Market segmentation in Asia depends on objectives
Large firms have to balance where capital deployed
AS the opening day keynote speaker at the launch of the three-day Cradle Buzz conference from March 19-21, Joel Neoh, international vice president of Asia Pacific at Groupon, will be talking about The Asean Entrepreneur Journey.
Cradle Buzz is organised by Cradle Fund Sdn Bhd, an agency under the Ministry of Finance, and aims to highlight, analyse and discuss entrepreneurship concerns in the region, as well as create networking opportunities.
Neoh’s own entrepreneur journey back in 2009 was limited to Malaysia with Groupsmore, a group buying site that got acquired by Groupon within nine months of launch.
Since joining Groupon, he has been involved in managing the group buying site’s Asian expansion into 12 markets, including helping to turn around the mature Japanese, Korean and Taiwanese markets.
He knows all about segmenting markets according to geographic region or similarities in maturity stage – the latter is important to create strategies that can be executed with consistency, and thus drive stronger results.
When asked about how Groupon looked at its Asian markets, Neoh says it depends on the objective of any segmentation.
“Groupings may differ. For example, we are in Malaysia, Singapore, Thailand, Philippines and Indonesia, which are under South-East Asia. Yet, at one point we segmented Malaysia and Singapore with Hong Kong and Taiwan, due to the similarity in market size and maturity of business,” he explains.
Meanwhile, at one time Groupon had also put Indonesia, Thailand, the Philippines and India together as emerging Asian markets which were smaller in size but growing the fastest, and thus needed a different investment position, he says.
All of this happened over the last few years under Noel’s watch – which is why he also understands the unique challenges any large company from the West faces when it attempts to expand into Asean (the Association of South-East Asian Nations bloc).
“The commitment to invest in the region puts a strain on both finance and technology resources.
“Large companies often have to balance where they deploy capital, and mature markets in Asia are often the low-hanging fruit for easy short-term growth, while emerging markets like those in Asean would require a longer gestation and ROI (return on investment) period,” he says.
As to what Asean governments can do relatively quickly to help increase investments into their countries, Noel says that catalysing more entrepreneurs, while making it easy for investors to find and invest in companies, would surely help.
While Asean has come to be described as a “market of 600 million,” would Neoh encourage entrepreneurs to subscribe to this or urge them to be more cautious in crafting their business plans?
“I would definitely encourage them to think and swing big. Depending on the product or service being offered, another way to view the initial opportunity is to first figure out how to win in the eight to 10 major cities in Asean,” he advises.
To pick up more pointers from Neoh, and to find out what aspect he feels is over-rated about companies, make sure you book your spot at Cradle Buzz by following Cradle’s Facebook Page or Twitter account.
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