Strategies & Effects of Competition in Emerging Markets

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  • 0:04 Emerging Markets
  • 0:32 Global Brands
  • 1:48 Company Scale
  • 3:16 Local Competition
  • 5:11 Lesson Summary
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Lesson Transcript
Instructor: Fred Hathaway

Fred has been a business consultant for over 20 years. His expertise includes marketing, human resources, and management.

Emerging markets present an opportunity for local and global companies to grow as the consumer market grows. This lesson looks at some of the strategies used by companies to compete favorably in the new world economy.

Emerging Markets

The big guy swoops in and takes away market share from the little guy. Familiar story? Maybe, with the notable exception that it's now playing out on a global scale as emerging markets (which are countries where the middle class is growing rapidly) have become the battlefield for brands looking to secure market share, revenues, and profits. By looking at the real-life examples that follow, we can glean insights into some principles that should guide marketers around the world looking to grow their brand in emerging markets.

Global Brands

In Brand Breakout, Nirmalya Kumar and Jan-Benedict Steenkamp explore eight different strategies that companies have attempted to penetrate global markets. Let's explore the application of three of the strategies here:

  • Asian Tortoise Route: when brands move upmarket over time
  • Business-to-Consumer Route: when business-to-business models are applied to consumer markets
  • Diaspora Route: when a people group becomes a target market, irrespective of how spread out they are

Most of these strategies can be used by companies of all sizes and located in any geography. The Asian Tortoise approach isn't a new tactic. Japanese companies have entered many markets by stealth in this exact manner. First, by getting a toehold in a market and then steadily 'upping the ante' by introducing slightly more premium brands as the markets are proven.

The concept of bringing B2B (business-to-business) concepts to B2C (business-to-consumer) markets is also practiced by many companies.

One of the more intriguing approaches, the Diaspora Route, has potential for those companies who can build a tribe of followers regardless of where in the world the tribe members are located. Identifying a niche demographic and pursuing its members globally has a variety of applications.

Company Scale

Multinational countries from first world countries have a key advantage: scale. While developing products for one niche, these behemoths can simultaneously offer a tweaked version for another niche market. Their knowledge of consumer trends worldwide has been gained through years of market research and experience with customers. Increasingly, multinationals are applying that knowledge in significant ways.

For instance, several companies found India to be a test lab for proving products to be launched in other markets using the Asian Tortoise method:

  • Japan manufacturer Panasonic developed a new type of air conditioner for tropical climates, like India, that are now being sold to other tropical countries.
  • Yamaha developed a low-end motorcycle for India that can be marketed to other economies.
  • Unilever developed a water purification system in India to help customers avoid having to lug a giant water jug home from the market. This system was identified by its Latin America team as a suitable application for the Mexican market. As a result, Unilever launched a water purification system in Mexico to help households have clean water.

The list goes on. The common denominator is that when your test market is huge, the sheer volume of consumers in one locale gives a global company a chance to develop products and services in one market that have cross-application to additional markets. With centralized R&D, manufacturing, and other corporate functions, these big companies take advantage of their size to get their offerings into many markets efficiently.

Local Competition

The advantages held by larger, foreign companies entering emerging markets are considerable: more robust financial resources, access to modern technology, proven products, brand awareness, and management teams with honed and specialized skills. To compete, the smaller companies usually do one of three things:

  1. Ask for government help
  2. Become a part of the big company's go-to market strategy
  3. Sell their business

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