Guidelines for Merchants

A lot of the local dot coms fail as resources were wasted by putting up online sites that compete with products available through direct sales and nearby shops. Some merchants created an all-in-one shopping site, trying to target a broad segment of the market, without understanding the Internet, lifestyle habits, and attitude of its target market.

Majority of the present sales by online merchants are from overseas Filipino workers and hardly from the local Internet community. A lot relied as well with online advertising as its main source of revenue.

Admittedly, there’s no silver bullet solution that can guarantee e-business success. There’s no effective benchmark and role model that can be used as a guide in determining the success factor of e-business as everyone is still struggling for survival. However, there are small lessons learned along the way shared in discussions with entrepreneurs and e-business managers.

It is no longer enough to say that one wants to target the rich, middle class, or the masses. One must take the effort in understanding their habits, culture, and lifestyle. A good book on this subject is Dr. Ned Roberto’s “Strategic Market Segmentation: How to Market to the Rich, the Middle Class, and the Masa” (ISBN 971-8611-02-9). The classes of Philippine society, I believe, are accurately depicted in the book. To compliment, I’m sharing here my take on Dr. Roberto’s book and some online business pointers that can be taken into consideration by our readers.

Based from the shopping habits that we’ve seen from our survey, majority of our online buyers right now belong to the upper middle class and smart nouveau rich (SNR) market segments. Most products bought are meant for oneself rather than a gift for somebody else.

Smart Nouveau Rich (SNR)
The Class AB is usually lump into as the rich people. Dr. Roberto classified them into three types. They are the born rich, gross nouveau rich (rags-to-riches), and smart nouveau rich (SNR). For this part, I’ll only focus on the last one.

The SNR is a practical person that does not engage in lavish spending and gift giving. However, once in awhile, it indulges oneself in “self-gifts” as a form of reward, inspiration, or morale booster in tough times.

The online buyers from this segment are great targets for “self-gifts” type of products and services. Merchants should strategize the packaging of one’s website and gear towards the “indulge” message in its marketing. As times are tough and people are pushed to the limit, products and services that will give relief and understand the pressure of this segment will definitely attract attention. Great bargains but practical items can also be of interest to this segment.

Upper Middle Class
The middle class sector or Class C passed the poverty level and are doing reasonably well in their lives. Dr. Roberto classified this segment into two groups: upper middle class and the broad C segment. For this part, we’ll look into the first one.

The upper middle class is composed of people who are in the peak of their careers and businesses. They have hectic work and business schedules. They are the pressured ones as well in ensuring that their family will have good food on the table, high-quality education for their children, and take care of oneself in terms of health and grooming. The pressure and stress of this segment are considered as self-inflicted because of their need to achieve one”s dreams and ambition. These are the people who will move later on to the Class AB segment. They can either become an SNR or a gross nouveau rich (GNR). The GNR are people who became rich but not ready to become one. In order to fit in, they engage in extravagant spending and rich lifestyle activities.

The SNR and upper middle class online buyers are maturing. They appreciate the value of the Internet and mobile banking. They can be considered as the most active user of Internet services. Some of them are surfing the Internet using GPRS-enabled mobile phones. For the online merchant, they are the prime target for gift products intended to be given to loved ones and corporate clients. They are also target for products and services that caters to whims and needs of people on the go that can help them in their daily “being organized” rituals, power looks and lifestyle. However, one must construct its offer and service so well that it would become the preferred provider of choice than its physical world counterparts.

Because of their busy lifestyle, marketing to this segment must be complimented in all forms such as direct marketing and tri-media advertising, to merit its attention. Offers must be made in its simplest and quickest form.

There are online buyers in other segments of Philippine society but their habits and lifestyle still needs to be understood further from our end.