Description
emerging markets and opportunities available in emerging economies. It also explains different strategies for emerging market economies.
Entry Strategies: Emerging Market Economies
Emerging Markets
What are Emerging Markets?
?
?
?
Regional economic powerhouses -large populations, large resource bases, and large markets Adopting open door policies to replace their traditional state policies that failed to produce sustainable economic growth. World’s fastest growing economies
?
?
By 2020, the five biggest emerging markets' share of world output will double to 16.1 percent from 7.8 percent in 1992. They will also become more significant buyers of goods and services than industrialized countries
?
Critical participants in the world's major political, economic, and social affairs.
The 86% Markets
•The developed world - GNP of over $10K per capitaconstitutes only 14% of the world’s population •86% of the world – the emerging markets - has a GNP of less than $10K per capita •It is this 86% that represents the future of global commerce
14%
86%
GNP per capita greater than $10K
GNP per capita less than $10K
Challenges in the 86% Markets
?
Markets, culture and environments are demanding
?
? ?
Extremely fragmented markets
Youthful and growing populations Limited income and space
?
? ?
Underdeveloped infrastructure
Weak supply and distribution channels Rapidly changing markets
Can these Challenges be converted into Opportunities?
The 86% Opportunities
Demanding markets, culture and environments “Don?t build a car when you need a bullock cart” Rapidly changing markets Develop with the market
Youthful and growing populations
Think Young Limited income and space
Grow big by thinking small
Weak supply and distribution channels Take the market to the people
Underdeveloped infrastructure
„Bring your own infrastructure/ Look for the Leapfrog?
The 86% Opportunities
Entry Strategies
Challenge :
Demanding markets, culture and environments
Opportunity :
Don’t Build A Car When You Need A Bullock Cart
Don’t Build A Car When You Need A Bullock Cart
?
Less is more
?
Product formulation and design must reflect the environment
Poor infrastructure - strip things down to basics
?
?
People don’t need advanced functions – they need to get work done . Eg: Simputer -India
?
Low price doesn’t mean low quality
?
Emerging market customers expect the most from their meager resources. Eg: Grameen Bank housing -Bangladesh
Don’t Build A Car When You Need A Bullock Cart (cont.)
?
Look at the deeper meaning of products
?
Products may have deeper meanings than their intended use Address deeper elements of culture and religion Eg: talking Farah dolls - Middle East
?
?
?
No customer culture
?
Lack an understanding of consumerism
Need to be educated about how to be customers
?
?
Eg: Spice Jet
Challenge: Rapidly changing markets
Opportunity: Connect Brands to the market
Connect Brands to the Market
?
There is no such thing as an ‘Indian’ or ‘Chinese’ market
?
Every national market is made up of several highly unique and fragmented markets
?
Local brands thrive
Tailor brand to individual markets Use the national/regional language
?
Localize the brand
?
?
Eg: MTV Asia
Connect Brands to the Market (cont.)
?
Use local brands to establish market presence
?
?
Use the existing goodwill
Find brands that reflect the spirit of the company
?
Grow local brands when possible
?
?
Acquiring local brands may be expensive
Create brands to counter well established local brands in their own market. Eg: Coca Cola’s Tian Yu Di
?
Brands mean something different in emerging markets
?
Global brands may benefit because of their foreignness. Eg: Pizza Hut Or they may lose in areas where they are not recognized
?
Challenges:
Youthful and Growing Populations
Opportunities: Think Young
Think Young
?
Young countries
?
?
Young adults make up nearly half the population in several of these countries High birth rates
? ?
Create loyal customers when they’re young Make your product ‘cool’
?
?
Huge market for entertainment, apparel, computers, fashion and other such youthful products and services Young celebrity endorsements. Eg: Fastrack watches –MTV India VJs
Think Young (cont.)
?
Multiple channels of communication to reach the young
?
Eg: Community Internet for youth in the Dominican Republic Although plugged into global culture, youth are deeply rooted in their own culture and tradition Individualism ranks higher than communities Global theme, local feel
?
‘Dual passports’
?
? ?
Challenges: Limited Income and Space
Opportunity: Grow Big by Thinking Small
Grow Big By Thinking Small
?
Reducing pack size to reach a larger audience
?
Smaller packages for price, not convenience
?
Installment plans for products that are expensive or out of reach to most
?
Eg: The Maruti Suzuki car for at a down payment of Rs.2000($45) and 0% interest
Grow Big By Thinking Small (cont.)
?
Small packs with several variants popular
?
Allow customers to get a wide choice of products for their scarce resources
What one customer may not be able to afford, several customers together can Eg: E-Choupal
?
Pool demand
? ?
Challenge: Underdeveloped infrastructure Opportunity: Working with Technology
Working with Technology
?
