Sandip Patil

MBA 2010

Thunderbird School of Global Management

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

Source :- The 86% Solution

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

Market Characteristic Strategies #

Markets & cultures are demanding Don’t build a car when you need a

bullock cart.

High rates of immigration to developed

world

Aim for ‘ricochet economy

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

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

Power of religion, culture and social values can

not be ignored

Products can be used beyond its scope

should be anticipated and served accordingly

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

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

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

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

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

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

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.

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

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.

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

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

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

Selling from

14% 86%

86%

Marketing To

14%

AUnilever, GM

BSamsung, Hero Honda, Tata

C DInfosys, Lenovo, TCL

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

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