Indonesia flag Indonesia: Buying and Selling

Advertising and marketing in Indonesia

Marketing opportunities

Consumer Profile
The median age in Indonesia is 30.3 years (Data Reportal, 2022): 25% of the population is between 0 and 14 years old, 68% is between 15 and 64, and 7% is 65 and over (UN, 2022). Indonesia has a population of more than 277 million people, 50.3% of which are men and 49.7% women. 57.9% of the population is urban and the main cities in terms of population are Jakarta, Surabaya, Medan and Bandung (Data Reportal, 2022).
Households in Indonesia tend to be large (3.9 average household size), as 7% of households consist of only one person, 37% of two or three people, 41% of four or five people, 15% of six people or more (UN, latest data available). The literacy rate in the country is 96%, with 93.5% of children enrolled in primary education, and 78.7% enrolled in secondary education (UNESCO, latest data available). In Indonesia, women are less likely to attain upper secondary education than men are, but they are more likely to attain tertiary education. According to the World Bank (2020), only 38.1% of the population over the age of 25 have at least completed the upper secondary education. While 34.6% of women are at the upper secondary education level, the rate for men is 41.6%.
Purchasing Power
The GDP per capita PPP in the country is 12,072.7 USD in 2020, as reported by the World Bank. The average salary in the country is around 12,100,000 IDR per month (USD 862) (Salary Explorer, 2022). Household spending in Indonesia is a major contributor to country’s GDP. It declined during the Covid-19 pandemic but picked up again in 2021, growing by 4.1%. It is expected to accelerate and climb by 7.6% over 2022 (Fitch Ratings). Despite Indonesia managing to more than halve its poverty rate since 1999, inequality has been rising fast in the country. The richest 20% have enjoyed much higher growth in income and consumption than the rest of the population. Indonesia's Gini coefficient is relatively high compared to other countries in the region, at 37.3% in 2021 (World Bank). Indonesia has the sixth-worst inequality in the world, where the four richest men in the country have more wealth than 100 million of the poorest people combined (Oxfam). Figures vary throughout the country, but the gender pay gap in Indonesia is high: women earn 23% less than men do on average (UN Women).
Consumer Behaviour

Indonesia has been experiencing a consistent growth rate for a few years, which has been reflected by a rise in incomes (including disposable income) thus increasing overall household spending. As many of Indonesia’s low-income consumers continue to move into the middle-income segment, they are becoming increasingly sophisticated in their spending habits and product choices. While this means an expected increase in expenditures in many sectors, companies also require more differentiated and segmented product offerings to attract these new consumers. While traditional retail channels still dominate the market, modern retail continues to gain ground, led by the growth of convenience stores. Indonesia’s retail market is characterised by its immense size. While it brings countless opportunities to consumer business companies in the form of a huge and ever expanding middle class, digital consumers, as well as rapidly urbanising cities outside of Jakarta, a multitude of challenges - such as the high cost of serving across the expansive archipelago - still exist. The main drivers for online shopping are lower prices and ease of searching for products. Online shopping is not very popular in the country yet, as most consumers prefer to make purchases in person. Additionally, infrastructure is still underdeveloped, which makes deliveries challenging outside the main cities. However, e-commerce has been growing steadily, and was boosted by the social distancing and lockdown measures put in place during the Covid-19 pandemic. E-commerce is expected to register a 23.8% growth in 2022 and reach around USD 30 billion (GlobalData). During the pandemic, consumers shifted their priorities towards necessities, and away from discretionary spending (Deloitte). However, before this disruption consumers had been focusing less on price and more on other factors like overall product quality and trustworthiness of brands. Consumers tend to be loyal to brands, even if that particular brand is not the cheapest option - especially when it comes to home and personal care products, as well as food and beverages. Therefore, even though price is still a relevant factor, the Indonesian consumer is willing to pay extra for a higher quality product. However, for low-income consumers, price is a decisive factor when making a purchase. While there is room for foreign brands in Indonesia, consumers prefer local ones, as they have more trust in their quality and believe that local companies understand Indonesian consumers better than foreign ones. Additionally, while not decisive when making a purchase, Indonesians tend to prefer brands and shops that provide quality after-sales services. Despite continued growth in digital and online media adoption, traditional media continue to dominate, with TV, In-Store Promotions and Friends & Colleagues remaining the preferred channels of communication. One reason for this may be the strong dependence of Indonesian consumers on sponsorship of their indoor environments, which in turn still tend to be strongly influenced by traditional media campaigns (Deloitte).

Consumers Associations
Consumers Association of Indonesia (YLKI)
Platform for Indonesian consumers
Main Advertising Agencies
Match advertising
Dentsu
Cheil & Co
DNA Design in action
 JWT Jakarta
PT Ad Indonesia

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Latest Update: September 2022