Marketing In Emerging Economies
Book summary Ch. 1 - 2 - 9 - Chattopadhyay
Chapter 1- Choosing consumer segments and expanding internationally 2
Choose segments first, and then countries 2
Choosing segments 2
Targeting Price-Sensitive Segments 3
Targeting Consumers Who Seek Functional and Reliable Brands 3
Targeting Consumers from developed markets and dissimilar to those served at home 4
Country choice 5
Ability to profit 6
Expanding the international footprint over time 7
Conclusion and Key Takeaways 7
Chapter 2 ‘Strategy competency building’ 8
Cost Leader Competencies 8
Knowledge Leverager Competencies 9
Niche Customizer Competencies 10
Global Brand Builder Competencies via Innovations 11
Creating the Needed Organizational Culture 11
Importance of Customer Insights 11
Building Customer Insight Competencies 12
Summary and Key takeaways: 12
Chapter 9 ‘Key Takeaways’ 13
The Cost Leader Strategy 13
The Knowledge Leverager Strategy 13
The Niche Customizer Strategy 14
The Global Brand Builder Strategy 14
Three broad lessons for challenger business and aspiring EMNCs 15
Lessons for TMNCs 17
Learning from the EMNCs´ successful strategies 17
1
,Chapter 1- Choosing consumer segments and expanding internationally
The Global Brand Builder Strategy is
the most complex and difficult one to
execute, but also the most profitable
and sustainable one.
In the figure 1-1 you see the road map
to the target-segment and
country-market decisions.
Choose segments first, and then countries
The choice of which segments to target should come before the considering which market to
enter.
● When using country characteristics as a proxy for segment attractiveness, countries that
may appear unattractive (or attractive) may actually be very attractive (or unattractive) if
one were to consider the attractiveness of the target segment directly.
○ Japan example (company Ranbaxy). It was said that emerging markets are more
attractive for branded generic players as the use of this is growing there. Japan is
not considered as an emerging market and thus would not have been targeted.
However, Japanese consumers are turning big time to branded generics now. If
no further analysis on the segment would have been done, then this profitable
opportunity for Ranbaxy would have been lost.
Choosing segments
All the firms we talked to had clearly identified the target segments they served at home and
held dominant positions. The dominant positions these firms hold come from their superior
customer insights.
● Mahindra & Mahindra example. This company understood the needs of India’s rural
consumers from the lower socio-economic strata. Public transport system was weak.
The company developed basic UVs and Jeep-like vehicles. These vehicles are acquires
by small entrepreneurs and fares are kept low (kinda like a taxi service).Now, Mahindra
& Mahindra vehicles, have a reputation of durability, reliability and cost-effectiveness
among these consumers behavsue it understands the needs of this segments and builds
vehicles tough enough to withstand the difficult use conditions,
overseas similar consumers
Targeting consumers overseas similar to those served at home helps develop a well defined
and cohesive consumer base that spans geographies, which is less expensive to cater to; builds
economies of scale; is easier to manage; and creates synergies for leveraging their existing
insights, capabilities, and product portfolio internationally. It also helps them to rapidly transfer
2
,new learning from international markets back home and vice versa, setting up a virtuous cycle
of leveraging all the markets synergistically.
● benefit: existing awareness and knowledge of brands in the home market, lowering the
cost of building the brand in this segment. This segment is also likely to be more
receptive to messages from home-country brands, as their perceptions are not colored
by negative country-of-origin imagery—indeed, they might be bolstered by nostalgia for
the old home country and old brand relationships.
Beyond following their ethnic diaspora1, we identified two other ways in which EMNCs
attempted to target consumers similar to the emerging-market consumer segments served at
home:s
● Targeting price-sensitive segments
● Targeting segments that seek functional and reliable brands
Targeting Price-Sensitive Segments
Price-sensitive segments similar to those in EMNCs’ home markets exist in other emerging
markets, in certain developed markets, and always in B2B contexts.
In other emerging markets
A key strengths of EMNCs is their lower cost structure, EMNCs wield a sustainable advantage
when seving price-sensitive segments.
● Evyap (Turkish personal-care brand), built itself reputation and market share by offering
good quality soaps with a broad range of scents, at competitive prices.
In developed markets
Price-sensitive segments are not the monopoly of emerging markets; they are present
everywhere,including in developed markets, and tend to be large enough to be attractive,
particularly in the less-affluent developed-world markets, like parts of Southern Europe. These
are even more attractive because they are often under-served by the local players
● e.g. Chinese mobile company Huawei has launched cheap and functional smartphones
in North America and Europe, as smartphone penetration grows into lower-income
segments in those developed markets.
