Emerging markets represent a growing opportunity for companies that successfully adapt their business models to these economies. From a demographic perspective, the population density of these economies gives them a considerable capitalization advantage. The United States Department of Commerce considers that over 75% of the world’s expected growth over the next two decades will come from more than 130 developing countries. Considering that more than a half of the world’s population resides in emerging economies, it is estimated that they are going to double their GDP in years coming (Cateora, Gilly, Graham, and Money, 2016.)
Some of the most prominent arising economies are India, China, Brazil, Mexico, Poland, Turkey, and South Africa (Mic Forum: The Rise of the Middle Class, The World Bank, 2017.) Emerging markets are economies that despite issues such as political instability, domestic infrastructure problems, currency volatility, and limited equity opportunities represent an excellent market opportunity and high rates of return. We could define emerging markets as economies that are progressing towards becoming more mature.
According to Goldman Sachs, the estimated emerging markets growth for the coming years is expected to reach at least 5%. For example, India’s GDP per capita is expected to double in less than ten years. Emerging economies are experiencing an improvement concerning diversification of the market. Sectors such as consumer, healthcare, and technology are becoming an essential piece of the market’s structure of these countries (Mind the Gap: Emerging Markets Growth Gap Widening, 2018.) The consumer sector is especially experiencing an uptrend because 86% of the world’s millennials live in emerging market economies. Corporations face a vital investment’s opportunity, and marketers have to develop successful strategies that allow them to capitalize on this new trend.
Companies fail for many reasons, among them are: bureaucracy, arrogance, tired executive blood, poor planning, short-term investment horizons, inadequate skills and resources, and because they fail to identify new trends and opportunities (Christensen, 2016.) Companies’ success in emerging markets is determined by the marketer’s ability to assess potential needs, and the capability to offer an affordable product that addresses those needs. Learning an understanding emerging markets is essential for marketers because they represent opportunities in businesses that have not been explored before, and more drastically from the consumers’ point of view, emerging markets represent a statistical advantage since the majority of the population resides in those countries.
As Eyring (2018) pointed out, during the evaluation of opportunities in emerging economies, we have to consider the entire business structure, and this evaluation should not be focused only on the product. If we think about it, successful products are the ones that find demand in the masses because they cover an unmet need, are affordable, have high quality compared to competitors, are accessible and culturally adapted to each region (New Model for Emerging Markets, 2018.)
In conclusion, the world is moving forward, and few people are satisfied with low standards of living, which opens the door to an array of new opportunities and challenges especially in emerging economies. The cultural and economic background of our consumers may determine the level of our products’ adaptation to this modern economies. Global competition is opening opportunities, but it also requires the ability to produce quality and innovative products at affordable prices.
References
Cateora P., Gilly M., Graham J., and Money R. (2016.) International Marketing. 17th Edition. McGraw Hill.
De La Torre A. (2017.) Mic Forum: The Rise of the Middle Class, The World Bank. Retrieve from: http://www.worldbank.org/content/dam/Worldbank/document/MIC-Forum-Rise-of-the-Middle-Class-SM13.pdf
Koch K. (2018.) Mind the Gap: Emerging Markets Growth Gap Widening. Retrieve from: http://www.goldmansachs.com/our-thinking/pages/katie-koch-on-emerging-markets-and-india.html?mediaIndex=1&autoPlay=true&cid=sch-pd-google-kochemergingmarkets-searchad-20183--&mkwid=WOmoO5hE
Christensen C. (2016.) The Innovator’s Dilemma, When new technologies cause great firms to fail. Harvard Business Review Press.
Eyring M. New Model for Emerging Markets. (2018.)