According to Kenichi Ohmae, one can draw a map of the world based on the per capita GNP of the population;

• below US$5000 – more than half the household income goes into food leaving little as disposable income;
• just above that – both religion and military adventurism begin to decline and selection is based on brand rather than nationalistic feelings; and
• at US$10,000 – academic/cultural backgrounds and lifestyles all become more homogenous and consumers start to become global consumers.

Marketers, typically, focus on the $10,000 club which forms just 14% of the world population and is characterised by high brand proliferation, stiff competition and ‘over saturation’. What is not on the marketers’ radar is the 86% population – what we call the invisible global market. These potential customers are virtually ignored because of challenges of reaching them by conventional methods. To find and connect to these markets, companies need to pay attention to the following 10 insights:

1. Build products to compete against ‘bullock carts’ not automobiles
Understanding local needs is important. For example, when an Indian-Australian car manufacturer created a rural transport vehicle, it was not designed to compete with automobiles but rather to replace the bullock cart. The new vehicle needed to be able to navigate the rough, narrow roads in rural India and haul both people and cargo.

2. Export the revolution
Hindustan Lever launched low unit value, small-serve shampoos sachets that really helped increase trial and usage in rural areas and small towns. This was then not only copied by the market for other fmcg products but was also exported to Africa and Latin American countries.

3. Watch the informal economy
Estimated to be as much as half the market, this economy often competes with the formal economy but without the constraints of regulation or taxation. When one Latin American country was opened to foreign companies in the mid 1990s, small entrepreneurial companies began rebottling domestic automobile oil in containers from the US oil companies and selling them at higher prices.

4. Use global family networks
Before the Indian economy was opened to outsiders, Japanese companies advertised products in India that were not sold in India. These advertisements led local Indians to contact their relatives overseas (about 20mn) who brought these products as gifts on their next visit home. There are more than 23 million foreign born people in the US, with 7mn from Mexico alone. If they spend just $200 per year on gifts for back home, this is more than $1billion!

5. Understand that customers don’t know how to be customers
Customers in emerging markets do not behave according to marketers’ expectations. As another example, money back guarantees don’t always translate well in these markets. Amway in China told customers that if they were not satisfied, they could bring back the product, liquid soap in this case, for a full refund with no questions asked even if the bottles were empty. Some enterprising third parties began repackaging the soap and returning the empty bottles. When refunds mounted to $100,000 per day, Amway rescinded the policy, only to face angry distributors.

6. Recognise low income does not necessarily mean low quality expectations
Mercedes-Benz did not expect to sell their cars in large numbers in India. Consequently, they built a factory in 1995 to produce an older model car used for taxis in Germany. Indian consumers turned away from what was perceived as an inferior product, leaving the plant hobbling along at 10% capacity.

7. Use ‘demand pooling’ to reach critical mass
In tiny villages in Bangladesh, the market is too small and income too low to make the villages attractive for most products let alone cellular phones. Yet Grameen-Phone, a Dhaka based company, has developed a strategy for marketing cell phones to the 35,000 villages in Bangladesh. It has appointed women in the villages as agents who lease phone time to other villagers, one call at a time.

8. Bring your own infrastructure
New technology and innovative solutions help to overcome inhospitable business environments in developing markets. Coca Cola rarely has to think about electricity in the US, but it is a serious concern in the developing world. Coca Cola’s challenge is to design refrigeration systems to ensure products remain cold despite long power cuts. Other companies need battery backup systems to keep computers running despite fluctuating power.

9. Rethink the entire marketing and business strategy
Customers in emerging markets are economically and culturally diverse, even within the same country. A wealthy housewife may be influencing decision making for maids and others employed in her household, who are advised by the ‘memsahib’ on all kinds of problems and on purchases as diverse as cough medicine and detergents.
Where repair costs are high, companies need to think about the lifetime costs of ownership of major purchases such as automobiles rather than purchase price.

10. Bridge the digital divide
The digital divide may increase the gap between large companies and the invisible market. In India, for example, the penetration of PCs is only 0.5% and this technological barrier threatens to make these markets ever more invisible. Companies need to think of clever ways to offer access to the Internet infrastructure as creative entrepreneurs are already doing through kiosks and other shared methods of access..
Companies that can use the Internet creatively may find that the lower cost of reaching customers actually makes these markets more accessible.

The invisible market is growing and is the market of the future. Marketers would do well to put them on their radars.

Vijay Mahajan, Professor of marketing at the University of Texas, Austin.
Kamini Banga (the usual by line)
These are excerpts from a forthcoming book by the authors being published by Prentice Hall.
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