by Japanese firms like Toyota Motor Corp and Honda Motor Co, has used the country as a major export base for decades. The shift toward EVs represents a new chapter in Thailand’s automotive market.

Beginning in the early 1960s, the sector saw its genesis with establishment of Toyota and Nissan plants near Bangkok. By the late seventies, European giants like Mercedes-Benz entered the market, followed by other major players, including Honda, BMW, and Suzuki. Today, Thailand hosts nearly every leading global car maker, forming an expansive network of 21 major vehicle assemblers and 12 motorcycle assemblers, supported by over 2,200 auto parts suppliers.

Thailand is the fastest-growing EV market in Southeast Asia. Toyota will help Thailand develop the local EV industry. Chinese EVs are currently the most popular in Thailand.

Factors Contributing to Thailand’s EV Market Success

There are many factors responsible for the surge of Electric Vehicles in Thailand:

Supportive EV Ecosystem and Government Support:

Amidst global sustainability trends and Thailand’s commitment to achieving carbon neutrality by 2050, the nation’s automotive sector is now pivoting toward electric vehicles (EVs). 

This transition is supported by a robust infrastructure for imports and exports and a skilled automotive labor force. The government has been crucial, offering incentives across the EV value chain, including tax exemptions and subsidies, to make Thailand the region’s EV production hub. Incentives and policies include financial subsidies for EV purchases, investment in EV manufacturing, and ambitious targets for EV adoption.

Growing Investment in EVs: Thailand’s robust automotive ecosystem and government backing have attracted significant investments from global EV automakers. Chinese, Japanese, and European car manufacturers are establishing a substantial presence, with companies like BYD and Great Wall Motor planning significant investments in the country. Mitsubishi Motors and Mercedes have already made significant strides in EV and battery production in Thailand.

Strategic Location and Manufacturing Base: Thailand’s strategic location in Southeast Asia and its well-established automotive manufacturing base provide a solid foundation for the growth of the EV market. This advantage is being leveraged to attract global EV manufacturers and investors.

Consumer Demand and Market Dynamics: An increasing awareness and demand for environmentally friendly transportation solutions among Thai consumers have further fueled the market’s growth. Additionally, the competitive pricing and variety of EV models available, especially from Chinese manufacturers, have made EVs more accessible to a broader demographic.

Comparison with Other Southeast Asian Countries

The rise of the EV market in Thailand also reflects a broader trend in the region, where different countries are at varying stages of EV adoption. While nations like Singapore are rapidly building EV infrastructure, others are gradually increasing their market share. This regional diversity showcases the growing relevance of EVs in Southeast Asia’s economic and environmental future. Automobile brands must pay attention to some important developments in the region. 

  • Singapore boasts the most connected EV ecosystem, with an extensive network of public charging points and ambitious expansion plans.
  • Indonesia and Malaysia are also taking significant steps toward EV adoption, with government incentives and plans to attract major EV manufacturers.
  • Though still in the early stages of EV adoption, Vietnam is showing potential, with local manufacturers like VinFast impacting the international market.

The Role of Chinese EV Brands in Thailand and its Vision for the Future 

Chinese EV brands play a crucial role in Thailand’s EV market. These brands dominate the market, offering a range of affordable and technologically advanced vehicles. The popularity of Chinese EVs in Thailand shows China’s global leadership in EV technology and manufacturing. It also reflects the broader trend of China’s increasing influence in Southeast Asia’s automotive sector.

The influence of Chinese EV brands is significant, with these vehicles dominating the Thai market.

With a clear strategic vision, supportive government policies, and an increasingly EV-friendly consumer base, Thailand is well on its way to achieving its ambitious goals for the EV sector. 

Ambitious targets, innovative policies, and a commitment to sustainable development characterise the country’s strategic vision. Let’s explore the key elements of Thailand’s strategy in the EV market, supported by the latest statistics, policies, and developments.

Ambitious Targets and Government Initiatives

  • EV Production Goals: Thailand aims to transform a significant portion of its automotive production into electric vehicles. The target is to convert half the country’s total car production to EVs by 2030, signalling a significant shift in its automotive industry.
  • Subsidy and Incentive Programs: The Thai government has introduced various incentives to promote EV adoption. These include subsidies for consumers and manufacturers to make EVs more affordable and encourage local production. A new subsidy package was recently approved, although it offers a lower subsidy than the current scheme.
  • Investment in Infrastructure: Recognising the importance of infrastructure in supporting EV growth, the government plans to enhance the EV charging network. This includes scaling up public charging stations across the country.

Collaboration with Global Automakers

  • Partnership with Toyota: A significant development in Thailand’s EV market is the collaboration with Toyota. The Japanese automaker, known for its expertise in hybrid and electric vehicles, is expected to play a crucial role in developing Thailand’s local EV industry. This includes the development of eco-cars and electric pickup trucks, underlining a broadening of the EV range. 

Toyota’s decision to conduct trials of its first electric pickup truck in Thailand aligns with its strategy to boost EV sales and address the growing competition from Chinese manufacturers in the Thai market.

  • Attracting International Investments: Thailand is working with Toyota and attracting other global players in the EV industry. These collaborations are vital for bringing advanced technology and expertise to the local market.

Focusing on Local Capabilities

  • Supporting Local Manufacturers: The Thai government’s strategy also includes nurturing local manufacturers. Thailand aims to develop EV brands that can compete globally by offering incentives and creating a favourable business environment.
  • Research and Development (R&D): Investment in R&D is a key part of Thailand’s vision. This involves developing local expertise in EV technology, battery production, and other related areas.

Addressing Challenges and Sustainability

  • Building a Robust Charging Infrastructure: One of the biggest challenges for EV adoption is the availability of charging stations. Thailand is addressing this by expanding its network of charging points, which is essential for the convenience of EV users.
  • Environmental Considerations: Thailand focuses on EVs’ ecological impact as part of its sustainability commitment. This includes considerations around battery production and recycling, as well as reducing the carbon footprint of the automotive sector.

Economic and Environmental Implications

  • Boosting the Economy: The shift toward EVs is expected to have a positive impact on Thailand’s economy, creating new jobs, attracting foreign investments, and promoting technological advancements.
  • Reducing Carbon Emissions: By embracing EVs, Thailand aims to significantly reduce its carbon emissions, contributing to global efforts against climate change.

Market Dynamics and Growth Factors in Thailand’s EV Market

Thailand’s electric vehicle (EV) market is experiencing remarkable growth, propelled by various factors ranging from technological innovations to shifting consumer preferences and supportive government policies. 

marketing-personas-automotive-buyers

Technological Advancements for Growth

  • Innovation in Battery Technology: Advances in battery technology are central to the growth of the EV market. Improvements in battery efficiency, lifespan, and charging speed are making EVs more practical and appealing to consumers.
  • Integration of Smart Technologies: Incorporating smart technologies like advanced driver-assistance systems (ADAS) and connectivity features enhances the EV driving experience, attracting tech-savvy consumers.
  • Localised Manufacturing and R&D: Thailand is increasingly focusing on local manufacturing of EV components, including batteries and electric motors. This not only reduces costs but also fosters innovation within the country.

Shifting Consumer Preferences and a Move Toward Sustainability

  • Environmental Awareness: Growing environmental awareness drives consumers toward greener transportation options. With their lower carbon footprint, EVs are becoming a preferred choice for environmentally conscious buyers.
  • Economic Considerations: As the cost of owning and operating EVs decreases, they become a more economically viable option for a broader range of consumers. Government subsidies and incentives further enhance their appeal.

Supportive Regulatory Environment: Facilitating Growth

  • Government Policies and Incentives: Thailand’s government has implemented a range of policies to promote the adoption of EVs. These include tax breaks, subsidies for EV purchases, and incentives for local manufacturing of EVs.
  • Infrastructure Development: Policies aimed at developing EV infrastructure, such as expanding charging networks and updating power grids, are critical for supporting the growing number of EVs on the road.

Influence of Regional Market Leaders

  • China’s Impact: China’s dominance in the EV market significantly influences Thailand. Chinese EV manufacturers are major suppliers in the Thai market, offering a range of affordable and technologically advanced vehicles.
  • Learning from Japan and South Korea: Japan and South Korea, known for their battery and vehicle technology advancements, serve as models for Thailand. Collaborations and technology transfers from these countries are helping Thailand enhance its own EV capabilities.

The Role of Major Players in Thailand’s EV Market

Navigating the Influence of Automotive Giants and Emerging Powers

Thailand’s electric vehicle (EV) market is not just focused on technological innovation and policy initiatives; it’s also about the significant roles played by major automotive players. Let’s examine the impact of these key players, particularly Toyota and Chinese EV manufacturers, on the Thai EV market, highlighting how their involvement shapes the market’s landscape.

Toyota: Pioneering Development in Thailand’s EV Sector

  • Strategic Collaboration with the Thai Government: Toyota’s partnership with the Thai government is a cornerstone of Thailand’s EV development strategy. This collaboration focuses on developing local EV manufacturing capabilities and introducing new EV models suited to the Thai market.
  • Investment in Local Manufacturing and R&D: Toyota has made substantial investments in Thailand, one of its key global R&D centres. This includes developing and testing new EV models, such as eco-friendly cars and electric pickup trucks, tailored to the local and regional markets.
  • Promoting EV Adoption Through Market Presence: As a well-established brand in Thailand, Toyota’s foray into the EV market significantly influences consumer preferences. Their commitment to producing EVs in Thailand helps normalise their presence and encourages other manufacturers to follow suit.

The Dominance of Chinese EV Brands

  • Market Penetration and Affordability: Chinese EV manufacturers have made a notable entry into the Thai market, offering a range of affordable and technology-rich vehicles. Their aggressive market strategies and competitive pricing have allowed them to capture a significant market share.
  • Technological Leadership and Innovation: The technical prowess of Chinese EVs, with advanced features and efficient battery systems, appeals to tech-savvy and environmentally conscious Thai consumers. This has set a benchmark for innovation in the region.
  • Investments and Expansion: Chinese EV manufacturers are selling their vehicles in Thailand and investing in local manufacturing and assembly plants. This move has boosted the Thai EV industry, created jobs, and fostered technology transfer.

The Impact of These Players on Thailand’s EV Sector

  • Creating a Competitive and Diverse Market: Major players like Toyota and various Chinese brands have created a diverse and competitive EV market in Thailand. This competition drives innovation, improves quality, and offers more choices to consumers.
  • Influencing Consumer Preferences and Trends: These players significantly influence consumer trends and preferences in the EV market. Their branding, marketing strategies, and product offerings are key in shaping public perception and adoption of EVs.
  • Driving Technological Advancements: The technological contributions of these major players are crucial in advancing the overall EV technology in Thailand. They bring global expertise and innovation to the local market, setting new standards and pushing the boundaries of what’s possible in EV technology.

Challenges in Thailand’s EV Market

Thailand’s burgeoning electric vehicle (EV) market, while promising, is resistant to challenges. These obstacles, however, also present significant opportunities for growth and innovation. 

Here are some challenges facing Thailand’s EV Market:

Developing EV Charging Infrastructure

  • One of the biggest challenges is the inadequate EV charging infrastructure. As the number of EVs on the road increases, the demand for more charging stations becomes critical.
  • A comprehensive charging network is necessary for the growth of the EV market. Range anxiety, or the fear of running out of battery without access to a charging station, remains a significant concern for potential EV buyers.

Balancing Demand and Supply

  • The global supply chain disruptions, especially in the semiconductor industry, impact the production and cost of EVs. This could hinder the availability and affordability of EVs in the Thai market.
  • As consumer interest in EVs rises, ensuring that the supply of EVs meets this demand is crucial. This includes various models catering to different consumer needs and preferences.

Technological Advancements and Adaptation

    • Staying abreast of rapid technological advancements in EVs globally is challenging for Thailand. This includes battery technology, vehicle efficiency, and smart features.
    • Adapting these global innovations to suit local conditions and preferences is necessary for the success of EVs in Thailand.

While there are challenges, we also see many opportunities stemming from the abovementioned challenges. 

Investment in Infrastructure Development

  • Public-Private Partnerships: Developing a robust EV charging infrastructure opens opportunities for public-private partnerships, inviting investments and expertise from various stakeholders.
  • Innovation in Charging Solutions: This need also drives innovation in charging technologies, including fast-charging stations, wireless charging, and battery-swapping models.

Boosting Local Manufacturing and Supply Chain

  • Building a Local EV Ecosystem: Challenges in the supply chain can prompt increased investment in local manufacturing of EVs and their components, reducing reliance on global suppliers.
  • Enhancing Local R&D Capabilities: This scenario presents an opportunity for Thailand to develop its R&D capabilities, focusing on EV technologies and sustainable manufacturing practices.

Advancing Technological Frontiers

  • Becoming a Regional Tech Hub: By embracing and developing new EV technologies, Thailand has the potential to become a hub for EV innovation in Southeast Asia.
  • Collaboration and Knowledge Exchange: Collaborations with global tech leaders can facilitate the transfer of knowledge and technology, fostering a climate of innovation and learning.
Consumers-are-taking-control-of-their-well-being-with-wearable-tech

Future Outlook for Thailand’s EV Market

The electric vehicle (EV) market in Thailand is at a pivotal juncture, poised for significant growth and evolution in the coming years. So, what is the future outlook for Thailand’s EV market, considering the interplay of consumer behaviour, government policies, and technological advancements?

