Emerging Market Needs for Products

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Are needs of emerging markets truly different from developed markets? This discusses the uniqueness of emerging markets with case studies

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Emerging Market Needs for Products

  1. 1. Business Transformation<br />Globalization<br />through<br />Are needs of emerging markets truly different from developed markets?<br />VamseeTirukkala<br />Co-Founder & Managing Principal<br />Zinnov<br />Disclaimer: This presentation is solely for the use of Conference attendees, Zinnov Clients and Zinnov personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the organization without prior written approval from Zinnov <br />
  2. 2. 2<br />Emerging markets of Brazil, India, China and Russia represent 42% of the world’s population and economies are growing faster<br />Real GDP Growth in 2009<br />Consumer Expenditure<br />(US $ Trillion)<br />Debt to GDP Ratio of Economies in 2009<br /> Disposable income in emerging markets is fast catching up with developed economies and this has resulted in increased consumer spending<br />Source: Zinnov analysis of reports from World Development Indicators Database, World Bank, CIA<br />
  3. 3. 3<br />At one level the needs of both developed market and emerging markets are similar<br />Illustrative list, non exhaustive<br />Enterprise Needs<br />Macro Economic Needs<br /><ul><li>Business Growth
  4. 4. Cost Optimization
  5. 5. Total Customer Experience
  6. 6. Energy security for next 5 decades
  7. 7. Basic Infrastructure for Economic Growth
  8. 8. Communication Infrastructure for Collaborative growth</li></ul>Socio-Economic Needs<br /><ul><li>Clean water, food and shelter
  9. 9. Quality & Affordable Healthcare
  10. 10. Education & Skill Development</li></li></ul><li>4<br />However the way companies need to cater to these needs vary because of some fundamental differences that exist <br /><ul><li>Brazil, China & India have a significant bottom of the pyramid customer base and this segment requires and fundamental re-think of strategy
  11. 11. The sheer size of the nations and unique price performance expectations makes scale a key attribute in these markets.
  12. 12. Most emerging markets lack basic infrastructure like power, road infrastructure, bandwidth etc
  13. 13. The price performance expectation of these markets are dramatically different. For $6 you can buy a coffee in the US or pay for one months education of a child in India
  14. 14. Most emerging markets have a high level of regulatory interference. The rules of the game can change over night.</li></li></ul><li>5<br />Companies are adopting new strategies to be successful in these markets and reaping the benefits of the success<br />Patience<br />Innovation<br />Belief<br />Key Imperatives<br />These imperatives need to form the basis on certain strategic initiatives that have proved successful in these markets<br />Innovation for these markets can lead to disruptions in home markets- GE is doing this in Healthcare<br />Localization of Product/ Solution offering is a must- Nokia is a market leader in mobile<br />Scale is a key to success in these markets-Telecom in China and India is ideal example<br />There is a need to engage the eco-system at a holistic level- Microsoft is doing this<br />
  15. 15. 6<br />Panelists<br />Moderator: <br /><ul><li>Po Chi Wu, Co-founding Executive Director, Global Innovation Research </li></ul>Panelists:<br /><ul><li>Ajit Nazre ,Partner KPCB
  16. 16. Amit Zavery, VP of product management, Oracle Server Technologies Division
  17. 17. Christian J. van den Branden, Director Strategic Planning, EMC
  18. 18. David J. Cope , President & CEO, Purfresh
  19. 19. Sajai Krishnan, CEO, ParaScale</li></li></ul><li>7<br />These markets are full of indigenous innovators who have successfully addressed these differences through simple yet powerful innovations<br />
  20. 20. 8<br />SMS ONE-Unique SMS Driven Information Services<br />Product Highlights<br />Emerging Market Pain Point<br />Vision: Local SMS Community newsletter<br /><ul><li> On weekly basis SMSONE gives critical information. E.g., farmers get instant updates about crop pricing or news of a seed or fertilizer delivery a town away
  21. 21. Employment opportunity of the local youth who keeps USD 15 of the USD 22 and is paid USD 1 for each story earning USD 66 to 132 per month
