We’ve been working with Bloomberg since the start of pandemic to understand how the priorities, actions and attitudes of business decision makers across APAC are evolving. Take a look at the infographic for the key insights from our latest wave including:

  • 67% of businesses are confident that their companies can continue to operate if another wave of the pandemic strikes
  • Brands are looking towards e-commerce and social commerce to power future growth. 87% business leaders plan to use digital platforms as their sales channels in the next 1 to 3 years, with 74% looking towards social commerce. 1 in 4 expect to decrease their use of physical stores
  • Expectations of brands are rising. 66% are looking for brands that use their resources to give back to society, up from 56% in wave 2 (June 2020)
  • The pandemic has placed greater attention on health and wellness with 55% of businesses now engaging an external partner to provide health and wellbeing services
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Market segmentation studies are powerful tools for brands. They help organizations divide a market into distinct segments that share specific attributes. The company can then focus on the most lucrative of these market segments. In this article, we outline the key benefits of this approach.

What is market segmentation in market research?

Market segmentation (sometimes called marketing segmentation) is a marketing strategy that identifies select groups of customers and how to present products to these groups to maximize appeal.

Market segmentation helps brands send the right message by efficiently targeting specific groups of consumers. By dividing a target market into approachable groups, market segmentation creates subsets based on demographics, needs, priorities, interests, and other psychographic and behavioral criteria. By understanding market segments, brands leverage this targeting in product development, sales, and marketing strategies. 

The benefits of market segmentation studies

Focus on the customers that matter most

The core principle at the heart of market segmentation is to break the market into groups of customers you can target rather than addressing the market as a whole. Rather than being all things to all people, this approach allows you to zone in on the most valuable customers for your organization so that you can focus your efforts where it matters most.

So what does this look like in practice? A recent case study brings this to life. We partnered with a leading university to design a segmentation of its alums. Securing donations from alums is a core revenue stream for universities. You may assume that targeting all alums equally is a surefire way to elicit donations. But in reality, a small proportion of alums make the most difference.

There are many ways of segmenting a market. In this instance, we opted for a needs-based segmentation, where we explored the attitudes and values of past students. A demographic segmentation would have allowed us to target those in the highest income bracket or particular professions. But, what mattered, in this case, was the attitudes of the alumni towards the university. We helped our client see that those that had enjoyed their time there and considered it a valuable stepping stone towards their future career were most likely to donate. Dividing the market up in this way means that you can focus on the customers that are most profitable or easiest to convert. This in turn helps to lower your acquisition costs.

Power new product development

Another benefit of carrying out a market segmentation study is that it can uncover new opportunities for innovation. Needs-based segmentations are particularly valuable for this purpose. They do as the name suggests: break the market into distinct segments based on customer needs. 

This can be a great starting point for innovation. By understanding what customers are looking for from your brand or the category and the pain points they face, you can identify whitespace and design products, services, and experiences that truly meet their needs.

Segmentation studies can also help post-launch. They can help you to understand where a specific product falls short versus consumer needs and how it can be improved to pull ahead of the competition.

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Design more effective marketing

Segmentation studies can also provide valuable input to your marketing strategies. They indicate who to target and can reveal where to find these people and how to speak to them. Brands can spend their marketing dollars more wisely and achieve greater cut-through with their comms.

Your brand could be investing in TV advertising year after year, hoping to reach as much of the mass market as possible. A segmentation might reveal that the people you want to target are Instagram addicts or avid readers of a particular publication. This target audience could be reached on these channels at a much lower price. In a world where we can harness digital platforms to target at such a granular level, understanding who to reach and where to find them is vital for any successful marketing strategy.

Another application of segmentation to marketing strategy development is shaping your marketing messaging. Different customers react differently to different messages, and segmentations can help you understand what to say to who. Imagine you’re a mobile phone company with a broad audience of all ages and tech proficiency levels. 

Segmenting your customer base will allow you to create targeted campaigns that appeal to the needs of each segment. Your early adopters may want to see your new device’s technical specifications front and center. But your bargain hunters are likely to want to see something else entirely. By taking a targeted approach to your marketing, you’ll achieve better engagement with your campaigns and maximize conversion.

Deliver better customer service

Segmentation studies are often mistakenly seen as belonging to the marketing department. To get real value from segmentation, the segments should be shared with and understood by everyone in the business – from the CEO to the customer and sales assistants.

We worked with an online dating service to identify key segments based on usage patterns and other behaviors. We then assigned all existing customers in the company’s database to one of these segments. This information popped up wherever the customer interacted with the firm. This proved a powerful tool for the company’s call center operators, who quickly got a sense of the type of person they were talking to – and could understand how best to approach them. 

This is something you’ll have recognized in your interactions with brands yourself. That network provider that offers you new benefits to stay at the slightest hint you’re dissatisfied? The TV provider knows what service to provide you based on your viewing history? These are all based on powerful segmentations designed to empower those working in customer service. With the proper knowledge, customer service agents can up-sell or aid customer retention.

Use your resources more efficiently.

As the examples above demonstrate, segmentation studies can be instrumental in helping businesses understand where to focus. 

Segmentation studies allow for more efficient use of resources – whether they are human resources (for example, getting a sales team to focus on a specific market segment for their outbound activities), or budgetary resources (for example, investing in a trade show that you know is popular with your target customer).

This emphasis on using resources wisely is why market segmentation studies can be most beneficial for the businesses that are least likely to consider them: small to medium-sized enterprises. The most effective market segmentations do require some investment as they rely on market research to understand behaviors, attitudes, values, and needs. But until you can invest, our advice is to start small. 

Take a more fundamental approach to segmentation. This could be a geographic segmentation. You could also segment on demographic factors or behavioral data if you’re lucky enough to have this. This can cut through the noise and provide a much-needed focus for your business.

Develop a more customer-centric culture

A further benefit of market segmentation is that it can result in a more customer-centric company culture, encouraging employees across departments to understand your target market and their needs and to place this at the heart of everything they do.

But it’s important to recognize that developing a segmentation alone will not automatically result in a shift in company culture. This needs to be actively managed, and you can do several things to encourage this.

The first is to secure buy-in to the segmentation early on. You can do this by working with key stakeholders to ensure they are involved and engaged in the process. Segmentations can be disruptive. Ensuring that the people using it feel a degree of ownership of the customer segments is critical if they are to be embraced and adopted long-term.

