A Framework of Brand Strategy and the “Glocalization” Approach: The Case of Indonesia

Introduction

It is no secret that Indonesia is considered one of the most attractive countries for investors. Indonesia is regarded as one of the favourites among the emerging market countries, known as BRICs (Brazil, Russia, India, and China) and CIVETs (Columbia, Indonesia, Vietnam, Egypt, Turkey, and South Africa). Despite a recent slowdown in its economic growth, investors continue to take notice of Indonesia, labelling it as a key emerging market to watch (Global Business Guide, 2012). In addition, according to A.T. Kearney’s (2013) Global Retail Development Index (GRDI) (see Table 1), Indonesia ranks in the top 20. Based on these reasons, Indonesia is a lucrative and attractive country for investors to consider. Moreover, statistics based on the 2010 Population Census conducted by the Indonesian government indicate that Indonesia had a population of 237.6 million people (Badan Pusat Statistik, 2010) – making it one of the largest markets in the world. Similar to China, many foreign global brands would like to have a big slice of this share of consumers. However, it is not easy to enter a foreign international market. As seen in the case of China, Best Buy – the world’s largest consumer electronics retailer – pulled out of China in 2011. One of the reasons was related to its brand. An analyst from the China Market Research Group said: “Not many people in China know what Best Buy is” (Bloomberg News, 2011). In Indonesia, a number of big global brands such as Wal-Mart and Harvey Nichols also failed.

The challenges of successfully operating, and in particular, creating strong brands in Indonesia are many, perhaps most strikingly due to its culturally diverse market. In conjunction with China and India, consumers in Indonesia exhibit great linguistic, religious and cultural diversity (Dawar & Chattopadhyay, 2002). For example, Islamic sharia law is practised in Aceh and Hinduism is practised on the island of Bali. Indonesia is diverse country with more than 300 ethnic groups (Tamindael, 2011); with the largest ethnic groups are Javanese and Sundanese, 45% and 15% respectively (Efferin & Hopper, 2007). Efferin and Hopper also note the existence and importance of the Chinese ethnic group, around 3% of the population, among other ethnic groups in Indonesia. In addition, Tamindael (2011) notes that the cultural diversity of Indonesia includes of various tribes (over 500), who speak more than 700 ethnic languages. The wide diversity of values within Indonesia is a challenge for marketers (Muchtar, Kingshott, Wong & Laksamana, 2011), since one of the key factors that characterises emerging markets is its variability in consumers (Dawar & Chattopadhyay, 2002). Alfansi and Sargeant (2000) argue that knowledge about the consumers (needs, wants and preference) may assist in the development of marketing activities (e.g. customer retention). It has also been argued that local cultural norms drive the consumption patterns (Dawar & Chattopadhyay, 2002).

Source: Adapted from A.T. Kearney’s Global Retail Development Index^TM (GRDI) 2013