?
Create markets in the gaps
Find ways to fill gaps in infrastructure
?Eg:
Aquaguard in India, Sulabh International
?
Create work around solutions
? Work within limitations of climate,
infrastructure and resources
?Eg:
Crank powered radio in Africa
?
Build infrastructure to support
the business or use existing infrastructure creatively
Working with Technology (cont.)
?
Recognize unseen rivals
? ?
Thriving business in counterfeits Build barriers, such as quality guarantees to keep them out
?
Modify and Apply existing technologies in new ways
?
Eg: CNG Autos in Delhi or ‘fuel flex’ cabs in Mexico Digital media more accessible Cheaper to run. Eg: telemedicine
?
Digitize and MPower
? ?
Challenge:
Weak Supply and Distribution Channels
Opportunity: Take the Market to the People
Take the Market to the People:
?
Position for the smallest shop owner
?
? ?
The organized retail sector in emerging markets is often only 28% of total Small stores number in the millions and have greater reach Eg: the kirana stores of India
?
Build strong supply and distribution channels
? ?
Distribution systems are only just being developed Look for local or entrepreneurial networks that help understand and connect to local markets
Take the Market to the People (cont.)
?
Take the bank out of the
branch
?
Finance and credit options scarce, but very important in emerging markets Banks need to reach the smallest customer to tap ‘Fortune at the Bottom of the Pyramid’ Eg: Micro Credit in Africa
?
?
CASE STUDY: Project Shakti - India
? ?
Launched in the year 2001
Objective to create income generating opportunities for rural women
HLL offers a range of mass-market products to Self Help Groups of rural women, teaches them basic enterprise management and helps them set up their enterprises A win-win partnership between HLL and the consumers
?
?
http://www.hllshakti.com
Challenge: Rapidly Changing Markets
Opportunity: Develop with the Market
Develop With the Market:
?
Work with Government, NGOs and other players
?
Use their understanding of the local culture and needs
?
Look for patterns of change
?
Emerging markets often follow the growth patterns of other developed markets
?
Exporting a success from one market to another.
?
Eg: Indica
In Conclusion
"The transformation is just beginning. There will be hiccups along the way
The only certainty is, the 86 percent markets are here to stay.
Even though they won't become developed
tomorrow, they are the future.
And the companies that can develop the right solutions to meet their needs will find a rich
source of growth."
doc_606419580.pptx
emerging markets and opportunities available in emerging economies. It also explains different strategies for emerging market economies.
Entry Strategies: Emerging Market Economies
Emerging Markets
What are Emerging Markets?
?
?
?
Regional economic powerhouses -large populations, large resource bases, and large markets Adopting open door policies to replace their traditional state policies that failed to produce sustainable economic growth. World’s fastest growing economies
?
?
By 2020, the five biggest emerging markets' share of world output will double to 16.1 percent from 7.8 percent in 1992. They will also become more significant buyers of goods and services than industrialized countries
?
Critical participants in the world's major political, economic, and social affairs.
The 86% Markets
•The developed world - GNP of over $10K per capitaconstitutes only 14% of the world’s population •86% of the world – the emerging markets - has a GNP of less than $10K per capita •It is this 86% that represents the future of global commerce
14%
86%
GNP per capita greater than $10K
GNP per capita less than $10K
Challenges in the 86% Markets
?
Markets, culture and environments are demanding
?
? ?
Extremely fragmented markets
Youthful and growing populations Limited income and space
?
? ?
Underdeveloped infrastructure
Weak supply and distribution channels Rapidly changing markets
Can these Challenges be converted into Opportunities?
The 86% Opportunities
Demanding markets, culture and environments “Don?t build a car when you need a bullock cart” Rapidly changing markets Develop with the market
Youthful and growing populations
Think Young Limited income and space
Grow big by thinking small
Weak supply and distribution channels Take the market to the people
Underdeveloped infrastructure
„Bring your own infrastructure/ Look for the Leapfrog?
The 86% Opportunities
Entry Strategies
Challenge :
Demanding markets, culture and environments
Opportunity :
Don’t Build A Car When You Need A Bullock Cart
Don’t Build A Car When You Need A Bullock Cart
?
Less is more
?
Product formulation and design must reflect the environment
Poor infrastructure - strip things down to basics
?
?
People don’t need advanced functions – they need to get work done . Eg: Simputer -India
?
Low price doesn’t mean low quality
?
Emerging market customers expect the most from their meager resources. Eg: Grameen Bank housing -Bangladesh
Don’t Build A Car When You Need A Bullock Cart (cont.)
?
Look at the deeper meaning of products
?
Products may have deeper meanings than their intended use Address deeper elements of culture and religion Eg: talking Farah dolls - Middle East
?
?
?