The second is ensuring that segments are communicated across the organization. Segments should be easy to understand and distinguish from one another. Visual outputs can be a helpful tool in aiding understanding and memorability. 

Over the years, our in-house design team has developed a range of deliverables that transformed slides that may not have made it beyond the insight department into easily accessible outputs that help all employees to embrace the segments and ensure they live on in the business. These deliverables should be shared far and wide. Everyone – from the engineer working on a new car model to the sales team at the dealership – should be able to visualize the segments and have them front of mind in their day-to-day work.

Our final tip for encouraging a more customer-centric culture is to activate the segments and embed them into future strategies. We often work closely with individual teams to help them understand what the segments mean for their department and role.

Create a superior experience for customers

Ultimately, the real benefit of segmentation is the impact on the end customer. Targeted marketing, great customer service, and innovation rooted in customer needs will create a fantastic customer experience that drives brand loyalty.

Segmentations can be powerful tools. In a world where behaviors, needs, and attitudes have drastically shifted, they are more critical than ever. Find out more about our experience in running market segmentation studies, or get in touch to discuss a specific challenge.


Market segmentation is a crucial strategy for businesses to target and cater to specific customer groups effectively. By tailoring your strategy based on the needs of your key customer segments, you can better appeal to the customers that matter most. This guide explores four key types of market segmentation: geographic, demographic, firmographic, and behavioral.

Geographic Segmentation

Geographic segmentation divides the market based on location factors such as:

  • Country
  • Region
  • City
  • Area (urban, suburban, rural)
  • Climate or season
  • Timezone
  • Language

Example: An automotive manufacturer selling four-wheel drives may target rural areas where such vehicles are more practical. However, relying solely on geographic data can be limiting as other factors like income and lifestyle also play significant roles.

Demographic Segmentation

Demographic segmentation creates customer segments based on demographic information, including:

  • Age
  • Gender
  • Income level
  • Level of education

Example: A luxury brand might focus on customers who earn above a certain income threshold, as they are more likely to afford high-end products. However, assuming that people of the same age or income level are alike can lead to ineffective marketing strategies, as demonstrated by Air France’s failed millennial-targeted airline, Joon.

Firmographic Segmentation

Firmographic segmentation is often used for segmenting B2B customers and relies on similar principles to demographic segmentation, looking at factors such as:

  • Company size
  • Industry
  • Job title

Example: Segmenting businesses by company size can help tailor services to the specific needs of small, medium, and large enterprises. However, it’s important to remember that individuals within these companies have unique motivations and values that also need consideration.

Behavioral Segmentation

Behavioral segmentation analyzes customers based on their past behaviors such as:

  • Spending patterns
  • Browsing history
  • Interactions with the brand

Example: E-commerce sites can use browsing history to tailor product recommendations, enhancing the shopping experience. However, behavioral segmentation based on digital footprints only tells half the story and may miss deeper customer motivations.

Needs-Based Segmentation

Needs-based segmentation creates customer groups based on attitudinal factors such as:

  • Needs
  • Values
  • Motivations
  • Priorities

Example: This approach allows businesses to understand how their products or services fit into customers’ lives, helping to put customer needs at the heart of their strategy. It can also reveal opportunities for innovation by identifying unmet needs.

Summary

Market segmentation includes geographic, demographic, firmographic, and behavioral types, each offering unique insights into customer behavior and preferences. By employing these segmentation strategies, businesses can create personalized experiences, retain loyal customers, and effectively target their desired audience.

FAQs

What is market segmentation? Market segmentation is the process of dividing a broad consumer or business market into sub-groups based on shared characteristics.

Why is geographic segmentation important? Geographic segmentation helps businesses tailor strategies to local needs, making it easier to target specific areas effectively.

How does behavioral segmentation improve marketing? Behavioral segmentation allows businesses to tailor marketing efforts based on customers’ past behaviors, leading to more relevant and impactful campaigns.

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Find out more about our capabilities in market segmentation or get in touch to discuss a new project with us. We’d be happy to share our expertise.

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How do you calculate your market size and the serviceable obtainable market??

This is a crucial part of any business plan, allowing you to gain a clear idea of how many customers you can potentially reach and how much revenue you can generate. This allows you to make more concrete plans and secure budget and buy-in from key stakeholders..

Top-down market sizing is one of the two main methods we can use to calculate the serviceable obtainable market.  In this article, we’ll take a look at what top-down market sizing involves, how you can use it in your own business, and the strengths and weaknesses of this approach.

What is top-down market sizing?

When we calculate our serviceable obtainable market, there are two main ways to approach the calculation: top-down and bottom-up.

  • Top-down market sizing starts by looking at the current market as a whole, taking a macro view of all the potential customers and revenue, and then narrowing it down to a section you can realistically target. This gives you your serviceable obtainable market, (SAM).
  • Bottom-up market sizing, on the other hand, is where you start with your own product and the basic units of your business and work out how you can scale them. Where can your products be sold, how much for, and how much of the current market could you command? You start small and build up to the result.

What is Serviceable Obtainable Market or SAM?

The SAM refers to the portion of the total addressable market (TAM) that a company or business can realistically target and serve. It represents the market segment that aligns with the company’s resources, capabilities, and competitive positioning. The SAM is determined by considering factors such as geographical scope, customer demographics, and market demand.

In the context of top-down market sizing, the SAM is the result of narrowing down the initial macro view of the market to a segment that the company can effectively target. It represents the potential customers and revenue that the company can realistically obtain within its market segment. The SAM is an essential metric in market research as it helps businesses understand the true size and growth potential of their target market.

What is Total Addressable Market or TAM?

The Total Addressable Market (TAM) represents the entire demand for a specific product or service within a particular market or industry. It is the maximum potential revenue that can be achieved if a company were to capture 100% market share, considering all potential customers and their willingness to purchase.

TAM provides an estimation of the market size and serves as a starting point for market analysis and business planning. It encompasses all potential buyers who have a need for the product or service, regardless of whether they are currently being served by existing competitors or are aware of the product’s existence.

Calculating TAM involves considering various factors such as market demographics, geographic scope, industry trends, and customer behavior. TAM helps businesses understand the market’s overall revenue potential and serves as a benchmark against which to evaluate their market share and growth opportunities.

It’s important to note that TAM represents the theoretical market size and may not be fully reachable or realistic for a company due to constraints such as competition, resources, and market saturation. Nevertheless, TAM serves as a valuable reference point for strategic decision-making, market segmentation, and assessing a company’s growth potential within a specific market.

