1. Five Rules for Winning Emerging Market Consumer
Strategic Management
Summer 2001

2. Strategic Importance of Emerging Markets
Top 10 (China, India, Brazil, Mexico and Indonesia, Korea,Turkey, Thailand, Argentina, Poland)
Total 44% of world’s economy
Responsible for 2/3 of world’s economic growth over last decade
Consumer base - hundreds of millions
Young
Growing 3 times faster than developed world

3.                 
World Fertility Rates, 1997
                                                      

4. Strategic Importance of Emerging Markets
Future growth in consumption concentrated in emerging markets
Big 5 (China, India, Brazil, Mexico and Indonesia)
Among 12th largest economies in world
Combined purchasing power half of Group of Seven (US, Japan, Britain, France, Germany, Canada, and Italy)

5. Winning Strategies in Emerging Markets
Reach the Masses
Manage Affordability
Consumer base significantly poorer than in Group of Seven
Consumers must balance price/performance equation more than Western consumer
Challenge to rethink product lines
Re-evaluate product development process
Re-evaluate investments
Avoid being a “market skimmer” with “first-world” products

6. Winning Strategies in Emerging Markets
Be Ubiquitous
Invest in Local Distribution System
Supermarket and hypermarkets miss 50-90% of the consumer base
Alliances with local producers as distributors rarely work - few incentives
Be creative
Exclusive distributors
Eliminate wholesalers - i.e. Coca-Cola in Japan

7. Winning Strategies in Emerging Markets
Create Desirability
Build Strong Brands
Branding extremely important
Aspirational attraction
Badge categories
Quality guarantee
Advertise to spread the word about your brand
Use umbrella brands where possible
Invest in local brands that have some customer loyalty - i.e. Coca-Cola’s Thums Up in India

8. Winning Strategies in Emerging Markets
Play to Win
Pick Your Markets Well
Avoid timid investments
Build leading or strong #2 position
Achieve critical mass
Demonstrate long-term commitment
Gain access to local management talent
Identify attractive product categories
Develop appropriate products for local needs

9. Winning Strategies in Emerging Markets
Be Local
Foster Emerging Market Entrepreneurs
Volatility and unconventional business practices require local expertise and skills
Raging inflation, currency swings, new taxes, changing regulations, interest-rate instability
Provide adequate global support
Provide freedom to make decisions quickly
Retool traditional planning and budgeting systems

10. Winning Strategies in Emerging Markets
Be Local
Foster Emerging Market Entrepreneurs
Compete with unconventional competition
Product counterfeiters, product diverters, informal competitors
Understand and properly manage power networks
Unique challenges to organizational structure and career development

11. 21st Century Growth Most multinationals not well-positioned
Reflect carefully on
Uniqueness of emerging markets
How to redesign Western strategies and business models
Growth in most emerging economies
Outpaced required improvements in
Financial institutions and systems
Government institutions and policies