Urban Java - Majority of Urban Population in Indonesia

This is a continuation of the subject 'consumer segmentation'. Yesterday, I reached to a conclusion that Urban and Rural segmentation is a good starting point and listed down few major urban concentrations. Today I will dive deeper in one of the largest urban concentrations i.e. Java Island.

Urban Java has the highest concentration of wealthiest consumers in Indonesia due to which it is the most important market for almost all the marketers, especially in consumer goods and services.  Of the top 5 largest cities, top 4 are on Java Island.

Total population of Java is around 140 million, which is more than two times of Thailand, or more than Mexico, or equal to that of Russia's population. Of this 140 million people Urban population is over 80 million, which is more than overall population of Turkey.

Even by ethnicity Javanese constitute the largest at 45%+ of the total population.

It would be good to have data specific to population in Java but due to its unavailability I will use overall Indonesia's data as a proxy. GDP per capita of the country is expected to be around USD 5000 in 2014, which will form the basis of my calculation. It might seem that the GDP per capita of Urban Java would be higher than the national average due to concentration of higher earning urban population. However, the highest GDP per capita is of resource rich East Kalimantan, which is around 3.5x the national average. Apart from Jakarta, which is around 2.5x the national average, no other city from Java appears in the list of top 10 provinces based on GDP per capita. Thus, overall numbers for Java should be considered at some discount over the national average, while analyzing Java separately.

Expenditure: Around 30% of the total Urban population spends over $30+ per month and around 70% less than $30 per month for consumption. I am not writing the full breakdown of segmentation, which is available on the below mentioned source - Statistics Indonesia, but I have only considered the break-off point of dollar a day. Thus, in Urban Java around 24 million people spend over dollar a day on consumption.

Next topic would be to analyze the expenditure basket.


Note: Java is divided into four provinces - East Java, Central Java, West Java, and Banten. And two special regions -Jakarta and Yogyakarta.

Sources:
Statistics Indonesia
World Bank

Consumer Segmentation

I returned today from my travel, due to which the gap in writing the post.

Today's topic is related with consumer segmentation. Indonesia is a large country and for a marketer it is essential to categorize the consumers to be able to target effectively. In some countries ethnicity is an important determinant, while in other religious preferences play a dominant role. Given the geographical spread of the country it is possible to categorize the consumers based on the different islands or provinces.

However, in spite of the geographical spread, various ethnicity and religious preferences the consumer preferences correspond more closely to the income group than any other factors. This means that the purchasing decisions of a consumer is more due to the income than lifestyle or local culture.

Thus, the urban and rural classification is a good starting point for segmentation. Urbanization is on the rise in this country, steadily increasing from 31% in 1990 to 51% in 2012 (Comparative numbers - In 2012 China's and India's urban population stood at 51% and 32% respectively). And the rate of urbanization is around 2.45% (Source: https://www.cia.gov/library/publications/the-world-factbook/fields/2212.html). As per the UN the urban population of Indonesia is expected to increase to 68% by 2030.

Top 5 of the largest cities are - Jakarta, Surabaya, Bandung, Bekasi, and Medan - which accounts for around 17-18% of the total urban population.