How to use top-down market sizing

To use top-down market sizing accurately, you should aim to start with a macro view of your market and work towards a micro view.

The first step is to look at industry size estimates to find the largest possible market size for your product. Then, reduce it to a segment that you can realistically target, and then calculate how many potential customers are in that segment.

For example, if you’re selling a payment management system for hair salons in the US, you’d start by calculating the total number of hair salons in the US. Then, reduce that to a smaller segment — how many of those salons have enough customers to justify a payment system? Finally, find out which ones you have already sold to, or which ones are already serviced by competitors and unlikely to buy from you, and so on, to find your serviceable obtainable market.

Here are some tips to do this process as effectively as possible:

  • Use reliable data sources. Some of the data that can help you calculate your market size is available for free or at low cost and can be obtained from analysts like Gartner and the Bureau of Labor Statistics. This can be supported by primary research to give you a rich picture of the market. Spend some time analyzing multiple, reliable sources to come up with an  estimate..
  • Be consistent and clear in your approach. Make sure your calculations are well-documented and rely on the same data.
  • Ask lots of questions throughout the process. Who are our customers? Where are they located? Is the market growing? Aim to get as full and accurate a picture of your market as possible.
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What factors to consider when using market sizing

When deciding which approach to use for market sizing, it’s essential to consider various factors that align with your business, product, and market dynamics. Here are some considerations to help you choose the most suitable approach:

  1. Market maturity: If you are entering an established and well-researched market with ample data available, a top-down approach might be more appropriate. The existing market data can provide a solid foundation for estimating market size and potential customers.
  2. Product uniqueness and disruption: If your product or service is innovative, disruptive, or targets a niche market, a bottom-up approach can be advantageous. This approach allows you to analyze specific customer segments, understand their unique needs, and project adoption rates more accurately.
  3. Available data and resources: Consider the availability and reliability of data sources. Top-down market sizing heavily relies on existing market research and industry reports. If comprehensive data is readily available, a top-down approach can provide a quick estimate. On the other hand, if you have access to internal data, customer insights, or primary research capabilities, a bottom-up approach using your own data can yield more accurate results.
  4. Granularity and specificity: Depending on your business objectives, you may need a more detailed understanding of your target market. In such cases, a bottom-up approach allows for a more granular analysis, enabling you to assess market segments, customer behaviors, and potential adoption rates on a more specific level.
  5. Time and resource constraints: Consider the time and resources you have available for market sizing. Top-down approaches are generally faster, as they rely on existing data and industry research. Bottom-up approaches require more in-depth analysis and data collection, which may be time-consuming. Evaluate the trade-offs between accuracy and the resources you can allocate to the market sizing process.

Ultimately, the choice between top-down and bottom-up approaches depends on your business context, market characteristics, and the level of precision required for decision-making. In some cases, using a combination of both approaches can provide a more comprehensive view of the market size and potential opportunities.

Remember, market sizing is an iterative process, and as your business evolves and gathers more data, you can refine and update your estimates using the most suitable approach for each stage of growth.

The top-down and bottom-up approaches — which one is best?

So, which approach is better? The reality is that each method has its pros and cons. What works extremely well for one business might not work well for yours, and vice versa. Let’s take a look at the advantages and drawbacks of each method.

Top-down market sizing: the pros

  • It tends to be faster than a bottom-up approach..  The process of gathering existing data to estimate your market size isn’t enormously time-consuming, making it .  the best option to get a quick estimate of the serviceable obtainable market, which you can supplement with primary data at a later date to reach a more accurate forecast. .
  • It tends to work well for big, established markets, where there is already plenty of data and existing analysis

Top-down market sizing: the cons

  • It doesn’t work as well for new, smaller markets and disruptive products. If there’s a good chance your product could have a disruptive effect on its market, this could significantly affect serviceable obtainable market and render your top-down analysis largely meaningless.
  • The initial research relies on general information collected by others, so the data isn’t specific to your business and situation. It’s a good general guide, but does need to be supported by primary research that’s specific to your particular market for greater accuracy. 

Bottom-up market sizing: the pros

  • It’s tailored to your specific circumstances and uses your own data 
  • It’s especially useful for new markets and markets where your product is likely to make a big, disruptive impact
  • It tends to result in better forecasting and more accurate data on amore granular level, helping you better understand how your individual projects will make an impact

Bottom-up market sizing: the cons

  • It can take longer and require more resources than a top-down approach, as a bottom-down approach requires much more in-depth analysis of your own business.
  • It has a tendency to assume there will be more customers than there actually will. This is important to look out for.
  • Any errors you make early on at the micro-level become compounded as you work up to the macro-level. It’s important to ensure you’re doing everything the right way, or these mistakes and misunderstandings will carry through your entire analysis.

Examples of Top-down and Bottom-up Market Sizing

To provide a clearer understanding of top-down and bottom-up market sizing, let’s explore some real-world scenarios:

  1. Top-down market sizing example: Imagine you are launching a new line of organic skincare products. To calculate your serviceable obtainable market (SAM) using a top-down approach, you would start with a macro view of the market and narrow it down. Here’s a step-by-step breakdown:
  • Step 1: Begin with industry size estimates: Research industry reports and studies to determine the total skin care market size.
  • Step 2: Identify your target segment: Narrow down the market to a specific segment that aligns with your organic skincare products, such as “organic skincare for sensitive skin.”
  • Step 3: Calculate potential customers: Determine the number of potential customers within your target segment. For instance, you might find that there are 5 million people in your target market based on demographics and consumer behavior analysis.
  • Step 4: Refine the SAM further: Consider factors like geographical location, purchasing power, and competition to determine the portion of the target market that you can realistically capture.

By following this top-down approach, you can estimate the SAM for your organic skincare products and make informed decisions about market entry and potential revenue.

  1. Bottom-up market sizing example: Let’s say you’re a software startup developing a productivity app for freelancers. To perform bottom-up market sizing, you would start with your own product and gradually build up:
  • Step 1: Identify your target audience: Determine the specific segment of freelancers you are targeting, such as graphic designers or copywriters.
  • Step 2: Determine the basic units: Calculate the number of potential customers within your target segment, considering factors like industry reports, freelance platforms, and online communities.
  • Step 3: Assess market penetration: Estimate what percentage of the target market you can realistically capture based on your value proposition, pricing, and competition.
  • Step 4: Calculate revenue potential: Multiply the estimated number of customers by the average revenue per customer to determine your potential revenue within the target market.

