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

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.