Monday, November 26, 2012

Developing a Model for Emerging Market

"Emerging markets often require business models that have a much broader scope," says Josh Suskewicz
With established markets becoming saturated, multinational corporations (MNCs) have turned increasingly to emerging markets (EMs) in the developing world.
Such EM strategies have been targeted almost exclusively at the wealthy elite at the top of the economic pyramid. Recently, however, a number of MNCs have launched new initiatives that explore the untapped market potential at the base of the economic pyramid, the largest and fastest-growing segment of the world’s population at 4 billion people. Almost completely ignored until recently is a huge base of potential customers whose annual purchasing power parity (PPP) is less than $1500 per year

And there are a lot more poor people in the world than rich people. To be a global business and to have a global market, you have to participate in all segments.
– Keki Dadiseth, Director, Hindustan Lever Limited (Unilever’s India subsidiary), discussing his company’s efforts to target the rural poor

The vast majority of the populations in emerging markets operate primarily in the large,but hidden, informal economies that are not recorded in official gross national product (GNP) or PPP statistics. Across the globe, it has been estimated that the informal sector includes more than $9 trillion in hidden (or unregistered) assets,
To succeed in Emerging markets you have to Co-inventing custom solutions:
 Allow for user innovation and modification

 Product and business model design should co-evolve

 Build local capacity

 Recognize the value of existing local institutions

 See gaps in local infrastructure or missing services as potential opportunities

Emerging markets have to deal with scarcity in so many forms: lack of capital, inadequate infrastructure, and low levels of literacy, however, they do not have ascarcity of ingenuity and determination to succeed. .