Marketing In Emerging Markets Essay

Topics: Marketing, BRIC, Middle class Pages: 8 (2312 words) Published: March 14, 2015
“Superior marketing in emerging market is all about tapping into the most affluent tier of customers in emerging-market-cities such as Delhi, Shanghai, Rio de Janerio and Moscow.” By
TONG KAR HEI JENNY
More than 20,000 multinationals which are operating in emerging markets nowadays. [1] They spend a huge sum of budget in the emerging markets marketing campaigns to raise the brand awareness and to boost the sales. The trend is expected to continue to thrive for the coming decades due to the expanding consumption of the people in various emerging markets, including the most well known countries BRICS and other emerging and potential economies just like the Philippines, Turkey etc. According to the Mckinsey report, the annual consumption in emerging markets will reach $30 trillion in 2025, which is the biggest growth opportunity in the history of capitalism. [2] Therefore, it is sensible that companies to be aggressive to capture the emerging markets through different marketing means including the traditional advertising as well as other social media platforms.

Someone say that marketing in emerging market is all about tapping into the most affluent tier of customers in emerging-market-cities such as Shanghai, Rio de Janerio and it can lead to the success of the whole company in the development in emerging markets. However, this idea is unjustifiable and the marketing should also focus on lower tier cities such as Tianjin, Hanoi and Ahmedabad. Three reasons with diverse real life examples will be given to explain why it is also significant to have marketing in lower tier cities and to target the lower customer segments. They will be discussed in the following paragraphs in the perspective of market size and growth, level of competition as well as customer needs.

First and foremost, the GDP growth in lower tier cities especially the second tier ones is fast. It means they consume more with the growth of GDP. Second tier emerging market cities are the fastest growing economies in the world right now. Thirteen second tier emerging cities in Vietnam, India and China are projected to experience growth by 10-12% year-on-year. They include Tianjin (12.9%), Dalian (12.7%), Chengdu (11.7%), Suzhou (10.5%), Hanoi (10.2%) and Ahmedabad (10.1%). Their growth rates exceed those of first tier emerging market cities and developed cities like Beijing (9.4%), Delhi (8.9%), Mumbai (8.4%), Hong Kong (4.9%) and New York (2.4%). [3] Under this circumstance, multinationals want to expand the business to these fast growing emerging market cities and they carry lots of marketing campaigns and efforts. Starbucks has over 500 stores in China. John Culver, the head of China and Asia Pacific, points out that Starbucks will be present in more than 70 Chinese cities in 2015. Most importantly, he cited and admitted that expansion into smaller cities is “most definitely” a viable way to grow and he is even planning to open stores in tier three and four cities. [4] Hence, we can see that the high growth rate of GDP in the lower tier cities can lead to the increase in the market size of companies due to the surge in the disposable income and consumption of the citizens and it definitely provides a huge opportunity for the corporations to have marketing and distribution in those cities. Besides Starbucks, insurance companies are also tapping into the lower tier cities in emerging markets. As lower segment customers have increased purchasing power parity, Manulife is now tapping into the second and third tier cities in Indonesia. They mainly promote driving insurance there. The next generation of the middle class, which is projected to grow to 135 million by 2030, will be more geographically dispersed across second and third tier cities outside Java. Therefore, companies see lower tier cities as a huge selling market and opportunity. [5]

Besides gaining benefits form the high growth rate in GDP and increased consumption, marketing the lower tier...

References: [1] Matthew EyringMark W. JohnsonHari Nair. 2011. New Business Models in Emerging Markets. [ONLINE] Available at: https://hbr.org/2011/01/new-business-models-in-emerging-markets. [Accessed 01 December 14].
[2] McKinsey&Company, McKinsey&Company, 2012. Winning the $30 trillion decathlon. McKinsey and Company report, 1, 47.
[3] Deloitte, Deloitte, 2011. Securing the next level for growth Second Tier Emerging Markets. Deloitte, 1, 4-6.
[4] Bloomberg News
[5] Hubbis. 2014. Driving insurance growth in Indonesia. [ONLINE] Available at: http://www.hubbis.com/articles.php?aid=1415078661. [Accessed 02 December 14].
[6] Deloitte, Deloitte, 2011. Securing the next level for growth Second Tier Emerging Markets. Deloitte, 1, 4.
[10] Martin Rapaport. 2012. Chow Tai Fook: The Inside Story. [ONLINE] Available at: http://www.diamonds.net/Magazine/Article.aspx?ArticleID=39992&RDRIssueID=90. [Accessed 01 December 14].
[12] Adobomagazine. 2011. Tier 5 cities overtaking tier 1 in China Internet consumption. [ONLINE] Available at: http://www.adobomagazine.com/tier-5-cities-overtaking-tier-1-china-internet-consumption-0. [Accessed 30 November 14].
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