A candid and personal examination of the Philippine comics scene from a social, cultural, economic and business point of view.

Friday, October 07, 2005

What do Filipinos spend their money on?

Venturing into comics publishing, marketing and distribution, entails prior background information on the economy, specifically on the prevailing consumer market in the Philippines.

The following overview may appear be daunting and hopeless to the average and clueless comics reader, would-be publisher, or creator, unaccustomed as most of them are to the realities of day to day commerce, but to marketing practitioners and professionals, the scenario is nothing more than another marketing problem demanding the formulation of real and workable marketing solutions. Why not then apply some of their proposed solutions to comics publishing? Printed comics after all, are a retail trade item.

We begin with a survey of the Philippine consumer market, its market segments, the impact of the present economic (and political) crisis, and then end with a possible solution to the problem of marketing and selling printed comics to such a market, applying proposed solutions by marketing professionals and practitioners.


The conservative and general assumption is that five (5) individuals comprise one Filipino household, a nuclear family. With a present population of about 80 to 84 million Filipinos, there are at present 15.3 million households all over the country with 2.5 million specifically residing in the Greater Manila Area. 5.3 million households translate to 76.5 million Filipinos, while 2.5 million households to 12.5 million Filipinos occupying the whole of Metro Manila from Valenzuela to Muntinlupa City.

This consumer market of 76.5 million is further classified into five (5) segments or class demographic by the Philippine advertising industry. As of 1999, families in the lower class households account for 90% of total households as follows: A,B -- 1%, C-- 9%, D--55%, and E-35%.

Class A,B constitute the upper income classes, C is the middle class, D is the lower middle class, and E comprise those who live below the poverty line of less than Php 32.00 a day. It was observed that the share of the class E segment (35%) in the consumer market has continuously decreased over the years due to extreme poverty, but this is tempered by a concomittant growth in the lower middle class D (55%).

Of these segments, the D and E markets are considered the most important in rural areas accounting for 98% when compared to a lesser 85% in urban areas.


Average household spending in rural areas is presently pegged at Php 3,150.00 a month or, Php 105.00 a day, while in urban areas, average household spending is at Php 3,592.00 monthly or, Php 120.00 a day. This Php 105.00 (or Php 120.00) ration is shared by all five household members in one day.

Given this measly family budget the next thing to consider is the spending priorities of rural and urban families. On this score, it was found that rural shoppers spend 52% of their income on food (i.e., carbonated soft drinks, noodles, coffee, snack foods, cooking oil, coffee creamer, dietetics, bouillon, chocolates, candies, soy sauce, MSG, biscuits, choco-drinks, sardines, powdered milk, hotdog, vinegar, ready-to-drink juice in tetrapacks, luncheon meat, and corned meat) when compared to only 40% by urban dwellers. The remainder of rural and urban families' income is spent on essential non-food items such as: laundry products, paper products including sanitary protection, diapers, bathroom tissue, facial tissue and table napkins, liquid shampoo, toilet soap, diapers, toothpaste, facial care products, hair conditioner, sanitary protection, fabric softeners, lotion, bleach, deodorant, talcom powder/liquid (and insecticide by the urban shopper). These then are the spending priorities of Filipinos in today's hard and turbulent economic times. (Source: "Basket Behavior: Understanding Buying Patterns, Especially during Hard Times" by Ramil Digal Dulle, BusinessDay Magazine, August 15-September 4, 2005 issue citing survey data furnished by Gladys De Veyra, AC Nielsen Executive Director for Retail Measurement Services).


Given the above data, one should seriously pause to consider whether printed glossy paged comics publications with an Php 85.00 to Php 100.00 price tag is part of the above spending priorities of the low income market. No wonder the target market of imported and globalized Filipino comics are the economic elite, or the few hundred thousand upper income A,B class demographic who comprise only 1% of the consumer market.

With the recent oil price hike, political turmoil, and rising inflation, there has been a marked decline in consumer spending:

"Local consumers will likely buy less goods for the rest of the year--including this coming holiday season--as their confidence in the economy continues to weaken, a central bank survey showed.

