Indonesia - Cultural and Economic Analysis

...

The distribution system in infrastructure consists of many middlemen. Usually, agents procure the foreign goods and supply to the modern retail. Central warehousing exists in major cities which make the distribution process extensive for traditional stores. Traditional stores are of high prominence when compared to that of mini markets and hyper markets. However, the role of the latter is growing currently. Also, with internet penetration, e-commerce trade is going up. Television as a medium has the highest reach with 95% penetration followed by internet which is 33%. The penetration of internet is increasing, likewise the advertising spend which is 8% of the total spending on advertising currently.

Economic Analysis of Indonesia: Insights

Equal distributed population poses huge potential to tap on for Patanjali Ayurved. It also means a huge opportunity to achieve economies of scale through efficient use of distribution systems provided the limitations of transportation and distribution infrastructure is managed. Increase in labor force participation, especially of women resulted in concept of Self Image, thereby increasing consumption rate for cosmetics. In such scenario, lack of trade restrictions in cosmetics is a leveraging aspect. Like India, multiple levels in distribution in Indonesia poses a need to carefully strategize the trade margins & pricing model. Both traditional and modern retail play key importance. There is a need to be dynamic in trade and consumer promotions to gain and secure shelf space. Television penetration rate is a big boost as it can be used as a single advertising medium to reach most of the population.

Conclusion

Thus, from the cultural and economic analysis of Indonesia, the various insights that will serve as inputs for developing marketing programs are arrived at.

---------------------------------------------------------------

[pic 4][pic 5][pic 6]

Exhibit 1: Cultural Analysis

- Brief discussion of the country’s relevant history[1]

The Dutch colonizers – burdened by international compulsion – ceded control of the Indonesian region in 1949 (with the exception of the western part of New Guinea). As the young nation faced the severe task of nation building and governance through a parliamentary structure, the nation’s various groups began competition against each other to impose their principles on the nation.

Through Pancasila concept – a fusion of elements of monotheism, nationalism and socialism – Indonesia’s first president, Sukarno tried to unite the different forces, and succeeded fairly (PS, Sukarno’s successor, Suharto, later, used the Pancasila concept as a tool of repression). However, the Muslims wanted a provision to implement the Islamic Law (Shariah), which was not supported by the other sects of people (Buddhists, Christians, Catholics, Hindus and the large group of nominal Muslims). Economic matters came second for Sukarno, who concentrated on getting the political situation in the country right.

Between 1965 and 1967, General Suharto began his ascend to the power. His top priority was to set the economic conditions right. He, ably guided by a team of economists trained from US, began a period of economic rehabilitation and recovery. They took steps to control inflation, re-establish international relations, and made it attractive for foreign investors to invest in the country. Between 1988 and 1991, Indonesia's GDP grew by 9% every year, slowing down to 7.3 % between 1991 and 1994, only to rise again in the following two years.

- Geographical setting

- Location

Indonesia is an oil-abundant bunch of archipelago of 17000 islands[2] extending across Southeast Asia and Oceania[3]. A part of Asia, Indonesia cover 1,811,569 square kilometres of land and 93,000 square kilometres of water – with a total area of 1,904,569 square kilometres, Indonesia is the 15th largest nation[4].

- Climate[5]

The climate of Indonesia is not decided by temperature or air pressure, but by rainfall. Equator splits the country into two – tropical climate with temperature averaging 26°C to 28°C amongst the coasts and inland, and higher mountain areas (23°C). Humidity of the area was also relatively high, ranging between 70 and 90 percent. Typically, the region experiences a dry season between June and September, and a rainy season from December to March.

- Topography[6]

Indonesian archipelago consists of three regions: the islands that stand on Sunda shelf (where ocean depths are at most 210 m), the islands that stand on Sahul shelf, and the in-between region (surrounded by seas reaching depths of 4,570 m). Peaks of the region rise up to 3,650 m. And, numerous volcanoes dot the island.

- Social institutions

- Family

- The nuclear family[7]

A simply nuclear family in Indonesia consists of husband, wife and their unmarried children or one person and his/her child. And so with the data collected from the village and town it states around 74.4% are nuclear family in villages and 58% in towns. So the nuclear families live in the same compound of the parent house and if it is overcrowded they build a new house inside the garden and start to live there, for generally after marriage the couple stays in the girls’ parent house for around 5 years to become economically stable and then they move to nearby households.

- The extended family[8]

The extended family includes, grandparents, cousins, uncle and aunt. It is very common for extended families to live in the same place in Indonesia. Although it is prevalent in both cities and villages, it has become less common in cities, but they respect and care for their elders very much and they work very close and help each other of the family and that is why they stay close to each other in a same place but in different households separated by walls. They are expected to look after their parents at the old age.

- Dynamics of the family

- Parental roles[9]

Parents play an important role in bringing up the kids to look after their siblings and the elders when they grow up. They tend to have two