Continued Expansion of the EV Market:

  • Market Projections: Analysts predict a sustained upward trajectory for Thailand’s EV market, with increasing sales and broader adoption across various vehicle segments. Thailand’s electric vehicle market is expected to experience an annual growth rate (CAGR 2024-2028) of 5.06%, resulting in a projected market volume of US$1,344.0m by 2028.
  • Diversification of Offerings: The market is expected to see a wider range of EV models, including more affordable options, high-performance vehicles, and specialised commercial vehicles.

Increasing Market Penetration:

  • Greater Consumer Acceptance: As EVs become more mainstream, consumer hesitations, particularly around range anxiety and charging infrastructure, will likely diminish.
  • Expansion into New Demographics: EVs will increasingly appeal to a broader demographic, moving beyond early adopters to the general populace.

Continued Support and Incentives:

  • Policy Evolution: The Thai government is expected to continue and enhance its support for the EV sector, possibly introducing new incentives and regulations to encourage EV adoption and local manufacturing further.
  • Focus on Sustainability: Policies will likely emphasise sustainability, including responsible battery disposal and recycling measures. By 2025, Thailand aims to have 30% of its vehicles operating as zero-emission vehicles (ZEVs) and 50% by 2030. The ultimate aspiration is to achieve full ZEV adoption by 2035.

Infrastructure Development:

  • Scaling Up Charging Networks: A key focus for the government will be the continued expansion of the EV charging infrastructure to support the growing number of EVs. Thailand is developing its charging station network, with approximately 1,482 public charging stations from 12 developers nationwide as of May 2023.

Advances in EV Technology:

  • Battery Improvements: Continued advancements in battery technology will likely lead to longer ranges, shorter charging times, and lower costs.
  • Integration with Renewable Energy: The integration of EVs with renewable energy sources, like solar power, is anticipated to become more prevalent.

Digitalisation and Smart Mobility:

  • Connected and Autonomous Vehicles: The future of Thailand’s EV market will likely intersect with trends in connected vehicles and, eventually, autonomous driving technologies.
  • Smart City Integration: EVs are expected to play a crucial role in developing smart cities, with seamless integration into urban transportation ecosystems.

Responding to Global Market Shifts:

  • Adaptation to Global Trends: Thailand’s EV market must adapt to global shifts, including supply chain changes and international regulatory developments.
  • Collaboration and Competition: Increased collaboration efforts with global players and competition from emerging EV markets will influence Thailand’s strategic positioning in the EV sector.

Final Thoughts

Thailand’s growth in the EV market shows the shifting focus of the global automotive industry toward Asia, particularly for EV innovation and manufacturing.

As we look at the comprehensive picture of Thailand’s electric vehicle (EV) market, it’s clear that the country is on the cusp of a transformative journey. The steady growth of Thailand’s EV sector shows the power of strategic vision combined with pragmatic action. 

Thailand’s rising EV market inspires emerging markets, aiding global carbon emission reduction efforts and setting new standards in affordable, advanced EV technology. This progress promotes sustainable transportation and attracts global investment in the EV sector.

For an in-depth analysis of trends in the automotive industry, download our trend report, “Speed Bumps on the Road to Change.”

Regional Comparison and Global Impact of Thailand’s EV Market

Thailand’s electric vehicle (EV) market, burgeoning with potential, is not an isolated phenomenon. When contextualised within Southeast Asia’s EV market and the global stage, Thailand’s market dynamics offer insightful trends and impacts. This section explores how Thailand’s EV market compares regionally and the implications of its growth on a global scale.

  • Fastest Growing Market in ASEAN: Thailand stands out as the fastest-growing EV market in Southeast Asia, leading the charge in adoption and infrastructure development.
  • Contrast with Neighboring Countries: While countries like Singapore are advanced in EV infrastructure, others in the region, such as Vietnam and Indonesia, are still in nascent stages, highlighting the varied pace of EV adoption across ASEAN.
  • A Model for Incentive Programs: Thailand’s mix of subsidies, tax breaks, and support for local manufacturing is a model for other ASEAN countries looking to stimulate their own EV markets.
  • Regional Policy Variances: Each country in the region has its unique policy approach to EVs, with Thailand’s strategies being among the most proactive.
  • Advancing Beyond Neighbors: Thailand’s focus on developing a comprehensive EV charging infrastructure sets it apart from other Southeast Asian countries, many of which are still grappling with this challenge.
  • Setting Standards for Affordability and Technology: The trends set by Thailand, especially in making EVs affordable and technologically advanced, can influence global market expectations and standards.
  • Encouraging Global Investments: The success of Thailand’s EV market can attract more global investments in the EV sector, especially in emerging markets.

Download our “Speed Bumps on the Road to Change” report for more insights into global EV trends.

Our latest market research study, The Green Brand, offers key insights into how eco-conscious adults view and respond to sustainability across major global regions. This research is a must-read for brands looking to tap into the growing interest in environmental responsibility.

Who We Studied

We focused on adults aged 18 and up in key areas: the United States, the United Kingdom, and eight countries in Asia (China, Japan, Singapore, India, Thailand, Indonesia, the Philippines, and Vietnam). All respondents were aware of sustainability and believed Climate Change was a real phenomenon.

What We Explored

  • Public and Consumer Efforts: How do people perceive efforts by governments and consumers to tackle environmental issues?
  • Environmental Priorities: What ecological concerns top the list for individuals?
  • Behaviour Changes: Are people altering their lifestyles because of environmental worries?
  • Corporate Impact: How do consumers view the role of businesses in addressing environmental challenges?
  • Eco-Friendly Products: Is there a growing interest in products that are kind to the planet?

Why It Matters

For brands operating in these regions, understanding consumer attitudes toward sustainability is crucial. This report not only sheds light on these attitudes but also offers a roadmap for creating a Corporate Social Responsibility (CSR) program or tailoring growth strategies to meet regional expectations.

Key Findings:

  • Growing Concern and Prioritisation: Across all surveyed regions, there is a notable trend toward prioritising environmentally friendly products and brands. Consumers are increasingly concerned about environmental issues such as climate change, pollution, and deforestation.

To access these statistics, please download the complete report here.

  • Regional Variations: While sustainability is universally valued, priorities vary across regions. The report shows the differences in emerging markets like India and the Philippines, where consumers prioritize affordability alongside sustainability, in contrast with developed economies such as the United Kingdom.
  • Influence of Brand Reputation: The reputation of brands plays a significant role in shaping consumer perceptions of sustainability. Consumers view companies with established track records of environmental stewardship more favourably.
  • Impact of Information Accessibility: The proliferation of social media and increased access to information has empowered consumers to make more informed purchasing decisions. Brands are under greater scrutiny, necessitating greater transparency and accountability in their sustainability practices.
  • Role of Government Regulations: Government policies and regulations shape consumer behaviour toward sustainability. Countries with stringent environmental laws tend to have more conscientious populations about sustainable consumption practices.

Global Attitudes Toward Sustainability:

  • Environmental Concerns: Consumers across all surveyed regions express growing concerns about environmental issues such as climate change, pollution, and deforestation.
  • Desire for Sustainable Solutions: There is a growing demand for products and services that minimise environmental impact while delivering performance and value across various industries.
  • Willingness to Pay a Premium: Despite the perception of higher costs, consumers in some countries are willing to pay more for environmentally friendly alternatives, viewing sustainability as a value proposition.

Download the complete report to discover which countries prioritise sustainable products. 

  • Influence on Brand Loyalty: Sustainability initiatives directly impact brand loyalty, with consumers more likely to support companies demonstrating a commitment to environmental responsibility.
  • Call for Corporate Accountability: Consumers expect greater accountability from corporations in addressing sustainability challenges, emphasising the importance of transparent reporting and tangible actions towards reducing carbon footprint.
The Green Brand Sustainability Study

Additional Resources:

In addition to global and specific country statistics, the Green Brand includes ten country fact sheets providing comprehensive information on the sustainability standards of each country. 

These fact sheets serve as invaluable resources for brands entering or doing business in these ten countries, offering insights into local sustainability practices, regulations, and consumer behaviours. 

Download the report to access these fact sheets.

The report also features case studies of global and regional brands leading the way in sustainability, showcasing innovative strategies and best practices for incorporating environmental responsibility into business models. 

Learn how Marina Bay Sands, an iconic integrated resort in Singapore renowned for its luxury and distinctive architecture, has seamlessly woven sustainability into its operations while maintaining its status as a key player in the hospitality and tourism sector. 

You can download the report to delve into this and other informative and insightful brand case studies.

We also offer a step-by-step guide on implementing CSR programs for companies new to this area. For brands with existing CSR policies and programs, we provide strategies to measure and enhance their impact and tips for expanding these initiatives throughout the organisation.

Access the full report here.

The concept of sustainability has gone beyond being merely a trendy term and has become a critical component of any successful brand. By embracing sustainable practices that take into account environmental, social, and economic factors, brands can revamp their brand image, meet consumer expectations, and increase their profits. 

Our comprehensive report delves deep into the world of sustainability and highlights how it’s not just the right thing to do, but it’s also a smart business decision. “The Green Brand” is your ultimate guide to leading the charge in the eco-revolution, showcasing how top brands have integrated sustainability into their business models and become synonymous with eco-friendliness.

You can access the complete report here.

Vietnam is experiencing the peak of its demographic dividend, boasting a sizable youthful population —the driving force behind its consumer class. McKinsey & Company forecasts an additional 36 million individuals joining the consuming class by 2030, signalling a surge in disposable income and purchasing power.

Projections indicate that more than half of Vietnam’s population will join the global middle class by 2035, which promises to stimulate consumer spending.

In recent times, Vietnamese consumers have demonstrated an acute sense of value and a deepening connection to digital platforms. Various factors propel this shift, notably the nation’s robust economic growth, mounting income levels, and escalating urbanisation rates. And what stands out is the discernible rise in sophistication among Vietnamese consumers.

However, as Vietnam experiences economic growth, it is also grappling with challenges that may affect its population’s spending capacity. Decreased demand from key markets such as the United States and the European Union, coupled with inflation hovering around 3.8%, presents hurdles to Vietnam’s economic stability. Despite these challenges, Vietnamese consumers remain optimistic about their economic prospects, with more than 70% planning to maintain or increase their spending in various categories.

Despite the economic disruptions, consumer confidence remains resilient, as many national survey results indicate optimism regarding the country’s economic rebound. However, amidst this optimism lies a growing sense of financial consciousness, with most consumers anticipating financial strains due to inflationary pressures and rising costs. This heightened awareness drives a shift toward more discerning shopping behaviours, emphasising value and frugality in consumer choices.

Vietnamese Consumers: A Snapshot

The socioeconomic fabric of Vietnam is undergoing profound shifts. Urban migration and declining birth rates have fueled the rise of a burgeoning middle class characterised by smaller yet wealthier households. 

The widespread adoption of smartphones and internet access, with 97% of adults owning a smartphone and 79% having internet connectivity, has ushered in a new era of digital transformation and innovation. This digital revolution can be seen in the internet economy’s substantial contribution of 5.7% of GDP in 2022. 

Vietnam is forging its way as one of Southeast Asia’s fastest-growing e-commerce hotspots. Online shopping has exploded in just a few years, grabbing a bigger slice of the retail pie. E-commerce giants Shopee and Lazada are leading the charge, but don’t count out local shops. They’re making a name for themselves, especially in consumer electronics and tech gadgets. And there’s a new player in town: social commerce. It’s quickly becoming the next big thing, with Vietnamese shoppers eager to click, share, and buy their favourite social platforms. The future of shopping in Vietnam? It’s online, social, and more exciting than ever.

Vietnam’s e-commerce scene recently saw its highest spending in the electronics category, hitting a peak of $4.52 billion. Fashion purchases weren’t far behind, with spending crossing the $2 billion mark, while toys also made a significant splash at $1.78 billion. Interestingly, the food sector outpaced them all in growth, with e-commerce spending on groceries surging by over 18%.

Four Key Consumer Trends

Vietnam’s consumers are undergoing a transformation marked by four key trends.

Trend 1: Value-conscious Consumption
Value-conscious consumers are prioritising some goods while being frugal with others. Inflation and the shift to premium brands drive higher spending in specific categories while lower spending is observed in others.

Brands can adapt to these shifts by doing the following:

  • Offer value bundles: Provide bundled deals with savings on essential items and premium products. For example, a grocery store can offer a package deal with necessities like rice and cooking oil alongside premium sauces or spices.
  • Introduce affordable luxury options: Create premium products priced competitively to cater to the desire for quality without breaking the bank. For instance, a skincare brand can develop a line of high-quality facial creams at a reasonable price point.
  • Implement loyalty programs: Reward customers for their purchases to encourage repeat business. For instance, a coffee shop brand can offer a loyalty card where every 5th cup of coffee is free, incentivising customers to return regularly.

Trend 2: Omnichannel Shopping
Omnichannel shopping is thriving, with consumers using alternatives to in-store shopping. Technology is contributing to the prevalence of omnichannel platforms.

