Marketing Strategies for Developed And Developing Markets - Prabhakar
Interest in developing markets such as China, India, Brazil and Russia has increased rapidly over the past ten years, meaning that market research and intelligence agencies are exploring a wider variety of geographies than ever before. This presents numerous challenges throughout the market research process, for fieldworkers, managers and analysts alike. This article discusses perhaps the most important issue of all – the different insights that tend to arise in different geographies. In particular, how do the critical marketing success factors in the developing and developed worlds differ from each other?
Developed And Developing Markets Product
In most business-to-business markets, customers regard product quality and durability as a ‘hygiene’ requirement; performance must be high in order for the supplier of that product to even be considered. Companies with low quality are not in business for long, leaving serious market players to differentiate on the extended offer – service, brand and the like. In developing markets, good quality is often not even a hygiene requirement, let alone a differentiator. 80%-90% of buyers of pump and instrumentation products in Russia or China are happy to buy products that last 18-24 months whereas their Western counterparts demand a lifespan of 6-7 years or more. This results in a preponderance of low-quality buyers in the developing market, and quality becomes a key differentiating factor for the small group of customers that demand it.
To the Western company with a high cost-base and high-quality product, the best strategy in a developing market is to cream-skim the market by targeting the 10%-20% of quality-focused buyers. In developed markets, suppliers are best advised to focus on service quality, knowledge and people, while of course maintaining high quality standards. -- Recommended Marketing Strategies In Developed And Developing Markets
Developed And Developing Markets Price
Value-added pricing is common in developed markets – that is to say buyers are willing to pay more for a superior offer, usually based around service, brand, consultancy and other benefits beyond the product itself. In developing economies, the willingness to pay extra for a superior offer is far less prevalent, with most b2b buyers relating price primarily to quantity.
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| Developing markets 2 (Photo credit: Wikipedia) |
Western clients tend to premium-price in developing markets, communicating high quality to a small part of the market and receiving high margins in return. Even companies that are relatively undifferentiated in their home markets frequently succeed when premium-pricing in developing countries. Consumer brands such as Pizza Hut have experienced huge success with this strategy.
In developed markets, the picture is far less clear, with customers generally more demanding and high-quality competition more prevalent. This is where specialist pricing research comes into its own, be that competitive pricing intelligence or more model-based techniques such as SIMALTO and conjoint analysis.
Developed And Developing Markets Place
Western businesses frequently underestimate the difficulties associated with routes to market in developing economies. Whereas market channels in the company’s home market may be long-established and familiar, channels in a developing market may be unrecognisable, fragmented, ephemeral and highly dependent on local knowledge and relationships. Many Western consumer-facing companies are experiencing real success in developing markets in this respect, with shampoo and cosmetic providers, for example, making huge profits in rural cities via local distributors and retailers. Industrial companies have been slower to build up their knowledge, many still relying on generic import-export agents and a low-quality, poorly trained salesforce. Underestimating the importance of a permanent on-the-ground presence and even local-language capability is another common mistake.
Developed And Developing Markets Promotion
In any b2b market, promotional messages should focus on customers’ ‘hot buttons’: product quality or price in developing markets; and in developed markets, service, brand, consultancy and other value-added messages. Promotional routes will also differ. While direct mail is increasing in prevalence in most developing b2b markets, it is still a scarcely used and ineffective marketing channel in these countries. Relationship-focused promotion, such as trade shows and site visits, is key, since trust in brands is in short supply.
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