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Tuesday, July 25, 2006
Big firms to market products in provinces
Large companies in the country will continue to focus its marketing efforts in provincial areas to capture the consumer market of about 70 million outside the country’s capital.
This is because companies believe that consumption will drive the country’s economy in the years to come.
“With a country of 85 million and (only) 15 million in Metro Manila, you have to distribute in the provinces. Otherwise, there is a big bulk missing if you are only serving the 15 million,” said Wick Veloso, Hong Kong Shanghai Banking Corp.’s (HSBC)s treasurer and head of global markets.
In a document which HSBC furnished to Sun.Star Cebu, top honchos of large companies have agreed that consumption of goods and services, which will come mostly outside of Metro Manila, will be the main source of growth of the Philippine economy.
Cecilio Pedro, chief executive officer and president of Lamoiyan Corp., said basic consumer products, such as household goods and cosmetics, are on an uptrend despite the sluggish economy.
“While (sales of) luxury products are doing well, household products, such as toothpaste, are still okay. (The sale of) cosmetics is doing well. Food is stable. This as an indication that the consumers are optimistic about their country and about their spending power,” he said.
Domestic
HSBC senior vice president June Veloso supported Pedro’s statement, saying retail sales, on the average, account for some 45 percent of the country’s gross domestic product (GDP).
Retail sales in China and Thailand account for some 34 percent and 38 percent, respectively, of their GDP.
Driver
“So, clearly, the consumer market is a major driver of the economy, add to that the underground economy,” he said.
With the bright prospect of the consumer market and considering the low income of the mass consumer market in the provinces, companies are now going into sachet packaging.
“To generate any substantial volume (in sale), you have to target the mass market with household income under P30,000 a month,” JG Summit president and chief operating officer Lance Gokongwei said.
Pedro said Lamoiyan is predicting a 20 percent growth this year on the sachet market, basing on the double digit growth of the company’s annual sales of toothpaste sachets.
“Selling toothpaste by the tube has eased off. The small item/mass market penetration is there, so we are very aggressively targeting that (sachet) market,” he said.
Ayala Corp. president and chief executive officer Jaime Augusto Zobel de Ayala (Jaza) urged private enterprises to serve the needs of a broader base of consumers, encompassing the low-income communities, including the poor.
Jaza said private enterprises that seek to sustain their growth must find ways to hurdle the inherent challenges in addressing the needs of the low-income market, such as afforda-bility issues, the level of infrastructure development, educational attainment and backgrounds by innovating and adapting their business models to penetrate the said market. (JBN)
For Bisaya stories from Cebu. Click here. (July 25, 2006 issue)
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