In today’s truly global economy, companies across industries are evaluating their next great market opportunity. From Brazil to Russia, Vietnam to South Africa, the middle class is growing rapidly, and brands need to understand how to reach these customers in the developing world.
For CMOs, successful marketing campaigns hinge on the ability to effectively engage with the next billion consumers. What works in the developed world may not work in the emerging markets. Here are five critical factors to keep in mind when considering a push into the developing world:
1. Traditional mass marketing no longer will cut it.
Advertising via traditional mass-media channels, such as billboards, TV, and radio, were once the only methods to engage consumers in emerging markets. However, virtually all emerging market consumers have mobile phones–and an increasing fraction of these devices are now being used to get online for the first time. Suddenly, marketers who have been employing the same 1950’s-style marketing techniques now have an entirely new set of channels to engage with consumers in high-growth markets.
2. Mobile air time is currency.
Consumers in these markets may not be watching commercials, but they are using more than 4 billion prepaid, “dumb” cell, and they spend an average of 10 percent of their annual incomes on airtime. By rewarding these consumers with airtime, marketers can incent them to complete surveys or purchase products. Global brands are providing consumers with instant discounts on products–but instead of taking the discount from the local merchant, the amount is credited to the consumer’s prepaid phone. Additionally, by rewarding people with free airtime in exchange for answering surveys, marketers can glean critical insight about these next billion consumers.
3. The middle class is on the rise.
Overall growth in emerging markets is driving the rapid emergence of the middle class. By 2020, the middle class is expected to increase from 1.8 billion people today to nearly 3.2 billion. This type of rapid growth creates increased spend on goods and services. Many predict that the dramatic increase in middle-class spending will outpace consumer goods spend in the Western World in the coming decade.
4. Each market has its own unique characteristics.
India’s labor force is overwhelmingly rural. Vietnam doesn’t allow access to Facebook. Sri Lanka is recovering from war. All markets are not created equal; what works in one country is not guaranteed to work in another. For brands to understand how to best leverage mobile marketing, for example, in these emerging territories, CMOs need to familiarize themselves with the individual political and cultural nuances of each country.
For example, based on a recent survey of consumers in Kenya, we know that nearly 80 percent of consumers–regardless of age or gender–would participate in a brief survey every day in order to receive free air time. That kind of willingness to be approached by a company each day would be unthinkable to consumers in the North American market, who generally avoid telemarketing calls and in-person requests for feedback at places such as malls and supermarkets.
5. Social media is the really big opportunity.
It is a little-known fact that the highest growth in social media is expected to come from emerging markets. According to an eMarketer forecast, just more than half of social media ad revenues in 2012 will come from outside the U.S. Given Facebook, Twitter, and the like have nearly saturated the developed world, it makes sense that the next frontier of opportunity lives in emerging markets, such as Indonesia and India.
This rapid growth presents a significant opportunity for marketers. First-mover advantage will be critical to global brands, and those who are late to the party will simply be left behind. Another industry study recently found that the size of a brand’s following on social media is more likely to impress users in emerging markets. For example, consumers in Brazil, China, and India are significantly more likely to consider a brand that has a lot of “friends” or has a significant number of “likes” on a social network. When it comes to emerging markets, the more significant the presence on social media, the bigger the opportunity.
While established markets may be saturated, the global economy and developing countries present an unprecedented opportunity to reach the next billion consumers. By understanding the drivers in these markets and treating each as its own unique target market, CMOs can develop strategic campaigns to capture the attention of this untapped audience.