Increased competition and discerning Asian consumers mean consumer healthcare brands need to look closely at how they connect to the consumer journey and maximize access through available channels.
This article will highlight potential challenges as well as list key ingredients for companies wanting to build a wider outreach to Asian consumers. Once a strategy is defined, a further question is whether it makes sense to build in-house capability to execute or look for a partner; a “make” or “buy” decision.
Challenge 1: Slowing growth and increasing competition
Despite higher growth compared to the other regions, Asia’s healthcare companies face a common challenge of slowing growth versus historic levels.
According to Nicholas Hall’s latest DB6 report, the global over-the-counter (OTC) market posted lower growth of 4.3% in 2016 at the back of 5.4% growth reported for 2015. China’s OTC market growth has also gradually slowed, largely due to a softer economy, new industry regulations and continues to be dominated by traditional Chinese medicine.
In addition, competition is also increasing, both from existing players and as well as from new entrants. This factor was highlighted by the DKSH Healthcare Market Monitor report published in March this year (1) where pharmacists stated the increased competition was the number 1 factor that would impact their business in 2017, ranking higher than drug prices, costs and regulations.
Established brands also face increasing threats from Asia-based healthcare companies, particularly those from Taiwan, Korea and Thailand looking for market expansion. A good example is Korean skincare products. According to statistics from the Korea International Trade Association, exports from Korea hit USD 2.75 billion in 2015 with China and South East Asia as top destinations (2).
Challenge 2: Connecting with a complex consumer journey
Consumers are increasingly making decisions driven by cost or time efficiency, lack of healthcare providers access and a desire to optimize health. As they become more discerning of their options coupled with an increasingly fragmented media consumption, the ability to engage consumers throughout the “consumer journey” is becoming very challenging.
Brands historically have focused on in-store marketing activities and in driving shoppers to bricks-and-mortar stores. Today, companies must understand and manage multiple physical as well as digital channels including online resources and e-commerce.
Challenge 3: What is optimal channel coverage?
Ensuring channel access is ever more complex and fragmented. There is a trend from independent pharmacies to specialist healthcare providers to modernize trade. This is also true within traditional fast-moving consumer goods channels such as supermarkets, hypermarkets and convenience stores, the health category is increasingly expanding and embedded pharmacies are also increasing.
Brand owners must engage with consumers through an omni-channel retail approach and tackle these challenges. There are three key ingredients which brand owners must consider:
Ingredient 1: Think outside and inside the store
Brand owners must aggressively connect shoppers and consumers. They must explore how to use digital and social media platforms to capture consumer’s attention in workplaces, at social activities and assessing the reach of in-store materials including point-of-sales, visual merchandising, brand presenter and promotion.
Brands must sustain a consumer’s interest at home or on the street on traditional and digital media. But more importantly, the customer experiences between these touch points/channels need to be aligned.
Ingredient 2: Achieving in-store excellence
To achieve in-store excellence, accessibility of the full portfolio of products in store is critical. This includes the full range of brands appropriate for store type, choice of packaging and a clear price architecture.
Visibility of product is a critical point of engagement with consumers. It is vital that the pharmacist is well-educated on the product and able to understand who to recommend to, how to provide guidance and respond to questions.
KPIs must be in place to measure service level, on-shelf availability, promotion compliance, pricing compliance and key message recall if pharmacists are to be a key trigger for recommendation.
Ingredient 3: Ensure optimal omni-channel coverage
As consumers’ demand for information, speed and accessibility to brands are increasing, it is crucial to offer closer relationships with customers through an increasingly omni-channel approach.
Whether it is through traditional channels like clinics, hospitals and pharmacies or via modern channels including hypermarkets, convenience stores, petrol stations and e-retailers, the goal of achieving optimal coverage is to have the right product and placed in the right channel where the target consumer segment wants access.
All three ingredients must be considered carefully by companies when they ask themselves “Where is my core strength?”, “Which products/markets/channels do I have the capability and focus to do everything needed to win on my own (“make”)?” and “Which ones are currently less optimal which I can possibly look to a partner who is better positioned to help me deliver the results I want (“buy”)?”
How do you currently manage increasingly fragmented communication and physical channel structures? How do you decide where to focus available resource and what to “make” and what to “buy"?
Luke Horton is General Manager, Business Development, Business Unit Consumer Goods at DKSH Thailand. He has lived and worked in Thailand for over five years and has developed a deep understanding of the Thai FMCG sector.