5 Key Facts About Mobile Youth in Emerging Markets A look at China, India and South Africa
Written and researched by Graham Brown and Mark Sheehan
mobileYouth.org
This document was downloaded from http://www.MobileYouthNet.com The Youth Research Community Your source for youth marketing contacts, free eBooks & infographics
Kerala India It’s often difficult to comprehend emerging markets beyond the numbers bounded around by investment banks and analysts until you sense it first hand. I was no emerging markets virgin – had spent 2 months travelling Indonesia under the rule of Suharto in the early 90s, explored Nepal, Bhutan, North Africa and the outer reaches of the Borneo jungle before landing in India. Yet it’s when you finally connect your working world of telecoms and marketing with your passion for travel in some of the remotest corners of our planet that the circle is finally squared. Fact One: Consider a market 3 times the size of the US but populated entirely by under 30 yr olds – that is India and China, welcome to the future… Incredible as it seems, the future has arrived through sheer numbers in the suburbs or Shanghai or the bustle of lower downtown Mumbai. Between India and China you have 1/3rd of the world’s population outright. It’s a vision of the future made even more poignant by the sheer weight of youth - 1.05 billion of them. So our journey starts here and it begins in India because of the 2 youth populations, India is the larger – 550 million people aged under 30. If you want to get brutal with statistical comparisons consider the implications of this market; there are more “tweens” in India (i.e. aged 10-12) than there are people of all ages in the entire UK. And visit India, you’ll find youth vibrancy exuding from every corner in numbers from the crowds that surround the foreigners taxi to the mobs that descend on the sparse makeshift cricket pitches. My first mobileYouth-based reconnaissance to India took place right in the middle of a heatwave. It's a hot summer's day. And, when I mean "Indian Summer", I don't mean those late August heatwaves that often bless European shores, I mean the real deal; 40 degrees Celsius in the deep south of India's agricultural heartlands - Kerala. This beautiful Indian province stretches endlessly across plains unfolding before you revealing colour, smiling faces emerging from tall plantations that constantly squeeze the narrow roads and a sense that this is a corner of India that has retained its spiritual and cultural integrity in the face of phenomenal progress in the Northern cities. Yet, this isn't theme park tourism - here be progress. Kerala is not only one of the most relaxed states in India, it's also the most literate. Officials are keen to press home the widely accepted fact that literacy in Kerala is 99%. It's a viable statistics - the southern Indian states have grown and trained a large proportion of the country's software legions. Kerala may have held on to many of its traditions but it's certainly not languishing when it comes to welcoming the technological future with open arms. I'm heading from Trivandrum airport to meet our research team out in the newly built Techno Park. There is a buzz of excitement compounded by the erratic driving of the taxi drivers, the fatalistic jaywalking of animals and the sense that here anything could just happen.
Youth swarming around street mobile phone retailers, throngs of teenage boys on one side, girls on the other with a mix of headscarves and folders held up against the 40degree sunshine as shade. Boys stand in line arms around shoulders, as is tradition in many Asian countries and girls stand giggling, huddled but distinctly separate. The contrast of technologies could not be starker. The street vendor demonstrates the latest Nokia N Series to students who carried no more than 200 rupees ($4) each as he talks in a mix of Telugu and Malayalam about the latest features - including MP3 player and stereo sound. His voice was pitched at a volume that would damage most human ears but he was fighting for attention with the on-street generator that plugged into his stall, a contraption that surely hailed back to the white Raj. The irony of contrast was not lost on the stray chicken that nested on top the generator seemingly oblivious to hum, hustle and the general melee of bodies, animals, traffic and rickshaws. Nokia, the brand, is universal but the sounds and smells are distinctly local. The heat, smell of local spices, cloves and the streets are inimically those of Kerala in South India. A coconut walla pulling a rickshaw stands a safe distance away observing this new arrival in town. He chews some local concoction in his mouth as he tries to catch a glimpse of this technological circus show obscured by the back of the local teenagers' heads and folders held high. As seems to be the mode of crowd control in India, the authorities (in this case the vendor) is obliged to beat back the hordes with some form of stick followed by a melee of shouting. One of the youths was handling the goods obviously excited by the prospect of a tangible and affordable status symbol within his grasp. He seems unphazed by the beating and quickly subsumes back into the mass of bodies. The scene is obscured once again by rickshaws, traffic and beggars pressing their sorry faces against my taxi window. I try to scramble for some spare rupees from my pocket but my host shouts something in the local dialect, the beggars scurry off like dismissed flies. Once upon a time, opportunity through cutting edge technology was only to be found in the developed worlds of Europe and North America. These days, it is no longer the case with mobile technology, and the young people using it, helping to open up new frontiers in the developing world. MobileYouth takes a look at these new lands of opportunity. While the rest of the world wallows in the economic slump, parts of the developing world are simply getting on with the business of realising their growth potential. Three counties in particular can now boast a potential for growth the West can only be envious of, with particular markets driving the level of opportunity that much higher: in India, the rural market is being pried open by mobile technology in areas like farming and banking; in China, young people are ignoring the global recession and continue to spend; while in South Africa, entrepreneurs are tapping into a hunger for social networks and civic services via their mobile phones.