Despite this, BSP Governor Amando Tetangco, Jr. told reporters the consumer outlook was expected to improve substantially in 2006. "But it will weaken in the last two quarters of the year", he said in a briefing last Friday.

According to the BSP survey, the decline in consumer expectations was due primarily to the respondents' pessimism on the country's economic conditions. Respondents were also more cautious about their families' financial situation.

According to a central bank statement, respondents cited the high prices of food, utilities, oil and transportation as their top concern. xxx

Despite an anticipated decline in family income, respondents expect their expenditures on basic commodities to rise by an average of 4.6 percent toward the end of the year--an offshoot of rising prices rather than increased consumption.

The survey revealed, however, that consumers expect a slight improvement in next year's outlook, although it remains overwhelmingly negative." (Source: "Consumers turning pessimistic: BSP survey cites rising prices, insufficient incomes" by Daxim L. Lucas, Philippine Daily Inquirer, September 12, 2005).


The majority of economically hard-pressed and pessimistic Filipinos are now on scrimping and saving mode. They have become more cost-conscious and discriminating in their purchases than ever before. Products that are not essential to their survival and coping needs have to take the back seat.

Furthermore, it was found that in times of crisis the low-income poor spend more on non-food items such as liquor, cigarettes and tobacco:

"With barely enough money to buy food, the poor are spending more to maintain their vices like drinking and smoking, a study said.

The study by Manila-based economic and political analyst Peter Wallace showed that the poor and those barely out of poverty accounted for an increasing share of spending on alcohol, cigarettes and tobacco (ACT).

Wallace noted that from 76.7 percent in 1997, the share of the D and E classes in total tobacco consumption increased to 82.8 percent 2000.

On the consumption of alcohol beverages, the share of the D and E classes rose from 72.7 percent in 1997 to 75.7 percent in 2000." (Source: "Poor buying more booze, cigs--study" by Carlito Pablo, Philippine Daily Inquirer, October 11, 2004).

In addition to the above, Filipinos turn to God and gambling as well:

"In times of crisis, Filipinos tend to turn to God, and gambling. Davao Archbishop Fernando Capalla, president of the Catholic Bishops' Conference of the Philippines (CBCP), said he noticed that during difficult times, "there are two places people frequent more: lotto (outlets) and the Church."

Many of the predominantly Roman Catholic Filipinos hope for a quick fix to their poverty and bet what little money they have on government sponsored lotteries, Capalla said. "Gambling here is a form of survival, unlike in Europe, where it is a pastime. That's giving false hope to people. False incentives like the two-child policy being proposed. We have failed in making people have a consistent conscience that they stick to," he said.

While Church officials have strongly opposed gambling, Capalla admitted that he and many other priests also refer poor people asking them for financial help to the state-run Philippine Amusement and Gaming Corp. (PAGCOR) office, which runs the lotto games." (Source: "In crisis, Filipinos turn to God, lotto" by Nikko Dizon, Philippine Star, October 11, 2004)

Consequently then, the more one ponders this marked and extreme change in lifestyle from simple living to practical survival, it is evident that printed glossy paged comics written in English, are not part of poor, functionally literate, Filipinos' spending priorities. To reiterate, these imported and "globalized" comics are a "luxury" patronized only by an affluent, Westernized, and enthusiastic few. And where exactly are these affluent, rich few located?


"Official data for 2000 place the average family income in Metro Manila at nearly four times that of the ARMM, the country's poorest region. Furthermore, families living below the poverty line in Metro Manila constitute only 3.7 percent of all Filipinos families living in poverty. This translates to 1.3 million persons or 4.1 percent of all individuals living in poverty. In contrast, 21 percent of all Filipinos who are not considered poor (about 10 million persons) reside in Metro Manila--confirming a long-running suspicion that the rich, more than the poor, tend to congregate in the nation's capital." (Source: "Metro Manila: Shared Prosperity --take away its power base and Metro Manila will rely more on the other states to help its people live decently" by Carmel V. Abao and Maitet Diokno Pascual, Newsbreak Special Edition, August 1, 2005).