Here are some strategies brands can employ to reach their audiences:

  • Invest in e-commerce platforms: Develop user-friendly websites and mobile apps to facilitate online shopping. Ensure seamless integration with brick-and-mortar stores for click-and-collect options. For example, a fashion retailer can offer online shopping with in-store pickup options for added convenience.
  • Collaborate with tech companies: Partner with technology firms to enhance the online shopping experience through features like virtual try-ons or personalised recommendations. For instance, a furniture store can collaborate with augmented reality companies to allow customers to visualise how furniture will look in their homes before purchasing.
  • Utilise social media channels: Leverage popular social media platforms for advertising and selling products directly. Engage with customers through interactive content and influencer partnerships. For example, a cosmetics brand can collaborate with beauty influencers to showcase products and offer exclusive discounts to their followers.
9-fashion-buyer-personas

Trend 3: Low Brand Loyalty
Vietnamese consumers exhibit little brand or store loyalty, with most switching stores or brands, making them among the least loyal in the Asia-Pacific region.

Brands can retain customers and boost loyalty by doing the following:

  • Focus on product differentiation: Offer unique features or benefits that set your brand apart. Highlight these differences in marketing campaigns to attract new customers. For example, a snack company can emphasise its use of locally sourced ingredients or unique flavour combinations.
  • Provide exceptional customer service: Prioritise customer satisfaction by offering responsive customer support and hassle-free return policies. Build trust and loyalty by addressing customer concerns promptly and effectively.
  • Foster emotional connections: Create memorable brand experiences that resonate with consumers on a personal level. For instance, a clothing brand can sponsor community events or initiatives that align with its values, fostering a sense of belonging among customers.

Trend 4: Sustainable, purpose-driven purchases
Vietnamese consumers seek purpose in their purchases and make healthier, more sustainable, and local choices, although environmental concerns rank lower in priority.

According to our latest study, 46% in Vietnam strongly agree they will select a product or service based on its environmental credentials.
– The Green Brand – A Comprehensive Report for Sustainable Trends Reshaping Brands by Kadence International

To sway purpose-driven consumers, brands must show their commitment to sustainability by:

  • Emphasising sustainability: Showcase environmentally-friendly practices such as using recycled materials or supporting ethical sourcing. For example, a skincare brand can promote its commitment to cruelty-free testing and eco-friendly packaging.
  • Support local communities: Partner with local artisans or producers to offer products that celebrate Vietnamese culture and heritage. For instance, a food company can collaborate with local farmers to source ingredients for speciality dishes.
  • Align with social causes: Demonstrate commitment to social responsibility by donating a portion of sales to charitable organisations or supporting community initiatives. For example, a clothing brand can launch a collection where proceeds go towards education programs for underprivileged children.

Other Strategies for Brands Entering the Vietnamese Market

As Vietnamese consumers evolve, companies must adapt their strategies to stay competitive and meet changing demands. Some critical factors for brands must build capabilities in when entering the Vietnamese market are:

Leverage the Working Age Population and High Labor Participation:

The working population is 62% of the total in 2022. Half of the working population is aged 20 to 39 years.  

  • Focus on workforce-related products and services such as workwear, office supplies, and professional development tools.
  • Offer flexible employment options and benefits to cater to the workforce’s diverse needs, including remote work solutions and family-friendly policies.

Tap into Vietnam’s Consistent GDP Growth:

The Vietnamese economy grew 8% in 2022, attracting a healthy trade surplus, a continued rise in foreign direct investment disbursements, and 1.7 million new jobs. 

  • Invest in industries that align with the country’s economic growth trajectory, such as technology, manufacturing, and infrastructure development.
  • Tailor product offerings to match the evolving needs and purchasing power of consumers as the economy expands.

Utilise Vietnam’s Manufacturing Gains:

Free trade agreements abound for Vietnam. Vietnam leads the charts on global trade interconnectivity. 

  • Establish partnerships with local manufacturers to streamline production processes and ensure product quality.
  • Invest in research and development to stay ahead of technological advancements and meet increasing consumer demands for innovative products.

Cater to Rising Retail Goods and Services Consumption:

Retail sales in the country grew by US$1 billion in 2022. 

  • Enhance the shopping experience by offering convenient and personalised services like home delivery, virtual shopping assistants, and loyalty programs.
  • Invest in sustainable practices to appeal to environmentally-conscious consumers and differentiate your brand in a crowded marketplace.

Target the Domestic Tourism Market:

Domestic tourism has replenished the international void since the pandemic.  Only 3% of tourists were international in 2022. 

  • Develop tourism-related products and experiences highlighting Vietnam’s cultural heritage and natural beauty.
  • Collaborate with local travel agencies and influencers to promote domestic tourism destinations and activities.

Harness the Power of the Internet Economy:

There were 77.93 million internet users in Vietnam at the start of 2023, when internet penetration stood at 79.1%. Vietnam was home to 70 million social media users in January 2023, 71% of the total population.

  • Expand digital marketing efforts to reach the growing online consumer base, including social media advertising, influencer partnerships, and targeted email campaigns.
  • Develop e-commerce platforms optimised for mobile devices to capitalise on the widespread smartphone usage in Vietnam.

Address the Needs of Rising Household Affluence:

  • Offer premium products and services tailored to the preferences of affluent consumers, including luxury goods, gourmet foods, and personalised experiences.
  • Provide financial planning and investment services to help households manage and grow their wealth effectively.
global-dining-trends

Capitalise on Financial Ecosystems for E-commerce and Entrepreneurship:

  • Partner with fintech companies to offer innovative payment solutions and financial services tailored to the needs of online shoppers and entrepreneurs.
  • Develop user-friendly digital banking platforms to facilitate seamless transactions and empower customers to manage their finances effectively.

Navigate Vietnam’s Political Stability and Geopolitical Management:

  • Build strong relationships with local government officials and regulatory bodies to ensure compliance and minimise risks associated with political instability.
  • Monitor geopolitical developments and adapt business strategies accordingly to maintain resilience and competitiveness in the market.

Final Thoughts

Vietnam’s vibrant consumer markets have enjoyed robust momentum for some time and are currently undergoing increased complexity. The consumer base is expanding across various geographical, social, demographic, and technological dimensions. With consumers becoming more diverse and discerning, brands aiming to cater to them must fine-tune their strategies to consider income levels, emerging channels, marketing approaches, and shifting behaviours within their existing customer segments.

Here are some critical capabilities for foreign brands entering the Vietnamese market:

  • Localise global products innovatively, tapping into local preferences and subsegments while optimising hero SKUs.
  • Master revenue growth management, balancing affordability and “premiumisation” to maximise revenue growth.
  • Invest in conscious spending areas, especially in an inflationary context.
  • Adjust the operating model, striking the right balance between ownership and agility to produce innovative products.

Suggested reading: What makes Vietnam an attractive destination for foreign investment?

Contact Kadence International, which is equipped with an office in Vietnam, to capitalise on this lucrative market. Our expertise and local presence empower brands to navigate the complexities and unlock the full potential of Vietnam’s dynamic consumer market. Reach out today and embark on your journey toward success in one of Southeast Asia’s most promising markets.

Leverage new business models like retail-media-network capabilities or digital ecosystems to create additional value in a demanding and connected consumer market.

Around the world, few cultural celebrations hold as much sway as the Chinese New Year. This time-honoured festival, celebrated by billions around the globe, has transcended its origins as a traditional Chinese holiday to become an international phenomenon with far-reaching implications for businesses worldwide. As we look ahead to 2024, brands would be wise to take heed, for the Chinese New Year, which falls on February 10th, ushers in the Year of the Dragon under the auspices of the Wood element.

The significance of Chinese New Year globally cannot be overstated. The festival has evolved from a local observance into a truly global celebration, representing a unique opportunity for brands to connect with a vast and culturally diverse audience. According to recent data, the influence of the Chinese New Year extends well beyond Asia, with 2 billion individuals from various cultural backgrounds partaking in the festivities. In 2023, for instance, the annual expenditure during the holiday reached a staggering $1.5 trillion worldwide, a figure that has steadily increased over the years.

In 2024, we find ourselves at the threshold of the Year of the Dragon, a symbol of power, strength, and good fortune in Chinese astrology. This celestial occurrence, combined with the prevailing Wood element, carries profound implications not only for individual destinies but also for the strategies of businesses seeking to capitalise on this auspicious year. Understanding the traditions and predictions associated with Chinese New Year is not merely an exercise in cultural awareness; it is a strategic imperative for brands aiming to navigate the global market successfully.

In this article, we delve into the transformative journey of Chinese New Year, from its roots as a local celebration to its current status as a global trendsetter. By examining the significance of the Year of the Dragon and the Wood element alongside the rich tapestry of Chinese New Year traditions, this article will equip brands with invaluable insights into how to harness the global influence of Chinese New Year in 2024 and beyond. 

The Global Reach of Chinese New Year

The global footprint of Chinese New Year is staggering, and the numbers speak volumes. In 2023, the festival reached its zenith with more than 2 billion people participating worldwide, making it one of the most widely observed holidays on the planet. Notably, Chinese New Year transcends ethnic and cultural boundaries, uniting individuals from diverse backgrounds in the spirit of celebration. This phenomenon extends beyond China’s borders, with vibrant festivities in Malaysia, Singapore, Thailand, and Indonesia, showcasing the holiday’s widespread appeal.

The evolution of Chinese New Year from a traditional festival to a global cultural phenomenon is a testament to its adaptability and resonance. No longer confined to ancestral customs, it has embraced modernity while retaining its core values. The holiday now encompasses many traditions, from the iconic dragon and lion dances to the giving of red envelopes (hongbao) and family reunions. Brands that grasp this evolution can leverage it to forge authentic connections with their target audiences.

Yet, its economic significance makes Chinese New Year an unmissable opportunity for brands. According to market research, consumer spending soars to unprecedented heights during the Chinese New Year season. In 2023, consumers worldwide spent an estimated $1.5 trillion, with most of this expenditure occurring in Asia. This astronomical figure underscores the immense purchasing power that Chinese New Year commands and the vast potential for brands to tap into this lucrative market.

For brands, Chinese New Year offers a window of opportunity beyond mere celebration. It provides a platform to engage with consumers on a deeper cultural level, foster brand loyalty, and drive sales. Savvy marketers have recognised the immense brand opportunities embedded in this tradition, crafting campaigns that resonate with the festival’s spirit while aligning with their brand identity.

travel-trends

The Year of the Dragon and Wood Element

In Chinese astrology, each year is woven with symbolism and significance. For 2024, the celestial spotlight falls upon the majestic and mythical creature—the Dragon. Understanding the symbolism and attributes of the Year of the Dragon, in conjunction with the prevailing Wood element, is essential for brands seeking to align their strategies with the overall cosmic forces.

The Dragon, in Chinese astrology, holds a preeminent position. It is regarded as a symbol of power, strength, and good fortune. Those born under the sign of the Dragon are believed to be charismatic, assertive, and natural leaders. Historically, Dragons have been associated with emperors, signifying their divine right to rule. This symbolic potency translates into consumer behaviour. During the Year of the Dragon, individuals often seek to embrace these qualities, aspiring to achieve personal growth and success. Brands can capitalise on this aspiration by crafting campaigns that resonate with the Dragon’s traits of leadership and ambition.

Complementing the Year of the Dragon is the Wood element, which rotates cyclically with other elements in Chinese astrology. Wood is associated with growth, renewal, and expansion. Just as a tree flourishes, Wood signifies the potential for growth, both personally and economically. Individuals born in a Wood year are believed to possess qualities such as adaptability and creativity, making them open to new ideas and experiences.

The intersection of the Year of the Dragon and the Wood element in 2024 offers a unique set of circumstances that can significantly influence consumer behaviour and brand strategies. As individuals look to harness the Dragon’s strength and Wood’s growth potential, they may be more inclined to invest in personal development, education, and career advancement. Brands that align their products and messaging with these aspirations stand to benefit greatly.

Statistics reveal the economic implications of such astrological phenomena. During previous Dragon years, consumer spending often witnessed a substantial increase. For instance, in the last Year of the Dragon in 2012, consumer spending during the Chinese New Year season surged by approximately 16.2% compared to the previous year. This data underscores the correlation between astrological symbolism and consumer behaviour, offering brands valuable insights into the potential growth and prosperity associated with the Year of the Dragon.

Chinese New Year Traditions and Predictions

These age-old customs are not merely rituals; they are woven into the very fabric of Chinese culture, symbolising a collective desire for luck, wealth, and health in the year ahead.

Key Traditions and Their Symbolic Meanings

At the heart of Chinese New Year celebrations lies the practice of setting off firecrackers and fireworks. These explosive displays are believed to ward off evil spirits and bring good fortune for the upcoming year. The resounding explosions, coupled with vibrant red and gold colors, create a sensory experience that brands can draw upon to evoke feelings of excitement and anticipation.

Another integral tradition is giving red envelopes, known as “hongbao.” These envelopes, typically containing money, represent blessings and are exchanged between family members, friends, and colleagues. Gifting hongbao is steeped in symbolism, signifying the transfer of good luck and prosperity. Brands can emulate this gesture by offering special promotions or discounts, effectively sharing the spirit of generosity associated with hongbao.

The dragon and lion dances are vibrant performances that captivate audiences worldwide. 

These traditional dances are not mere spectacles; they are deeply symbolic. The dragon dance represents the powerful Dragon sign, and the lion dance is believed to ward off evil spirits and bring good fortune. Brands can harness the energy and symbolism of these dances in their marketing campaigns, symbolising their commitment to warding off negativity and inviting prosperity.

Influence on Year’s Prospects

These Chinese New Year traditions hold more than just cultural significance—they are believed to influence the prospects of the year. The rituals surrounding the holiday are steeped in auspicious symbolism. For example, fireworks are thought to dispel negative energies, allowing positive forces to flourish. Similarly, the exchange of hongbao is believed to ensure financial well-being throughout the year.

