Friday, July 18, 2008

Leaving Money on the Table in Emerging Markets

Handset manufacturer Sony Ericsson announced this week that it is in talks to acquire India-based Spice Mobile. The move is part of Sony Ericssons recent investments in emerging markets, an effort to counteract its slowing growth in the mid- to high-end markets of the developed world. The Peoples Phone,” Spices low-cost handset, could help Ericsson better compete with Nokia in Indias lower-end markets.

Traditionally known for premium phones, the bid for Spice could be Ericsson
s ticket to providing products with more local appeal. A recent China Daily article on Nokias entry into China outlines a different strategy but with a similar end in mind. Nokia struggled initially to gain a foothold in China and outlined drastic cost-cutting plans for key products. But at the last minute the plans were changed. Conversations with customers and channel partners convinced Nokia that new distribution channels and locally designed products would better meet customer needs - not cheaper phones. The companys ability to respond to market intelligence delivered what is now a 35% market share for Nokia in China (in spite of fierce domestic competition) and reinforced that cost-cutting is not the only method for achieving growth in emerging markets.

Rigorous data collection and research-driven strategies can reveal new opportunities for profitability. A common assumption that price reduction should drive emerging-market strategy can often cause multinational corporations (MNCs) to leave money on the table. Foreign MNCs expanding into emerging markets would do well to leave room in their processes for thorough market research and the time to respond according to its results. With both quantitative and qualitative market data, emerging-market professionals have the business case ammunition they need to cause a big ship like Nokia to turn on a dime.

Also in the news:

No comments: