How to reach emerging market consumers with new ... - Roland Berger

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Roland Berger Strategy Consultants Conclusion Five key actions for success
Study 29 In the coming two decades, consumers in emerging countries will experience change at rates unparalleled in economic history. The range of goods and services available, the extent of the urban environment, and for many the size of disposable incomes will grow at a speed surpassing that seen in all previous major economic phases. How should companies respond to these changes? What strategic steps must they take to benefit from the opportunities offered by new consumer markets in the developing world? We summarize the key actions needed below. Analyze trends and market environments – A world of change A prerequisite for understanding consumer behavior is to see how fundamental megatrends such as population growth, urbanization and globalization are driving the development of emerging countries. Tools such as scenario planning can help companies develop detailed pictures of the future and identify the main factors influencing consumer behavior. Extended market analyses add detail to these scenarios. Understand consumers in emerging markets – Not a closed book Significant differences in consumer behavior will persist both between rural and urban areas and between cities of different sizes. Companies can use tools such as the RB Profiler to derive detailed consumer profiles and identify brand preferences. They should also remember that ethical and religious values in emerging countries will favor more socially oriented, ecological consumerism. Find the right marketing strategy – Simple but creative The marketing strategy and message have to speak to local consumer needs. Here, again, companies must strike a balance between rural and urban customers' preferences. Sometimes simple marketing strategies are the solution. Urban, middle-class consumers prefer online shopping and use social media such as Facebook, so targeted mobile marketing strategies can often be effective here. Adapt your distribution strategy – Go glocal Companies face a wide range of challenges when it comes to designing distribution strategies that adequately reflect local conditions. Especially at the market entry stage, it is often simply too expensive to supply remote regions directly. Companies need strong partnerships with regional distributors or subcontractors. Import and tax regulations must be clarified. Firms should re member that bureaucracy can slow processes down con siderably. Sometimes a strategic alliance with competitors can create an opportunity to distribute products in new regions or cities. For the urban middle class, whose purchasing behavior is very similar to consumers in industrialized markets, innovative technology-intensive strategies may prove the most effective. Create the right portfolio – Broad but specialized Bottom-of-the-pyramid consumers prefer cheap products that are simple to use. This may mean offering products in different sizes and packaging formats. The company's familiarity with local and cultural preferences is also crucial. The product portfolio must meet the needs of both poor customers and the growing middle classes. To satisfy the requirements of both groups, companies need critical mass, solid financial resources, a broad product mix and strategic partnerships with local manufacturers. They must also clarify patent issues in emerging markets, as several countries still fail to provide sufficient protection for foreign brands.
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