If companies are to win over this valuable consumer segment, they should consider three actions.
Taking Advantage of Digital Tools. Digital media and e-commerce are powerful ways to reach the upper middle class in Asia. These consumers tend to use social media to advocate for brands they like. They also use social media to figure out which products to buy next.
The digital habits of the segment haven’t been lost on global companies. Burberry and Louis Vuitton are already active on the Chinese social media platform Sina Weibo; both also have official accounts on the popular mobile messaging service Weixin (known outside China as WeChat). The perfume and cosmetics site Rose Beauty was launched in China in 2010 by Lancôme and now has more than 4 million subscribers.
And, as is the case with affluent consumers in the West, upper-middle-class consumers in Asia often look at a product online as well as offline before deciding whether to buy it. E-commerce can also fill in gaps in supply availability. After all, a product not available through any retailer in a smaller city can often be ordered on a website and delivered directly to the customer.
Anecdotal evidence suggests there is already a lot of online commerce in tier 2, tier 3, and lower-tier Asian cities—much of it involving upper-middle-class consumers. For instance, in the first half of 2015, 45% of premium skin care sales on Alibaba’s Tmall came from consumers in cities that don’t have physical stores in which those products are sold, according to Alibaba’s research arm. The Economic Times recently quoted Amazon as saying that more than half its orders for luxury brands (including Tumi, Versace, and Roberto Botticelli) in India were coming from smaller cities such as Jaipur, Indore, and Coimbatore.
Thinking Globally as Well as Locally. Affluent Asian travelers bring their overseas experiences home, and their cultures shape their expectations when they travel abroad. Many makers of luxury brands have begun to cater to these consumers and have been hiring more retail personnel who speak Asian languages for their stores in locations popular with Asian tourists, such as Paris.
Upper-middle-class travelers frequently return to their home markets with new interests. When Thai consumers find something they like while traveling abroad, they often write about it on Pantip, the widely used Thai-language discussion forum. The buzz about a product like Tokyo Banana (a Japanese snack) or the roasted duck from London’s Four Seasons Chinese Restaurant creates interest in these products, boosting their popularity in the domestic market. Local Thai companies then look for ways to offer similar products.
Retailers and brands can take advantage of this phenomenon by staying on top of traveler trends and making sure their brand image and messaging are consistent across all channels. Some companies might even want to introduce changes in their organizations that make it easier for them to serve Asian upper-middle-class consumers, regardless of which countries the consumers happen to be in.
Targeting the Younger Generation. The Asian upper middle class can be viewed as two subsegments: those below 35 and those above it. The distinction is important because the young upper middle class represents the most promising part of the segment. These consumers spend an average of 40% more than older members of the segment. This is true across a broad range of products, including digital cameras, electric razors, and cosmetics.
Not surprisingly, younger upper-middle-class Asians are more digital savvy than older ones. That means an investment in digital tools and capabilities, as mentioned above, could be particularly effective in reaching them.
For many luxury companies, it may make sense to develop two different brands: one with broad reach that attracts the majority of upper-middle-class consumers and a more narrowly focused brand that appeals to the younger subsegment.