Thursday, June 4, 2009

Weathering the Recession in Emerging Markets

Vital Wave Consulting's CEO, Brooke Partridge, discussed how to Weather the Recession in Emerging Markets in today's seminar series event. The discussion revolved around:

How is the global recession impacting emerging-market opportunities? Most large developing countries will see a decline in their GDPs this year, but will quickly recover and will grow between 3% to 6% in 2013. India and China are, in particular, the two stars of the developing world, generally and during this recession. Latin America is defying its own history. In previous recessions, the region struggled to bounce back, but, over the last decade, many Latin American countries have implemented better fiscal policies that bode well for the region’s economy. Export-oriented economies in both the developed and developing world have been particularly hard hit by this recession.

Which trends and dynamics of emerging markets remain constant and should be addressed in emerging-market strategies?
Although we are in the midst of a global recession, it is important to keep perspective, there are still a great deal of emerging-market citizens with purchasing power. These individuals may be modifying consumption patterns, looking for less-expensive items and substituting for traditional brands/quality, but there is still significant purchasing occurring in these countries. In terms of purchases, in a series of interviews Vital Wave Consulting conducted with emerging-market citizens, everyone aspired to the three essentials: a stove, refrigerator and television...and increasingly the mobile phone. They felt they had a respectable standard of living with these products in their home.

What are the important aspects of business model design for emerging markets?More than technology or product innovation, business model innovation is the key to accelerating the purchase of products further down the economic pyramid. In recent years some new business models have proven effective for business growth in emerging markets, and they can be considered for application or modification in your own business - these include:
  • Pay-per-use
  • Smaller quantities for purchase
  • Community purchasing
  • Financing of even low-cost items Separation of economic buyer and end user

What are the internal dynamics within large companies that can impede success in emerging markets, and are also likely to become even more pronounced during and economic downturn? Many internal dynamics within large corporations are more powerful inhibitors to emerging-market growth than challenges in the markets themselves. And during hard economic times, these dynamics can become even more powerful and require yet more attention to overcome their impact. First and foremost is the issue of incentive structures. For example, growth in emerging markets requires well crafted success metrics imposed on all parties involved in the process to ensure the desired focus and behavior. This includes the sales force.

An audio recording and the sides from this session will be posted on the Vital Wave Consulting website ( later this week.

In the interim, we invite more comments and discussion on this topic.

No comments: