The document discusses strategies for companies to succeed in developing markets, which represent 86% of the world's population. It notes opportunities for growth in these large emerging economies. Some key points made include: developing tailored, durable, low-cost products through innovation; educating customers with different behaviors; leveraging social/cultural values; targeting the young population; designing for limited space and infrastructure constraints; and evolving offerings as these rapidly changing markets develop.

1. Sandip Patil
MBA 2010
Thunderbird School of Global Management

2.  86% of world population in developing countries
◦ GNP less than 10k USD
 Companies mainly focus on rest of 14% affluent
population
 Tremendous opportunities in developing nations
 The high revenue growth is possible in
86% population of developing countries

3. Source :- The 86% Solution

4.  High growth rate of these markets helps top line
growth
 Local companies are heating up the market with
competition
 Steady growth of consumer class
 Stagnation in 14% world
 It would be wrong to wait till developing countries
become developed
 Opportunities within diverse segments

5. Market Characteristic Strategies #
Markets & cultures are demanding Don’t build a car when you need a
bullock cart.
High rates of immigration to developed Aim for ‘ricochet economy
world
Fragmented markets Connect brands to market
Young and growing population Think young
Limited income and space Grow big by thinking small
Weak infrastructure Bring your own infrastructure
Underdeveloped technology Look for leapfrog
Weak distribution channels Take markets to people
Rapidly changing markets Develop with markets

6.  Tailored products suitable for local conditions
 Highly durable and low cost
 Innovation is key in product offerings
 Educate the customers against the lack of consumer
behavior

7.  Power of religion, culture and social values can
not be ignored
 Products can be used beyond its scope
 should be anticipated and served accordingly

8.  High % of immigrants from developing countries to
developed countries creates opportunities
 Immigrants have strong social network back home
 Strategies to be developed to reach immigrants
 Connections of social networks are the key
 Synergies exist in flow of information, money and
travel
 IT and new technologies are vital for success

9.  Developing countries have fragmented markets
◦ Creates local brands along with global brands
 Global brand should be made local to establish the
market presence
 Acquiring local brand can give a head start
 While promoting global brand, local sentiments
should be considered
 Brand awareness in rural areas is highly
recommended

10.  Developing world has large younger population.
◦ More than 40% population is under 30 which is core consumer
class
 Products and services shall be designed for youth
 This age group has local as well global taste
 It is important to see what are their influences and
decision making powers
 Changing role of women will be important in future

11.  86% world has space constraints for home and business
 Products need to be designed to fit in limited space
◦ Required to reach broader market
 Small installments and payment options will attract more
customers
 Package the product for just-in-time pantry
 Higher the volume of customers more the profit
 Providing combination of products to suit the space
availability

12.  Developing world lack basic infrastructure
◦ It’s contrast with few rapidly growing cities
 Many areas have infrastructure challenges
◦ water, electricity, roads, telephone, sanitation etc.
 Infrastructure weaknesses create opportunities to fill
the gap.
◦ poor roads need robust design of engines

13.  Strategies to work around solution are required
◦ Overcoming the weakness with product design
◦ Radios without batteries or Ready to eat meals
 It’s required to build our own infrastructure
◦ McDonald's, Tata create own supply chain infrastructure
 Use of available technology creatively can reduce the
challenges

14.  86% world is not growing along with technology
 This provides opportunities to use most advanced
technologies
◦ E.g. instead of basic landline telephones, cell phones
have prospered in developing world.

15.  Adoption of latest technology is very rapid in
developing world
◦ can be used to sell products and services
 Use of technology to reduce cost
 Pooling of resources to use latest technology
◦ Telephone booths, internet Kiosks

16.  Due to existing voids, it is not easy to get
customer out and reach our services.
 Therefore, strategies to reach the customers need
to be developed
 This opens the scope of new value points on
supply chain
 Developing world consists of small shops which
hold key to reach the customers.

17.  Local partners bring the understanding of local
markets
 Multi-level marketing, direct to home, seasonal
festivals are some of ways to take products to
customers
 Use of existing transportation system to create
‘dabbawallahs’ in supply chain

18.  Developing markets are moving target so it is
necessary to evolve along with markets
 Observing the patterns of change
◦ will help to see how products can be improved
 Comparison of evolution of technologies
◦ To predict the life cycle of product
 Sharing the success amongst different developing
markets

19.  Exporting the successful products from emerging
countries to developed markets
 changing the product offerings to suit the current
market conditions
 Importing the customers from developed world
◦ low cost products and services
◦ Medical tourism

20. Selling from
14% 86%
A B
86%
Unilever Samsung, Hero Honda,
, GM Tata
Marketing To
14% C D
Infosys, Lenovo, TCL

21.  It will be too late to wait for these economies to
develop
 The time is right
 Products suitable to local conditions will be
required
 Local, social and religious perspectives will be
important
 Evolving along with markets as they grow

23.  The 86 Percent Solution: How to Succeed in
the Biggest Market Opportunity of the Next
50 Yearsby Vijay Mahajan, Kamini
Banga, Robert Gunther