There is a general acceptance that it is the young generation that pushes new markets open, but rarely is that fact more acutely clear than in India where the under-27 age group has been identified as the power behind the potential of its new markets. The majority of this group comes from the same source too, with graduates of India’s Institutes of Technology being hailed as its principal drivers. Fact Two: If you consider Emerging Market Youth, you need to consider the “Emergents” India is one of the youngest countries in the world, with 60% of its population under the age of 24. While 31.5% of that number is middle class youth, with an appetite for shopping and knowledge of world brands, a staggering 67% reside in rural areas. And with the rural market still relatively untapped, the opportunities for investment are enormous. Here are the next generation of customers – the “Emergents” – the “bottom of the pyramid”, the billion strong market overlook and largely ignored by mainstream marketing and technology industries until mobile made headway into the rural expanses of South Asia. Low income households, those that consist of an income of <$100 a month can comprise up to a third of all mobile subscribers on South Asian networks. How does one manage an operating margin when your typical young emergent customer spends 61% of his income on subsistence – i.e. food? The numbers make it possible; Airtel’s Apnadesh is able to offer an emergent-facing offering that charges but 1 rupee (around $0.01) per minute for calls and still turn a profit because the emergent population in India is estimated to be between 400 and 500 million strong. While the youth continues to drive the country into the 21st Century, two markets of particular note for the mobile provider are farming and banking. With internet access limited, the mobile phone has become the most effective mobile information source and Indian farmers have been good use of theirs. Nokia’s Life Tools software, which is available on even their low-cost phones, has handed farmers a way to access vital information on aspects like weather forecasts, pesticides and, perhaps of most value, up-to-date market prices for crops. ‘Nano Ganesh’, a service currently on trial in two villages in Gujarat, allows farmers to switch on and monitor irrigation pumps remotely. Offered by Tata Teleservices and developed by agri-tech firm Ossian Agro, it involves a simple modem costing less than $60 attached to the pump’s starter motor. A code dialed from a phone then starts the motor automatically. In banking, a new push to bring greater and more efficient services to rural India is in the pipeline. To date, the type of banking service available to the rural customer has been sparse but new proposals before the Reserve Bank of India would make it possible for services to expand. It would allow owners of petrol pumps and fair price
shops, grocers and chemists, public call office operators, insurance agents, jobless rural youth, retired teachers and even existing bank borrowers with a good track record will be allowed to spread banking services in the rural India. In line with that proposal is the growth of mobile banking. According to figures published on Telecomindiaonline.com, between February and March this year, an estimated 40 million mobile subscribers used their phones for banking purposes, mostly to check their bank balances. However, there are several other services already available, including accessing credit/debit card information and mini-statements, and looking up cheque status. Advanced mobile users can also access bill payment and fund transfer services via HTML and WAP technology on their phones. The figures also show that low-income mobile users are more likely to use mobile banking, and as mobile subscribers far outnumber fixed line subscribers makes mobile banking, banks and service providers alike see a huge potential for growth in this area. Advertising is already changing to reflect the new developments with a move away from print, TV and radio media. Figures from Zenith Optimedia show there were 14 million new mobile subscribers in July of this year alone, bringing the total to some 440 million across India, and mobile advertising has been earmarked as the next big advertising trend. Fact Three: While the world stumbles, Youth brands in China continue to flourish Until recently for most “Western” marketers China was part of the mysterious orient, but the current economic trend there must be providing the greatest mystery of all to marketers around the globe. While the rest of the world struggles to recover from the economic crisis, young people in China have continued their spending as if nothing ever happened. According to a survey carried out by China Polling, some 19% of young people still spend more than they earn, while 55% have two credit cards and 26% at least three. This is excellent news for the world’s top brands, which are turning to China to shore up losses being made in Europe and North America. Nike saw their sales increase by 6% from March to May this year, while sales in the US fell by 2%. In April, Quicksilver opened its biggest store, a 330sqm complex, in Shanghai, buoyed by the fact that their sales in China were reportedly unaffected by the global slump. But why is this that case? Why has retail spending risen in China by 15% in the first half of 2009 and fallen everywhere else? The fact is that the ‘one family-one child’ law means that a huge number of young adults now exist in China with a proportionally large disposable income. While families in the west have the expense of giving allowances to three or four children, Chinese families only need to give to one. It means that a young Chinese woman could have allowances from her parents and both sets of grandparents, and be living rent-free at home.
