Developing world to throw up future brands


Today barely 14% of the world’s 6 billion-plus population lives in countries with a per capita gross national product in excess of $10,000. Ironically, most of the companies in the world have focused their efforts on this 14% alone. Changing demographics aren’t helping things either as many developed countries grapple with an ageing population, the balance will tilt in favor of developing countries like India and China which have a young consumer class.

According to Vijay Mahajan, the professor of marketing who holds the John P Harbin Centennial chair in business at the McCombs School of Business, University of Texas at Austin opines the next big opportunity lies with countries like India and China which have a young consumer class. Marketing gurus have been passionate about what they call it 86% opportunity with markets of countries like India and China. If all these countries become developed nations, there would be no issue at all. But it may not be practically possible in the next 3 or 4 decades or even more. Since 1948, not many Asian countries with the exception of Japan and very few others have been able to make this transformation.

The above facts and figures made the marketing wizards tinker with the idea of focusing on the 86% population where there is ample potential in consuming more and more products.

The question is how to focus on the 86% and the type of products to be designed for them. The solution lies with the companies themselves. They need to understand what their problems are and figure out the new pockets of opportunity.

People in the developed world have had some sort of superior complexity and a very negative impression for a long time about emerging countries. Their thinking was that emerging countries are poor nations and need help.

In practice emerging countries never resigned to the fact they are poor but the same people perceived by developed nations as having problems developed their own innovative solutions. The developing world gradually started becoming a source of innovation.

There are several examples of product innovations that came out of the developing world: be it spilt Air-conditioners or inverters. People in the West don’t even know what an inverter is Take Brazil: so many car thefts happen there that people don’t even leave their stereos inside their cars. It is not a coincidence that the best designed security vehicles comes from Brazil. Incidentally the US deployed some of these Brazilian cars in Iraq. These problems don’t even crop up in the 14% nations says Mahajan.

This century we will see a celebration of brands coming from the 86% economies. The 14% will learn how to adapt because the population is shifting. India and China are already the hub for software development catering almost 100% to the western countries including U.S and U.K. Manufacturing of Polyester yarns for textiles and Nylon Industrial yarns are now totally shifted from Europe to India and China and even getting exported to western countries. These products are now fully integrated in India itself and no imports are required of Fiber intermediaries except Caprolactam. One could not imagine in the past but now it is a reality that Petroleum products get exported from India. Reliance Petroleum refinery set up at Jamnagar, India boasts of ranking in he top 5 refineries of he world. Likewise there are several consumer brands from south east Asia which are now established in Super markets of U.S and western Europe. Machine Tools are another example of exports fro this part of Asia to developed countries. All these examples very well justify the title to this article.