If you aren’t living in a developing country, you may have missed the release of an interesting study by MasterCard Worldwide ranking the top 65 emerging-market cities that drive economic growth. The study received considerable attention in developing countries, particularly in China and India, which had the highest number of cities on the list. MasterCard’s commendable “Emerging Markets Index” was compiled by nine independent experts on economics, urban development and social-sciences. Cities were rated by eight key dimensions (economic and commercial environment; economic growth and development; business environment; financial services environment; commercial connectivity; education and IT connectivity; quality of urban life; and risk and security). Some key results: China has 15 of the top 30 cities, Budapest ranks very highly (3rd overall), and South Africa has more cities in the Index than any country outside of Brazil, Russia, India and China.
Vital Wave Consulting agrees that understanding emerging-market cities is critical. Though cities are typically much more developed than rural areas in terms of infrastructure, income and available services, they often foretell countrywide development, and many cities are significant markets in their own right. However, business managers in the IT and telecommunications industries should understand that the choice and weighting of technology-oriented variables is crucial to pinpointing viable markets, and reliable city-level data are particularly difficult to find. To create the Emerging Markets Index, MasterCard had to draw heavily on country-level data (often the only data available), though it can impact city-level analyses. For example, national data can cause same-country cities to appear more homogenous than they really are and group together in a segmentation analysis. It may also account for the cluster of Chinese cities in the top half of the Emerging Markets Index. The Index is a definite step in the right direction; however, the results underscore the difficulty of conducting city-level research and the potential pitfall of using country-level data to evaluate city performance.
As multinational corporations dedicate more resources to selling products and services into emerging markets, reliable data and accurate assumptions on sub-national markets will be essential to developing comprehensive and effective go-to-market strategies, Companies that develop or acquire specialized, appropriate data, research and analysis will gain a more nuanced way of segmenting, sizing and selling to local markets in developing counties.
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