In B2B markets
B2B segments are typically price sensitive, as purchase managers are rewarded for achieving
the lowest possible prices. Thus, there is a genuine opportunity for EMNCs to build a strong
B2B brand by providing superior offerings at lower price points, as well as lower lifetime value,
compared with what their TMNC competitors provide
Targeting Consumers Who Seek Functional and Reliable Brands
EMNCs are not only focusing on traditional cost-advantage (lower costs), but also on delivering
functional and reliable products. In doing so, they are becoming formidable competitors in the
backyards of the developed-market multinationals.
1
ethnic diaspora → ‘overseas communities’
3
, Targeting Consumers from developed markets and dissimilar to those served at
home
EMNCs targeted dissimilar consumer segments using three approaches:
1. targeting niche segments,
2. spotting and targeting high-growth product categories,
3. targeting segments more predisposed to accept brands from unknown players.
These three approaches enabled EMNCs to learn about new consumers and learn to manage
in international environments without becoming overwhelmed by the costs, lack of knowledge of
new consumers, competitive pressures, and managerial challenges of internationalization.
Targeting Niche Segments
When EMNCs target dissimilar customers in the developed markets, they suffer from a lack of
knowledge, les financial resources and weaker capabilities to compete internationally.
● By focusing on niche segments, EMNCs can offset these weaknesses by avoiding a
direct confrontation with TMNCs.
○ TMNCs do typically not focus on niche segments as they find them unattractive,
with regard to revenue-potential.
○ These niche segments allow TMNCs to learn about the new target customers,
grow in size, develop capabilities. Moreover, the smaller smize of the segments
also means that the requires marketing budgets are in line with what EMNCs can
afford.
Spotting and entering high growth market
An alternative to targeting a niche consumer segment is to spot and target a category that is on
the verge of growing dramatically.
Participating in these new categories has four important benefits beyond market share gains:
● easier sales,
Given rapid growth, competing firms vie for a share of the growing pie rather than try to
take share away from each other.
→ e.g. L.G. would have found it much harder to grab a leading position if it had to take
share away from established incumbents such as Whirlpool, rather than grab a share of
a rapidly growing category.
● greater visibility,
High-growth categories are more visible to consumers due to greater activity created by
the rapid entry of new players.
● perceived innovativeness
The perceived rapid innovation due to competitive activity in these emergent categories
also leads to a positive rub-off on the pioneering brands in terms of being perceived as
“innovative” and “modern.”
● access to younger consumers
The emergent markets may provide opportunities to reach out to younger consumers,
creating a defensible position for the future.
4
Book summary Ch. 1 - 2 - 9 - Chattopadhyay
Chapter 1- Choosing consumer segments and expanding internationally 2
Choose segments first, and then countries 2
Choosing segments 2
Targeting Price-Sensitive Segments 3
Targeting Consumers Who Seek Functional and Reliable Brands 3
Targeting Consumers from developed markets and dissimilar to those served at home 4
Country choice 5
Ability to profit 6
Expanding the international footprint over time 7
Conclusion and Key Takeaways 7
Chapter 2 ‘Strategy competency building’ 8
Cost Leader Competencies 8
Knowledge Leverager Competencies 9
Niche Customizer Competencies 10
Global Brand Builder Competencies via Innovations 11
Creating the Needed Organizational Culture 11
Importance of Customer Insights 11
Building Customer Insight Competencies 12
Summary and Key takeaways: 12
Chapter 9 ‘Key Takeaways’ 13
The Cost Leader Strategy 13
The Knowledge Leverager Strategy 13
The Niche Customizer Strategy 14
The Global Brand Builder Strategy 14
Three broad lessons for challenger business and aspiring EMNCs 15
Lessons for TMNCs 17
Learning from the EMNCs´ successful strategies 17
1
,Chapter 1- Choosing consumer segments and expanding internationally
The Global Brand Builder Strategy is
the most complex and difficult one to
execute, but also the most profitable
and sustainable one.
In the figure 1-1 you see the road map
to the target-segment and
country-market decisions.
Choose segments first, and then countries
The choice of which segments to target should come before the considering which market to
enter.
● When using country characteristics as a proxy for segment attractiveness, countries that
may appear unattractive (or attractive) may actually be very attractive (or unattractive) if
one were to consider the attractiveness of the target segment directly.
○ Japan example (company Ranbaxy). It was said that emerging markets are more
attractive for branded generic players as the use of this is growing there. Japan is
not considered as an emerging market and thus would not have been targeted.
However, Japanese consumers are turning big time to branded generics now. If
no further analysis on the segment would have been done, then this profitable
opportunity for Ranbaxy would have been lost.
Choosing segments
All the firms we talked to had clearly identified the target segments they served at home and
held dominant positions. The dominant positions these firms hold come from their superior
customer insights.
● Mahindra & Mahindra example. This company understood the needs of India’s rural
consumers from the lower socio-economic strata. Public transport system was weak.