By employing a bottom-up approach, you can analyze the granular details of your specific market segment and tailor your strategy accordingly. This approach allows you to make projections based on your own data and assumptions.

These examples showcase how top-down and bottom-up market sizing approaches can be applied in different scenarios. Remember, the choice of approach depends on factors such as market maturity, product uniqueness, available data, and the goals of your business.

Ultimately, it can be useful to use both models in your market sizing. If they both roughly agree, then you can probably assume you have a fairly accurate estimate of your market size. The approach you opt for will also depend to some extent on the type of business you’re building and the product you’re selling.

Regardless of which approach you go with, it’s important to do it right. At Kadence, we have many years of experience helping businesses with their market research, and in sizing the market and we can help you do the same. To find out more, get in touch.

In today’s globally connected world, every product has a potentially vast market. Trying to target everyone in this market with the same materials, approaches, and techniques would be crazy — people are too varied and different to respond to the same marketing message.

So how do you ensure your marketing connects effectively with as many people as possible in your target market? The only real solution is to use market segmentation.

In simple terms, market segmentation is the process of taking a diverse and varied market and dividing it into more homogeneous segments.

Typically you’ll split your market into sub-groups based on criteria like their needs, behaviors and attitudes. . Market segmentation is nothing new, but it delivers a wide range of benefits to businesses if you do it the right way.

In this guide, we’ll take a look at why market segmentation is so important, the benefits it delivers, and how you can do it effectively.

Why do we need it?

Targeting everyone in a broad market with the same message is a fast route to poor response rates and low conversion rates.

Imagine you’re selling a new smartphone. The kind of message that will resonate with a 19-year-old customer is likelyto be very different from the message that resonates with a 74-year-old. Whichever you opt for, you’ll end up alienating a segment of your market.

It’s crucial to split your market into different groups so you can use a more tailored marketing message for each one. This works across all channels, from social media ads to email and direct mail.

What are the benefits of market segmentation?

There are many good reasons to segment your market, such as:

  • Better conversion rates. The ultimate reason to use segmentation is to improve your conversion rates and increase your revenue. By targeting groups with an offering more relevant to them,  you boost your chances of a positive response.
  • It helps you lower acquisition costs by focusing on the most profitable customers. By targeting customers who are easier to sell to and bring on board, you’ll be able to focus your efforts more efficiently and avoid spending lots of resources on tricky customers. This is the approach MetLife took with their segmentation efforts, and it’s strategy we’ve used to great effect with a university looking to secure donations from its alumni. 
  • Create more tailored marketing content. By creating content and ads that are specifically targeted to a certain sub-group of your market, you’ll be able to build a closer relationship with customers. This ensures better retention and stronger connections that, over time, leads to more sales.
  • Better response to marketing campaigns. Email is one area where segmentation can work extremely well. Research by Mailchimp found that segmented campaigns had open rates 14.31% higher than those that didn’t use segmentation.
  • It saves cost. By increasing the accuracy of your marketing, you’ll get more for your money and ensure less is wasted on poorly targeted marketing campaigns
  • Greater personalization. In one report by SmarterHQ, 80% of people who classify themselves as frequent shoppers said they only shop with brands who personalize their experience. By segmenting your market, it’s possible to personalize your messaging and connect more deeply with your target audience.
  • Better service. A good segmentation can help you to provide more effective customer service. Some businesses empower their front of house or call center staff with information as to what segment a customer falls into so that they can tailor their interactions accordingly. 
  • It provides a focus for further market research so that you spend your budget and time on getting to know your most valuable customers

How to do market segmentation

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Before you start segmenting your market, it’s important to know what to aim for. A good market segment should have the following attributes:

  • It’s big enough to be profitable. If your segment is too small, there simply won’t be enough demand for your product or service and you’ll fail to reach your goals.
  • The members of your market are similar enough to respond to one message. This is the main reason to segment — is your sub-group homogenous enough for the same marketing strategies to be relevant and effective?
  • It’s future-proofed. Will your segment stand the test of  time?
  • It’s distinct. The segment is memorable and easy to distinguish from other segments.

What categories should you segment your market into?

When it comes to deciding on the criteria for your segments, there are a number of options. Let’s take a look at some of the main types of market segmentation and the benefits and drawbacks of each.

  • Demographic segmentation. This involves using criteria like age, gender or income level to segment your customer base.. It’s one of the easiest ways to quickly start dividing up your market, but it is a very simplistic and outdated approach to segmentation. As Mark Ritson rightly argues “millenials are not a segment”. Assuming that everyone of a certain age has the same needs and attitudes and behaves in the same way is misguided and has resulted in some well-known marketing fails. Take Joon, Air France’s sub-brand for millennial travelers. Rooted in stereotypes, the brand alienated its target customers and crashed and burned. 
  • Geographic segmentation. Similar to demographic segmentation, segmenting your customers based on where they live can leave you in hot water. Assuming that all consumers are the same just because they live in the same place is reductionist and is unlikely to be effective as a segmentation strategy.
  • Behavioral segmentation. This type of segmentation is based on how customers have responded or behaved in the past in their interactions with your brand. It’ll help you understand your most profitable customers and what to sell to them but the drawback is in the name. This type of segmentation only tells you how customers have behaved in the past. As such, it’s a poor predictor of future behavior, and it doesn’t provide any insights around motivations, values or needs which can help you connect with consumers on a deeper level. 
  • Psychographic segmentation. This segments customers based on their views, values and lifestyles. s . It makes it easier to create a more resonant and relatable marketing message and avoid alienating your market with views they won’t agree with.
  • Needs-based segmentation. This is by far and away the most effective approach to segmentation. Segmenting people with similar needs allows you to be more targeted in product and service design or marketing campaign development, as you can focus on addressing customer needs and pain points. What’s more needs-based segmentations tend to be more long lasting and future-proofed than other approaches. 

Market segmentation is a great way to ensure you’re targeting the right customers  and tailoring your interactions for maximum success.

It allows you to forge a deeper bond with your audience. and whilst, it requires more work than a one-size-fits-all message, it’s well worth it in terms of the results.

At Kadence International, we help our clients design effective market segmentation studies and do it in a way that maximizes revenue. To find out how we can do this for you, get in touch.

