In the wake of recent flooding activity, experienced in Thailand in the latter part of 2011, business are retooling themselves to accommodate and take advantage of fast-changing consumer behavior. An expected shift in consumer preference is the move from consumption of mass products to luxury goods, luring tourists from around Asia. Here are some of the expected market trends in products and services.

 

Retail Segment


In order to differentiate itself from its competitors, Thailand will seek to promote itself as a luxury-goods shopping destination in Asia. Well-off tourists are expected to take advantage of this trend, by shopping for those goods which may not be available within their own region. Another expected shift on the retail segment is the rise of online shopping, as consumer’s demand for digital products like iPads has seen an increase. This in turn will have a ripple effect. Customers will opt to buy e-books and other tablet based applications. These shifts will likely lead retailers to focus their marketing efforts on niche markets, rather than mass markets.

 

Broadcasting Segment


Thailand has experienced increase in the market penetration of C-band and KU-band satellite dishes, which in turn has led to the blossoming of Satellite TV providers. However, radio-programme providers are experiencing heavy losses, as advertising revenue has moved to alternative media sources like cinemas, transit, outdoor and satellite TV. Despite this changes Ad placement, TV still remains the dominant source of advertising, with 60% of total billings. The use of satellite dishes has experienced a significant increase over the past few years, with statistics indicating that 50% of Thai household has replaced their territorial antennas for satellite dishes. Industry observers expect this trend to continue, with market penetration of satellite dishes expected to hit 80% in the next three years. As a result, advertising expenditure for satellite TV is expected to amount to THB 5 billion. The rising use of the internet among the youth is expected to impact negatively on radio-programmes, as they look for alternative means of entertainment, particularly social media.

 

Commodities Market


The prices of agricultural products are expected to maintain their upward trend. Fuel crops, gold and crude oil are expected to see an increase in prices, whereas rubber and rice are expected to perform poorly. Sugar prices are expected to rise steeply, thanks to increasing demand and global warming, which has affected the output of sugarcane in many countries around the world. Even though the price of crude oil dropped below the $100 per barrel mark, in the later part of 2011, prices are expected to rise to due to higher consumption in emerging countries. As a result, the average price per barrel is anticipated to range between 105 to 110 dollars per barrel. Tapioca exports are expected to rebound, after the destruction beset by the insect outbreak two year ago. This trend is likely to be bolstered by increased global demand for cassava, which is viewed as a fuel crop. Most of the exports will be directed towards China. Gold will still continue to play its role in the commodity markets, as the quintessential flight-to-quality asset. This trend in the markets has mostly been driven by sovereign debt crises and currency issues in various economies.

 

Even though the price of gold in the international markets saw a slight drop in the later part of 2011, they are expected to rebound during the second half of this year, due to political instability, a weakening dollar and the European debt crisis. The price of gold is expected to range between 1500-1600 dollars per ounce, in the first half of the year, and 2000-2500 in the second half of the year. The Government’s rice pledging scheme is expected to have a negative effect on the sale of locally produced rice, due to the higher price of local rice as compared to export rivals. A lot of completion is expected from India, which has lifted its export ban, while other countries have expanded their production. The price of rubber is also expected to go through bearish year, as current prices have dipped to below Baht 90 per kilogram, as compared to a high of Baht 180 last year. This drop in performance is a result of the slowing growth of the Chinese economy, which is the world biggest rubber importer (taking up 35% of global trading volume). Additionally, the disastrous effect of the floods on Thai motor industry will reduce demand for rubber in the first half of the year. Rubber prices are expected to rebound, once the auto-makers have been able to resume their operations, to full capacity in the second half of the year.

 

Tourism


Market observers in the hotel industry indicate that small to medium size and independent hotels are likely to become more popular with tourists, due to their cheaper costs (around THB 4,000 per night) as compared to luxury and business hotels, which charge around Baht 5,000 per night. Low cost air lines are also expected to capitalize on this trend, as consumers become more sensitive to prices.