Recent news articles have called into question the reliability of developing-country market data that is crucial to good decision-making for developing-country business expansion. Respected economist Lester Thurow challenged China’s economic growth statistics (New York Times subscription required) by using electricity consumption as a proxy for economic growth. Thurow estimates that China’s economy is growing at a rate of 4.5% to 6% annually, far less than the Chinese government’s figure of around 10%. Similarly, the Arab Advisors Group (AAG), a local telecommunications industry advisor, suggested that estimates of Jordan’s mobile penetration rates may be exaggerated based on results from their recent survey. Using two simple calculations - an assessment of population that takes into account migrants and expatriates as well as standard population figures, and an estimate of the actual number of phones per users – AAG asserts that mobile penetration may be closer to 50%, rather than the 74% claimed by local operators.
Market data such as mobile penetration and economic growth rates inform critical business decisions. The possible discrepancies suggested by AAG and Thurow demonstrate the complexity of designing for, and selling into, developing-country markets. Erroneous data can result from misrepresentation, insufficient validation, or from applying mature-market methods, user trends and historical adoption curves directly to emerging markets. Thurow’s approach to assessing China’s growth demonstrates how even developing-country data can be tested with creative proxies. AAG’s primary research revealed that over a third of all mobile users in Jordan have multiple phone lines (to capture savings on operator offers and promotions), which would lower market penetration estimates based on a unique subscription-to-subscriber ratio.
These two examples demonstrate that gathering accurate, reliable data on emerging markets requires new tools and methods, investigation beyond standard published sources, and a profound knowledge of local user needs, preferences and usage patterns. The companies that base their business growth decisions on sound, market-appropriate data collection and analysis will have the best chance of understanding the scope and location of the most compelling emerging-market growth opportunities.
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