With an estimated 200 million people between the ages of 15 and 24, it’s enough to keep the wolf from the door for all the major global brands. Fact Four: The New Markets present a New World Order for Brands My recent conversations with John Solomon from Enovate Labs provided confirmation that the state of play in emerging markets is disruptive (NB The audio interview is available on mobileYouth.org under “Upstart Radio”). It’s nothing new. My experience living in Japan in the early 90s taught me that high growth consumer markets with a strong youth presence have the ability to create brands under the radar of the “Western” media and provide a beachhead to later enter the global stage. If you need evidence consider the fortunes of Burberry. By the mid 90s Burberry was still authentically English and synonymous with the raincoat and scarf. 10 years later, Burberry was playing out the swansong of its cultural overkill – from being plastered all over hip hop videos to featuring in Hello magazine on Victoria Beckham’s bedspread. What happened in the decade between that enabled this conservative brand to breakout onto the global stage? Japanese high school girls happened. By 1994 Burberry had become their badge of inclusion. No 17-year-old Japanese girl worth her salt would be seen without the “unofficial” school uniform of the Burberry scarf. The highly visible pattern’s mission creep started appearing on umbrellas, handbags and shoe wear just as the marketing mavens began realizing that its tried and tested appeal in this hard-to-please market was indicative of wider potential in the West. John’s rationale to up sticks in the US and move to China resonated with mine a decade prior to move to Japan – here was the frontier of opportunity. Now he tells me that whereas the world’s youth are getting comfortable with the fact that Nike is the de facto footwear brand of choice, in China it’s different; here New Balance runs things. And it’s not just NB’s foothold in the Chinese market that offers an insight into what’s next on the global stage it’s a raft of other niche youth brands that are set to break out in next decade – brands such as Kappa, an authentic youth offering that never really enjoyed large scale success except for a few spikes associated with early assimilation into the rave scene in the late 80s and early 90s. For years American based record producers had used the UK to test launch new artists because the youth scene was more consistent, more centralized and more vocal. These “breeder grounds” formed useful beachheads to experiment with the brand without the scrutiny of the global marcomms or media menace that was quick to disperse of failed ideas that may have been too radical or too out of sync with the status quo.