Looking ahead to the trends that will shape the coming year is a critical exercise for any business. But in 2021, this is perhaps more significant than ever. Consumer behavior has been transformed as a result of Covid-19, as many shifts in behavior have accelerated.

To understand the key trends to watch in Asia, we spoke to trend watching experts across our 8 offices in the region. Watch the video to hear their thoughts, or download the full report.

Free report

Consumer Trends in Asia: 2021

Download the full report to learn how 5 key trends are playing out across Asia, the implications of this for businesses and success stories of brands successfully capitalising on the trends:

In the world of market research, we can only get so far by relying on hard, numerical data.

Hard metrics (generated from quantitative research) are extremely useful and should form a core part of any business strategy. But they only tell part of the overall story.

To dig deeper and gain a fuller picture of why our customers behave the way they do, it’s important to consider supplementing quantitative research with a more qualitative approach. Qualitative research is based on conversational and open-ended communication and aims to dive a little deeper than quantitative metrics and explore the why behind customers’ actions.

If you want to get the most out of your research, you should be using both approaches. In this guide, we’ll take a look at what qualitative research is, what makes it so useful, and how you can employ it in your own work.

How is qualitative research different from quantitative research?

Quantitative research:

  • It is more data-based, relying on hard data points and objective measurements.
  • It uses statistics and numerical data to identify trends and patterns.
  • It allows you to quickly establish what’s happening and look at possible causes. 

Quantitative studies are extremely valuable. They allow us to gain a reliable, accurate understanding of what’s happening in our market and amongst our customers and make clear-headed decisions that influence the bigger picture. But quantitative data alone isn’t enough.

Qualitative research is more human-focused. It’s less concerned with numbers and figures and more focused on what customers have to say. It can take the form of interviews, focus groups or online communities, and its goal is to dig into the more intangible and subjective reasons why customers behave the way they do.

Why is qualitative research useful?

Qualitative research is useful because it helps us dive into the human factors driving our customers’ actions. People are complex and often unpredictable, and our behavior can’t really be boiled down into a series of metrics.

For example, we might know that sales for one product are outperforming another. But why is this happening? Our hard metrics can show us the overall trend and might allow us to pinpoint certain glaring patterns, but they don’t tell us what’s going on in our customers’ minds.

For this, we need qualitative studies. We need to gain insight into the microtrends that lie beneath bigger patterns. 

The benefits don’t end there, though. Qualitative research means getting to know your customers and their motivations better. Here’s how that helps:

  • It can help you to understand customer needs, generating new ideas for products and services. 
  • It can provide valuable feedback on your existing offering. Using qualitative research, you can explore pain points and barriers to use, helping you understand how to improve your current products and services.
  • It can be a useful input to your marketing. By truly understanding your audience, you can take a more personalized approach, speaking their language and talking to your customers in a way they can really relate to. It can also provide useful input to campaign or content development. By understanding customer needs, you can create marketing content that solves specific problems for your audience and delivers real value in response to the challenges they face and the pain points they grapple with.
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Qualitative research methods 

Qualitative research is made up of a range of different methods and techniques. Each has its own use cases, and the best approaches will combine several methodologies based on your customers and your goals. Here are some of the main methods:

Qualitative research methods are approaches and techniques used to gather and analyze non-numerical data to understand human behavior, experiences, and social phenomena deeply. Unlike quantitative research, which focuses on numerical data and statistical analysis, the qualitative study seeks to explore and interpret the meanings, patterns, and complexities of human experiences.

Qualitative research methods are characterized by their flexibility, contextuality, and emphasis on subjective interpretations. They are suitable for studying social and cultural phenomena and individual perspectives and exploring new or complex research areas. Here are some commonly used qualitative research methods:

  • Focus groups. This is where you bring a small number of customers (usually less than 15) together in a group to discuss a particular issue. By tapping into the power of group dynamics, we’re able to uncover rich insights around attitudes and behaviors, and explore underlying motivations, need states and perceptions.
  • One-to-one, in-depth interviews. Here, researchers speak to customers directly in a one-to-one setting. It’s a good way to get truly in-depth on a topic, delving into the participant’s opinions and gaining valuable feedback and insight. In-depth interviews can be carried in person, on the phone or online. 
  • Expert interviews. Like in-depth interviews, expert interviews involve speaking to industry experts to build a rich understanding of the market and its direction. This approach can help you explore the impact of emerging trends to help future-proof your business.
  • Ethnography. This is where researchers immerse themselves in customers’ worlds to understand more about their day-to-day lives and the role of brands and products. Ethnography can take different forms, from visiting consumers and accompanying them as they go about their day to mobile self-ethnography, where consumers complete video tasks to show us how they live. 
  • Online communities. This is where groups of consumers are brought together over a series of days on an online platform to explore specific issues. Consumers then complete individual or group tasks, enabling the researcher to uncover rich insights. Like mobile self-ethnography, online communities can involve photo and video tasks and are a great way of bringing an audience to life for key stakeholders. What’s more, as online communities consumers over a longer time period than an in-depth interview or a focus group, they allow you to explore complex or sensitive issues and uncover deep insights into attitudes and values to inform your decision-making.

Traditionally qualitative research was done according to the grounded theory method. This is a framework for research that involves collecting qualitative data through the above methods and then using that data to form a theory or hypothesis. However, it’s easy to underestimate the sheer amount of data you can collect through qualitative research and this is particularly true of online methods such as online communities. As such, using the grounded theory method is often not feasible. At Kadence we take a different and more structured approach, exploring hypotheses with key stakeholders and designing the research so that we can test these. This means that the research is tightly focused on the areas that matter most to stakeholders, ensuring that the insights we uncover are actionable.  

These methods often employ thematic analysis, constant comparative analysis, and coding to organize and interpret data. The data collected in qualitative research can be rich, nuanced, and context-specific, providing deep insights into human behavior, motivations, and social phenomena. Qualitative research is frequently used in disciplines such as sociology, anthropology, psychology, education, and marketing, where understanding the subjective experiences and meanings attributed to phenomena is essential.

Some examples of qualitative research questions you might ask:

  • How important is corporate responsibility to our customers?
  • What are the main reasons people use social media?
  • Why do people want to work for our organization?
  • How do adult males feel about hair loss?
  • What are the key motivations for undertaking a weight loss program?

