Thailand - Country Commercial Guide
Selling Factors and Techniques

Identifies common practices to be aware of when selling in this market, e.g., whether all sales material need to be in the local language.

Last published date: 2021-02-19

Overview

Price, quality, and availability of service are the key selling factors in Thailand.  In addition, relationships are also significant in selling products and services in Thailand, especially to the government.  Therefore, U.S. suppliers are strongly encouraged to seek partnership with a local agent or distributor and provide training for marketing and the technical support staff as the basis for successful market entry and expansion in Thailand.

Trade Promotion and Advertising

Advertising and trade promotion are important marketing tools in Thailand, especially for the sale of consumer goods, communications, and automobiles.  The Thai media and entertainment industry has been transforming itself on a digital platform in order to raise brand awareness and establish customer engagement.  Earlier this year, the Digital Agency Association of Thailand (DAAT) estimated digital spending to grow at 13% from last year and reach more than $687 million in 2020.  The DAAT forecasted that digital advertising spending could drop to single digits for the first time since 2013 as a result of the pandemic outbreak.  Consumer purchasing power decreased, and physical shops closed, thus leading advertisers to spend on their advertisements more carefully.

According to the DAAT report, the fast-moving consumer goods category is unlikely to see much impact from the crisis, while motor vehicles, real estate, spas, and restaurants will be depressed. Travel, airlines, and tourist-focused items are going to be the last group to recover. 

Facebook and YouTube are expected to remain the top two powerful platforms for digital ad spending by having 32% and 21% of the shares, respectively.  Brands are expected to spend more on social media to increase brand awareness and user engagement.  Instagram, Twitter, and instant messaging are forecast to see the biggest rise in digital ad spending at 24%, 28%, and 71%, respectively.  The other online platforms are creative, social media (including Instagram) display, LINE (chat application similar to Whatsapp), and online video. Advertisers expect to see the highest spending growth in online video, as well as Google and LINE in 2019.

Thailand has almost 70 million people, with over 93% of the population owning mobile devices and 70% of the population owning smartphones. Thais spend an average of nine hours per day on the internet and three hours per day on social media.  The top three popular internet activities are watching videos online at 98%, streaming tv content at 53%, and playing online games at 36%.  The top three social media are  Facebook (94%), YouTube (94%), and Line Messenger (85%).  In terms of social media advertising audiences, the top three active audiences are Facebook (47 million users), Instagram (12 million users), and Twitter (6.5 million users).  The top three e-commerce activities are searching online for a product or service (90%), visiting an online retail store (85%), and purchasing a product online (82%).  More than 69% of Thai internet users made an online purchase via a mobile device, according to the digital report by the “we are social” website. 

Commercial promotions are an equally important marketing tool for both consumer and industrial products in Thailand.  Consumer trade promotion in Thailand is frequently conducted by using gift premiums, discount coupons, or drawings for items such as package tours, cars, or electrical appliances.  Consumer trade promotion events are frequently held in supermarkets and shopping malls.  Exhibiting firms repeatedly take part in these events because the cost of attending is much lower than participating in a privately organized trade fair.  The Department of Trade Promotion in Thailand frequently holds industry exhibitions to promote Thai exports to international buyer audiences during “trade days” and increases domestic awareness by staging “public days” at such fairs. Trade events will become hybrid events after the recovery from the pandemic, as more virtual or live streaming for content events and seminars are likely.    

Industrial product promotion, on the other hand, varies from industry to industry.  The two most efficient methods of promotion for industrial products are trade exhibitions and placement of advertisements on social media.  Trade fairs with an industry focus serve as a screening tool since exhibitors can be certain they will have access to the appropriate group of customers.  The Commercial Section at the U.S. Embassy in Bangkok maintains a list of suggested industry events staged in Thailand as well as U.S. Pavilions at local events and trade missions (listed in Chapter 9 of this Country Commercial Guide).  This information is also published on the web in English at Commercial Service Thailand and in Thai at BuyUSA-Thailand.  It is advisable to localize all product literature and technical specifications when advertising in trade journals, participating in trade shows, or organizing technical seminars.  Successful firms also arrange for their agents to receive specialized training at offices or factories in the United States.

