When it comes to global markets, the spotlight often falls on well-established economies like the United States or the European Union. However, emerging markets are becoming increasingly hard to ignore. With burgeoning populations and rapidly evolving consumer behaviors, these markets offer a goldmine of opportunities.
But there’s a deceptive illusion that prevents a lot of business leaders from realizing the advantages of their own market: Stereotypes and anecdotal perceptions of market potential often deter companies from developing their business in their own country. Instead, they seek larger markets where they believe people are more apt to spend more.
In this post, we’ll explore the obstacles that businesses face and the opportunities they’re leaving on the table by solely chasing foreign markets. By the end, you should have a better awareness of the gains that can be had by tapping into your own market focus.
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The Perception Gap: Are Emerging Markets a Risky Bet?
There’s a prevailing notion that consumers in emerging markets are less willing to part with their hard-earned money compared to their counterparts in more affluent Western countries.
An “emerging market” is an economics term to describe a country that has some characteristics of a developed market but does not yet meet all the standards to be classified as such. Countries like Brazil, Russia, India, China and South Africa are typical examples of emerging markets.
These markets are typically in the process of moving towards becoming more advanced, usually by means of rapid growth and industrialization, so keep in mind that the classification can change over time.
This perception often acts as a deterrent for businesses contemplating expansion into these global markets. The underlying assumption is that the return on investment ROI will be low, making the venture less appealing.
Contrary to this popular belief, consumers in emerging markets are indeed spending money, and they’re doing so in a manner that defies the stereotypes. The spending isn’t limited to just one sector; it’s spread across a variety of industries, such as:
- technology
- healthcare
- consumer goods and services
This line of thinking suggests that the consumer base in these markets is not only large but also diverse, offering multiple avenues for businesses to explore and invest in.
Taking India and Pakistan as examples, the spending habits in these countries often mirror those observed in Western markets like California. Consumers in India and Pakistan are willing to spend on a wide range of products, from luxury items like high-end electronics and designer clothing, to everyday necessities such as groceries and household items.
CNBC even projected that India is positioned to take the #3 slot for the largest consumer market by 2027 — by this year, the market is expected to grow to over $615 billion:
Small Businesses: The Unsung Heroes
A common misconception that often circulates is the idea that consumers in emerging markets are primarily inclined to spend on well-known, big brands while overlooking small businesses and local entrepreneurs.
This belief stems from the assumption that established brands offer a sense of reliability and quality assurance that smaller businesses can’t provide. However, this viewpoint doesn’t capture the full picture and tends to underestimate the role and impact of small businesses in these markets.
Data and real-world observations paint a different story, one where small businesses serve as the lifeblood of local economies, often creating upward of 70% of jobs in emerging markets.
These SME businesses attract a diverse customer base that goes beyond just the local population:
They cater to people from various socio-economic backgrounds, age groups, and even tourists or business travelers. This diversity not only enriches the business landscape, but also provides these small enterprises with a level of stability and resilience.
Why the Market Focus Should Shift
Focusing solely on established markets comes with its own set of drawbacks, the most significant being the likelihood of missing out on untapped opportunities in emerging markets.
These markets often have enormous populations and rapidly growing middle classes, making them ripe for investment. Ignoring these markets could mean missing out on the chance to establish a strong brand presence early on, which can have long-term benefits.
Being one of the first brands in your industry to penetrate an emerging market can offer unparalleled advantages.
It provides the opportunity to position your brand as a pioneer, a household name that sets the standard for others to follow.
This early market entry can lead to brand loyalty and recognition, creating a strong customer base that will continue to choose your brand as the market matures. In essence, early investment in emerging markets can solidify your brand’s reputation and set the stage for long-term success as a staple of your industry in a particular market.
Investment experts agree that emerging markets are poised to make a comeback in the coming decade after a stagnant period. While established markets like China have been the go-to for growth in the past, the focus is shifting.
Emerging markets offer a unique blend of youthful demographics, technological advancements, and a burgeoning consumer base that is increasingly becoming more sophisticated.
A Word of Advice: Timing Is Everything
For businesses contemplating entering these markets, the time is now. Whether you’re a small entrepreneur or a large corporation, the opportunities are abundant. The keys to new market penetration are:
- Understanding the market dynamics of the region you’re considering: Naturally, there’s more risk involved with investing in unknowns about a specific economy. But that’s why you have to make calculated decisions based on trends that you see with that specific country or region.
- Adapting your business model to meet the needs of the local consumers: You may find that your business is ripe for potential growth if it adjusts its product or service strategy to accommodate the growing needs of a particular market. McDonald’s tackled this by offering featured menu items that cater to the tastes and desires of a particular culture, like McSpaghetti in Philippines!
- Shedding any preconceived notions you may have about these markets: The biggest hurdle to jump over for sure is getting over the assumptions you might have that a specific country or area is, by default, ineligible for your brand’s expansion. While it’s always wise to use tact and discernment when evaluating which markets you should enter, you should assess the growth potential of these seemingly underwhelming areas. Your specific vertical also plays a big part in this, as certain industries will develop faster or slower in some regions of the world as opposed to others.
Last Thoughts on Establishing Market Focus for Your Brand
Your market focus ought to be deliberate and careful. Beyond expanding into markets that seem obvious now, look deeper into how up-and-coming countries are gaining momentum. The perception that these markets are not lucrative is not just outdated; it’s fundamentally flawed.
In overlooking these markets, businesses are missing out on a chance to be part of something transformative.
So, the next time you’re thinking about market expansion, remember: the world is much bigger than the established markets, and the emerging markets are ready to rise!
If you’re ready to expand globally, overcome market saturation challenges, and drive sustainable growth, Single Grain’s growth strategy experts can help!👇
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