WPP, the world`s largest communication services group in cooperation with Y&R Mongolia, the world`s leading full service advertising agencies have released "Spotlight on Mongolia", business environmental analysis report on Aug 31.
David Roth, CEO, The Store WPP, EMEA and Asia noted:
"There is a ready pool of people in Ulaanbaatar right now who are already wealthy, and now is the time to serve them. Almost 39% of adults in the country are sitting on wealth of between US$10,000 and $100,000, and there are about 32,000 dollar-millionaires. While their numbers are small, they are all in one place, in a cosmopolitan city with good infrastructure and reliable and affordable communications, and they are open to new ideas".
The report includes 10 key take aways for entering Mongolian market.
THIS IS A TALE OF ONE CITY
Mongolia has two distinct parts – the peaceful, rural landscape of nomadic herders, who tend not to be materialistic and who are generally content with their simple lives. The other part is Ulaanbaatar, known as UB, where there’s wealth, sophistication, a desire for progress and affluence, and a certain edginess that tends to go with fast-expanding frontier mining towns. A thread of cultural pride runs through the country and unites its people, from the capital to remote pastures, but for many international brands seeking to explore the Mongolian market, their business will start – and stop – in the capital.
THERE IS A PRIDE IN THE MONGOLIAN IDENTITY
Mongolia has a population of 3 million people, but it is also the ‘motherland’, the cultural capital of the Mongol ethnic group. Mongol people live across the Central Asian plains and number at least double the number of people living in Mongolia. What’s dubbed ‘pan-Mongolism’ has taken Mongolian culture and products as far north as Russia and south to Inner Mongolia in recent years, driving demand for everything from milk to pop music.
3.NEW IS EXCITING
There is a curiosity about Mongolian consumers that is a huge boon for businesses looking to launch in this market. People are open to giving new brands and new products a try. In fact, this willingness to consider something new can make it difficult for brands to build loyalty, and businesses here must keep products feeling fresh and exciting through innovation and change, with regular updates, variants and new packaging. A long nomadic tradition is possibly behind this readiness to move on and could help explain why local service businesses often start off strong and then drift after a few months. Local brands often emphasize making a big entrance, without having a long-term strategy in place.
EXPECT TO FIND CONTRADICTIONS
Mongolian consumers have traditionally looked to Europe for the latest trends and for lifestyles to aspire to. There is a sense of individualism here that is more recognizable in the West than in the rest of Asia, where the collective usually dominates. But while older people feel a degree of nostalgia for the order that Soviet rule brought, there is immense pride in Mongolian independence and culture, and growing interest in quality, and locally made goods such as organic soaps and toiletries. There is Eastern influence, too; Lunar New Year is a huge family celebration, and Korean dramas are among the most popular shows on TV.
5.THE COUNTRY IS YOUNG, BUT CONSUMERS ARE NOT AVERAGE
Almost a third of the Mongolian population is aged under 15, but the disparity in wealth and living conditions among the population here mean averages must be treated with caution. The future of the country is in the hands of its young people, but much of the spending power in the country right now resides with more mature consumers. For now, the majority of affluent consumers are aged 30-plus, even for what might be considered quite youthful brands in other markets.
6.CHEAP ISN`T NECESSARILY APPEALING
Mongolian people have a keen eye for value, but they are more concerned with the quality of what they’re buying than the price. In fact, after a decade of being on the receiving end of cheap imports that quickly fall apart, consumers are suspicious of cheap prices, which now connote poor quality and will be overlooked by shoppers who want to buy things that last and who can afford to insist on better.
7.AFFLUENT CONSUMERS ARE ONLINE AND SOCIAL
Television remains, as in much of the region, a hugely effective tool for achieving mass reach in a short time, and news, current affairs, dramas and comedy are highly popular. Free time is increasingly being spent online, however, often on several devices at once, and among consumers who have access to the internet, most are connecting using a smart phone, and almost all are using social media. Social media remains a largely untapped opportunity for brand marketers, with most brands simply transferring their offline activity to a new screen rather than creating fun, interactive experiences that match the medium.
8.THE PACE OF PROGRESS IS DIFFERENT
In some ways, Mongolia is skipping entire stages of what in other markets have been small periods of development taking place over many years. Think a step ahead. Many people’s first phone is a mobile, and first internet access is via a smart phone rather than a laptop or desktop. Internet banking is being rolled out fast, and online or phone-based bill paying is commonplace. At the same time, however, it’s important not to make assumptions about consumers’ knowledge of brands and categories. What might be considered obvious in other markets might not be so here. The fact Burger King only sold burgers, for instance, came as a surprise to many of its first Mongolian customers.
9.INFORM AND INSPIRE
This may be a new market for many global brands, but people here have been exposed to brands for decades now and are open to quite sophisticated messaging in advertising. While information is important, consumers are looking for an emotional connection with brands, and creating aspiration is vital if brands are to stand out. The ‘family around the table’ motif is frequently deployed in television advertising, but is so widely used that brands tend to blur into one another. Similarly, the legacy of Chinggis Khaan is to be overlooked at your peril; his name adorns everything from the airport and the capital’s central square to bars, bottles of vodka and the country’s main airport. His name has become a shorthand expression of quality - but is ubiquitous to the point of saturation.
10.DEMAND CAN BE VOLATILE
People in Mongolia tend to spend more money when they have it, and pull back sharply when times are leaner. Given the dependency of much of the economy on natural resources, retailing enjoys boom times when commodity prices are high and the converse is true as well. Brands and retailers here need to plan for fluctuating demand. They should also be aware that end-of-season sales are a fairly new phenomenon, and customers aren’t always delighted to discover items they paid full price for a month or two earlier being sold off at a deep discount.
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