INSIGHTS
In Brief
- Indonesian consumers choose their bottled water primarily based on the perceived health benefits that they will get.
- Almost half of the Indonesian market (44.36%) don’t understand the difference between each different brand of bottled water and the additional benefits they offer.
- Optimizing strategy in pricing, product availability, and brand image will be the gateway to shift consumer preference towards your brand.
Debunking the Norms!
Have you ever thought “why would there exist so many bottled water brands, when what they are selling are basically the same?” Well, you might not be the only one. But it is a fact that there are a large number of companies competing in this market. In 2020, BPOM has listed a total of 7780 brands of bottled water from 1032 companies in Indonesia. It is such a large number that raises even more questions. “Why is it so saturated? And how could they possibly be different?”
Worry not, we have conducted a research joined by 257 participants across ages and cities in Indonesia to find out what they are looking for in a bottled water brand. One of the aspects we seek is what factors that the consumer thinks are the most important in deciding which bottled water brand they should buy. These are the participants’ answer:
As you can see, health benefits are the most important factors they look for in a bottled water brand. This shows that Indonesian consumers seek a water that not only helps them rehydrate but also offers additional benefits that suit their needs. Factoring the importance of price and popularity of the brands, this already creates a spectrum of niche markets that can be targeted for any bottled water brands.
Okay, but do the consumers even understand the difference?
Well, bottled water is a unique commodity. It’s a crucial thing in human lives that needs to be consumed everyday, therefore everyone wants the safest and the healthiest options.
There are two common ways to differentiate your bottled water from competitors in terms of product development. One, is to add beneficial ingredients (such as added minerals, electrolytes, oxygen, etc), and two, reducing the un-needed ingredients (pure water, demineralized water). Combination of these two approaches and the ingredients involved is what creates the diverse options in the market today.
With these extensive numbers of bottled water brands that circulate in the market, one would think that it would be arduous to know the difference between them. But it turns out, we found that 55.64% of research participants understand the difference between mineral water, pure water, and oxygenated water. Meaning that, the majority of Indonesian consumers do understand the difference and benefit that comes with it to a certain degree.
What does this mean to the brand owners?
The remaining 44.36% of these consumers will be the prime target, since they haven’t yet understood the additional benefit offered. Therefore, proving and convincing them about additional benefits offered will play a crucial role.
Advertisement is found to be the determinant factor to deliver this information to potential consumers. Consumers prefer to buy bottled water products that they are frequently exposed to through advertisements.
Our research findings suggest that the consumers most often exposed to information about bottled water when they went to the store/minimarket (61.48%), watching TV advertisements (53.31%), and recommendations given by friends or family (31.13%). Therefore, brand owners are advised to optimize their advertisement around these three main channels when explaining the additional benefits or their products.
What about the 55.64% who understand the difference? As you guess, these consumers might already have a brand of choice that they use everyday. However, 98% of our research participants said that while they already have a brand of choice, there is still a chance that they would want to try another brand. So, there are still chances for you to win their trust and change their preference.
There are three aspects that might possibly be able to change those who already have a preference in bottled water brands:
Pricing
Price is an important factor that is found to be a significant predictor of brand choice decision for bottled water. Most of the research participants believe that affordability and reasonable price influences their brand choice decision for bottled water products.
It doesn’t necessarily translate to lowering the price, since a consumer’s buying decision will change based on the situation they are in. Hence, it is advised to set a pricing strategy that provides affordability to consumers while taking into account the types of water offered, ingredient contents, and the location where your products are placed.
Availability
More often than not, consumers will always choose the most convenient choice. If they are in dire need of water products, the fastest and the easiest one they can find would be their best choice. Will they drive a few km just to find the brand of their choice? Probably not.
Therefore, brand owners should consider their distribution networks, to guarantee a level of product availability that is able to satisfy given market demand throughout the country and provide products easily accessible at the right time and place. (example: a few meters from the consumer’s home, workplace, etc.). Otherwise, customers prefer to buy bottled water products that are easily available for them in shopping displays/supermarkets.
Curiosity
Virality and talk among their peers about certain products are considered as factors that increase consumers willingness to try different products. For example, in 2015, one of a local bottled water brand launched a campaign that was so viral. Through that campaign, the brand explains the benefit of their product in a unique way. For several of our research participants, that campaign was so memorable and it was able to shift their choice of bottled water. Therefore, it is proven that the way a brand delivers the benefit of their products can make or break the connection to potential consumers.
Hence, it is advised to brand owners to go beyond the ordinary, delivering the information about offered benefits of their products along with a persuasive and creative campaigns that develops positive relationships with potential consumers.
While these three aspects could shift consumers product preferences momentarily, it should be kept in mind that these aspects only act as a gateway for potential consumers to try their products. Brand owners should also prepare the whole customer journey, leveraging promotion, offers, or gift, that is strategized to convert them into loyal customers.
Final Thoughts
Indonesia’s bottled water industry is projected to grow even more throughout upcoming years. While the competition is still fierce and dominated by long-time players, it is definitely possible to break through the crowd by understanding how the consumer thinks and feels about the water of their choosing.
“Bottled water is a red ocean market that has its own set of challenges and needs a lot of effort for a brand to rise up and be known. But by understanding the needs of the niche consumer of your choosing, and delivering the solution through consistent strategized activations, eventually your brand will be at the top of their mind for a long period of time.”
– DHIYA ALDIFA ULHAQ, SENIOR CONSULTANT