Incorporating these traditions into brand strategies can foster a strong emotional connection with consumers. Brands that embrace these customs acknowledge their cultural significance and actively participate in the collective aspiration for good fortune. It’s not merely a matter of superficial marketing; it’s about becoming a part of the auspicious narrative.

Incorporating Traditions into Marketing Strategies

Brands can take inspiration from these traditions to craft campaigns that resonate with consumers on a profound level. Red and gold color schemes can be incorporated into product packaging or promotional materials, symbolising luck and wealth. Special discounts or promotions can be framed as a form of hongbao, aligning the brand with the spirit of giving and prosperity.

Additionally, the idea of dispelling negativity and inviting positivity can be woven into messaging. Brands can convey their commitment to a fresh start and the pursuit of success in the Year of the Dragon. By aligning marketing efforts with these traditions and their underlying symbolism, brands can authentically connect with consumers and stand out in a crowded market.

guide-to-gen-z

Successful Brand Campaigns

Let’s turn our attention to some noteworthy case studies of brands that have successfully tapped into this dynamic market. By combining strategic insight and cultural sensitivity, these brands achieved remarkable results.

1. Burberry’s Lunar New Year Campaign (2020)

In 2020, Burberry embarked on an innovative Lunar New Year campaign that left a lasting impression on consumers. The brand introduced a dedicated WeChat mini-program, which allowed users to embark on a digital journey through their hometowns, sharing festive greetings and exploring Chinese culture. The mini-program cleverly engaged users and fostered a sense of connection.

However, the true brilliance of Burberry’s campaign lay in its limited-edition collection, adorned with Chinese New Year motifs. This move demonstrated cultural sensitivity and catered to the desire for exclusive, festive attire during the holiday season. The strategy paid off handsomely, with sales soaring, underscoring the immense potential for brands to leverage the allure of Chinese New Year to boost revenue.

2. Nike’s “Year of the Rat” Collection (2020)

Nike, renowned for its innovative marketing strategies, scored big with its “Year of the Rat” collection in 2020. The brand consistently releases special Chinese New Year-themed products, but this collection was exceptionally well-received. Nike expertly fused traditional Chinese symbols with contemporary design elements, creating a product range that appealed to a wide-ranging audience.

By celebrating the Year of the Rat in style, Nike tapped into the consumer desire to embrace the astrological sign of the year. The collection resonated with Chinese consumers and those who appreciated the aesthetics and cultural significance, exemplifying Nike’s ability to bridge tradition and trend seamlessly.

Pitfalls to Avoid

While successful Chinese New Year campaigns can yield immense rewards, it is equally crucial to heed the cautionary tales of brands that have faltered in their attempts to tap into this celebrated tradition. 

1. Pepsi’s “Fails” Campaign (2018)

In 2018, Pepsi ignited a controversy with an ad that exhibited a lack of cultural sensitivity. The ad featured Kendall Jenner seemingly resolving a protest by offering a police officer a can of Pepsi, implying that a soft drink could heal societal divisions. The commercial’s oversimplification of complex social issues and its trivialisation of protests were immediately met with public outrage.

The campaign’s failure can be attributed to a profound misunderstanding of the cultural and social nuances surrounding such sensitive topics. Pepsi’s attempt to capitalise on a festive occasion came across as tone-deaf, rendering its message culturally insensitive and deeply inappropriate.

2. Dolce & Gabbana’s Controversial Campaign (2018)

The same year, Dolce & Gabbana faced a monumental public relations crisis during the Chinese New Year season. The brand’s ill-conceived campaign featured a Chinese model attempting to eat Italian food with chopsticks, a portrayal that many deemed offensive and culturally insensitive. The controversy deepened when offensive messages allegedly sent by one of the brand’s co-founders surfaced online.

This debacle illustrates the potential repercussions of cultural insensitivity and the power of social media to amplify consumer outrage. Dolce & Gabbana’s failure to understand and respect Chinese culture damaged their brand reputation and resulted in canceled events and a significant loss of sales in the Chinese market.

These instances serve as stark reminders of the pitfalls that brands must avoid when participating in Chinese New Year marketing. Cultural awareness, research, and sensitivity are paramount. Brands that fail to appreciate the intricacies of the holiday’s customs, symbolism, and values risk alienating their target audience and facing public backlash.

Strategies for Brand Success

As brands seek to capitalise on the global influence of Chinese New Year, it is essential to approach this vibrant market with careful consideration and strategic intent. To ensure success, here is a checklist of practical tips and strategies that emphasise the significance of cultural sensitivity, authenticity, and local market knowledge:

1. Cultural Sensitivity and Respect

  • Prioritise cultural awareness and sensitivity throughout the campaign planning process.
  • Invest in cross-cultural training for your team members to foster a deep understanding of Chinese traditions and values.
  • Conduct thorough research to avoid any inadvertent cultural insensitivity in your messaging, imagery, or symbolism.

2. Authenticity and Storytelling

  • Craft authentic narratives that resonate with the spirit of Chinese New Year. Share meaningful stories that reflect the values and aspirations of the holiday.
  • Showcase your brand’s commitment to cultural understanding and appreciation in a genuine and transparent manner.
  • Highlight the cultural significance of your products or services in a way that feels authentic rather than forced.

3. Local Market Knowledge

  • Recognise that Chinese New Year traditions can vary across regions and communities. Tailor your campaign to specific local customs and preferences.
  • Leverage local partnerships and collaborations to gain insights into the nuances of your target markets.
  • Stay informed about market trends and consumer behavior in the lead-up to Chinese New Year, adapting your strategies as needed.

4. Integrating Chinese New Year Themes

  • Incorporate traditional colors such as red and gold, which symbolise luck and wealth, into your product packaging, marketing materials, and store decorations.
  • Feature Chinese New Year motifs, zodiac animals, and auspicious symbols in your designs to resonate with consumers’ cultural sensibilities.
  • Develop special limited-edition products or collections that align with the Year of the Dragon and the Wood element, reflecting themes of strength and growth.

5. Personalisation and Gifting

  • Consider offering personalised or customisable products and services, echoing the tradition of gifting hongbao (red envelopes).
  • Create unique and memorable customer experiences, such as personalised messages or exclusive gifting options.
  • Encourage consumers to share their Chinese New Year experiences with your brand through user-generated content, promoting a sense of community and connection.

6. Digital Engagement

  • Harness the power of digital platforms, especially social media and e-commerce, to engage with consumers during Chinese New Year.
  • Develop interactive campaigns, games, and challenges that encourage user participation and generate buzz.
  • Utilise Chinese social media platforms such as WeChat, Weibo, and Douyin to reach a wider audience and engage in real-time conversations.

By adhering to these strategies and ensuring cultural sensitivity, authenticity, and local market knowledge, brands can navigate the complexities of Chinese New Year successfully. The Year of the Dragon and the Wood element provide a unique backdrop for creating meaningful connections with consumers and driving brand growth. Remember that the global influence of Chinese New Year is not just an opportunity for sales but also a chance to foster long-lasting relationships and brand loyalty.

Unleash Prosperity: The Power of Chinese New Year Marketing

Chinese New Year is more than a holiday; it is an unparalleled opportunity for brands to bridge tradition and trend, uniting the profound significance of culture with the dynamic forces of global commerce. It is a time to celebrate the harmony of tradition while daring to innovate and create trends that resonate with consumers.

As we look ahead to the Year of the Dragon and the Wood element in 2024, let us remember that Chinese New Year is not merely a festival; it is a canvas on which brands can paint stories of prosperity, connection, and growth. It is a time when tradition and trend converge, offering a transformative journey for brands and consumers.

The streets of Milan during Fashion Week echo the vibrancy of an industry that never ceases to evolve. The fashion industry, constantly on the move, shapes and reshapes the way we perceive style, leaving an indelible mark with each new trend. It’s a world where the bold lead and the rest follow, where what was en vogue yesterday may be passé today.

The rapid change in fashion trends can be exemplified by the resurgence of 90s aesthetics in recent years. What was once considered outdated —the oversized jackets, mom jeans, and vibrant neon colours have found their way back to the runway, embraced by a new generation. Similarly, the rise of sustainable fashion marks a significant shift in consumer consciousness, influencing major brands to rethink their strategies and designs.

Understanding these shifts is critical to creating fashion personas that resonate with the current trends that change at dizzying speeds. As we navigate the fashion runways, we must understand the many fashion buyers and their personas based on their purchasing habits, preferences, lifestyles, and motivations.

In this guide, we will explore how to harness the power of evolving trends to craft a fashion identity that is both unique and relevant. From the runways of Paris to the high street fashion in New York, let’s unravel the secrets behind creating a fashion persona that stands out in the fashion world today.

You can also download our guide here for a detailed look at 9 Types of Fashion Buyers in 2024 and beyond.

The global fashion industry is valued at $1.7 trillion, with the US alone accounting for $343.70 billion. 

Fashion has moved online.

The shopping cart has increasingly shifted online. With retail e-commerce sales hitting trillions worldwide, the fashion world has unmistakably woven into daily life’s fabric. 

In 2023, the global fashion e-commerce sector is set to be valued at more than 820 billion US dollars, potentially crossing the 1.2 trillion US dollar mark by 2027. 

While apparel dominates online purchases, accessories and footwear also claim substantial shares of the global online fashion revenue. 

Brands today are marketing sustainability, as highlighted by 66% of global millennials opting for sustainable brands even at premium prices.

However, despite its glitz and glamour, the fashion industry grapples with challenges —from the sustainability of fast fashion to ethical manufacturing and more. 

The State of the Fashion Industry: Resilience, Challenges, and Emerging Trends

In 2022, the fashion industry demonstrated remarkable resilience, echoing its previous year’s performance. According to the McKinsey Global Fashion Index, the industry nearly matched its record economic profit from 2021. 

The luxury sector led this robust performance, which saw a significant 36% rise in economic profit, counterbalancing softer segments. Even non-luxury sectors outperformed their long-term averages. The fashion industry in 2022 accrued more than double the financial profit of any year between 2011 and 2020, barring one indicative of solid margin performance.

2023: A Year of Persistent Challenges

2023 presented persistent and deepening challenges for the fashion industry. Europe and the United States experienced sluggish growth, while China’s initially strong performance diminished in the year’s second half. The luxury segment, initially resilient, began to feel the impact of weakened demand, leading to slowing sales and uneven performance.

The ever-evolving fashion buyer 

The fashion industry has always been dynamic, reflecting cultural shifts, societal values, and individual identities. Yet, one of its most profound evolutions hasn’t been just in the clothes we wear but in how we buy them. As the fashion world has spun forward, the way we engage with it has transformed, primarily influenced by the rapid growth of technology. To fully grasp this metamorphosis, let’s journey through time, from the intimate boutiques of yesteryears to today’s digital storefronts.

Imagine it’s the early 1970s. Meet Eleanor, a fashionable woman in her mid-20s. Shopping for Eleanor was a tactile, almost ceremonial experience. She’d stroll down to her local boutique or department store when she needed a new dress. She’d greet the store owner, perhaps even by first name. She’d touch the fabrics, try on various outfits, and often chat with other shoppers, making it a social experience. Personal recommendations, trust in local shopkeepers, and word-of-mouth drove her buying decisions. 

Catalogues played a role, too, especially for those living further from urban centres. This was an era where shopping was as much about community as it was about consumption.

Fast forward to the 1990s, and meet Eleanor’s daughter, Lisa. While local stores still held their charm, shopping malls became the new house of fashion. Lisa would spend hours with her friends, hopping from one brand to another under one roof. Advertisements on TV, magazines, and billboards influenced her choices. The rise of chain stores meant she had access to global brands, allowing her to tap into broader trends. Yet, the most significant change was looming on the horizon: the dawn of the internet.

Now, step into the present and meet Zoe, Lisa’s tech-savvy daughter. For Zoe, shopping is literally at her fingertips. Through her smartphone, she can access any brand, anywhere in the world, at any time. Influences come from social media content, online reviews, and digital advertising. Algorithms curate personalised shopping experiences for her, and Augmented Reality lets her ‘try on’ clothes without ever stepping into a physical store. While she might still enjoy a day out shopping with friends, many of her buying decisions are shaped online, emphasising the power and reach of digital platforms in today’s retail world.

This evolution from Eleanor to Zoe isn’t just about changing shopping venues; it’s about shifting mindsets, influences, and expectations. Fashion buying has been interwoven with technological advancement and cultural change, making understanding the consumer more critical than ever.

In the following sections, we’ll dive deeper into the role of consumer personas, like Eleanor, Lisa, and Zoe, and explore how they help the fashion industry navigate this intricate landscape.

Brands face the dual challenge of sustainability awareness and the urgency to reduce landfill waste.

In crafting effective fashion personas, it’s essential first to comprehend the many challenges the fashion industry encounters. This understanding is pivotal for grasping the evolving ecosystem in which these personas operate and interact. 

Much like character studies in a novel, fashion personas are deeply influenced by the industry’s dynamics —from sustainability efforts to digital transformations. Recognising these challenges helps marketers appreciate the context in which fashion personas evolve, adapt, and thrive. 

The sustainable fashion industry is valued at over $6.5 billion and is expected to reach $15 billion by 2030.

The fashion industry is undergoing significant transformations due to challenges encompassing a range of environmental, economic, and social issues.