Pricing

The market in Thailand is open and very competitive.  U.S. firms should study factors such as the channels of distribution, necessary sales and promotional techniques, and the current pricing practices of key competitors.  Standard credit payments apply in Thailand as well.

Importers of large equipment or machinery charge a commission of 5–10% and allow their customers to open a letter of credit themselves.  Manufacturers or wholesalers normally receive a 5–10%  profit margin.  Retailers and distributors of local products require a 25–35% margin.  There is also a 7% VAT charge on consumer goods.

Thai consumers are very price-conscious.  In fact, less than half of Thai consumers report buying based on brand-name recognition, and first-time buyers often buy on price alone.  Consumers are often offered free gifts or extra options with their purchases.  In addition, midnight sales and one-off promotions have proven to be quite successful.  Retailer’s pricing depends on the product and the frequency of turnover.  In general, the margin structure is as follows:

  • Convenience Stores                                                       18-20%
  • Discount Stores                                                               8-10%
  • Department Stores                                                          40%
  • Manufacturers or Wholesalers                                        5-10%
  • Distributors of Local Products                                         10-15%
  • Direct sale of specialty products                                      60-80%
  • Direct sale of general products                                        40% maximum
  • Importers of large equipment or machinery                     5-10%
  • Importers of luxury products                                             60% minimum

Sales Service/Customer Support

Training, post-sales service, reliable customer support, and the availability of spare parts are the most important factors cited by Thai customers in evaluating services related to their purchasing decisions.  These factors are especially important when marketing industrial products.  Buyers seek a quick turnaround time on their requests for technical assistance and expect such service to be provided by reliable suppliers.  If a local branch cannot provide the service, suppliers should be able to acquire support from overseas branches.  Spare parts should also be available in a timely manner. 

Better support and post-sales service have placed U.S. suppliers in a better position relative to Asian competitors that provide lower-priced products.  Thai customers generally have high confidence in U.S. suppliers due to their well-trained service and support teams, availability of manuals, and willingness to modify product offerings.  Some Thai buyers would rather invest in higher quality, more expensive products in order to save expensive maintenance costs following warranty expirations.

Suppliers of products that have complicated technologies should hire and train a team of highly qualified and experienced technical people as well as provide technical training to their customers.  It may also be advisable to set up a customer help desk.  High-end Thai customers usually consider quality, service, and price when purchasing products.  A well-trained, post-sales service team can increase the possibility of repeat orders from satisfied customers.  In addition, Thai customers appreciate receiving periodic technical updates and information from their suppliers.  Often, engineers or specialists are sent by U.S. firms to stay for extended periods in Thailand to conduct larger-scale training for large employee groups who will operate new equipment.

Since sending engineers and technicians for training or customer service can be costly for local end-users, it is advisable for U.S. suppliers to appoint a qualified partner who can provide customers with quality services in the Bangkok area and elsewhere.  Major suppliers note that competitive pressures and slim margins have led them to place a high priority on service and support in order to retain existing customers and gain new ones.  Positive word of mouth from customers can increase the supplier’s reputation and sales volume.  Conversely, bad service can severely hamper a company’s chance of increasing sales in the Thai market.

Local Professional Services

The Foreign Working Act of 2008 requires all foreigners working in Thailand to obtain work permits prior to employment in Thailand.  In addition, permit holders must have prior permission to change their occupation or place of work.  Change of employer location, or the residential address of the permit holder, must be properly endorsed in the work permit by the labor authorities.  The Foreign Working Act does not prevent a foreigner from engaging in work in more than one field or for more than one employer.

A Royal Decree in 1973 listed 39 occupations and professions that are prohibited to foreigners.  This list has been amended on several occasions by subsequent Royal Decrees, with the latest amendment in 2005.

Select the link for more information regarding the guidelines and the general agreement on trade in services and other international agreements on the practice of foreign professionals in Thailand.

Principal Business Associations

Provide references to the principal business associations, indicating which accept U.S. company members. Describe the primary roles of those associations and to what extent they influence government actions.

Limitations on Selling U.S. Products and Services

Provide information on any manufacturing sectors or services where only citizens or a sub-set of the population in that country can own or sell.