Qualitative research is essential if you want to truly understand your customers and improve your product or service to deliver what they want and need. It goes hand in hand with more quantitative methods of research and helps add context, explanation, and depth to the more numerical and data-based metrics.

At Kadence, we can help you get the most out of qualitative research better to understand your customers and market on all levels. To find out how to get in touch with us.

Looking ahead to the trends that will shape the coming year is a critical exercise for any business. But in 2021, this is perhaps more significant than ever. Consumer behavior has been transformed as a result of Covid-19, as many shifts in behavior have accelerated. This blog post summarizes 5 key trends from our latest report Consumer Trends in Asia: 2021

  1. Vocal for local – Consumers are looking to support brands closer to home
  2. Looking for action – Consumers want to see brands having a positive impact on the community
  3. Racing towards a digital future – Online shopping is booming, ushering in new innovation
  4. Seeking value – Consumers are prioritizing value and saving more
  5. Health is wealth – We’re seeing a marked change in diets as consumers focus on health

Read the summary below or download the full report to learn more about consumer trends in Asia in 2021 and what your business can do to capitalize on them. It’s packed full of insight and analysis from local experts across our 8 Asian offices – China, India, Singapore, Thailand, Vietnam, Indonesia, the Philippines and Japan – and contains inspiring examples of brands successfully tapping into these trends.  

1. Vocal for local – Consumers are looking to support brands closer to home

The economic turmoil of Covid-19 has made consumers more conscious than ever of the impact of their purchase power. In light of this, we expect one of the big consumer trends in Asia in 2021 to be supporting local brands.

In some markets this is manifesting itself in a wave of support for national, rather than global brands. India and China are two markets where this is happening. In India, Prime Minister Modi’s strategy to aid economic recovery in the country is to focus on local manufacturing and supply chains and to encourage Indian consumers to support Indian brands. In response local brands have leveraged this messaging in their marketing campaigns, further promoting the concept. In China, we also see consumers looking to purchase from homegrown brands rather than global companies. This trend was already underway, due to international trade tensions and the growing popularity of Chinese brands, but it has been accelerated further by Covid-19.

In other Asian markets, we’re seeing the emergence of hyper-localization. Now spending more time at home and recognizing the companies that helped them during the height of the pandemic, we are seeing consumers looking to support businesses in their local neighborhoods through challenging economic times.  This is very much a continuation of the behaviors of the behaviors we saw at the onset of the pandemic. In Japan, for instance, the 応援消費  (consume to support) movement went viral, and whilst in Indonesia, consumers were encouraged to #belidariteman (buy from a friend). This sentiment is likely to be important in 2021 and beyond, particularly in the food and drink industry as our research Understanding the impact of Covid-19: Food industry trends for 2020 and beyond indicates. When asked which of the behaviors they’d adopted in the pandemic that they’d continue in future, 42% of Asian consumers told us they plan to continue supporting local food and drink brands, the second highest of any behavior.

2. Looking for action – Consumers want to see brands having a positive impact on the community

When we think ahead to 2021, we mustn’t underestimate the impact of the pandemic. Covid-19 has caused many people to reconsider what is important to them and this has extended to their relationship with brands. Our Brands Exposed research, exploring how Covid-19 has changed expectations of marketing and brands, found that 63% of Asian consumers think that brands need to re-evaluate their role in society in a post-Covid world.

There’s also an expectation that brands need to do more to support the communities they serve, a trend that is more prevalent in Asia than it is in the West. 63% of Asian consumers believe that organizations have a responsibility to contribute financially to their communities, compared to 43% in the US and 51% in the UK. They’re also appetite to see brands going further, leading meaningful initiatives in their communities – 58% of Asian consumers believe this to be importance, compared to just 41% in the US and 46% in the UK.

So what does this mean for brands looking to make their mark in Asia? One thing’s for sure – brands need to be prioritizing actions over words, providing evidence of the steps they are taking to make a difference and the impact that this is having. And this isn’t just confined to the B2C space. Our recent work with Bloomberg understanding the attitudes of business decision makers across 6 markets in Asia and Australia found that 56% are looking for brands that are protecting the underprivileged and vulnerable and a further 56% want to see brands using their resources to give back to society.

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3. Racing towards a digital future- online shopping is booming, ushering in new innovation

Seismic regional and global events have often act as a catalyst for behavioral change and innovation – and Covid-19 is no exception.

In response to regulations, businesses and consumers have adopted online solutions at a rapid rate. In some markets like India this has been accompanied by governmental action to provide digital connectivity in remote rural areas and to low income groups, enabling the delivery of basic services during this time. As such, some demographic groups have experienced the benefits of online shopping for the first time.

Others, already accustomed to shopping online, are doing this more and spending in new categories such as grocery and personal care according to a survey of digital consumers in 6 Asian markets from Bain and Facebook. The research suggests that this represents a permanent shift in behaviors. 83% of those surveyed said they are likely to continue increased spending online after the pandemic. These behaviors aren’t just confined to younger people. There are significant numbers (35%) of older people – aged 55 and over – that share this sentiment.

In response to the rapid growth of online shopping we’re seeing innovation in this space. From shopstreaming in China to a new breed of influencers in Japan, you can read more in the full report.

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4. Seeking value – Consumers are prioritizing value and saving more

The Bain and Facebook study also provides interesting insights into consumers’ attitudes towards personal finance in this period. 57% of the consumers surveyed are prioritizing value for money in their purchases. They are also saving more. The study found that 60% are planning to put more money aside in future and that Asian consumers are two times more likely to start saving more after the crisis than their American counterparts. We see this reflected in our own data, as consumers cut back on non-essentials in Thailand.

Against this backdrop, companies across all sectors will have to work harder to get consumers to part with their cash, clearly articulating the benefits and value of their products, and focusing on building customer loyalty to avoid switching.

5. Health is wealth – We’re seeing a marked change in diets as consumers focus on health

Health has been a big focus in 2020 and we expect this to continue, with it being one of the big consumers trends in Asia to watch for 2021. Our research with Bloomberg reflects this, with 67% of business decision makers across Asia and Australia telling us that taking care of their personal and family’s health is more important than ever.