Major Challenges Facing Fashion Brands

Environmental Impact and Sustainability Challenges

Transition to Eco-Friendly Materials: Transitioning to sustainable materials like organic cotton, recycled polyester, and Tencel is imperative but expensive and demands new manufacturing processes. Reducing harmful chemicals in textile production is also a priority​​.

Supply Chain Transparency: Achieving transparency and traceability in the supply chain is challenging. Consumers increasingly demand information about product origins, working conditions, and environmental impacts​​.

Textile Waste and Circular Fashion Model: The industry must address textile waste through recycling and reuse. Adopting a circular fashion model, which involves designing easily disassembled and recycled products, is essential to reduce waste​​.

Reducing Carbon Emissions: The fashion industry, contributing around 10% of global carbon emissions, is under pressure to reduce its carbon footprint across the supply chain, from raw material production to garment manufacturing and transportation​​.

Eliminating Toxic Chemicals and Microplastics: Addressing toxic chemicals and microplastics in clothing production is crucial for human health and environmental protection​​.

Developing Climate Change Resilience Plans: Adapting to the impacts of climate change requires a comprehensive approach across the entire supply chain​​.

Economic and Market Challenges

Economic Uncertainty: The industry faces macroeconomic tensions and a potential global recession, with inflation causing rising costs and potential consumer spending decreases​​.

Inventory and Returns Management: Efficiently managing inventory and returns is crucial to address changing consumer habits and minimise waste and decreased profitability​​.

Competition from Fast Fashion: Fast fashion and off-price retailers, offering trendy and affordable clothing, challenge traditional brands. Competing requires a focus on quality, sustainability, and innovation​​.

Rethinking Sales Strategies: Rethinking discounting and sales strategies is necessary to maintain profitability and manage inventory effectively​​.

Growth in Rental and Resale Models: The growing rental and resale markets offer opportunities for brands to invest in and promote sustainability​​.

Social and Labor Challenges

Labor Rights and Fair Wages: Ensuring fair wages and improving labour rights and workplace conditions are essential. This includes addressing long hours, unsafe conditions, and harassment​​.

Advancing Diversity and Inclusion: Promoting diversity, equity, and inclusion in the workforce is necessary to provide equitable employment opportunities​​.

Talent Shortage and Skills Gap: The industry faces a talent shortage and skills gap, affecting innovation and competitiveness. Attracting and retaining talent, reskilling for digital transformation, and investing in upskilling are crucial​​.

Challenges arising from Digital Transformation

Adopting E-Commerce and Omnichannel Models: E-commerce growth and the need for omnichannel retail models are reshaping the industry. Brands must meet the increasing demand for seamlessly integrating offline and online shopping experiences​​.

Leveraging Digital Marketing: Utilising digital marketing and social media influencers is becoming increasingly vital for brand awareness and sales​​.

Exploring Innovations: Innovations like virtual try-ons and the metaverse are emerging as influential factors in the fashion industry​​.

How Fashion Personas Help Brands Understand What Their Customers Want

As brands jostle for attention in an oversaturated market, the key to success is resonating with the right audience. This is where fashion personas, like Eleanor, Lisa, and Zoe, from our example, come into play. 

But what exactly are these personas, and how do they steer a brand’s strategy?

1. Defining Fashion Personas:

A fashion persona is a detailed representation of a specific segment of a brand’s target audience. More than just a demographic breakdown, it encapsulates preferences, shopping behaviours, values, challenges, and even aspirations. These personas are like fictional characters, crafted using market research, data analytics, and, sometimes, a dash of intuition.

2. A Mirror to Consumer Desires:

Fashion personas act as mirrors, reflecting what consumers seek. By understanding the likes and dislikes of ‘Athleisure Annie’ or the values and challenges of ‘Sustainable Sam,’ brands can curate collections, marketing campaigns, and even in-store experiences that cater to these needs. It eliminates the guesswork, ensuring every decision, from the fabric chosen to the style promoted, and the message resonates with the intended audience.

3. Crafting Tailored Narratives:

With personas, brands can craft narratives that speak directly to their audience. For example, knowing that “Retro Rita” values nostalgia and the history of fashion allows brands to weave stories that tug at these sentiments. This results in advertising campaigns, social media content, and even runway themes that feel personal and engaging.

4. Predicting and Adapting to Trends:

Fashion is notorious for its ever-changing trends. However, brands can stay ahead with a keen understanding of their consumer personas. By monitoring the evolving preferences of their key personas, brands can predict emerging trends, ensuring they’re not just keeping pace with the industry but leading it.

5. Enhancing Customer Loyalty:

When consumers feel seen and understood, their loyalty to a brand deepens. Brands build trust by consistently delivering products and experiences that align with their personas’ desires. Over time, this translates into a dedicated customer base that doesn’t just buy but also advocates for the brand.

6. Optimising Resource Allocation:

Understanding where to invest is crucial for brands, especially those with limited resources. Fashion personas offer clarity. If a brand knows that a significant segment of its audience mirrors “Budget Brenda,” they can prioritise affordable yet trendy collections and forgo high-end materials that might not appeal to this group.

9 Core Fashion Personas Shaping the Fabric of Retail 

Let’s look at nine fashion personas that serve as your brand’s North Star, guiding you through consumer expectations, preferences, and behaviours. They are about creating fictional characters and embedding the consumer’s voice within the brand’s strategy. In a world where personalisation is paramount, and consumers crave authentic connections, these personas are the bridge between brands and their audiences.

Segment 1: Trendsetters

Overview

As their moniker suggests, trendsetters stand at the vanguard of fashion, defining and reshaping the fashion norms of the era. These individuals are not fashion followers but architects, blending their personal style with a foresight of where the industry is headed. Living in an age where boundaries between private and public lives are blurred, trendsetters wield their fashion choices as an extension of their identity. 

For them, fashion is more than aesthetics—it’s a mode of communication, a means to convey their perspective, values, and individuality.

Their influence isn’t contained within the realm of apparel alone. It stretches across various domains like technology, music, art, and food. The quintessential trait of a trendsetter is their ability to spot the developing, to discern what will capture people’s attention next. They are early adopters, fearless in their choices, and often become the touchstone for others seeking direction.

While their choices might seem eclectic and unpredictable, there’s a method to the madness. Trendsetters are adept at coherently weaving diverse inspirations from high fashion runways, street styles, or global cultures.

Current Trends and Impact of Trendsetters on the Fashion Industry:

  • Digital First: Trendsetters are invariably digital natives. They discover the latest styles on social media platforms, from TikTok’s quick-paced style challenges to Instagram’s curated fashion shoots.
  • Sustainability and Ethical Fashion: Unlike ‘fast fashion,’ many trendsetters now advocate for sustainable fashion. It’s chic to be sustainable, and brands that promote ethical sourcing and production are gaining traction.
  • Cultural Fusion: There’s a blend of global cultures in their wardrobe. Whether it’s the Japanese kimono-inspired jackets or African print dresses, it’s about blending borders seamlessly.

The impact of trendsetters on the fashion industry is significant. Their choices can make or break brands. Their endorsement brings legitimacy, and their critique can push brands to re-evaluate their offerings.

Segment 2: Classic Traditionalists

Overview

As fashion trends come and go with blinding speed, the Classic Traditionalists stand as pillars of timeless style. These individuals resonate with fashion that transcends seasons and fleeting trends. They embody the adage, “Fashion fades, style is eternal.” Drawing inspiration from eras where every garment was a statement of elegance and poise, Classic Traditionalists often gravitate toward attire that has withstood the test of time.

They are often seen as the antidote to today’s frenzied fashion cycles, preferring quality over quantity. Their choices are a harmonious blend of the past and the present, creating a style that feels both familiar and fresh. By interweaving contemporary nuances with classic elements, they create looks that exude sophistication and self-assuredness.

While they may appear resistant to change, it’s not about aversion but discernment. They meticulously select pieces that complement their curated wardrobe, ensuring every addition has a sense of purpose and longevity.

Current Trends and Impact of Classic Traditionalists on the Fashion Industry:

  • Tailored Fit: The importance of a well-fitted garment cannot be overstated for Classic Traditionalists. Precision is vital because there’s a noticeable move toward bespoke and tailored clothing.
  • Neutral and Earth Tones: While bold colours have their moments, Classic Traditionalists often lean toward neutral palettes – beige, navy, white, and grey- that offer versatility.
  • Quality Fabrics: Silk, wool, and organic cotton are materials of choice, emphasising durability and comfort.

Their preferences are pivotal in ensuring the fashion industry keeps in touch with its roots. The sustained demand for classic pieces ensures that brands balance innovation and tradition.

classic traditionalists fashion persona

Segment 3: Eco-Conscious Shoppers

Overview

Eco-conscious shoppers emerge from an intersection of style and sustainability. This segment believes that fashion should not come at the planet’s or its inhabitants’ expense. While their predecessors might have prioritised the look and feel of garments, these individuals weigh their purchases’ ethical and environmental implications just as heavily. Their commitment goes beyond mere labels; it’s about tracing the entire journey of a garment, from the raw material sourcing to the conditions under which it was produced.

This segment does not view sustainability as a passing trend or a niche; instead, it’s an indispensable facet of their purchasing philosophy. In an age where the environmental impact of industries is exposed, these shoppers make informed, intentional choices in harmony with their values. Their wardrobe reflects the world they envision —one where style and sustainability coexist seamlessly.

Current Trends and Impact on the Fashion Industry:

  • Transparency: Eco-conscious shoppers seek brands that offer complete transparency about their supply chains and manufacturing processes.
  • Upcycling and Circular Fashion: This segment shows a keen interest in brands repurposing materials, thereby reducing waste.
  • Plant-Based Materials: Materials like hemp, bamboo, and organic cotton are in demand due to their low environmental impact.

Their purchasing behaviour has nudged the industry toward a more sustainable course. Brands are now investing in eco-friendly materials, ethical labour practices, and sustainable packaging in response to the demands of this segment.

eco-conscious fashion buyer

Segment 4: Luxury Enthusiasts

Overview

Luxury Enthusiasts are connoisseurs of exclusivity, craftsmanship, and heritage. For them, fashion is an art form, an experience, a reflection of a legacy often spanning centuries. Their choices aren’t driven by necessity but by a deep appreciation for the meticulous craftsmanship, unique designs, and the stories embedded in each piece. Luxury is a profoundly personal journey of aligning with brands that echo their values and aspirations.

Positioned at the apex of the fashion hierarchy, Luxury Enthusiasts are pivotal in setting broader industry directions. Their preferences often trickle down, influencing mass-market designs and trends. They are constantly curating and refining their style, which is often bespoke, personalised, and tailored to perfection.

Current Trends and Impact of Luxury Enthusiasts on the Fashion Industry:

  • Bespoke Experiences: Luxury Enthusiasts seek personalised shopping experiences beyond just clothing, from private viewings to custom fittings.
  • Digital Integration: Luxury shopping is increasingly moving online, with augmented reality fittings and virtual consultations becoming standard.
  • Heritage and Storytelling: Brands with a rich history and can weave compelling stories around their products find favour with this segment.

The choices of Luxury Enthusiasts set the gold standard in the fashion industry. 

Their patronage can elevate a brand to iconic status, and their critique can be a call for introspection.

luxury fashion shoppers

Segment 5: Athletic and Sporty

Overview

This segment of Athletic and Sporty fashion enthusiasts prioritise comfort, functionality, and performance in their wardrobe choices, but not at the expense of style. This intersection of fashion-forward designs and technologically advanced materials has propelled sportswear from the confines of gyms to mainstream streets, workplaces, and social settings. “Athleisure,” a term now ubiquitously used, epitomises this merger of athletic apparel with everyday wear, highlighting the evolution of sportswear into a lifestyle.

The rise of this segment spotlights a broader societal shift toward health, fitness, and overall well-being. This demographic is not solely composed of athletes or fitness enthusiasts but is increasingly embraced by individuals seeking versatile attire that aligns with their active, on-the-go lifestyles. This fusion of comfort and style underpins the segment’s universal appeal.

Current Trends and Impact of Athletic and Sporty Personas on the Fashion Industry:

  • Tech-infused Apparel: Clothing integrated with tech features, like moisture-wicking, breathable fabrics, and even embedded sensors for tracking physical metrics, is gaining traction.
  • Versatility: Multipurpose clothing that can transition from a workout session to a casual outing is in high demand.
  • Sustainable Sportswear: Eco-friendly materials and ethical manufacturing in the sportswear segment attract this group’s eco-conscious subset.

The Athletic and Sporty trend has democratised sportswear, making it a staple for diverse demographics. Brands traditionally not in the sportswear domain are collaborating or launching their athleisure lines, reflecting the segment’s industry-wide influence.

Segment 6: Bohemian Romantics

Overview

The Bohemian Romantics are a breed apart in the fashion world, exuding an eclectic blend of vintage, ethnic, and uninhibited style. They aren’t just donning garments but curating stories, drawing from global influences, eras, and personal experiences. Their wardrobe choices are less about fitting into a mould and more about self-expression, liberation, and embracing the unconventional.

This segment’s fashion is characterised by its free-spirited aesthetic, harmonising rich textures, layered garments, earthy tones, and artisanal details. It’s a rebellion against the structured and the mainstream, a nostalgic nod to the days of Woodstock, and a tribute to artisan communities worldwide.

