Debnath Guharoy, Consultant – Whichever way you look at it, not many people in Indonesia have real disposable incomes. Census data from the BPS will tell you that only 3 percent of all wage earners make over Rp 2 million per month.
Year after year, independent research reconfirms, not just conforms, with that conclusion. Yet, this 3 percent represents substantial spending power when you translate that number to the 160 million people above the age of 14, all legally able to earn a wage. That's 4.8 million people.
But if you're thinking that US$10 a day isn't much, remember that a bundle of string beans costs Rp 500 in Central Java. How much is a tube of toothpaste in Indonesia, a table fan, a prepaid cellular connection or even the monthly repayment for a new motorcycle? Not much, by any standard.
If you're asking about new cars, credit cards, airlines, hotel rooms, insurance, or even bank accounts, let's raise the bar to Rp 5 million per month. After three years of experience across the country, almost 100,000 interviews and innumerable conversations with manufacturers, bankers and high-end service providers, we zoomed in on this narrow band of society by substantially boosting the number of affluent people we interview in Indonesia each week.
We have listened to figures like "76 million cellular subscribers", "8 million credit cardholders, unbelievable numbers of "airline passengers".
Simple arithmetic using published data from sources like the BPS and the World Bank will quickly make it clear that these numbers are wishful thinking, not just unrealistic. Words make sense only when they are used appropriately, otherwise they confuse instead of communicate.
Does "subscriber" actually mean SIM card sold (then thrown away by many as soon as the discounted credits have finished)? Does "cardholder" mean card issued even though it wasn't asked for (but nobody knows for a year whether it's actually being used by the same person, who's already been offered too many cards)?
Does "passenger" actually mean tickets sold (including foreigners and frequent flyers like myself being counted over and over again)?
These observations are based on the country's largest syndicated survey with over 27,000 Indonesian respondents annually, projected to reflect 90 percent of the population over the age of 14. Over 30 industries, over 150 categories, over 1500 brands are researched.
Everything measured is within a reasonable timeframe of usage, everybody interviewed decides whether they have an active relationship with the brand. They decide whether that relationship is real or not, not the manufacturer or service provider.
Anybody with a layman's understanding of statistical reliability will know that the findings can't have a catastrophic margin of error. On that basis, words have a significantly different meaning when applied to the goods and services reportedly consumed by the relatively affluent people of Indonesia.
The common assumption among most marketers of these high-end products is that wealth is concentrated in Jakarta, at best the Top 10 cities. This is simply not true. Only 62 percent of those earning over Rp 5 million per month live in the Top 20 cities, 22 percent in smaller towns and 16 percent in rural Indonesia.
In densely populated Java, the lines between urban and rural are particularly blurred. As for the provinces, the DKI Jakarta accounts for only 16 percent of this elite group, trumped by West Java on 22 percent and Central Java on 17 percent.
Now is a good time for some introspection. Where are marketing resources, energy and attention focussed by the marketers of these products? If knowledge is power, how dangerous can small-scale and therefore unreliable ad hoc studies be? The Top 3 percent cannot be identified and analyzed if the remaining 97 percent isn't measured and monitored as a whole.
Another popular myth is that female workers earn very little. In reality, 25 percent of the people who earn over Rp 5 million per month are women. Similarly, it's not just the older people who earn the bigger salaries. 76 percent of these affluent people are between the ages of 25 and 49.
Only 10 percent have a diploma or university degree. While professional managers account for less than 1 percent of the workforce, they constitute over 70 percent of the high-end earners, followed by white collar workers at 13 percent.
What hopes and aspirations do the Top 3 percent of Indonesia have? What are they "thinking of doing", financially, in the next 12 months? Eleven percent want to start a business. Even further up the economic ladder, one in ten people earning over Rp 5 million per month would also like to start a business.
Similarly, 7 percent, and a corresponding 5 percent, intend taking out a personal loan. While less than 1 percent of the workforce is planning to get a car loan, 2 percent of the Top 3 percent of earners are keen.
The same is true for people intending to sign up for life insurance. On a more buoyant note, one in ten members of the entire workforce is planning to open a savings account. While many of these dreams may not materialize in the next 12 months, the potential isn't unknown.
Winning them over and nurturing those relationships is another matter altogether. A reader recently wrote asking why anybody would pay for our insights if I gave them away for free each week, via this column.
If any marketer is taking multi-billion rupiah decisions based on these tip-of-the-iceberg revelations alone, he needs divine help, not ours. It makes sense to handle these insights with care. Don't make assumptions or jump to conclusions.
[The writer can be reached at Debnath.Guharoy@roymorgan.com.]