Global companies striving for the $30 trillion prize should start by determining where their most promising emerging-market opportunities lie, McKinsey in its latest report titled ‘winning the $30 trillion decathlon: Going for gold in emerging markets, said.
Many will need to change their current strategies, which rely on a national view to choose targets for global growth, sometimes with an overlay that emphasizes “megacities” instead, as detailed in “Unlocking the potential of emerging-market cities,” the greatest potential lies in about 400 emerging-markets “middleweight cities” whose rapid expansion is driven by the new consuming class. Understanding these cities’ distinct cultures and buying patterns can appear daunting.
But as the authors explain in “Is your emerging-market strategy local enough?” targeting city clusters can help a company find an attractive balance between localization and economies of scale. Indeed, to Zeinal Bava, CEO of Portugal Telecom (PT), “There’s no such thing as an effective countrywide strategy.” That’s particularly true for a market as large and diverse as Brazil, a country PT knows well through its investments in leading local players, and where it has looked beyond averages to find the right openings.
Within emerging-market cities, consumer behaviors are evolving rapidly. “Meet the Chinese consumer of 2020” analyzes the largest of the emerging markets, where by the end of the decade the number of midmarket “mainstream consumer” households is expected to explode, rising from fewer than 14 million now to around 167 million—or some 400 million people—by the end of the decade. At the same time, China will also have about 126 million more consumers aged 65 and over, many of them more willing to spend than today’s elderly.
Behavioral shifts are being accompanied by profound technology changes. The effects will likely be even greater in emerging markets, which have a golden opportunity to leapfrog mature economies in embracing the digital world. As noted in “Riding Asia’s digital tiger,” Internet usage is still skyrocketing across Asia, not just in India and China but even in countries where penetration rates are already comparatively high, such as Malaysia. India may have a particular opportunity, suggests a related article, “Can India lead the mobile-Internet revolution?”, provided it has sufficient commitment and cooperation from the private and public sectors. Finally, the rise of social media will have far-reaching implications for how companies engage consumers, even in places where the top developed-market platforms are virtually unknown. “Understanding social media in China” describes how companies navigating a world with no Facebook, Twitter, or YouTube can develop authentic, user-oriented content; adopt a test-and-learn approach; and support broader brand goals via sustained social-media efforts.