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FEBRUARY 2015 BRIEFING
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SH INTERNATIONAL LLC


FEBRUARY 2015 BRIEFING


Designing for the emerging markets consumer
 
Dear Clients & Friends of SH International:
 
More than half of commerce now takes place in emerging markets. Can your business afford to ignore this statistic when making major strategic and operational decisions? If your company is planning on long-term sustainability and competitiveness, it no longer can. Gone are the days when sufficient planning meant just hiring someone who speaks a foreign language or two. Companies on the cutting edge do not simply hope for interest from the emerging markets, or even just plan for it. They design for it.
 
We are always on the look out for companies who have products and services well-designed (even if inadvertently) for the emerging markets consumer. The emerging markets consumer is demanding, intelligent, and extremely discerning.
 
While there are many aspects to successful design that can be real game changers for emerging markets entry, this month’s briefing will focus on logistics and pricing design considerations.
Logistics & Distribution
Emerging Markets Design Issues

Delivery of products or services to emerging markets can add incredible expense to operations and erode profit margins. Changes to logistics and distribution can help achieve sustainability and scalability. Small and medium-sized companies can tackle these issues by working with local partners or distributors, which can manage larger shipments. Large companies can also build their own warehouses or manufacturing facilities closer to their target emerging market.
 
You can also increase sustainability of logistics and distribution through creative packaging and formulation. Consider eliminating product components adding considerable weight and cost of overseas shipping, but not commensurate value to the consumer. The food & beverage sector provides many examples. For instance, baking mixes can exclude sugar, which can be part of the preparation recipe.
 
Pure Inventions, an SH International client, concentrates sixty servings of all-natural water enhancer in one two-ounce bottle. Not only is it more environmentally sustainable, but it costs far less to ship one small bottle instead of sixty bigger ones across oceans! Imagine how much less shelf-space is needed, making it more practical for retailers as well!
 

Learn more about our engagement with Pure Inventions by reading our case study.

Consider an extreme case: Internet-based educational platforms circumvent the issue of physical product delivery and provide a service in extremely high demand: a US education. TestOut, an on-line IT education platform, sees the emerging markets as key to its growth strategy, as does the on-line language education platform Rosetta Stone.
 
ICT & Software companies in general have incredible potential in emerging markets, and innovative companies like SH International client Karvy Data Management Services (see case study) are actively expanding into these markets.
Pricing
Emerging Markets Design Issues

Be hyper-conscious of the right pricing to attract your target demographic, as price sensitivity can make or break emerging markets expansion success. However, a product does not need to be the lowest-priced option to succeed in emerging markets. If your offering has unique value, there may very well be a market for it, even with premium pricing.
 
A luxury cosmetic company recently shared with us their confusion over pricing strategy for India. We counseled them that the majority of the population (~86% earn less than 15 USD a day)1 would not be accessible even at a generously reduced price point. Reduced pricing could negatively affect their global image. Furthermore, importers could inadvertently be incentivized to resell product into other countries, outside of the company’s control. We further counseled them that the affluent consumer, their real target market, would respond well to prestige pricing.
 
On the other end of the spectrum, consumer goods companies targeting the mass market need to work on very thin margins and push large volumes. They often see greater success in emerging markets by selling single-usage packets, thus lowering the absolute cost to consumers, even with a higher cost on a volume basis.
 
Pricing considerations are complex, and we do extensive work with our clients to establish viable pricing strategies.

[1] Shukla, R. (2010). How India Earns, Spends and Saves – Unmasking the Real India
Reflections from Sara 
@Haqcast

External Publications

1/24- Indian Skyline Prominent on Twitter’s Future    
Business Insider India Cites Sara on Emerging Markets Acquisition  

1/23- 5 Tips for Managing Troubled Relationships in Emerging Markets
Forum for International Trade Training, Guest Post    

Internal Publications

2/9- A Journey of a Million Steps Begins With One

2/5- Seven Tweets on the Role of Etiquette in Global Trading Success

1/29- Seven Language Learning Tips for Global Business
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ABOUT SH INTERNATIONAL LLC

We expand businesses into emerging market countries through hands-on consulting services. Half of global commerce is now conducted in emerging markets, and access to these markets defines the future prosperity of US companies.

We offer multilingual expertise with practical experience in five continents. We go beyond theoretical market analysis, operating on a results-oriented basis to open up emerging market opportunities to companies of all sizes. We leverage a proprietary network of resources, specialists and partnerships to achieve powerful results.

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Copyright © 2015 SH International LLC, All rights reserved.


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