World GDP is predicted to rise by hundreds of trillions of dollars by the year 2050. However, to benefit from this rise, your business will need to be active in more emerging markets than just the BRIC (Brazil, Russia, India, China) countries. The financial downturn of 2009 also shifted the competitive landscape for many companies, regardless of their geographic location or industry sector, putting a sharper focus on emerging markets.
Spending power continues to its upward trajectory in countries like Indonesia and Turkey, as well as the better-known markets of China and India. If it's time for your company to review and retool its marketing strategy for emerging markets, here are some guidelines to get you started down the right path.
Emerging Markets, By Definition, Are Not Static. Don't Let Your Strategy Be Either
How do you know if it's time to tweak your strategy for emerging markets? Ask yourself the following questions:
• What, according to your company, is an "emerging market"? The definition of "emerging markets" is constantly evolving. It also conjures up different places for different people. It may signify South Korea and Turkey, rather than Brazil and Poland, according to your revenue figures and your website traffic. It could even mean emerging groups of buyers in your more established markets, as the purchasing power of local communities characterized by languages or cultures continues to increase (for example, Brazilians in Ireland, Turks in Germany and Denmark, and Hispanics in the United States, to name just a few).
• When did you last check which countries are "emerging" in your industry? Perhaps your company has addressed major emerging markets like China and India. However, your plans may not have taken into account the consumers clamoring for your product or service in Vietnam and Malaysia. Sectors like food services and pharmaceuticals are projecting developing economies to generate 30 to 40% of their growth over the next decade. Find out the projections for your industry, and then review the plans you have in place to meet this demand, with the goal of cultivating repeat customers over the long term.
• Does your company have a full-fledged strategy in place for emerging markets? If you are constantly fighting for budget when a project relates to an emerging market, or if it is always "too expensive" or "requires too much time" to localize for these markets, this indicates one of two things. Either your company has no strategy for emerging markets, or the strategy is not fully aligned with plans throughout the rest of the organization.
• Do you have a local expansion strategy in place? Purchasing power has increased enough in Turkey during the past eight years that Carrefour, the French retailer, recently opened a store in the third-tier city of Antioch. When one of your competitors makes such a move, then it is time for you to focus on the mid-tier cities as well, so that you don't cede the entire market to local or regional competitors. If these same competitors are increasing their lead over you—or catching up fast from behind—then you need to swiftly engage your local partners to update and strengthen your initiatives in these markets.
Tips to Re-shape Your Emerging Markets Strategy
Try these eight steps to reinvigorate your emerging markets strategy:
1. Know the local flavor. Customers in many emerging markets are earning their livelihoods by producing the products that the rest of us eat, wear, play and do business with. They are also supporting the companies that deliver the services that support these products. As they make these products and deliver these services, their tastes are being transformed as well (iPhone vs. Nokia outside of the U.S., anyone?).
2. Follow the money into the cities. Appreciate the extent to which urbanization has affected almost every market in the world, to the point that smart marketers for consumer goods are now basing a greater percentage of their research on megacities (usually considered to be 10 million inhabitants and above), rather than focusing exclusively on countries or regions.
3. Pick your emerging market(s). Then drill down to focus on two or three possible customer profiles and how to reach them. If you want to market a product, follow people into their homes and businesses. What works in one developing economy may not in another. For instance, Nike adopted the 'Bleed Blue' campaign in India in support of the cricket World Cup. This attempt to cash in on the cricket craze in India helped the company connect with the youth better than if they had chosen, say, football.
4. Be ready to innovate on demand. You must be able to respond quickly and constantly, as you face local and regional competitors that live and die by innovation. This means a whole new set of rules as your product developers go up against motorcycles that page you when your cell phone rings and iPad knockoffs with local content—all at attractive prices that consumers in emerging markets can afford.
5. Customize the user experience. In addition to product design, you must provide a good quality experience and, when required, build a responsive customer care infrastructure in each market where you do business. Upwardly mobile consumers in emerging markets are keenly attuned to what "high quality" means for a given product or service, because they usually have to spend a greater percentage of their income to obtain it. Do not try to fool them, unless you want to cede market share that will be almost impossible to regain.
6. Reassess your approach to customer profiling. In most emerging markets, the majority of people are younger than 25. They have grown up with mobile phones as literal extensions to their ears and fingers. If you don't have a strategy in place to leverage "global mobile" and the social media space to engage your prospects and customers in these markets, make it a high priority to develop one. Again, there is no one policy that fits all. In the Philippines, for instance, no social media strategy can afford to not include Facebook, as the country has the highest number of Facebook users. But, in another country, other social networking sites may be leading instead of Facebook.
7. Create a translation and localization strategy to support your emerging markets strategy. A strategy based on delivering "all components at the highest quality in all languages in the same timeframe" is not scalable when it comes to supporting a major push into emerging markets. It may make more sense to build tools to support your partners—whether they are local distributors, language services providers, software outsourcers, the crowd, or some other non-traditional partners—to provide you with the local versions of the products and support your customers want.
8. Develop and implement metrics to measure your success or failure. Why exactly are you entering or staying in a particular emerging market? To gain new customers? To service existing global customers? To keep the competition at bay? To leverage innovation? If your company is successful, these reasons (and their priority) will change over time as you gain customers and brand recognition. Whatever your motives, you need metrics to measure how you are doing within a given time period. Metrics will also enable your executives to make real business decisions—instead of ones influenced by emotions or current events—and to maintain the funding for those markets that will ensure your company's future success.
One company's emerging market is another's strategic source of revenue. By following guidelines such as these, you can help your company reach its goals in emerging markets by ensuring that your strategies for marketing, product development, and localization match your objectives. Instead of constantly fighting for budget, you will have time to fine-tune your strategy and to seek out further opportunities with local partners.
Rebecca Ray (email@example.com) is a senior analyst at global market research firm Common Sense Advisory.