  22. 22. Revenue is generated from ads and promotions
  23. 23. On-time and critical information doesn't reaches the villagers and rural inhabits
  24. 24. There’s no Internet access, no TV, no local paper, and frequently no electricity. </li></ul>SMSONE , is the local newsletter which makes in-time community information available to the villagers <br /><ul><li> An initiative launched in 2005 to utilize the penetration of mobile phones to use SMS as Micro-media
  25. 25. Local youths pay USD 22 to get ‘franchise’ rights to be the local reporter for a village
  26. 26. He compiles the basic information of villagers like names, mobile numbers, etc and signs them up as subscribers
  27. 27. This is passed on to Ravi Ghate who sends messages to these subscribers about basic community information </li></ul>The Innovator<br />Ravi Ghate Director<br /> <br />Product Usage<br /> Qualification : 12th Pass, IInd year Diploma Failed.<br />Innovator of the idea of Local SMS Community Newsletter <br />Similar models are being built in parts of Africa , where mobile ubiquity can play a vital role in developing communication<br />
  28. 28. 9<br />Godrej –Low cost Refrigerator- USD 69 per refrigerator<br />Emerging Market Pain Point<br />Product Highlights<br />Vision: Low Cost fridge for masses<br /><ul><li>Portable, top-opening unit weighing only 17.2 lbs, has a capacity of 30-40 liters
  29. 29. Uses high-end insulation to stay cool for hours without power and consumes half the energy used by regular refrigerators
  30. 30. Does not have a compressor, instead running on a cooling chip and a fan similar to those used in computers and can run on a battery</li></ul>Chotukoolby Godrej and Boyce, is a portable affordable refrigerator designed to meet the requirements of rural consumers<br /><ul><li> Non-availability of effective refrigeration in rural areas and access to fresh food and essential drugs
  31. 31. Entry level refrigerators in India are priced at USD 156, way above the budget of tier II, III and IV customers
  32. 32. The needs and requirements of rural consumers was a portable refrigerator
  33. 33. To be launched in 2011, touted as world’s cheapest refrigerator at USD 69 by Godrej and Boyce
  34. 34. Co-designed with village women to assure its acceptability, and distributed by members of a micro-finance group
  35. 35. The number of parts in the Chotukool refrigerator is 20, almost ten times less than other refrigerators which have more than 200 parts</li></li></ul><li>10<br />Chamak-Village Laundromat- One Machine for neighborhood<br />Product Highlights<br />Emerging Market Pain Point<br />Vision: Affordable high quality washing, drying, and ironing services<br /><ul><li> Environmentally friendly, front-loading washing machine utilizes about 40% less water than a top-loading machine
  36. 36. Unique water handling system which allows us to use the rig without having any water connection
  37. 37. Drying facility in-built which gives 100% drying 
  38. 38. Non-availability of affordable laundry service for working professionals in urban cities
  39. 39. Dependence on expensive laundry services or laundrymen who are notorious for using low-quality detergents and un-clean water
  40. 40. Non-existence of ‘launderettes’ or ‘laundromats’ in India </li></ul>Laundromat Service by VLS*, under the Chamak brand, offer laundry service from one-machine neighborhood laundry booths<br /><ul><li> Offer to wash, dry and iron clothes at only 40 cents/1 lb
  41. 41. Deliver clean ironed clothes with-in 24 hours. Alert the customer through SMS when clothes are ready
  42. 42. Chamak booths are innovatively design of be rollaway booth units (small 4ft by 4ft footprint, with self-contained water supply) allowing positioning in high demand locations and flexibility to move</li></li></ul><li>11<br />TATA Swach- Water Purifier at USD 17 per device<br />Emerging Market Pain Point<br />Vision: Low Cost water Purifier<br />Product Highlights<br /><ul><li> Complies with US Environmental Protection Agency standards
  43. 43. Has resulted in 14 patents being filed by Tata
  44. 44. Competitors - HUL's Pureit and Eureka Forbes' Aquasure, cost
  45. 45. USD 44</li></ul>Tata Swachis a portable, replaceable filter-based water purifier and requires no energy or running water to operate.<br /><ul><li> Availability of clean drinking water for masses