Metro Manila, from Valenzuela City to Muntinlupa City, is so highly urbanized that its so-called "poor" are more well-off than those in the provinces. Pointedly, even though severe health, sanitation, garbage, and air pollution problems abound in Metro Manila's "poor" communities, these so-called "poor" actually earn twice as much as the average poor Filipino family. (Source: "Metro Manila: Shared Prosperity", Ibid).

Why is this so? The answer is simple. All economic and political power reside, or are centralized in Metro Manila. That is why there are proponents of a federal form of government advocating that such central and monopolized power be dispersed, shared, and "democratized" to the other poor regions of the country. Thus:

"Metro Manila is the single biggest market for products of many regions in Luzon, the Visayas, and Mindanao. It is also a main supplier of commodities to practically all the regions, as far north as the Cordilleras and as far south as the Autonomous Region in Muslim Mindanao (ARMM), according to trade and industry data of the National Statistics Office." (Source: "Metro Manila: Shared Prosperity", Ibid.)


Despite such crisis however, those in the marketing profession now advise that companies formerly catering to the highly profitable A,B market with large disposable income, reform their marketing strategy and target instead the low income D and E markets. Feddie Magpantay, Executive Director of A.C. Nielsen, a world renowned media research multinational company, made this same disclosure during the first Philippine Association of National Advertisers' Marketing and Brand Advancement Seminar held at The Loft, Rockwell, Makati City, as follows:

"Magpantay shared the latest research findings on the profiles of the Filipino as consumers. Among her strongest recommendations were for marketing professionals to tap the undeserved low-end market as well as those in the countryside and the increasing number of "empty nesters". (Source: "Marketing success strategies revealed at PANA MBA confab", Manila Standard Today newspaper, September 8, 2005).

Prof. Jose Jesus Roces, President of the Asia Pacific Marketing Federation (APMF) expounds on this new development as follows:

"What is the issue of the "have less"? The issue for them is a double edged challenge. First is affordabilitiy then the second is Cash Flow. If you are able to overcome these hurdles for the "have less" then you have a potential market of approximately 20 million Filipinos. And if you do your marketing mathematics well, you could expand into the larger (albeit, lower income) segment where the majority of 60 million Filipinos are.

These are the "have less" of our society. They deal with the issues of Affordability and Cash Flow on a daily basis. Their consumption demands are normal but their ability to purchase is limited. xxx

How do you respond to the challenge of serving the needs and wants of the "have less"? You need to give smaller offerings with less cash outlay and increase the value for money proposition of your offers. This is not as simple as it seems.

To produce smaller offerings means that you will affect your production processes (in fact, you may need to purchase packaging machines that do smaller packs). You need to create an effective marketing communication campaign to support the alunch of the smaller offerings. The challenge will be communicating the value for money proposition in smaller offerings because that is not the competitive advantage ingrained in smaller offerings. The core value of smaller offerings is to address the issue of affordability rather than value for money. Thus, this will pose a communication challenge to the marketer. xxx

We have seen the "pasa-loads and the e-loads" emerge as a strong attractor to the "have less". If we closely examine consumer behavior of these products/services, it becomes quickly evident that this segment of the market does not complain very much.

This is a very lucrative market that is waiting to be tapped. It is a market that does not require as high a level of service as required by the more sophisticated markets. It is a segment that pays more and is relatively easy to communicate to.

Why not target the "have less"? The "have less" do not complain as much and do not expect a lot. And the "have less" pay more." (Source: "Marketing to the "HAVE LESS" by Assoc. Prof. JJ Roces, Marketing Insights: The Official Magazine of the Philippine Marketing Association, July-August, 2005).

