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A Data Backed Insight Into Malaysian Consumer Habits

Consumer Spending in Malaysia averaged about 1.1 billion MYR from 2005 until 2019 according to the department of statistics, Malaysia. And as the digital economy expands, there is no doubt the figure will climb even higher. A survey carried out by the Conference Board Global Consumer Confidence shows Malaysia’s consumer confidence still ranks 10th in the global list. The CCI is driven by three indicators, which are: consumers’ perception of local job prospects, personal finances and intentions/readiness to spend. It
seems Malaysians’ willingness to spend is quite resilient, given the current economic climate.

So what drives Malaysians to spend and more importantly, what influences their behaviour? Let’s take a look at a specific product to lend us some insights. Laptops are generally well known and considered almost a necessity among Malaysians. Laptops.

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Pie Chart 1: Breakdown of considerations when purchasing electronics.

Based on a survey we conducted across 307 respondents, we asked what they looked for when buying a laptop, and the quality was their biggest consideration. As compared to price which only 20% of the respondents highlighted. This is surprising as Malaysians are stereotypically known to be price-conscious in their purchasing. A hypothesis can be made here; consumers in Malaysia are more concerned with the quality of goods as the price increases. When asked about the specification of laptops, less than 10% of them highlighted this as one of their priorities. This suggests that Malaysians are generally less concerned on technical aspects as compared to the brand, which is the 2nd highest factor influencing the consumers. Generally, Malaysians factor in quality, brand and price when purchasing laptops.

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Bar Chart 1: Another survey showing respondents’ considerations when making purchases.

Similarly, in a separate survey asking what are the 3 main factors that respondents consider when purchasing something, price and quality have almost equal footing. Even for goods in a general sense, quality remains a crucial factor in driving the purchasing decision. It is important to note quality is not mutually exclusive to a well-known brand, a lesser-known brand can have better quality in some instances. The data suggests that Malaysians are more conscious in purchasing and take precautions in making sure the item is assured quality-wise.

So if Malaysians are indeed conscious about buying goods, does brand matter to them at all? The question would need to be framed around what type of goods we are talking about, according to our data, for daily necessities, price is more important than the brand for an astounding 68% of people based on 2014 respondents. This suggests that Malaysia’s consumers are more flexible when it comes to daily goods, perhaps looking at our farmer’s market (Pasar) and the emergence of supermarts such as Mr.DIY and KK Mart which are providing cheaper alternatives for daily items compared to other major established brands.

Brand vs Price, which matters?

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Bar Chart 2: How respondents value price and brand in the categories of items they get.

On the other hand, for luxury items, 58% out of 2013 respondents chose brand over price.
An observation can be made of the remaining 42% of respondents who would still pick a cheaper, albeit less established brand. Even though the brand is the highlight for many, price is still a sensitive indicator for these products. So what does this mean? Luxury brands in Malaysia are facing a point of change, one of the significant moves made by luxury brands such as Louis Vuitton (LV), is appealing to the younger generation by sponsoring an E-sports tournament, an unprecedented move made with video game developer Riot Games. LV will create a customized trophy awarded to the tournament champions.

To survive in the current economic climate, brands especially luxury ones, cannot afford to stay within their niche market. For example, Gucci’s North American revenue in the first half of 2019, only rose by about 1.1%. Even the used to be safe haven, China, has been put in a corner due to the China-U.S trade war, again showing the market is ever-changing and there is no vanguard business plan against everything except being flexible to change.

In Malaysia, the E-sport industry is growing and recently has received support and funding from the government in the 2020 budget. Twenty million Ringgits was allocated for the E-sport industry. This is a good time for luxury brands to collaborate with the E-sports industry, to increase their relevance with Malaysian consumers.

How do Malaysians know about the products or services?

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Pie Chart 2: Where do people get information on products and services.

There’s a saying that behind every successful brand, there is a good marketing team. Advertisement, regardless of whether traditional or digital, forms a huge part of our daily lives. According to our data, the top 3 sources in order are Television, Facebook and Instagram, Newspapers. An inference can be made, that Malaysians are still very much influenced by traditional advertising methods. There is a certain perception towards traditional marketing, perhaps it is seen as more “legitimate” in the eyes of the consumers compared to digital marketing. A plausible explanation is that the barrier to entry to advertise on Television networks is generally higher in cost.

So do advertisements have a direct influence on consumers? Based on our data, 67% of respondents say advertisements do not influence their decision to purchase and a similar response was received when asked whether they seek information before purchasing something. Malaysia’s consumers are conscious of their decision to purchase products and services and are generally indifferent to advertising. Or at least they would like to think so. Advertisements sometimes aim to establish the name of a brand, they do not necessarily expect to have a direct correlation on buying.

As goliaths such as Google and Facebook monopolise the advertising avenues, it is clear as day that digital advertising will expand and become the norm in the future. Within Malaysia itself, 78% of Malaysians are internet savvy and are on social media. The government is also pushing for increasing digitalisation through various initiatives. More and more companies are moving online with their marketing. INVOKE has noted that there are many companies out there who rely on traditional marketing, word of mouth and networking to market their services and products. But all of them are aware of the fact that they need to start moving online with their marketing to stay in the game.

Consumers in Malaysia are increasingly concerned about the quality of goods while remaining highly price-sensitive. This is a trend observed for luxury and high-ticket items. As education levels increase coupled with increasing digitalization, Malaysians are evolving into buyers who are also more technical and specification conscious. As for advertisers, they must be more attentive to the socio-demographic segments of consumers to determine which advertising platform they want to focus on and what marketing angle to take in order to optimise their ad buy.

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