On page 3 of the March 19th edition of the New Straits Times (NST) was a full page full colour (FPFC) ad for Patek Philippe. On page 3 of the March 20th edition of the same publication was a full page black and white (FPBW) ad for Prada.

The NST is the only English language broadsheet in Malaysia. Actually it was a broadsheet but now it’s a tabloid or junior broadsheet as they like to be known. Anyway, it’s still considered to be the premier newspaper in Malaysia in terms of readership quality. In much the same way as the South China Morning Post (SCMP) is in Hong Kong and the Straits Times (ST) is in Singapore.

Why would such prestigious brands advertise in the 2nd most expensive position of a daily newspaper in a developing country? Even though most readers are unable to remember any print ads they see in a newspaper 30 minutes after closing the newspaper, I know why an advertising agency or media planner would recommend such a tactic in a developed country. Daily newspaper readerships are high and representation amongst ABC 1 and other relevant demographics are also significant. Furthermore, it’s quick, easy, generates high commissions, appeals to the brand owners ego and of course it’s highly profitable because materials only need to be created once.

But Malaysia is not yet a developed country. A quick search on the net finds a rather old PWC report, that states ‘the mean monthly gross income per Malaysian household increased from MYR2,472 in 1999 to MYR3,011 in 2002, denoting average growth of 6.8% per annum’. So if we use that growth rate to bring us up to 2008, the mean monthly gross income per Malaysian household is now RM4,468 or US$1,191. Don’t forget that is gross and does not take into account the impact of the economic crisis.

A quick glance at shop.com reveals a virtual rack of Prada suits retailing at between US$1,000 – US$1,950 or RM3,750 – RM7,312.50. Another quick glance at thefinestwatches.com has PP watches ranging from US$10,000 – US$140,000 or RM37,500 – RM525,000.

According to the NST media pack, for the period July 2007 – June 2008, the daily circulation was 136,530 and the daily readership 416,000. That’s 3.07 readers per newspaper. Of those 416,000 readers, 45,000 or 10.8% has a monthly household income of RM10,000 and above. Actually this is an assumption because the rate card doesn’t actually state if this is a monthly or annual figure.

There are no figures for household incomes above RM10,000 so one assumes that the advertising agency and/or the media planners have researched this figure and are of the opinion that a household earning over RM10,000 can afford a Prada suit or a Patek Philippe watch. Anecdotal empirical research disputes this assumption. But never mind. The ad agencies or media planners have convinced the client that this channel will reach these 45,000 prospects and make them aware of the brands. But in this day and age, is the tactic of attempting to reach as many consumers as possible, whoever they are, and making them aware of a brand, the most effective use of valuable marketing resources?

This tactic, developed over 50 years ago and possibly relevant in Malaysia as recently as 15 years ago, when there was limited competition and few conduits to consumers, hopes that the consumer will be interested in the product, has time and the inclination to study the ad, develop a bond with the product, remember the product the next time they go to a mall and then have time to visit the boutique to try the product. Essentially a strategy based on hope!

If the budget is large enough to allow the ads to be run often enough then maybe, just maybe someone will eventually purchase the product. What makes this highly unlikely for Patek Philippe is that they don’t have a boutique in Malaysia! So even if a consumer has remembered the product and is wandering around a mall looking for a PP boutique, they won’t find it! So then they have to visit every watch shop to ask if they stock PP. This will throw a lot of temptation their way as they are confronted with numerous offerings from competitors! Of course they could just call the number in the ad and find out where the product is stocked. Unfortunately, the contact number in the ad is a Singapore number!

There was a local Malaysian number in the Prada ad so we called the number. Unfortunately it was the number of a boutique that doesn’t stock the suit in the ad. They gave us a number of another boutique and asked us to call them! That’s right, make the valuable consumer do all the work. We called the other branch and they didn’t know what we were talking about so took our number and promised to call us back which they did 20 minutes later with a pretty good explanation of the sizes available and so on. However they let us go without any commitment to visit the store.

So how would we develop a luxury brand in Malaysia?

1) Build a database of your prospects and customers
2) Segment your database
4) Only a limited number of consumers can afford your product. Find out where they go and what they do and then do it too
5) Develop communications strategies for those segments based on their individual requirements for value
4) If you want your prospects or customers to buy your product, don’t expect them to have to work hard to give you their hard earned income
6) Make every step of the process easy for them. Better still, where possible, do it for them
7) Mass circulation publications are for toothpaste not US$140,000 watches
8) Awareness is irrelevant, engagement is key
9) Creativity will not build a brand
10) What is needed to build brands is long term bond between the brand and existing customers to encourage these customers to become ambassadors. Stop selling products and start building relationships.