Go to market strategies in emerging economies and markets
Marcos Fava Neves
13 Nov 2012 06:01
Special by Marcos Fava Neves to China Daily, 13/November/2012
This article has the objective of proposing some specific strategies to enter and conquer the emerging markets. These markets are booming nowadays and if any company wants to grow in the global arena, the chances are to try to participate and capture the growth of the emerging countries or in the developed world, to merge, acquire or conquer market share of competitors, since in these regions most of the markets are not growing. Here goes a list of 20 points to think about and to help in entrance decisions, due to the specific characteristics of these markets.
1 – Emerging markets can´t be generalized. A deep understanding of each market is necessary. Countries differ among them and even inside them. Just as an example, China, Brazil and India are real “continents” and differ depending on each specific region, urban or rural areas, and cultural background. Imagine generalizing Africa, what a huge mistake would be done.
2 - As opposite to developed markets, to get information in emerging economies is quite more difficult due to a lack of reliable data, official statistics and other sources. So having an information system will depend on finding information and developing own sources based in local information and knowledge. This is a unique characteristic.
3 – Bartering systems (exchange of goods) may be a strategy to finance and avoid risks of not receiving, due to the lack of income in several emerging economies and also due to the fact that in some of these economies, the issue of inflation is still present, changing business models.
4 – Marketing channels in emerging economies are very unique, involving a large amount of distributors very different in the way they do business and perform services. Sometimes it is a chaotic system, difficult to understand and measure. Also the modern retail systems are present, making a very diverse and dual system. Several variations within each country are also found. A segmentation process should be done using this variable and a clear multi-channel approach (in product and services) established by the company.
5 – Adapting to deal with family business and family managed distribution systems is needed. They tend to respond differently to the company offer, asking for more services and financial benefits than for discounts, the basic demand of large multinational retailers.
6 – A motivated sales force carrying modern technology that allows for data generation and analysis should be used to build information about the market and help to target the very different market segments.
7 – Try to select well and build trust with distributors in order to establish entry barriers for latecomers in these markets.
8 – The issue of human resources is critical. These countries are facing a fast rate of economic growth, and job opportunities are booming within competitors or other industries. So a strategy to attract and retain talents is fundamental. Sharing participation in the company may be a good retaining strategy.
9 – Competition should be treated in a different way, since new competitors may come in to these markets faster than in consolidated markets and local competitors more adapted to local situation offer huge competition, since they know the rules of the game, the so called “how to play”.
10 - Acquisition of local companies may be a strategy to get resources like people and market knowledge, but always taking care of the cultural aspects when taking over management. A lot of mistakes and bad cases can be reported here.
11– It is recommended the use local experts to understand the regulatory systems, since these offer several complications to be understood and also the institutional environment in some countries is weak, making justice very slow and expensive. Sometimes the strategy will be shaped by institutional restrictions (enter only via joint-venture, with local partners) of each specific market.
12 – Adapting product lines to local logistic systems is also needed. In several markets, cooled transportation systems and structures are not available.
13 – Find the right media to communicate with possible consumers, since effective ways to advertise may vary strongly. Local sources of media may be available and more effective than national programs.
14 – Focusing in the growing segment of foodservice in emerging cities may be a nice strategy to enter and to have products known by consumers, and then approach retail, when demand was already created by the foodservice strategy.
15 – Avoid starting a strategy of reaching all the existing market, since the complexity is huge and the company may get lost. Focusing in target segments is a key resource for avoiding major pitfalls.
16 – The need of manuals describing the procedures is necessary due to the lack of education and the need to train human resources in a faster way than competitors. These manuals will be important as a source of fast training to employee turnover.
17 – Investing in emerging economies may require other types of investments not planned, like infrastructure, local communities benefits, corporate social responsibility programs and others.
The challenge is set. To grow today in the global arena will be very difficult without playing the game at emerging economies. And the difficulties are immense, so are immense the opportunities. It is the decade of the emerging economies.
The author is professor of strategic planning and food chains at the School of Economics and Business, University of Sao Paulo, Brazil (www.favaneves.org) and international speaker. Author of 25 books published in 8 countries and in China, “The World on the Tongue”.