Current Trends and Impact of Bohemian Romantics on the Fashion Industry:

  • Global Fusion: A blend of cultures and traditions, often showcased through embroidery, prints, and jewellery.
  • Sustainable and Artisanal: A tilt toward slow fashion, with handmade, upcycled, and ethically sourced pieces in the spotlight.
  • Mix and Match: A juxtaposition of vintage finds with contemporary pieces, creating a unique style language.

The influence of the Bohemian Romantics has led to the resurgence of craft-based techniques, emphasising the narrative and the hands behind the piece rather than mass-produced fashion. Their impact is evident in seasonal collections where boho-chic elements often find prominence, reflecting the segment’s influence even in mainstream fashion.

boho-chic-fashion buyer

Segment 7: Minimalists

Overview

Minimalists stand out as a refreshing voice of simplicity and intentionality. This segment seeks purity in design, valuing function as much as form. A Minimalist’s wardrobe is characterised by its neutral palette, clean lines, and timeless pieces that effortlessly blend, representing a conscious departure from the frenetic cycle of fast fashion.

For Minimalists, less is indeed more. They prioritise quality over quantity, investing in versatile pieces that serve multiple purposes rather than fleeting seasonal trends. Their clothing choices reflect a holistic lifestyle that appreciates subtlety embraces sustainability, and rejects the noise of overconsumption.

Current Trends and Impact of Minimalists on the Fashion Industry:

  • Capsule Wardrobes: Curating a limited set of interchangeable garments that can create multiple outfits, emphasising doing more with less.
  • Sustainable Fabrics: A gravitation toward organic, sustainable, and long-lasting materials that align with the Minimalist ethos.
  • Neutral and Earthy Tones: Dominance of monochromatic shades, beige, white, black, navy, and muted earthy hues.

The Minimalist approach has steered the fashion industry toward sustainable practices, highlighting the need for quality, longevity, and ethical production. 

It’s a pushback against the disposability culture, prompting brands to re-evaluate their production practices and design philosophies.

minimalists

Segment 8: Budget-Savvy Shoppers

Overview

Amid the dazzling allure of luxury labels and high-end boutiques, Budget Savvy shoppers navigate the fashion industry with a sharp eye for value. Driven by fiscal prudence, they seek style without compromising their wallets. These consumers excel in balancing aesthetics with affordability, ensuring they remain stylish without breaking the bank.

Their shopping habits are characterised by strategic planning: waiting for seasonal sales, leveraging loyalty programs, and hunting for the best deals online and offline. This doesn’t mean they compromise on quality; instead, they are adept at discovering underrated brands or items that offer great value for the price. They challenge the stereotype that fashion needs to be a load on the wallet. 

Current Trends and Impact of Budget-Savvy Shoppers on the Fashion Industry:

  • Flash Sale Platforms: Websites and apps dedicated to limited-time offers and steep discounts on branded fashion items.
  • Loyalty Programs: Brands offering points, rewards, and exclusive discounts to frequent shoppers.
  • Thrift Shopping: Embracing pre-loved items from thrift stores or online platforms, further emphasising value for money.

Budget Savvy shoppers have significantly shaped retail strategies, compelling brands to offer competitive pricing, regular promotions, and value-added services. 

Their behaviour has also fostered the growth of discount platforms and second-hand marketplaces, diversifying how fashion is consumed.

budget-savvy-fashion-buyers

Segment 9: Edgy and Alternative

Overview

The Edgy and Alternative persona is a testament to the spirit of rebellion, self-expression, and defiance of the norm. This group is not content with blending into the crowd; instead, they make bold statements with their sartorial choices. 

Defined by their unique tastes, they gravitate toward unconventional designs, striking patterns, and a palette that often leans into dark or vibrant hues.

Their fashion lexicon includes punk, grunge, goth, streetwear, and other subcultures, epitomising an unapologetic departure from mainstream fashion. 

While they might embrace specific trends, their primary motivation is to be authentic to their style, even if it means swimming against the popular tide.

Current Trends and Impact of the Edgy and Alternative Persona on the Fashion Industry:

  • Alternative Prints and Patterns: Motifs like skulls, chains, or graffiti are becoming part of mainstream collections.
  • Diverse Materials: Using leather, mesh, or PVC to create edgy silhouettes.
  • Unique Accessorising: Chokers, spiked bracelets, and platform shoes appear recurrently.

The presence of this segment has enriched the fashion industry by challenging the conventional definitions of beauty and style. It has prompted designers to experiment, take risks, and incorporate subcultural aesthetics into their collections.

edgy-alternative-fashion-persona

The Future Outlook for Fashion Brands in 2024

An overall theme of uncertainty mirrors broader economic concerns, including subdued growth prospects, persistent inflation, and weakened consumer confidence. Fashion brands face the challenge of identifying new performance drivers amidst these conditions.

Global Economic Challenges and Consumer Shifts

Geopolitical Concerns: Geopolitics remains a top concern for fashion industry executives, influencing growth prospects and operational strategies.

Economic Volatility and Inflation: Economic instability and inflation continue to challenge the fashion industry, requiring strategic responses from brands.

Consumer Confidence and Regional Variations: Consumer spending patterns show notable regional differences, with countries like India displaying higher consumer confidence than Western nations.

Key Themes for 2024

Global Economy: The industry must navigate an unsettled global economic climate, requiring enhanced contingency planning and management for uncertainty.

Climate Urgency: Increasing extreme weather events make climate change an urgent priority, demanding immediate action in emissions reduction and supply chain resilience.

Consumer Shifts: Expectations around travel and lifestyle changes will necessitate refreshed brand distribution and category strategies.

Influencer Marketing Evolution: Brand partnerships with influencers will require new strategies, focusing on video content and creative collaborations.

Outdoor and Lifestyle Fusion: As consumers embrace healthy lifestyles, the line between outdoor functionality and lifestyle fashion will continue to blur.

Generative AI in Creativity: Gen AI’s role in enhancing human creativity will be pivotal in the fashion industry, extending beyond automation.

Fast Fashion Dynamics: The competitiveness of fast fashion is evolving, with new players challenging traditional approaches to pricing, customer experience, and speed.

Focus on Brand Marketing: Emotional connections and long-term brand building will become crucial as the industry shifts focus from performance marketing.

Sustainability Regulations: With increasing regulatory interventions, brands and manufacturers must adapt their business models to comply with new sustainability standards.

Supply Chain Volatility: The bullwhip effect in supply chains will pressure suppliers, emphasising the need for transparency and strategic partnerships.

The fashion industry is navigating a complex landscape marked by economic headwinds, consumer shifts, and the urgent need for sustainable practices. As it adapts to these challenges, the industry’s agility and innovative capacity will be critical to its continued resilience and growth. 

Download our guide here for a detailed look at 9 Types of Fashion Buyers in 2024 and beyond.

In our latest feature for the People in Research series at Kadence International, we’re thrilled to present an insightful conversation with Adhistya Febriani, Associate Research Director at our Indonesia office.

Adhistya Febriani is the driving force behind many of Kadence International’s successes in Indonesia. Her journey in market research began in 2012 when she joined Kadence. 

What started as a leap of faith transformed into a remarkable career marked by dedication, passion for learning, and a commitment to delivering results. Adhistya’s story shows the power of hands-on experience and continuous growth, making her an invaluable asset to the world of market research.

Here’s an in-depth discussion about her career, the future of market research and working at Kadence International. 

How did your journey in market research begin, and what led you to Kadence International?

Joining Kadence marked the beginning of my career in market research in 2012. Kadence caught my eye as a company that could help me bridge the gap between theory and practice. 

I learned the ropes of market research from scratch. This hands-on experience gave me insights into data collection, analysis, and strategic thinking. Kadence has been more than just a workplace; it’s been the foundation of my career growth.

You’ve had a swift progression at Kadence. What do you attribute this rapid advancement to, and what have been the key milestones in your career here?

My success can be attributed to:

  1. A combination of dedication.
  2. A passion for continuous learning.
  3. A commitment to delivering results.

Critical milestones in my career at Kadence International include:

  1. Achieving success in fostering repeated business with clients.
  2. Actively mentoring the team to excel as outstanding consultants.
  3. Overseeing the expansion into social media listening—an area beyond traditional surveys.

Additionally, I actively pursued professional development opportunities, such as Data Science and Analytics, which enhanced my skills and contributed to my growth within the company.

What aspects of market research do you find most fulfilling, and how has this passion evolved over your career?

I’ve had the opportunity to engage in diverse studies across various industries. What keeps me excited is that I’ve never worked on the same research or within the same industry year after year. This variation keeps the work engaging and allows me to approach each project with a fresh perspective. 

This continuous exposure to variety ensures that my work remains dynamic, and there’s always something new to discover and master in market research.

Can you share an example of an exciting or challenging project you’ve worked on at Kadence?

We had this exciting project at Kadence, where the client wanted to understand how consumers use this popular pay-later payment method in Indonesia. Pay-later is similar to a unique version of a credit card.

We employed qualitative and quantitative research across various cities in Indonesia, followed by workshops with the brand team to craft targeted messages for each customer segment.

The qualitative phase established a baseline, while the quantitative survey validated and quantified insights gained, supplying statistically significant data for segmentation analysis.

The results provided our clients with detailed segmentation of their target audience and offered actionable recommendations for tailored marketing strategies, product features, and customer communication to better address the specific needs of each identified segment.

In your role, how do you approach troubleshooting and problem-solving in complex projects?

I follow a systematic and collaborative approach. This involves breaking down the problem into smaller parts, identifying key variables, and assessing potential root causes. 

Once the problem is well-defined, I collaborate with team members. Brainstorming sessions are valuable tools in this phase. We assess each solution’s feasibility and potential impact, prioritising those with the highest likelihood of success and the most significant positive impact on the project.

Communication is essential throughout this process. Keeping stakeholders informed about progress, challenges, and proposed solutions fosters transparency and ensures alignment. 

Additionally, I remain adaptable and open to refining the approach as new information emerges during troubleshooting.

What advice would you give those new to market research, particularly in Indonesia?

Market research is a dynamic field. Stay curious and commit to continuous learning. Keep yourself updated on trends and developments by following industry news and reading market reports. 

Also, explore training programs and workshops focused on market research. I saw many organisations offer courses that provide practical skills and insights specific to the industry in Indonesia. 

Lastly, familiarise yourself with the technological tools commonly used in market research. This includes survey platforms, data analysis software, and other digital tools that streamline research processes. Being tech-savvy will enhance your efficiency and effectiveness in the field.

guide-to-gen-z

How does conducting market research in Indonesia differ from other regions, and what unique challenges does it present?

The urban-rural divide in Indonesia is pronounced. With over 17,000 islands comprising the Indonesian archipelago, each with distinct socio-economic dynamics, research strategies must account for the different lifestyles, preferences, and access to technology between urban and rural populations. 

While Indonesia has a rapidly growing digital landscape, there are still challenges related to internet penetration and technology accessibility, especially in rural areas. Researchers must adapt their methodologies to accommodate these digital literacy and access variations.

Indonesia is the world’s most populous Muslim-majority country, and religious considerations play a significant role in daily life. Researchers must be sensitive to religious norms and values, ensuring that research approaches and topics align with cultural and religious sensitivities.

What should foreign brands know or consider when entering the Indonesian market based on your research experience?

Based on my research experience, foreign brands require a holistic approach that acknowledges Indonesia’s cultural diversity, regional nuances, and linguistic variations.

As a result of Indonesia’s rich cultural diversity, we see varying consumer behaviours and preferences. Brands should tailor their strategies to accommodate these regional variations, recognising each market’s unique characteristics. 

For instance, cooking behaviour differs between Java and Sumatra, with Java Island leaning towards sweeter flavours, while in Sumatra, spiciness is more prevalent.

While Bahasa Indonesia is the official language, the archipelago’s linguistic diversity is vast. Localisation efforts, including language adaptation, are crucial for effective communication. Consideration of regional languages can enhance the brand’s reach and impact.

How have technological advancements influenced your approach to market research?

Technology advancements have significantly enhanced the efficiency of data collection and analysis. 

The shift towards digital surveys and online platforms has played a pivotal role in streamlining data collection processes. These tools not only facilitate quicker response times but also ensure a broader reach and more efficient organisation of survey data.

Integrating survey data and social media listening tools has also become integral to our research approach. Social media listening lets us gauge public sentiment, track trends, and understand online conversations about brands or products in real-time.

Kadence Indonesia is currently in the process of developing capabilities in AI and machine learning. We look forward to leveraging these advancements to gain deeper insights and deliver even more impactful research outcomes.

travel-trends

Can you discuss any innovative methods or technologies that Kadence has adopted under your leadership?

Recognising the growing significance of online conversations, I’ve been selected to lead the development of advanced social media listening tools. 

These tools help us track what people say online about brands and products in real time. They’ve added a new layer to our research, giving us a deeper understanding of what consumers think and like.

How do you stay updated with the latest trends and developments in market research?

I keep up with the latest trends in market research by following critical influencers on LinkedIn, subscribing to the Harvard Business Review, and reading Kadence’s newsletter every month. Additionally, I find professional growth and development by reading 1 to 2 books per month. 

I also enjoy listening to our podcast, ‘The Elusive Consumer,’ which gives me valuable insights from the CEO of Kadence America. This mix helps me stay on top of what’s happening in our industry.

How do you balance the demands of your role with personal time and hobbies?

Balancing the demands of my role with personal time and hobbies is crucial for maintaining a healthy lifestyle. Integrating my hobbies, like running, into my routine helps create a sense of balance. 

It has become a habit for me to run in the early mornings before the official working hours begin. 