As mentioned elsewhere in this blog, our middle class has shrunk due to the economic and political crisis plaguing our country. Most of them have become overseas contract workers while those who remained, got poorer and swelled the number of the lower middle class D and low income class E (i.e., comprising 55% and 35% respectively of the Philippine consumer market). Businesses have therefore concentrated on the upper income class A,B, market. But these markets are now nearing saturation points. There are too many players and products within this high end market compounded by the fact that this market is highly westernized and discriminating.

The class D and E demographic on the other hand, are easier to please and are fervent patrons of essentials such as food and non-food products whose retail sales have been experiencing a slow but steady rise since year 2000 despite frequent crisis. Their continued and resilient purchasing power (albeit limited) could be attributable to the billion dollar remittances of Filipino OFWs abroad and the increasing urbanization in some parts of the country where, due to improved technology lessening the cost of production, most goods have consequently begun to cost less and thus become affordable to almost all within the six (6) income class demographics (i.e., appliances, television, second hand computers, etc.) Gladys de Veyra, Executive Director for Retail Measurement Services of A.C. Nielsen Philippines adds this observation on the untapped potential of the class D and E market:

"Our income class distribution may seem to remain in a sorry state. The vast majority of our people are merely surviving, and they have been doing so for the past several years. And they would likely remain so in the next few years.

This however, should not necessarily portend ill tidings for business, especially those in the consumer industry. On the contrary, with the hopefully continuous decrease in share of the class E, and with the population continuing to grow in the D class, opportunites abound. The huge proportion of the population belonging to the lower economic classes offer vast marketing opportunities.

But things have to be seen from their perspective. And seeing things from their perspective will not only open marketing opportunities, but also ways to help improve the lot of out people." (Source: "Forever Living in Exciting Times: A look at economic trends and Filipino Consumer buying patterns" by Gladys De Veyra, Business Day, August 15- September 04, 2005).


Recalling the advise of Prof. JJ Roces above, if printed Filipino comics are to enter the class D and E markets, their production costs and consequently, price, should be lowered. Like the cheap but ubiquitous "sachets", "tipid packs", and "pasa-loads" we are looking at a probable scenario of Filipino comics selling at the same price level of these items. In format, they may be published in non-glossy newsprint paper, maybe in black and white, with maybe reduced page counts or paper size, and with a weekly or bi-weekly frequency. In other words, Filipino comics would have to roll with the times; skrimp and save. When subsequent demand and popularity of the comics feature develops, an improved product version or compiled reprint could be made later on and marketed to the upper income markets as a quality product with increased price.

We are also looking at a probable scenario where most of these cheap comics publications may have to be distributed away from the comics specialty shops frequented by the upper income market. Preferably, to reach their low income target market, avoid the corruption of the banketa kiosk newspaper dealers, as well as steer clear of the high magazine rack rental cost imposed by most urban supermarkets, our cheap Filipino comics publications may have to be sold in village sari-sari stores, groceries, and retail stores such as "Mini-Stop", "7-11", and "Shell Select", where essential food and non-food products are also being sold and frequented by the C, D, and E consumer market. Significantly, it was also observed that both upper and lower income groups frequent sari-sari stores more than supermarkets to save on transport and other costs, to wit:

"While both urban and rural shoppers buy from sari-sari stores every day, urban shoppers go to the supermarket three to four times a month, while rural households visit the supermarket twice a month at most." (Source: "Basket Behavior: Understanding Buying Patterns especially during Hard Times" by Ramil Digal Gulle, Business Day, August 15-September 04, 2005).

Admittedly, the foregoing scenario may seem amusing and appear to harken back to the olden days of the cheap, shoddily produced Filipino komiks of yesteryear. But given the above set of facts, we should honestly ask the question: should artistic pride stand in the way of practical reality?

As noted, there have been advances made in printing technology making the same affordable to those enterprising enough to meet the challenge. We are not short either on new, undiscovered, local talent. Right now, its a wide open space for opportunities. If Filipino comics publishers and creators can be flexible and show their adaptability with the times, its just possible that Filipino comics can regain its lost position as a medium of communication that is read and patronized by millions of mostly adult readers, becoming as well a lucrative venue for advertising.


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