This is playing out in a number of ways, first and foremost in diets. Our report, Understanding the impact of Covid-19: Food industry trends for 2020 and beyond, found that 59% of  Asian consumers believe that what they eat and drink has changed from the better, with only 6% stating their diet has changed for the worse. This represents a marked difference to Western markets – where just 24% of Americans and 34% of Brits believe what they’re eating has improved. In line with this renewed focus on health, the majority of consumers are also cooking more for themselves and consuming more fruit and vegetables than before the onset of the pandemic. This indicates a opportunity for food and beverage brands to develop healthier versions of their products and support consumers in cooking healthy meals from scratch – be that through recipes or product launches.

But health goes beyond just diet. There’s also a greater emphasis on fitness and on mental health, with PwC reporting that in China, 87% of consumers are focused on taking care of their mental health. There are numerous opportunities for brands to support consumers in these areas, which we analysis in detail in the full report.  

To learn more, download the full report: Consumer Trends Asia: 2021

To learn more about how these trends are playing out in each market, our analysis of the implications of these trends and success stories of brands making inroad in these areas, download the full report.

Alternatively, if you’d like our support in understanding the changes taking place in your key markets and how you can capitalize on these, please get in touch.

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The arrival of Covid-19 has brought with it dramatic changes in food and drink purchase patterns. Shelf-stable food like pasta, rice and canned goods flew off the shelves. Immune system boosting ingredients were top of the shopping list. But which behaviors will stick and what are the longer term food industry trends to watch?

We spoke to consumers in 10 countries, as well as our own internal food and beverage experts to understand the global picture and the local nuances and trends in each market. We wanted to understand how people are eating and drinking in this new normal, and what implications this has for the future.

We’ve summarized the key global and local trends in this blog post but for the full findings, download the report: Understanding the Impact of Covid-19: Food Industry Trends for 2020 and Beyond.

Global food industry trends for 2020 and beyond

The pandemic has improved eating and drinking habits across the world

Over half (53%) of the consumers we spoke to told us that since the onset of the pandemic, what they eat and drink has changed for the better. Some countries like India and Vietnam have seen a big swing towards healthier diets, whereas others like the US, UK and Japan have been more consistent. Overall, very few people (just 6%) believe their diet has changed for the worse.

People are cooking more at home and they’re eating more fresh fruit and vegetables

With more time at home, and health high on the agenda, it’s unsurprising that half of consumers globally (51%) are now cooking more for themselves and their families. This trend is more prevalent in some Asian markets, such as India, China, Thailand and Vietnam, than it is in the US, UK or Japan. But even in this market, consumers have found an innovative workaround to sourcing home-cooked meals. Over the past few months, professional chef / dietician delivery services like Sharedine have boomed in Japan. This is where a personal chef will come to a customer’s house and cook a number of dishes from scratch that can be reheated over the coming days. The service even includes grocery delivery!

At a global level, people are also more conscious of what they eat, with a real focus on fresh produce. Half of consumers globally (51%) tell us they are eating more fresh fruit and vegetables. This is more significant than any other dietary changes, such as eating more grains and nuts (adopted by 29%) or eating more meat-free products or dairy and cheese (practiced by just 16% and 13% respectively).

Health-conscious consumers are looking to boost their immune systems and brands are responding

Even now long after the onset of the pandemic, immune-boosting solutions are still at the top of consumers’ shopping lists. Consumers in markets like India are looking to natural ingredients. But others, like those in Thailand and China are making use of a new range of RTD products that have sprung up to meet this need. The “water plus” category has boomed in Thailand, with brands such as Yanhee Vitamin Water, B’lue, VITADAY Vitamin Water and PH Plus 8.5 Alkaline Water coming to the fore. In China, product launches have included milk with immune globulin, Vitamin C fruit tea and Chinese jujube drinks.

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Consumer Trends in Asia: 2021

Download the full report to learn how 5 key trends are playing out across Asia, the implications of this for businesses and success stories of brands successfully capitalising on the trends:

Worries about the origin of food are one of the key food industry trends for 2020 and beyond

When asked which of the behaviors they’d adopted in the pandemic that they’d continue in future, being conscious of where the produce I consume originates from for safety / health reasons came out top. We see this reflected in consumer behavior. Some people in countries like Vietnam and Indonesia have moved away from visiting wet markets, opting instead for mini supermarkets or online solutions. In some markets, there are also significant groups of consumers that are opting to eat more meat-free products, perceived to be less prone to infection. This amounts to 32% of consumers in Vietnam, 28% in India and 23% in China. With these concerns top of mind for many consumers, it’s the brands that prioritize hygiene and safety that will come out on top. We’re already seeing some great examples of this happening, with the help of technology. One example is Haidilao. This hotpot restaurant in Beijing has installed smart robotic arms to prepare and deliver raw meat and fresh vegetables. It’s also introduced technology to track and dispose of food that has passed its expiry date.

Supporting local is a key consideration for many consumers

Across the world people are doing their bit to keep local food and beverage brands afloat. This looks set to continue in future. When asked which of the behaviors they’d adopted in the pandemic that they’d continue, supporting local produce and food and beverage brands came out second highest.

In Japan, this trend has manifested itself in the 応援消費 (Consume To Support) movement. This initiative that went viral, ranking first amongst the top 10 consumer trends in the first half of 2020 according to Rakuten, an online retail giant and Nikkei, a flagship financial newspaper. The term was first created and gained popularity in 2011 when a 3.11 earthquake shook the eastern part of Japan and people showed their support through making purchases from the damaged areas. In the pandemic, we saw a resurgence of this. Consumers purchased from the food and beverage brands hardest hit – farms, manufacturers and restaurants with excess stock – thanks to innovative apps like Pocket Marche and TABETE.

We’ve seen similar movements in other markets. In Indonesia #belidariteman (buy from a friend) was promoted by the Association of Indonesian Young Entrepreneurs (HIPMI) encouraging people to support local. In the Philippines, the traditional value of “Bayanihan” which translates as “spirit of communal unity” has seen Filipinos shopping from local food and beverage brands in these difficult times.

With local being an important purchase consideration for consumers both now and in the future, brands will do well to emphasize their heritage and role in the community going forwards.   

Consumers are looking to food and drink as escapism to create occasions at home

As people spend more time at home, there’s a real opportunity for brands to help consumers create special occasions with their loved ones through the power of food and drink. This could be through providing inspiration for at-home events and special recipes for consumers to cook themselves. It could also be achieved by creating products, services and experiences that can be delivered at home. There are some great examples of this emerging around the world. In Singapore, bar and restaurant, Tippling Club, is offering virtual cook-along sessions with its in-house chef. In Hong Kong, Café Earl Grey is delivering restaurant signatures with simple instructions to cook and assemble at home. These dishes are accompanied by an extensive selection of curated wines and bottled cocktails. And in the Philippines, restaurants are delivering uncooked ingredients so that people can cook their favorite dishes at home.

