How Asian companies will survive in the Millennial Age

Nov 18, 2016, 09:22 am

By AsiaToday reporter Jisu Kim - "The Millennial Age" has come to Asia now. Millennials (those born between the early 1980s and the early 2000s) represent more than 45 percent of the region's population, with 60 percent of the world's millennials expected to live in Asia by 2020.

Global consulting firm Accenture said that millennials in Asia will have more spending power than any previous generation - estimated to be US$6 trillion in disposable income by 2020, and e-commerce sales in Asia Pacific region is expected to rise 300 percent to US$2.6 trillion by 2020.

In particular, China's millennials, which account for the largest number of Asian millennials, are already having a profound impact on global consumption as Goldman Sachs has called them "the single-most important demographic in the world today." In fact, about 80 percent of the 434 million consumers who actually bought a product in China's largest e-commerce site Alibaba last year were millennials aged below 35.

As millennials are set to dominate the consumer market in Asia, capturing their hearts has become a critical issue for companies in the region. "Gaining the loyalty of millennial consumers is absolutely imperative for 'legacy' companies," said Joan Kuhl, founder and president of consultancy agency Why Millennials Matter.

To capture the hearts of millennials, we first need to look at the characteristics of the generation. APEX defined the characteristics of Asian millennials as follows: "They are moneyed, educated, technologically proficient, socially united - and a little bit spoiled."

First, Asian millennials are 'digital natives', who experienced the proliferation of the World Wide Web. Jason Dorsey, millennial researcher in U.S., said, "Millennials in other places tend to be less tech-savvy, more tech dependent. In Asia though, there's a complete integration into that digital world, which to them is as important and almost as real as the physical world."

Asian millennials tend to spend more time online, and more tech dependent than those in Western regions. According to a report from nonprofit organization WYSE, about 57 percent of Chinese millennials use their smartphones four or five times a day, and 39 percent admit they can't go more than five minutes without glancing at it. They spend 27 hours a week online - approximately 69 percent of that time on social media.

Asian millennials, who spend a lot of time online, are often quite happy to stay home. They never get bored spending their time at home alone because there are so many online activities to do, such as interacting with friends digitally on their social networks, researching products and shopping online, streaming movies and gaming, and more.

This tendency makes it more difficult for companies to reach them. Companies are reaching them online, especially through smartphone applications, believing that their traditional way is limited. China Southern Airline opened a WeChat account and developed more than 20 functionalities - from booking flights to customer service - on the app. Air China (China), AirAsia (Malaysia), China Airlines (Taiwan), KLM (Netherlands), Air France (France) and British Airways (UK) also provide similar services.

China Merchants Bank launched a digital baking proposition for the millennial generation. It offers a short paperless account-sign-up process that links the account to the customer's identity card and mobile phone number. After signing up, additional features can be activated by uploading pictures of the customer holding his or her identity card, and linking the new account to other bank accounts.

Cheryl Zhou, who runs a Singaporean home décor online shop, said, "Social media is very important for sellers who want to target the millennial group. In addition to maintaining a website, we also market our products aggressively via Carousell (online consumer-consumer marketplace for buying and selling secondhand goods) and Facebook."

Despite the efforts of these companies, millennials are good at judging information effectively and don't easily respond to ads. They have their own standards of consumption and their hearts aren't easily stolen by traditional or social ads. A recent survey by MasterCard in Asia-Pacific showed that millennials enjoy fine dining more than their previous generations, yet they are still cost conscious. Sixty-eight percent of millennials in Asia Pacific look out for deals before choosing a place to eat.

At the Millennial 20/20 summit in Singapore, Teo Correia, Senior MD in Accenture’s Consumer Goods and Services practice, said, “Digital is transforming the industry globally by empowering customers with more choices, insights and control."

Millennials are less hesitant about cross-border buys. According to a survey by online payment giant PayPal Inc, 65 percent of the millennials in the major Asian markets transacted in a foreign currency and 33 percent bought from a website in a foreign language.

Singapore millennials are the ones who enjoy cross-border online shopping the most. 80 percent of them have shopped online last year, and 69 percent of them have shopped online across borders, winning the No 1 spot among the six countries surveyed, including South Korea, India, China, Singapore, Japan, and Australia.

In addition, Asian millennials want to reveal and develop their own individuality as they have enjoyed freedoms than previous generations. They consider independence and freedom as the most important values, and they are willing to pay extra for their own unique experiences. Experts say that emotional approach is needed for millennial generation.

InterContinental Hotels Group (IHG) operates the Hotel Indigo brand aimed at millennials. "Millennials are looking for something memorable and personal," said Bruce Ryde, head of marketing for Asia, Middle East and Africa. "There are currently 62 Hotel Indigos, every one of them in its own unique environment and neighborhood. Cities are made up of neighborhoods and we want our guests to have a relationship with what's local and unique."

Teo Correia said, "Millennials expect easy and delightful experiences that are tailored to their interests and lifestyles. To win their loyalty, it is imperative for brands to keep it simple but make it personal using data-driven applications." She added, "We see successful brands ramping up their data and analytics capabilities to enable personalized customer experiences and pricing based on loyalty, purchase history, and demographics."

Millennials also tend to place emphasis on how delightful their shopping experience is more than previous generations, and they like small luxuries.

Jason Dorsey explained that small details are important to make big loyalty gains. He said, "Millennials like small luxuries. What that means is that a nicer soap or a nicer cookie, or anything like that,that adds just a touch of luxury to the experience is meaningful to them."

Joan Kuhl said, "Appealing to millennials is a delicate balance. This demographic can often tell what corporations are trying too hard to appeal to them, which can turn them off. Understanding their desires and behaviors is imperative for gaining their business, but do not make the efforts to appeal to them too extreme."

#Millennial generation #Asian companies #Accenture #Chinese millennials #Asian millennials