Here in China we have the emergence not just of a market impressive by its sheer size but also its ability to accommodate, culture and transform the brands of tomorrow – whether they be the bastardized global masterbrands or the localized offerings. But as John said, it’s early stages; marketers haven’t yet fully explored the potential of the beachhead concept. It’s a matter of time before we start to see the first tentative steps of these face lifted brands back on the global scene. The question is not if but when. Fact Five: Mobile in Emerging Markets will play a key role in building Community Infrastructure Like India and China, South Africa is brimming with youth, with some 22 million under the age of 30 and, like India, mobile technology is leading a youth-driven revolution with some $4.5 billion spent by young South Africans every year on mobile services. According to figures published by Ernst & Young, the rise in mobile phone subscribers has been constant each year since 2002, at around 43%. The country has a market penetration of 98% and with 50 million subscribers at December 2008; there is certainly a thriving market, as well as keen competition, for service providers. With such competition, there is little wonder that a different approach has had to be taken by marketers to secure their share. While youth in the west seems happy to be offered games, online access and mobile TV, young South Africans are looking for something more – a sense of community. And mobile’s role in this community is key. 85% of under 20s will experience internet for the first time through their phone rather than the PC. Youth workers will tell you that PC equipment given to social programmes will spend its time locked up in cupboards rather than out there in the youth community. With these considerations, mobile can be the only credible channel to get the message out there. In an interview with mobileYouth’s Graham Brown on Upstart Radio, Gordon Parkin of Brandscape Marketing agrees that the market needs to be treated differently. “The social network side of things has become incredibly important here in South Africa. It’s about community, it’s about culture and it’s about communication,” he says. “There is a uniqueness about South Africa. Being an emerging nation, the infrastructures that you would expect in the west, like communications, landlines and internet, are certainly not as expansive here and therefore mobiles become the primary source of communication.” Gordon added that the number of unique WAP browsers each month has increased by 10 million, which shows the level of young South Africans’ mobile usage.
Hans Mobile of Be-Mobile, also in an interview on Upstart Radio, says that young people have to be marketed to differently. “The mobile phone is one of the most personal devices you can have. It is all about communities and people developing and building their own communities. So, it’s [about] identifying how you can engage in those communities,” he says. So social networks and civic services are the areas of particular growth amongst young users. MXit Lifestyle, launched in 2005, offers such mobile social networking tools as instant messaging, music downloads, and low-cost book downloads, education tools for kids. It is available right across the developing world and is attracting 25,000 new members every day; it already has over 14 million users. It has been very successful but what has struck a cord with the nation’s youth is its desire to inform on real issues. It provides real-time drug counselling and is also part of Angel, a 24-hour mobile phone service that offers advice not just on drugs, but HIV/AIDS, depression and stress. The potential that mobile has does not just rest in the youth-orientated niche, of course. Because of the poor internet infrastructure and the mobile phone’s position as the communication form of choice, the mobile’s reach is far. A perfect example is Satellife, which is being used by the physicians to access up-todate medical research and literature which is compact and accessible during the working day. Health care workers can also submit reports to district health centers or health ministries. The focus of young South Africans is unique. They do not just want to communicate, they want to communicate about real issues. Offering services that connect people with concerns is therefore a key factor in succeeding in one of the fastest growing markets in the mobile world.
You can check out more about growing markets, including the Upstart Radio broadcast, through these links: INDIA: Mobile Banking: http://finance.indiamart.com/investment_in_india/mobile_banking.html http://www.telecomindiaonline.com/telecom-india-daily-telecom-station-mobilebanking-in-india-perception-and-statistics.html Farming Developments: http://springwise.com/telecom_mobile/nanoganesh/ India’s Youth Population: http://ingene.blogspot.com/2009/08/indias-tech-revolution-led-by-men-and.html Advertising Stats: http://www.medianama.com/2009/08/223-july-2009-1438m-mobile-connectionsadded-in-india-landlines-sink-broadband-at-68m/ CHINA: Spending Stats: http://www.chinapolling.com/insights/chinese-consumers-remain-in-a-spendingmode.html China’s Young Shoppers: http://barkingrobot.tumblr.com/post/170617330 SOUTH AFRICA: Upstart Radio: http://www.mobileyouth.org/post/upstart-radio-youth-marketing-in-south-africa/ Mobile Usage Stats: http://www.bizcommunity.com/Article/196/16/37615.html http://www.cellular-news.com/story/38361.php MXIT http://www.businessweek.com/technology/content/aug2009/tc20090820_669558.htm The Grid http://www.techmasai.com/2009/08/30/the-grid-is-a-mobile-social-network-fromsouth-africa/ Mobile Health: http://www.ihealthbeat.org/Features/2009/Mobile-Phones-DrivingHealth-IT-Innovation-in-Developing-Countries.aspx http://mobileactive.org/rapid-response-mhealth-platform-how-it-works http://mobile.trendpool.com/?p=1404 ENDS