This ritual helps me recharge and sets a positive tone for the rest of the day, keeping me energised and focused.

You’ve been involved in social services, like the orphanage buddy program. How do these experiences influence your professional perspective?

It has significantly shaped my professional perspective. Engaging with the orphanage buddy program, where I had the opportunity to mentor and support young individuals, taught me the importance of effective communication, patience, and the ability to tailor my approach to meet individual needs. This hands-on experience has enhanced my interpersonal skills, enabling me to collaborate more effectively with colleagues and clients from various backgrounds.

What are your professional goals for the next few years at Kadence International?

My goals at Kadence International for the next few years are all about growing and making a positive impact. Firstly, I want to take on more leadership roles, using my experience to help with important decisions and managing projects.

I also want to improve in new market research areas, like data analytics, data science, and artificial intelligence. This way, I can bring fresh and smart solutions to our clients.

I’m excited about creating a teamwork environment where everyone works well together. I want to help the team members learn and do their best in their jobs.

Overall, I’m eager to help Kadence succeed, keep learning, and adapt to the fast changes in our industry.

Where do you see the market research industry in Indonesia heading in the near future?

I’m optimistic about the significant changes happening in the market research industry in Indonesia, but these changes may take some time, especially considering Indonesia’s diverse regions and populations. 

Adopting advanced technologies like data analytics and artificial intelligence might be gradual due to these regional variations. Overall, I see a positive direction as most of the market research firms in Indonesia embrace new ideas and figure out how to handle the unique challenges in different parts of Indonesia.

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Have you ever wondered why obtaining a bank loan isn’t as easy as shopping online? Or why selecting a health insurance policy isn’t as quick as booking a hotel?

The modern consumer has higher expectations and is increasingly asking these questions. Brands that cater to these expectations stand to beat the competition and garner customer loyalty. 

So, if you think you know your competition, think again. 

A senior executive at IBM once captured the modern consumer’s needs: “The last best experience anyone has anywhere becomes the minimum expectation for the experience they want everywhere.” 

This statement challenges most executives’ understanding of competition —that they’re limited to major players or emerging brands in their industry. However, what if the real competition extends beyond your industry? How do brands craft a winning strategy when they’re not just competing with industry peers but also with ever-evolving customer expectations shaped by their best experiences in other sectors? 

In the past,, brands gauged their competition based on rivals within their industry. A car dealership compared itself to other car dealers, a bank to other banks. This approach, while logical, is increasingly becoming outdated. In a connected world where consumers can instantly compare services and products across sectors, their expectations are no longer siloed within industry lines.

A coffee shop isn’t just competing with the café next door but also with the fast, personalised service of tech firms or the immersive experience of a luxury retailer. This broader perspective on competition compels brands to innovate continually, not just in their product or service offerings but in customer experience, convenience, and reliability.

The story of Amazon epitomises this change. Once an online bookstore, Amazon became a colossal e-commerce platform, challenging bookstores and retailers across countless sectors. Their competitive edge? Understanding and setting new benchmarks in customer expectations.

Most recently, Dubai International Airport set new benchmarks in its sector by introducing a new biometric system that allows travellers to Dubai to travel without a passport, which makes the experience more pleasant. 

Rethinking competition means brands must now consider how they stack up against the best experience a customer has had anywhere, not just against their traditional industry competitors. It’s a move from industry-focused to customer-experience-focused competition, a transition that requires a deep understanding of customer expectations far beyond industry boundaries.

Role of Market Research in Revealing True Competitors

Market research is integral to identifying a brand’s opportunities. It helps companies understand who they compete against and their customers’ evolving expectations. For instance, a fast-food chain might find its real competition lies not only with other fast-food outlets but with the expected experience whenever or whatever they buy.

Chick-fil-A, a U.S. fast-food chain known for its chicken sandwiches, redefined its customer service by looking beyond its immediate competitors in the fast-food industry. This venture was initiated through a partnership with Horst Schulze, the COO of Ritz-Carlton at the time, as the hotel chain is synonymous with luxury and exceptional customer service.

The Challenge:

Chick-fil-A was already performing well against its direct fast-food competitors. However, Schulze’s assessment that they were the “best of a bad lot” challenged them to aim higher, to compete not just with other fast-food chains but also with sit-down and fine-dining restaurants known for their superior customer service.

Market Research and Strategy:

To bridge this gap, Chick-fil-A executives thoroughly analysed these higher-end dining experiences. They conducted surveys and customer feedback sessions to understand the most valued service elements in these settings. The result was the creation of the “Core 4” principles of customer service, focusing on creating eye contact, sharing smiles, using an enthusiastic tone, and personalising customer interactions.

Image Courtesy: Chick-fil-A

Further Consultation with Danny Meyer:

Chick-fil-A didn’t stop with the insights from Ritz-Carlton. They also consulted with Danny Meyer of Union Square Hospitality Group, who is renowned for his hospitality expertise. Meyer, who later founded the popular fast-casual chain Shake Shack, worked with Chick-fil-A to deepen their understanding of hospitality, emphasising the importance of going the extra mile in service, a relatively uncommon fast food concept.

Impact and Results:

Implementing these strategies led to a significant transformation within Chick-fil-A’s service model. As a Chick-fil-A executive noted, the impact on sales, profits, and overall customer engagement was profound. The adoption of “second-mile service” became a hallmark of Chick-fil-A, noticeably differentiating them from their traditional fast-food competitors.

Competitive Analysis Across Industries

Conducting a competitive analysis beyond your immediate industry is crucial. This broader approach can uncover valuable insights and innovative practices from various sectors, offering a more comprehensive view of the competitive terrain.

brand-analysis

How to Conduct a Cross-Industry Competitive Analysis

Identify Key Competitors in Other Industries: Identify companies in other sectors admired for customer service, innovation, or efficiency. These could be organisations your customers frequently compare you to, even if they are outside your direct line of business.

Gather Information: Utilise public resources like company websites, press releases, case studies, and industry reports to gather information about these competitors. Pay attention to their business models, customer engagement strategies, marketing approaches, and operational efficiencies.

Analyse Customer Reviews and Feedback: Look at customer reviews and feedback for these companies. Platforms like social media, online forums, and review sites can provide insights into what customers value in their experiences with these brands.

Study Their Service Delivery and Processes: Examine how these companies deliver their services or products. What makes their process stand out? How do they handle customer service, and what are their operational efficiencies?

Benchmark Against Best Practices: Compare these findings against your practices. This benchmarking should cover customer experience, service speed, technological adoption, and innovation.

SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis for both your company and the companies in other industries. This comparison can highlight areas for improvement and potential opportunities for your brand.

Learning from Best Practices in Different Sectors:

  • Adopting Technological Innovations: Look at how tech companies use technology to enhance customer experience and consider how you could implement similar technologies in your sector.
  • Customer Service Excellence: Study the customer service strategies of companies known for outstanding customer care, like luxury hotels or high-end retailers, and integrate applicable elements into your customer service approach.
  • Efficiency Models: Analyse the operational efficiency of companies in industries like manufacturing or logistics. Their practices could offer insights into streamlining your processes.
  • Innovative Marketing Strategies: Observe companies’ marketing tactics in creative industries or those that have successfully tapped into new customer segments.
  • Sustainability Practices: Learn from companies leading in sustainability and environmental responsibility. For instance, even if you are a beverage brand, you can learn from Patagonia, a clothing brand that is leading in sustainability. This could improve your company’s environmental impact and enhance your brand image.

Using Market Research to Adapt to Market Conditions and Customer Expectations

  • Continuous Market Monitoring: Regularly monitor market trends and consumer behaviour to stay ahead of changes and adapt strategies accordingly. Through constant market research and monitoring, Nike remains innovative with new product lines. In recent years, Nike introduced athleisure wear in response to the growing fitness and casual lifestyle blending trend.
  • Feedback Loops: Establish mechanisms for continuous customer feedback to gauge the effectiveness of the implemented strategies and make adjustments as needed. For example, Xiaomi, a Chinese consumer electronics brand, uses a unique business model that relies heavily on customer feedback. They regularly update their smartphones and other electronic products based on consumer suggestions gathered through online forums and social media, ensuring they stay closely aligned with user needs and preferences.
  • Agility in Strategy Execution: Be prepared to quickly alter or refine strategies in response to market feedback or shifts in the competitive landscape. Faced with unprecedented challenges in the restaurant industry due to lockdowns and restrictions during the pandemic, McDonald’s swiftly adapted its approach. They expanded contactless ordering and delivery options, simplified their menu to streamline operations, introduced promotions, implemented rigorous safety measures for employees and customers, and engaged in community support efforts. This rapid response allowed McDonald’s to maintain its customer base, ensure employee safety, and serve as a dependable source of affordable food during a crisis, showcasing its ability to pivot and succeed in a changing market landscape.
  • Incorporating Technology: Leverage technology to enhance customer engagement, streamline operations, and gather data for ongoing market analysis. For example, Amazon has continuously leveraged technology to improve customer engagement and streamline operations. From its recommendation algorithms to the use of AI and robotics in its warehouses, Amazon uses technology to improve efficiency and the customer experience.
  • Sustainability and Social Responsibility: Integrate sustainable practices and social responsibility into business strategies, aligning with the increasing consumer emphasis on ethical and environmental considerations. For instance, Toyota has long been a leader in sustainability, particularly with its development of hybrid and electric vehicles like the Prius. Their commitment to reducing environmental impact through sustainable practices is a core part of their business strategy, aligning with global concerns about climate change.
beauty-trends

Final Thoughts —Use Customer Expectations as a Competitive Benchmark

Working with global brands across industries and geographies, we have uncovered a critical insight: many brands may not fully realise who their competitors are. As we’ve seen through various successful brand examples, your competitors may sometimes be different from the ones you’ve traditionally considered. Instead, they could be any brand or service that sets the expectations for your customers, often from entirely different industries.

Customers today are exposed to a wide range of services and products, from online retail giants to high-tech consumer electronics. The quality of service and efficiency they experience in one sector invariably shapes their expectations of others. This shift means a brand is no longer just competing within its industry but also against the best practices of sectors far removed from its own.

Market research emerges as a powerful tool in this scenario. It helps you understand what your customers expect based on industry standards and their best experiences in any sector. These expectations become your competitive benchmark. Whether it’s the seamless convenience of an app, the personalised service of a luxury hotel, or the efficiency of a tech giant, these are the standards against which your customers are measuring you.

Therefore, brands must engage in market research and competitive analysis continuously. This ongoing process will help you stay abreast of current market trends and customer expectations and allow you to anticipate future changes. Understanding and adapting to these evolving benchmarks allows your brand to remain competitive in a market reshaped by new players, technologies, and consumer behaviours.

Look beyond your industry, learn from the best in all sectors, and use these insights to refine and enhance your business strategies. This continuous market research and competitive analysis is essential for sustained success and growth in a rapidly changing market.

For more information on how to conduct a competitive analysis, contact us here.

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Imagine you’re planning an ad campaign where a group of animals take on human roles in a humorous setup – think of dogs walking on two legs, dressed in business suits, holding a meeting. Drawing on charm and humour, this idea is a sure winner in your team’s eyes. However, without proper ad testing, there’s a risk you won’t realise until after the launch that your audience might find this concept too whimsical or unrelated to the serious nature of your product.

Ad reactions are deeply personal and vary widely among different demographics. A clever and humorous concept in one segment might be perceived as irrelevant or inappropriate by another. This is where the importance of ad testing comes into play. 

Through this process, you can validate whether the creative elements of your campaign – in this case, animals in human scenarios – effectively convey your message and resonate with your target audience. It helps fine-tune the ad to ensure it captures attention, appropriately reflects the product’s value, and aligns with your brand image.

Testing your ad concept before its full-scale launch provides invaluable insights into consumer preferences and behaviour. It’s a critical step in ensuring that your ad campaign is well-received, memorable, and, most importantly, effective in driving your marketing objectives.

Advertising has evolved dramatically with the advent of social media, search engines, and mobile devices. How ads reach consumers has become more varied and complex. This proliferation of digital channels means ads can be tailored and targeted more precisely than ever. However, this also implies a greater challenge in capturing and retaining consumer attention amidst a sea of digital content.

With rapid media consumption and shifting consumer preferences, understanding the impact of your ad before it goes live is more crucial than ever. Ad testing provides a vital bridge between a creative concept and its real-world reception, ensuring the message not only reaches the right audience but also resonates with them. By integrating ad testing into marketing strategies, brands can significantly improve the efficiency and effectiveness of their advertising efforts, ensuring they stay relevant and compelling in the ever-evolving digital world.

What is Ad Testing? Understanding the Cornerstone of Effective Marketing

Ad testing is the evaluation of an advertisement’s effectiveness before it goes live to a broader audience. This process isn’t about gut feelings or aesthetic preferences; it’s a calculated, data-driven approach to predict how well an ad will perform. It involves exposing a target demographic to an ad and then collecting and analysing their responses to gauge its potential success.

Unlike traditional market research methods that may focus broadly on brand perception or product preferences, ad testing is specifically tailored to understand the impact of a particular advertisement. It evaluates various elements like the ad’s appeal, clarity of the message, call to action, and overall effectiveness in driving the desired response from the audience.

Differentiating Ad Testing from Other Marketing Research Methods

Ad testing stands apart from other forms of marketing research due to its focused approach. While general market research might gather broad insights about consumer behaviours and preferences, ad testing focuses on the specific reactions and engagement elicited by an advertisement. This specificity allows for more precise adjustments and optimisation of marketing campaigns.

