13-08-2012, 04:33 PM
Entry Strategies: Emerging Market Economies
Entry Strategies.ppt (Size: 2.76 MB / Downloads: 39)
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 capita- constitutes 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
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
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
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
Localize the brand
Tailor brand to individual markets
Use the national/regional language
Eg: MTV Asia
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
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
Take the Market to the People:
Position for the smallest shop owner
The organized retail sector in emerging markets is often only 2-8% 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 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