Entries in emerging markets (7)


Accelerating the next billion

Many tech startups and their corporate venturing partners or incubators focus on hitting it big within the hot consumer markets – U.S., Europe and China – aiming to be the next Unicorn or the next big target. Google, on the other hand, is using its accelerator program, Launchpad, to tap into the preferences and pain points of its next target market – the next billion (emerging markets like India, Brazil and Indonesia, which house the next billion people that will be coming online). It’s no secret that Google sees great potential within emerging markets, and is pulling out all the stops to make sure it does it right.

Speaking to the Financial Times, entrepreneurs from emerging markets worldwide offer up a few of the lessons they’re teaching their mentor Google when it comes to making progress – and importantly, an impact – within this digitally evolving group of emerging market consumers who are often hindered by spotty internet connectivity and low-bandwidth.

For example, FT points out, many Western developers make the assumption that online billing features are needed, when in reality this group of consumers doesn’t have widespread access to credit cards. Or, as Jorge Abraham Soto Moreno, the co-founder and CTO of Miroculus points out, regional regulations that restrict certain functions of an app are often taken for granted by Western developers, such as Brazil’s restrictions to house health data on the cloud. Cultural preferences should be considered when developing technology for emerging market consumers, such as India’s and China’s preference for a “crowded style of user interface.”

Lessons aren’t one sided at Launchpad, with emerging market participants learning of the benefits certain Western developments offer, such as live chat features and the possibilities made available through artificial intelligence and machine learning. Ultimately, Google has tapped into an opportunity to better bridge intel from all areas of the world, helping drive greater success opportunities for emerging market startups, while also gleaning insights into what drives the next billion and their quest for digital.

-- Clara Shen


Microsoft, social enterprise and last-mile innovation

Microsoft is providing seed capital for 12 social enterprises through its Affordable Access Initiative, a program that aims to leverage last-mile innovation in emerging markets.

According to initiative's director, Paul Garnett, the idea is to support low-cost, practical, high-impact, and scalable approaches by empowering local entrepreneurs with funding and access to peer resources. They're designed to increase connectivity for the 60% of humanity who are outside the digital loop. According to Garnett, local entrepreneurs not only understand local needs, they have the expertise to create new technologies and business models to meet market conditions.

Video source: Microsoft

-- Catalysts


Best management practices for reaching, acquiring and retaining rural customers

As a follow on to our last post, How CPG Companies Overcome Challenges to Reach Thriving Rural Markets, which discusses how certain companies are successfully overcoming challenges to reach consumers in rural markets of emerging economies, we want to highlight the management practices these companies have in common.

According to the authors of this Harvard Business Review article, all of who are with Accenture, companies that are successful in reaching, acquiring and retaining rural customers tend to encompass the following organizational and management practices:

The authors point out that reaching rural customers alone is not enough for a company to thrive in these markets. Rather, to be successful, companies must implement transformational strategies and, they must act quickly to secure a first-mover advantage.

Image source: Harvard Business Review

-- Jia Yan Toh


How CPG companies overcome challenges to reach thriving rural markets

This recent Harvard Business Review article points out that despite a slowdown in urban demand for consumer products, rural markets are growing faster than ever in some of the world's largest emerging economies, spurred by rising wages that are helping grow the middle class in these areas.

India, in particular, is seeing this trend play out. Between 2009 and 2012, spending by India's rural residents eclipsed that of its urban counterparts by about 25%, and according to Neilson projections, consumption in rural areas is growing 1.5 times faster in urban areas.

Not only is spending increasing in these markets, but rural consumers are increasingly buying branded products, and more-expensive goods are replacing entry-level versions.

The authors, all with Accenture, undertook a study to better understand the challenges that businesses face in these markets and determined a set of market leaders who are being innovative in their approach to gaining rural market share. They found:

What sets these organizations apart is their superior understanding of how to forge viable distribution paths into the countryside, identify profitable new customer segments, earn the loyalty of channel partners and create durable ties with customers to build a strong first-mover advantage.

Rural market leaders are forgoing traditional distributors, instead relying on smaller-scale subsidiaries who carry a narrower assortment of products tailored toward local tastes. Rather than using distributors, they are using vans as a way to get products to retailers directly, and retailers are using mobile technology to order appropriate stock levels for their local customers. For micro-markets, where there are no paved roads for vans, companies are innovating by using two- or three-wheelers to deliver goods to retail kiosks. Some companies are adopting the village entrepreneurship model as a way to distribute to these remote markets; partnering with, and in some cases establishing, independent businesses that are run by locals.

One of the biggest success factors, however, is a company's ability to establish trust among its rural customers. The authors suggest that in most cases, rural markets differ from more transactional urban ones, and they demand strategies that integrate companies within a region's social fabric. Successful firms are engaging with community members to build a reputation for caring about customers, beyond just trying to grow profits.

Taking an innovative, collaborative approach to the way companies reach these consumers can help not only a company's bottom line, but also help social efforts in these regions as well.

-- Jia Yan Toh


Emerging trends enriching lives in developing regions

There are some notable trends emerging in developing regions around the world that we find to be very interesting. Residents in these areas are making use of available technology to help enrich their lives and improve their standard of living.

One of the most notable trends is the use of scalable solar panels, as is explored in this recent Re/code article. While these areas are seeing a major uptake in the use of mobile phones and Wi-Fi, one thing that is missing is the ability to power these technological advancements. In a short period of time, there has been an explosion in the use of solar panels in these regions, so much so that Re/code article author Steven Sinofsky, a Board Partner at Andreessen Horowitz, believes solar power, combined with large-scale batteries, will become the energy grid in developing markets, perhaps even in the near future.

Sinofsky explains:

Solar will prove enormously useful and beneficial and require effectively zero-dollar investments in infrastructure to dramatically improve lives.

Image Source: Re/codeWith China investing heavily in solar technology, they are creating more choice and lowering prices for these products. This, paired with the abundance of trade between China and Africa, is creating an upsurge in the use of this technology in developing regions. This is just the beginning of this notable trend. As more battery-operated appliances hit the marketplace and the cost of solar panels continue to trend downward, the use of solar power will only increase.

Another emerging trend, explored in this recent article in The Guardian, is the use of eLearning in these areas. Virtual learning is opening up educational opportunities for residents that weren't available before. According to Microsoft co-founder Bill Gates:

Cheaper smartphones and tablets, advances in software and better network coverage will revolutionize the way children in developing countries learn over the next 15 years.

Bakary Diallo, rector of The African Virtual University (AVU), an intergovernmental organization that has used virtual learning to train 43,000 students since its creation in 1997, says these online classes can address some of the bigger challenges facing the continent:

In Africa, the need for education is so important. Poverty, violence, extremism – I think the root of these problems is lack of education.

In 2014, AVU announced 29 new distance learning centres for students to take part in and said it is considering plans to make lectures accessible on mobile phones.

As technology continues to reach developing areas around the world, residents are taking advantage and are making a strong effort to improve their living standards.

What other trends are you seeing emerge in these regions?

-- Jia Yan Toh