Key Components of an Effective Ad Testing Strategy

An effective ad testing strategy involves several key components:

Clear Objective Setting: Defining what you want to achieve with the ad test, whether it’s testing the ad’s appeal, message clarity, or call to action.

Target Audience Selection: Identifying the right demographic that represents your intended market.

Methodology: Choosing the appropriate testing method (e.g., surveys, focus groups, online testing) that aligns with your objectives and audience.

Data Analysis: Rigorously analysing the collected data to draw meaningful insights that can inform ad optimisation.

But why is this step so crucial in an advertising strategy? 

The answer lies in understanding the ever-evolving consumer. Today’s consumers are bombarded with an overwhelming number of ads daily. The average American is exposed to 4,000-10,000 ads per day.

Ad testing allows marketers to refine their messages, ensuring they strike the right chord with their intended audience. It’s not merely about avoiding campaigns that could flop but maximising the impact of every dollar spent on advertising. By testing ads, brands can identify which aspects of their advertising are most effective: the imagery, the copy, or the overall concept. This process can significantly improve return on investment (ROI), as it helps avoid spending on ads likely to underperform.

This methodical approach also fosters a deeper understanding of consumer preferences and behaviors. Through ad testing, brands can gather insights beyond a single campaign’s success. This data can inform broader marketing strategies, helping brands stay aligned with their audience’s evolving tastes and expectations.

Why Testing Advertisement Effectiveness is Important

Ad testing is more than a pre-launch checkpoint. It’s a strategic tool that empowers advertisers to make informed decisions, ensuring their creative efforts align with business objectives and audience preferences. As the advertising world continues to shift, the importance of ad testing only grows, solidifying its role as a cornerstone of effective marketing.

The importance of this process can be distilled into several key areas, including its impact on ROI, understanding consumer behaviour, and learning from both successful and failed ad campaigns.

Impact on Return on Investment

The most immediate and measurable impact of ad testing is seen in the Return on Investment (ROI). By identifying which aspects of an advertisement resonate most with the target audience, brands can allocate their budgets more effectively, ensuring every dollar spent contributes to a higher conversion rate. Ad testing helps refine the message, media, and targeting strategies, maximising the ad’s effectiveness and ROI. It reduces the risk of investing in an ad campaign that fails to connect with the audience or damages the brand’s reputation.

Understanding Consumer Behavior and Preferences

Ad testing goes beyond the surface level of consumer reactions to ads; it delves into understanding why certain elements work or don’t. This process uncovers valuable insights into consumer behaviour and preferences, allowing brands to effectively tailor their marketing strategies. By understanding the emotional and psychological triggers that drive consumer actions, brands can create more impactful and engaging content that aligns with the audience’s values and interests.

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Types of Ad Testing Methods

Advertising testing methods have evolved significantly, allowing marketers to gain deeper insights into the effectiveness of their campaigns. Understanding these methods is crucial for implementing successful advertising strategies.

Pre-testing vs. Post-testing: Definitions and Comparisons

Pre-testing is about prediction and optimisation, while post-testing focuses on performance evaluation and learning.

Pre-testing

As the name suggests, pre-testing is conducted before the advertisement is fully launched. This method aims to predict the ad’s effectiveness in engagement, message delivery, and potential impact on the target audience. Pre-testing helps fine-tune the ad’s content and presentation to ensure maximum impact upon release.

Post-testing

Contrastingly, post-testing is conducted after the ad has been released to the market. This method evaluates the ad’s actual performance in real-world settings. It assesses metrics like recall, reach, and actual impact on sales or brand perception. Post-testing provides insights into the effectiveness of the ad and informs future marketing strategies.

Quantitative Methods

Surveys

Surveys are a common quantitative method used in ad testing. They involve collecting structured responses about the ad from a selected audience. Surveys can measure various aspects, such as ad recall, brand perception, and purchase intent. They are valuable for gathering statistically significant market research data that can be generalised to a broader audience.

Online Tracking

Online tracking involves using digital tools to measure the performance of online ads. This method can track metrics such as click-through rates, impressions, engagement rates, and conversion rates. Online tracking provides real-time market research data, making it essential for evaluating the immediate impact of digital ads.

Qualitative Methods

Focus Groups

Focus groups involve a moderated discussion with a small group of target audience members about the ad. This market research method allows in-depth discussions about the ad’s appeal, messaging, and perceived effectiveness. It’s beneficial for gaining qualitative insights into audience attitudes and emotional responses.

Interviews

Individual interviews offer a more in-depth exploration of an individual’s thoughts and feelings about an ad. Unlike focus groups, interviews can provide deep, personal insights without the influence of group dynamics. They are essential for understanding personal consumer attitudes and perceptions.

Neuromarketing Techniques

Eye-Tracking

Eye-tracking technology measures where and how long a viewer looks at different elements of an ad. This ad testing method in market research provides insights into what captures the audience’s attention and how they visually interact with the ad. It’s especially useful for optimising the design and layout of the ad.

Facial Coding

Facial coding is used to analyse the micro-expressions of viewers while watching an ad. This ad testing technique helps understand the emotional responses elicited by the ad. Facial coding can be crucial in measuring the audience’s emotional engagement and subconscious reactions to the ad.

Each of these methods has its strengths and is often used in combination to provide a comprehensive understanding of an ad’s effectiveness. By leveraging these diverse testing market research methods, marketers can significantly enhance the impact and success of their advertising campaigns.

How to Run Ad Testing

Running ad testing effectively involves several key steps, each crucial for deriving meaningful insights to optimise your ad campaigns. Let’s delve into the process:

Setting Clear Objectives for Ad Testing

Before beginning any ad testing, defining what you aim to achieve is essential. Clear objectives guide the entire ad testing process and determine the type of testing to be conducted. Objectives can range from understanding the ad’s impact on brand perception to gauging direct response in terms of clicks or conversions. Common goals include testing ad recall, message clarity, emotional response, or call-to-action effectiveness.

Designing the Test: Choosing the Right Sample, Methods, and Metrics

Choosing the Right Sample

Selecting an appropriate sample of your target audience is critical. This sample should represent your broader audience to ensure the findings are relevant and actionable. Consider factors like demographics, consumer behaviour, and psychographics in your selection.

Choosing Methods and Metrics

Based on your objectives, decide on the testing methods (surveys, focus groups, online tracking, etc.). Additionally, identify the ad testing metrics that will indicate the success or failure of the ad. These could include engagement rates, conversion rates, or survey response patterns.

Implementing the Test: Timing, Platforms, and Managing Variables

Timing

The timing of your ad test can significantly influence the results. For pre-testing, ensure you have enough time to incorporate feedback before the campaign launch. For post-testing, choose a period that reflects typical consumer behaviour to avoid seasonal or event-specific biases.

Platforms

Choose platforms that align with where your ad will be ultimately displayed. Consider the specific online channels (social media, search engines, etc.) for digital ads. For traditional media, consider conducting tests in environments that mimic where the ad will be featured.

Managing Variables

Control extraneous variables that might skew the results. This includes factors like the time of day, the context in which the ad is shown, and the medium used for testing.

Analysing and Interpreting Results: Making Data-Driven Decisions

After collecting the data, the next step is analysis and interpretation. Look for patterns and insights that align with your objectives. Use statistical tools and methodologies to interpret the data accurately.

  • Quantitative Data Analysis: Using statistical methods to identify significant trends and correlations for data from surveys and online tracking.
  • Qualitative Data Analysis: For data from focus groups and interviews, analyse the themes, emotions, and narratives that emerge. This may involve content analysis and coding.

The goal of ad testing is not just to validate an idea but to refine it. Effective ad testing is iterative – continually learning from each test and applying these learnings to optimise your advertising strategy.

So use these insights to make informed decisions. This could mean adjusting your ad based on feedback, re-targeting your campaign to a different demographic, or even revising the messaging to better align with your audience’s preferences.

Choosing the Right Platform or Service for Ad Testing

Selecting an appropriate platform or service for ad testing is crucial for obtaining accurate and actionable insights. The market offers a variety of tools and services, each with unique features and capabilities. Here’s a guide to help you navigate this choice:

Digital Platforms

  • Google Ads: Offers tools for ad testing, including A/B testing, and provides extensive reach through the Google network.
  • Facebook Ads Manager: Suitable for social media ad testing, with robust targeting options and detailed analytics.
  • Twitter Ads: Provides testing capabilities for Twitter-specific advertising campaigns.

Specialised Testing Services

  • Optimisely: Known for its A/B testing capabilities and personalised content optimisation.
  • VWO (Visual Website Optimiser): Offers A/B testing, split testing, and multivariate testing for websites and mobile apps.
  • For more traditional, research-based ad testing services, contact us here. 
Image credit: Qualtrics

Criteria for Selecting a Platform

Budget: Consider the cost of the platform and ensure it aligns with your advertising budget. Some platforms offer tiered pricing based on usage and features.

Scale: Assess the scale at which you’ll be advertising. Larger campaigns may benefit from platforms with extensive reach and advanced targeting capabilities.

Demographics: Choose a platform that effectively reaches your target demographic. For instance, younger audiences may be more accessible through social media platforms like Instagram or TikTok.

Type of Ads: Match the platform with the types of ads you plan to test. For example, video ads perform best on YouTube or TikTok, while display ads are more effective on Google or programmatic ad networks.

Recommendations for Different Business Sizes and Industries

Small to Medium Enterprises (SMEs): Consider cost-effective platforms with easy-to-use interfaces, like Facebook Ads Manager or Google Ads. These platforms also offer valuable data for local targeting.

Large Enterprises: Opt for comprehensive solutions for integrated marketing needs.

E-commerce: Platforms like Google Ads and Facebook Ads Manager offer robust tools for retargeting and conversion tracking, which is essential for e-commerce businesses.

B2B Industries: LinkedIn Ads can be highly effective for B2B ad testing due to its professional user base and targeting capabilities.

Integration with Other Marketing Tools and Analytics

Choose a platform that integrates well with your existing marketing tools and analytics software. Integration facilitates seamless data transfer and comprehensive analysis, providing a holistic view of campaign performance. 

Platforms that offer APIs or native integrations with CRM systems, Google Analytics, or email marketing software are typically advantageous.

Best Practices in Ad Testing

Ad testing is not just about gathering data and refining strategies; it’s also about maintaining high ethical standards, respecting consumer privacy, and continuously adapting and learning. Here are some best practices in ad testing:

Adapting to Changing Market Trends and Consumer Behavior

Market Research: Keep abreast of changing market trends and shifts in consumer behaviour. Regular market research can help you adapt your ad testing strategies to current realities.

Flexibility: Be flexible in your approach. If a specific type of ad or message no longer resonates with the audience, be ready to pivot and test new concepts.

Target Audience Understanding: Continuously update your understanding of your target audience. What worked a year ago might not be effective today due to changes in consumer preferences or societal trends.

Continuous Learning and Improvement in Ad Strategies

Learning from Data: Use the data collected from ad testing to learn what works and what doesn’t. This is about improving a single campaign and refining your overall advertising strategy.

Iterative Process: View ad testing as an iterative process. Continuous improvement should be the goal, meaning that each round of testing should build on the insights gained from the previous one.

Integrating Feedback: Integrate feedback from your target audience and your internal team. Different perspectives can provide valuable insights.

Benchmarking: Regularly benchmark your ad performance against industry standards and competitors. This helps in understanding where you stand in the market and identifying improvement areas.

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The Future of AdTech: Key Ad testing Technology Trends in 2023 and beyond

As of 2023, the field of AdTech is evolving with new trends and challenges, particularly in privacy and digital advertising. 

These trends reflect a shift toward enhancing traffic quality, leveraging automation for outcome-driven advertising, focusing on superior user experiences, balancing efficient ad solutions with user privacy, and adapting to the surge in mobile usage. 

Here’s a brief overview of each trend:

  • Enhanced Focus on Traffic Quality: This trend emphasises the importance of traffic quality in digital advertising. Advanced technologies are being developed to monitor traffic quality in real-time, offering solutions to combat ad fraud and improve targeting accuracy.
  • Automation and Outcome Orientation for Advertisers: Advertisers are increasingly adopting automated solutions focusing on achieving specific outcomes, like sales or conversions, rather than just ad impressions or clicks. This shift allows for more efficient and targeted advertising campaigns.
  • Striving for the Best User Experience for Publishers: The aim is to balance effective ad delivery with a positive user experience. This includes using AI-based solutions to show relevant ads without disrupting the user’s online experience.
  • Matching Efficient Ad Solutions with User Privacy: There’s a move towards ethical marketing practices in response to privacy concerns. This involves finding new ways to deliver relevant ads while respecting user privacy, particularly in light of changes to data collection policies like the phasing out of third-party cookies.
  • Mobile Usage Growth: With the rapid growth of mobile internet usage, advertisers focus more on mobile traffic and in-app advertising. This includes developing solutions tailored to mobile users, reflecting the increasing importance of this demographic in digital marketing strategies.

Final Thoughts

Digital advertising is where creativity meets data, so the key to success is harmoniously embracing both elements. The integration of data-driven insights with creative vision not only enhances campaign effectiveness but also ensures relevance in a rapidly changing market.

As we forge ahead, the true art of advertising will be in this synthesis, balancing the allure of creativity with the precision of data, ensuring that messages captivate and connect with audiences effectively.

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