Rajiv Goel, Global President for Havells Sylvania, argues that to succeed in emerging markets businesses need to offer a tailored service that reflects the nuances of individual markets.
Capitalising on opportunities in emerging markets is going to continue to be a key growth driver for many businesses for the foreseeable future.
With economic growth that has often defied wider global trends, growing populations within emerging markets are crying out for new products, services and infrastructure.
As a business, we believe that the first step to take when looking at emerging markets is to determine which geography is best suited for your products and services and how existing business resources can be used to support new market expansion.
In recent years, countries such as Indonesia, Turkey, Nigeria, South Africa, Mexico and Columbia have seen marked economic growth and are only expected to grow further in the years to come. With an established presence in Europe, we have taken the decision to continue focusing our 2012 growth efforts on these markets.
“Businesses need to be daring. Only by throwing everything at an emerging market can you determine what will work”
When deciding on which emerging markets to focus on, businesses will often base their decision on a lengthy evaluation of market segmentation, marketing dynamics and the competition. Whilst important, we have taken a different approach, choosing instead to break with normal business models and to focus primarily on local business practices.
Ultimately, as an Indian owned company that itself is based in an emerging market, experience tells us that you can ill afford to be too structured or inflexible. Businesses need to be daring. Only by throwing everything at an emerging market can you determine what will work; only by taking this risk will businesses create a platform on which to build and grow.
In essence, the business focus in these markets cannot be based solely on commodity items. Instead, it’s about providing value based products with price points that can be managed and tailored to each individual market.
Emerging markets are value conscious by nature, so in order to understand a market you need to understand its nuances. As such, when dealing with emerging markets, businesses need to be aware that:
- Businesses cannot function in an emerging market without extreme fluidity.
- Finding skilled and motivated staff can be a challenge – entrepreneurial employees who can develop their own business plans are paramount.
- Businesses need to be flexible and adaptable if they’re going to succeed – don’t be afraid to embrace uncertainty.
- New entrants need to be humble – accept that the company won’t always know what is right despite its size and track record.
A central component for success is to build a local mindset. This is because penetrating emerging markets often requires local expertise to understand market specific dynamics.
For example, how companies engage with distributors will vary drastically from one emerging market to another. A locally presented team comprised of local or regional hires with established offices will allow you to market your portfolio in a tailored way.
“You will be better able to attract the local and regional entrepreneurial talent required for success”
As such, entrepreneurial individuals who can develop market specific business plans will be paramount to success. Don’t forget, creativity, go-getting and the ability to think outside the box is what emerging markets are all about.
Take Angelica Valderrama for example. Initially a Services Manager in our Columbia office, Angelica showed exactly the sort of entrepreneurial spirit that we were looking for when launching our Mexican operation.
Now The General Manager of Havells Sylvania in Mexico, last year Angelica oversaw the acquisition of 150 new clients, new products accounting for 70% of total sales and the establishment of a highly competitive distribution channel.
Based on these achievements, our Mexican market growth in 2012 is forecast to more than double, from $19m to $50m.
By embedding your emerging market approach in the nuances of each individual market, as a business you will be better able to attract the local and regional entrepreneurial talent required for success.
Coupled with flexibility and a willingness to roll with the punches and to take a chance, your business will be well positioned to take advantage of growth in emerging markets.