The company developed basic UVs and Jeep-like vehicles. These vehicles are acquires
by small entrepreneurs and fares are kept low (kinda like a taxi service).Now, Mahindra
& Mahindra vehicles, have a reputation of durability, reliability and cost-effectiveness
among these consumers behavsue it understands the needs of this segments and builds
vehicles tough enough to withstand the difficult use conditions,
overseas similar consumers
Targeting consumers overseas similar to those served at home helps develop a well defined
and cohesive consumer base that spans geographies, which is less expensive to cater to; builds
economies of scale; is easier to manage; and creates synergies for leveraging their existing
insights, capabilities, and product portfolio internationally. It also helps them to rapidly transfer
2
,new learning from international markets back home and vice versa, setting up a virtuous cycle
of leveraging all the markets synergistically.
● benefit: existing awareness and knowledge of brands in the home market, lowering the
cost of building the brand in this segment. This segment is also likely to be more
receptive to messages from home-country brands, as their perceptions are not colored
by negative country-of-origin imagery—indeed, they might be bolstered by nostalgia for
the old home country and old brand relationships.
Beyond following their ethnic diaspora1, we identified two other ways in which EMNCs
attempted to target consumers similar to the emerging-market consumer segments served at
home:s
● Targeting price-sensitive segments
● Targeting segments that seek functional and reliable brands
Targeting Price-Sensitive Segments
Price-sensitive segments similar to those in EMNCs’ home markets exist in other emerging
markets, in certain developed markets, and always in B2B contexts.
In other emerging markets
A key strengths of EMNCs is their lower cost structure, EMNCs wield a sustainable advantage
when seving price-sensitive segments.
● Evyap (Turkish personal-care brand), built itself reputation and market share by offering
good quality soaps with a broad range of scents, at competitive prices.
In developed markets
Price-sensitive segments are not the monopoly of emerging markets; they are present
everywhere,including in developed markets, and tend to be large enough to be attractive,
particularly in the less-affluent developed-world markets, like parts of Southern Europe. These
are even more attractive because they are often under-served by the local players
● e.g. Chinese mobile company Huawei has launched cheap and functional smartphones
in North America and Europe, as smartphone penetration grows into lower-income
segments in those developed markets.
In B2B markets
B2B segments are typically price sensitive, as purchase managers are rewarded for achieving
the lowest possible prices. Thus, there is a genuine opportunity for EMNCs to build a strong
B2B brand by providing superior offerings at lower price points, as well as lower lifetime value,
compared with what their TMNC competitors provide
Targeting Consumers Who Seek Functional and Reliable Brands
EMNCs are not only focusing on traditional cost-advantage (lower costs), but also on delivering
functional and reliable products. In doing so, they are becoming formidable competitors in the
backyards of the developed-market multinationals.
1
ethnic diaspora → ‘overseas communities’
3
, Targeting Consumers from developed markets and dissimilar to those served at
home
EMNCs targeted dissimilar consumer segments using three approaches:
1. targeting niche segments,
2. spotting and targeting high-growth product categories,
3. targeting segments more predisposed to accept brands from unknown players.
These three approaches enabled EMNCs to learn about new consumers and learn to manage
in international environments without becoming overwhelmed by the costs, lack of knowledge of
new consumers, competitive pressures, and managerial challenges of internationalization.
Targeting Niche Segments
When EMNCs target dissimilar customers in the developed markets, they suffer from a lack of
knowledge, les financial resources and weaker capabilities to compete internationally.
● By focusing on niche segments, EMNCs can offset these weaknesses by avoiding a
direct confrontation with TMNCs.
○ TMNCs do typically not focus on niche segments as they find them unattractive,
with regard to revenue-potential.
○ These niche segments allow TMNCs to learn about the new target customers,
grow in size, develop capabilities. Moreover, the smaller smize of the segments
also means that the requires marketing budgets are in line with what EMNCs can
afford.
Spotting and entering high growth market
An alternative to targeting a niche consumer segment is to spot and target a category that is on
the verge of growing dramatically.
Participating in these new categories has four important benefits beyond market share gains:
● easier sales,
Given rapid growth, competing firms vie for a share of the growing pie rather than try to
take share away from each other.
→ e.g. L.G. would have found it much harder to grab a leading position if it had to take
share away from established incumbents such as Whirlpool, rather than grab a share of
a rapidly growing category.
● greater visibility,
High-growth categories are more visible to consumers due to greater activity created by
the rapid entry of new players.
● perceived innovativeness
The perceived rapid innovation due to competitive activity in these emergent categories
also leads to a positive rub-off on the pioneering brands in terms of being perceived as
“innovative” and “modern.”
● access to younger consumers
The emergent markets may provide opportunities to reach out to younger consumers,
creating a defensible position for the future.
4
