By Mustafa Moosajee, Managing Director, Nielsen Pakistan
Several years of internal political shuffling as well as low levels of foreign investment have led to recent slow growth and underdevelopment in Pakistan. But the situation has now changed. Democracy appears to have gained traction in Pakistan.
But what has changed in terms of consumer concerns and spending intentions in Pakistan, and what does it mean exactly for marketers? To keep a pulse on consumer attitudes and behaviours as they relate to the ever-changing retail, media and technology landscape, marketers need to understand the Pakistan consumer – better than ever before.
This is where Nielsen comes into play. The Nielsen Global Survey of Consumer Confidence and Spending Intentions, established in 2005, measures consumer confidence, major concerns and spending intentions among more than 30,000 respondents with Internet access in 60 countries – Pakistan included. Consumer confidence levels above and below a baseline of 100 indicate degrees of optimism and pessimism. In the latest round of the survey, conducted February 17 – March 7, 2014, consumer confidence increased in 60 percent of markets measured by Nielsen — up from 43 percent the previous quarter (Q4 2013).
How has Pakistan Consumer Confidence changed in the last years / months, and more interestingly, WHY? And what does it mean for marketers? How can they profit from these changes?
Pakistani consumers trust their economy and are more confident in the future than a year ago. According to our latest Global Survey study, Pakistan consumer confidence rose to its highest level since 2008 with an index of 99 in the first quarter of 2014. The Pakistan index — which recorded its lowest score of 86 in Q3 2011 — represents a two-point increase from Q4 2013 and a 12-point increase from a year ago (Q1 2013). This is quite a difference and raises the question what has changed within the last year in Pakistan which justifies this high increase?
First of all, Pakistani consumers continue to express confidence in the incumbent government — the first ever to have transitioned democratically from another elected government last year. This appears to be an endorsement that the economy is showing signs of recovery, behind reforms and stabilization introduced by the current administration and despite the challenges living in one of the most populated countries in the world. Macroeconomic and security challenges, however, continue to weigh on the economy. Also, Pakistan’s inability to meet domestic energy requirements is a key political and economic issue. But the on-going developments and reforms have already started to reflect in several positive economic indicators.
Let’s focus on the employment situation in Pakistan. Does the rise of the general consumer confidence also impact people’s sentiment regarding their job perspectives? With more than 60 percent of the population under the age of 30, there is a constant demand for employment opportunities. Unfortunately, the answer to the question is – not yet. Even that the general consumer confidence in Pakistan is growing, locals still feel reluctant about job opportunities, and gave a more pessimistic outlook for their future job prospects: Only 40 percent of respondents registered positive perceptions for employment opportunities, compared to 42 percent in fourth-quarter 2013 - a decline of two index points. Fact is that unemployment was, and is still, one of the biggest challenges in Pakistan. Due to the growth in population it has ensured that a very large number of young people are now entering the labor market. And even that the Government has already taken many activities to overcome this problem – creating jobs will be difficult in 2014. It still requires huge efforts and long term planning to overcome. This won’t change overnight.
Lastly, how does it affect the financial situation of Pakistani consumers? The general consumer confidence is getting better but the job outlook worse. How do Pakistani respondents feel then about their financial situation? Good, bad, the same? In summary – better as Pakistani consumers feel more secure in money matters. More than half (57%) of Pakistani respondents regarded their personal finances positively, a level that has increased in comparison to the last quarter (55%). And also the number of Pakistani consumers who told us that it is a good time to buy things they want and need over the next 12 months has risen from 35 percent in Q4 2013 up to 39 percent in Q1 2014.
However, what we are witnessing in Pakistan is “cautious optimism”; Pakistani consumers are optimistic about the economic progress yet many are cautious in their spending due to the geo political situation in the country. One significant change is that they focus now more on savings and also think about the(ir) future. Caring about loved ones and about children’s education prepares a better generation to lead the country. Family comes first, I believe this is what drives Pakistan forward.
So, what does this mean for marketers in conclusion?
Pakistan changes fast and is also changing fast in its development. Despite all the challenges in our country, we do have a high potential to achieve significantly higher economic growth and prosperity.
Even if Pakistan consumers have a better feeling about their financial situation it doesn’t mean that they will spend money on things they don’t need. Therefore, linking demand with consumer sentiments is vital to developing marketing strategies that connect the right consumers with the right products, brands and services. Pakistan represents a large area of growth opportunity for industry, but capturing this opportunity hinges on marketers successfully identifying, understanding and effectively connecting with buyers’ needs and desires.
Getting to the heart of what drives purchase decisions allows marketers to fine-tune their marketing strategies to address the unique needs of the buyers in Pakistan.
So let’s start doing it and push our economy in the 21st century.
This article is based on the latest Nielsen Consumer Confidence Q1 2014.