  46. 46. Non-availability of resources like uninterrupted electricity and running water hurdle in working of conventional water purifiers
  47. 47. In India, water-borne diseases* cause more than 1.5 times the deaths caused by AIDS and double the deaths caused by road accidents
  48. 48. Two variants priced at USD 17 and USD 22 launched in December 2009
  49. 49. Delivers safe drinking water at market price of Rs. 30, less than a dollar, per month for a family of five
  50. 50. Lifespan of 3,000 liters, enough to provide drinking water to a family of five for a year
  51. 51. Uses paddy hush ash (India produces 20 million tonnes a year) matrix bound with microscopic silver particles</li></ul>Note * Water-borne disease include diarrhea, jaundice, typhoid, cholera, polio, and gastroenteritis. <br />
  52. 52. 12<br />Aravind Eye Care- 2, 400 Eye surgeries per doctor<br />Emerging Market Pain Point<br />Vision: Low-cost surgeries for low-income segments<br />Aravind Eye Care provides high quality end-to-end eye care services to the low-income segment<br /><ul><li> Low-income segment population in India are not able to afford surgeries and are exposed to needless blindness
  53. 53. In India Government alone is not able to sustain the health needs of an ever increasing population
  54. 54. Founded in 1976, it conducts two-thirds of its surgeries free of cost, and continues to be a profitable entity
  55. 55. Have conducted 2 million surgeries, with 2.7 million patients screened per year for the surgeries in ‘eye camps’
  56. 56. Aravind does2,400 surgeries per doctor per year compared to 300 in standard Indian clinics
  57. 57. Its success lies in its end-to-end, all-inclusive business model, which operates very like an assembly-line</li></ul>Product Highlights<br /><ul><li>Aravind minimizes the demand on its Doctors’ time , who participate only in preliminary</li></ul>examination, final diagnosis, and surgery<br /><ul><li>Paraskilled professionals who are trained to do a range of clinical tasks manage the other stages</li></ul>The Visionary<br />Dr. G. Venkataswamy<br />Founder<br />
  58. 58. 13<br />Life Spring Hospitals- Child Birth at USD 35<br />Vision: Low-cost maternity care<br />Emerging Market Pain Point<br />Life Spring Hospitals is a chain of less than 20 bed hospitals providing low cost maternity care<br /><ul><li> More than 100,000 women lose their lives because of child birth complications
  59. 59. 80% of health care expenses in India is out of pocket ( not insured)</li></ul>Product Highlights<br /><ul><li> Maternity care cost are 50% lower of market rates at LifeSpring, which is focused at working poor population in slums
  60. 60. Average number of deliveries per month is equivalent to 100-110 in comparison to 15-20 in Private clinics
  61. 61. No-Frills Delivery Model. Standardized Procedures, No Canteen, Low attrition, High Volumes
  62. 62. LifeSpring charges only USD 35 for a normal delivery compared to a average prevailing market price of USD 120
  63. 63. Standard quality protocols have been developed for provision of healthcare services</li></ul>Cost of Doctor/Patient<br />LifeSpring Asset Utilization is more than 5 times that of comparable private clinics <br />
  64. 64. 14<br />About Zinnov<br />Zinnov helps organizations globalize their business and improve people strategy.  <br />Our consulting solutions are based on rigorous research techniques, data analytics and communities<br />Zinnov Research: http://www.zinnov.com/white_papers.php<br />Zinnov Blog: http://zinnov.com/blog/<br />Zinnov Services: http://zinnov.com/services.html<br />Zinnov Events: http://www.zinnov.com/zn_events.php<br />@zinnov<br />For additional details on the topic, contact info@zinnov.com<br />
  65. 65. Thank You<br />575 N. Pastoria Ave<br />Suite J<br />Sunnyvale, CA – 94085<br />Phone: +1-408-716-8432<br />21, Waterway Ave, Suite 300<br />The Woodlands, TX – 77380Phone: +1-281-362-2773<br />Vatika Business Centre,2nd Floor, Block B,1st India Place, M.G Road,Gurgaon-122002.Phone: +91-124- 4028888<br />69 "Prathiba Complex", 4th 'A' Cross, Koramangala Ind. Layout5th Block, Koramangala<br />Bangalore – 560095<br />Phone: +91-80-41127925/6<br />info@zinnov.com<br />www.zinnov.com<br />@zinnov<br />15<br />Zinnov <br />

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