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Online shopping is on the rise but this is playing out differently in different markets

Food and beverage brands have had to innovate to survive in the wake of local restrictions. Online has played a critical role in this transformation. Consumers across markets have experienced the benefits of online shopping first hand, accelerating its growth. But this has played out differently in different markets. In Vietnam, ghost kitchens have been set up to meet the growing demand for meal delivery. In Indonesia, a jastip service allows consumers to make and receive orders from local wet markets via WhatsApp. And in the UK, where online grocery is more well established, growing numbers of older customers are moving their grocery shopping online. In 2019, just 8% of over 55s in the UK had bought food and essentials online. This figure has now soared  to 25% according to the How Britain Shops Online report.

Country specific food industry trends

Food industry trends in the UK

One of the key global trends we see in the UK is the shift towards supporting local. Office workers in the UK have been encouraged to work from home for the majority of 2020, meaning that food and drink spend has been concentrated closer to home – and we expect to see this continue as working patterns shift as a result of the pandemic. According to Mastercard data, it’s been people shopping and eating out locally, rather than spending money in Central London, that has driven the economic recovery in London. Other key trends in this market include the growing number of silver surfers that are embracing to online grocery shopping as mentioned above and rise of at-home food and drink occasions. As in other markets, brands are anticipating consumers will spend more time at home, and catering to this with services such as online cooking classes and delivery collaborations.

Food industry trends in the US

We expect to see consumers continuing to eat and drink more at home in the US too, as many office workers continue to remotely, and city dwellers flee to the suburbs. Whilst consumers are enjoying cooking at home and planning to do more of it in future, they’re are also ordering more takeout, and looking to meal kit companies for ease and convenience. Attitudes towards health in the US depart from the global trend. Whilst 53% of consumers globally tell us that what they eat or drink has changed for the better, in America only 25% think this is the case. In the US, consumers are viewing health more holistically. Whilst some are looking to food and drink to support physical health, others are using food as a tool to support their mental health, with two thirds of Americans eating more comfort food than before.

Food industry trends in Singapore

Global trends such as the rise of online shopping and a growing focus on health and wellness are reflected in Singapore. In fact, an AIA survey conducted prior to Phase Two of safe reopening found that Singaporeans are allocating the highest portion of their expenses on healthier meal choices. One trend that is more specific to Singapore is the growing importance of sustainability. When it comes to sustainability efforts, Singapore falls behind many other nations in terms of recycling, plastic-use reduction, and food wastage reduction, and this has come into sharper focus as a result of the pandemic, alongside more recent government efforts to achieve a Zero Waste Singapore. In response, we’re starting to see the rise of more sustainable packaging, “ugly” produce and bulk food stores.

Food industry trends in Vietnam

Vietnam has seen big changes in the channels people use for shopping. Online meal delivery has boomed as restaurants have pivoted, and ever more Vietnamese consumers are turning to the mini supermarket, as worries about food safety and origin come to the fore. In line with this, organic food is also growing in popularity, although high prices mean that at present this trend is confined to the middle class.

Food industry trends in China

In China and Hong Kong, global trends around health and eating at home are particularly important, with 86% of Chinese respondents acknowledging their desire to eat at home even after the pandemic ends according to Nielsen. Concerns about food safety are also front of mind, and in response we’re seeing a growing trend towards automation and contactless processes in manufacturing and distribution.

Food industry trends in Thailand

As in Vietnam, meal delivery in Thailand has boomed, accelerating the adoption of online and mobile banking and contactless payment methods. The global trend towards an increasing emphasis on health is evident in Thailand, too with 71% cooking more for themselves and their families and 62% consuming more fresh fruit and vegetables. Many Thai consumers are also looking towards beverages as a way of looking after their health. Drinks containing Vitamin C have seen 47% growth compared
to last year.

Food industry trends in India

Like their counterparts in Thailand, Indian consumers are looking for immune boosting products, but many of the specific trends we see playing out in this market are driven by food safety concerns. As mentioned previously, a significant number of Indian consumers are eating more meat-free food due to worries about infection, and they’re also buying more packaged food. Against this backdrop, street food vendors have had to pivot, elevating their offering, leading to the emergence of gourmet street food.

Food industry trends in Japan

As mentioned above Japanese consumers have been quick to support local brands through the 応援消費 (Consume To Support) movement. This is a trend that we believe will persist in Japan, albeit not as prominently as it does on a global scale. Our research shows that 1 in 4 consumers in the country say they will be more conscious of supporting local produce and food and beverage brands in future, compared to 4 in 10 globally. One emerging trend that is quite specific to Japan is the move towards stocking up on food. In most countries this behavior peaked at the height of the pandemic and has since subsided but in Japan 41% of consumers plan to ‘stock up’ on essentials rather than buying day-to-day in future and 35% are intending to buy more frozen or tinned produce. This can be explained by looking at the specific experience of the Japanese people. In response to natural disasters like earthquakes, typhoons, flooding and landslides, Japanese consumers are used to having to stock up.

Food industry trends in the Philippines

We see this trend towards bulk buying emerging in the Philippines too, where 48% of consumers say they plan to ‘stock up’ on essentials instead of buying day-to-day. Global trends around eating more healthily are also important in the Philippines, which is significant given that the traditional Filipino diet is higher in total fat, saturated fat, and cholesterol than most Asian diets.

Food industry trends in Indonesia

Trends in Indonesia closely mirror those seen globally. There’s been an uptick in online grocery shopping, with a large proportion of Indonesian grocery shoppers (59%) having used e-commerce sites for this purpose according to a Snapcart survey carried out in May. People have also started to adopt online shopping in new categories, such as OTC, multivitamins / supplements, herbal products, and even RX drugs. Cooking more at home, and supporting local food and drink businesses are also key trends in this market.

To learn more about the food industry trends in each market, download the full report – it’s packed full of facts, stats and examples from each country. Alternatively, if you need further support in understanding changing consumer behavior in your market, please get in touch with us. We have a wealth of experience in food and beverage, having worked with the likes of Mars, Unilever and Arla, and would be happy to share our expertise.