Growing the Core Business in Emerging Markets. DR. JAGDISH N. SHETH Charles H. Kellstadt Professor of Marketing Emory University

Transcription

1 Growing the Core Business in Emerging Markets DR. JAGDISH N. SHETH Charles H. Kellstadt Professor of Marketing Emory University 2014 World Marketing Summit Tokyo September 24, 2014

2 The Fundamental Shi/ in Global Growth UNBRANDED PRODUCTS & SERVICES New Reality MATURE MARKETS EMERGING MARKETS Past Reality BRANDED PRODUCTS & SERVICES 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 2

3 Forces Driving the Shi/ in Global Growth ECONOMIC REFORMS AGING OF AFFLUENT NATIONS FORCES DRIVING THE SHIFT RAPID ADVANCES IN TECHNOLOGY RISE OF THE NEW BRAND CONSCIOUS MIDDLE CLASS 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 3

4 New Measures of World Economies Purchasing Power Parity (PPP) based GDP 2015 (Forecast) 1. U.S. $ 18 trillion 2. China $ 17 trillion 3. India $6.0 trillion 4. Japan $5.0 trillion 5. Germany $ 3.4 trillion 6. Russia $ 2.9 trillion 7. Brazil $ 2.8 trillion 8. UK $ 2.7 trillion 9. France $ 2.6 trillion 10. Italy $ 2.0 trillion Source: International Monetary Fund (IMF) 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 4

5 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 5

6 New Measures of World Economies China is the second largest economy based on PPP index and just surpassed Germany and Japan in GDP. It will be the largest single economy by the year India is the third largest PPP economy, and it is likely to surpass Germany and Japan in GDP by Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 6

7 Five of Emerging Markets Regulated markets (government rules & regulations) Market heterogeneity (Bottom of the Pyramid) Unbranded competition (make vs. buy) 1 2 Inadequate infrastructure (physical & financial) Chronic shortages of resources (raw materials to working capital) 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. Source: Jagdish N. Sheth, Impact of Emerging Markets on Marketing: Rethinking Existing Perspectives & Practices. Journal of Marketing (Vol. 75) July 2011, pp

8 the New Reality Most marketing failures in emerging markets can be directly attributed to these five unique characteristics. Neither extension nor adjustment strategy is sufficient. What we need is a fresh perspective on how to succeed in emerging markets Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 8

9 Strategies for Emerging Markets Think local, act global Leverage digital media Reinvent distribution Purpose Driven Marketing Focus on fusion 10 6 Convert nonusers into users Reverse brand lifecycle Invest in branding, packaging and design Democratize innovations Implement reverse innovation 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 9

10 Strategies for Emerging Markets 1. Convert Non- users to Users Wine consumption in China Jeans & T- shirt for Indian farmers 2. Invest in Branding, Packaging & Design Branded commodities Climate, culture and consumption 3. Democratize Innovations Cell phones Nano car 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 10

11 Strategies for Emerging Markets (cont d) 4. Implement Reverse Innovation Focus on affordability & accessibility Base of the Pyramid 5. Reverse Brand Lifecycle Corolla- Camry- Lexus Chinese cell phones & appliances 6. Focus on Fusion Fusion on arts & culture Fusion meals 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 11

12 Strategies for Emerging Markets (cont d) 7. Reinvent Distribution Avon products in Brazil Mobile Banking (M- PESA) 8. Leverage Digital Media Social media Mobile marketing 9. Think Local, Act Global SAB Miller, Heineken Diaspora Marketing 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 12

13 Strategies for Emerging Markets (cont d) 10. Purpose Driven Marketing Environment: The Show Stopper Mindful Consumption Nurturing Nature 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 13

14 Conclusion Marketing practice will be more driven by growth of branded products and services in emerging markets. This is due to aging of affluent nations, rise of new brand conscious middle class, advances in technology and economic reforms. Rise of Chindia (China and India) will have the greatest impact on world s resources, markets and geopolitics Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 14

15 Conclusion Understanding and adapting to the five unique characteristics of emerging markets will be key to success. The five characteristics are: Unbranded competition Inadequate infrastructure Chronic shortage of resources Regulated markets Market heterogeneity 2014 Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 15

16 Conclusion We will need new and innovative perspectives on how to market products, services and ideas in emerging markets. These include: Converting non- users into users Focusing on affordability and accessibility Investing in reverse innovation Sustainability Rethinking existing perspectives and practices in marketing will generate future growth of the core business Dr. Jagdish N. Sheth. All rights reserved. Growing the Core Business in Emerging Markets. 16