No customer culture
?
Lack an understanding of consumerism
Need to be educated about how to be customers
?
?
Eg: Spice Jet
Challenge: Rapidly changing markets
Opportunity: Connect Brands to the market
Connect Brands to the Market
?
There is no such thing as an ‘Indian’ or ‘Chinese’ market
?
Every national market is made up of several highly unique and fragmented markets
?
Local brands thrive
Tailor brand to individual markets Use the national/regional language
?
Localize the brand
?
?
Eg: MTV Asia
Connect Brands to the Market (cont.)
?
Use local brands to establish market presence
?
?
Use the existing goodwill
Find brands that reflect the spirit of the company
?
Grow local brands when possible
?
?
Acquiring local brands may be expensive
Create brands to counter well established local brands in their own market. Eg: Coca Cola’s Tian Yu Di
?
Brands mean something different in emerging markets
?
Global brands may benefit because of their foreignness. Eg: Pizza Hut Or they may lose in areas where they are not recognized
?
Challenges:
Youthful and Growing Populations
Opportunities: Think Young
Think Young
?
Young countries
?
?
Young adults make up nearly half the population in several of these countries High birth rates
? ?
Create loyal customers when they’re young Make your product ‘cool’
?
?
Huge market for entertainment, apparel, computers, fashion and other such youthful products and services Young celebrity endorsements. Eg: Fastrack watches –MTV India VJs
Think Young (cont.)
?
Multiple channels of communication to reach the young
?
Eg: Community Internet for youth in the Dominican Republic Although plugged into global culture, youth are deeply rooted in their own culture and tradition Individualism ranks higher than communities Global theme, local feel
?
‘Dual passports’
?
? ?
Challenges: Limited Income and Space
Opportunity: Grow Big by Thinking Small
Grow Big By Thinking Small
?
Reducing pack size to reach a larger audience
?
Smaller packages for price, not convenience
?
Installment plans for products that are expensive or out of reach to most
?
Eg: The Maruti Suzuki car for at a down payment of Rs.2000($45) and 0% interest
Grow Big By Thinking Small (cont.)
?
Small packs with several variants popular
?
Allow customers to get a wide choice of products for their scarce resources
What one customer may not be able to afford, several customers together can Eg: E-Choupal
?
Pool demand
? ?
Challenge: Underdeveloped infrastructure Opportunity: Working with Technology
Working with Technology
?
?
Create markets in the gaps
Find ways to fill gaps in infrastructure
?Eg:
Aquaguard in India, Sulabh International
?
Create work around solutions
? Work within limitations of climate,
infrastructure and resources
?Eg:
Crank powered radio in Africa
?
Build infrastructure to support
the business or use existing infrastructure creatively
Working with Technology (cont.)
?
Recognize unseen rivals
? ?
Thriving business in counterfeits Build barriers, such as quality guarantees to keep them out
?
Modify and Apply existing technologies in new ways
?
Eg: CNG Autos in Delhi or ‘fuel flex’ cabs in Mexico Digital media more accessible Cheaper to run. Eg: telemedicine
?
Digitize and MPower
? ?
Challenge:
Weak Supply and Distribution Channels
Opportunity: Take the Market to the People
Take the Market to the People:
?
Position for the smallest shop owner
?
? ?
The organized retail sector in emerging markets is often only 28% of total Small stores number in the millions and have greater reach Eg: the kirana stores of India
?
Build strong supply and distribution channels
? ?
Distribution systems are only just being developed Look for local or entrepreneurial networks that help understand and connect to local markets
Take the Market to the People (cont.)
?
Take the bank out of the
branch
?
Finance and credit options scarce, but very important in emerging markets Banks need to reach the smallest customer to tap ‘Fortune at the Bottom of the Pyramid’ Eg: Micro Credit in Africa
?
?
CASE STUDY: Project Shakti - India
? ?
Launched in the year 2001
Objective to create income generating opportunities for rural women
HLL offers a range of mass-market products to Self Help Groups of rural women, teaches them basic enterprise management and helps them set up their enterprises A win-win partnership between HLL and the consumers
?
?
http://www.hllshakti.com
Challenge: Rapidly Changing Markets
Opportunity: Develop with the Market
Develop With the Market:
?
Work with Government, NGOs and other players
?
Use their understanding of the local culture and needs
?
Look for patterns of change
?
Emerging markets often follow the growth patterns of other developed markets
?
Exporting a success from one market to another.
?
Eg: Indica
In Conclusion
"The transformation is just beginning. There will be hiccups along the way
The only certainty is, the 86 percent markets are here to stay.
Even though they won't become developed
tomorrow, they are the future.
And the companies that can develop the right solutions to meet their needs will find a rich
source of growth."
doc_606419580.pptx