Marketing in Emerging Countries

Emerging Markets  Emerging Markets refer to countries in Eastern Europe – Russia, Poland, Baltic States, China and India  Marketing in these countries faces special problems  Markets are not as developed as in US  Infrastructure bottlenecks exists  Market segmentation is not clearly defined  Middle Class in Emerging countries are not the same as middle class in US & Europe

Market Segmentation  Market Segmentation based on income levels and geographic location & demographics  Consumers have more sophisticated tastes and preferences than what appears on the surface  Poor Income levels must not be mistaken for having lower aspirations on quality and performance  Lower Income levels does not correlate with low priced durable goods  Upscale & Premium positioning targeted at the high income market segment works

Product Positioning  Mass market for basic needs tends to be price sensitive  Choice of domestic alternatives for basic tends to be limited in rural areas – this is changing rapidly as we speak  Products developed specifically for the local markets have a higher success rate  Products with Premium positioning has its markets limited to large urban cities

Pricing  Pricing in emerging countries is a balance between affordability and upper-end positioning  MNC’s tend to adapt skimming price – to ensure a quick payback  Lower penetration price ensures affordability but requires large volume of sales  Smaller sized package, store credit & liberal credit terms are used to increase affordability  E.g: Sachet sized shampoo

Distribution  Distribution network beyond the urban centers is severely constrained  Large geographic distances and lack of land transportation facilities are a major challenge  Poor communication infrastructure in rural areas  Lack of storage facilities, small & fragmented retail sector demands bi-weekly supply by manufacturer

Promotion  Promotion channels were once very limited  Rapid changes has made promotional channels on par with the developed world  TV, Print, Radio as a mass communication channel is very effective  Educational promotion campaign is necessary to educate rural customers  Demonstration of utility and use has a big impact on consumer behavior

Closing Thoughts  Emerging Markets like Russia, India and China offer huge potential  Market conditions are a lot different in these countries when compared to developed world  Upper end markets in emerging countries are similar to developed world  Middle class want latest quality products and dislike old technology or inferior products  Distribution challenges must be overcome