Marketing in the era of Globality

Banco Central do Brasil has developed products that are simple, flexible, and accessible to target NB customers in Brazil. They offer loans with a higher number of installment payments and allow the customer to increase or postpone payments with little to no penalty. They link products directly to individual sources of income and pensions. These products now account for about half of all their personal loans.

The final challenge posed by RDEs in the era of globality is to overcome the long distances and weak infrastructure. China, India, Brazil, Argentina, Russia and South Africa account for 31% of the world’s landmass. The size issue is further exacerbated by relatively poor infrastructure. China, seen by many to have moved the fastest in building world class infrastructure, still has only 0.15 km of paved road per sq km of area compared to over 1 km in most developed countries.

In India it takes a truck 8 to 12 days to cover what it takes a train 2 days. While the penetration of organized retail is increasing rapidly, customers are still served by millions of small retailers. Winning this battle means having the mind-set and ability to manage multiple channels and multi-level channels. Fast moving consumer goods players in India directly reach nearly 1 million outlets and indirectly 5-6 million more. They have to manage not just the fast growing organised retailers, but also the grocery stores, the chemists, the road side kiosks and the village haats.

The European company, the ‘hero’ of this story, made products which catered to their core developed market customers at price points that were 100% higher than what local players in India were offering. No doubt the products were superior in terms of features and performance, but were these required for the current set of applications and customers? The second lesson learnt by this company was that even the so-called ‘mid-market’ which they found difficult to penetrate was not homogeneous.
There were customers who wanted lower price and others who wanted lower total cost of ownership. There were customers who wanted more durability and others who wanted high utilisation for shorter periods and did not care what happened to the machines after the project (where these products were used) ended. Local leaders cater to these divergent needs.

The market leaders in the era of globality will have to exploit this heterogeneity to their advantage. They have to bring new products to market very quickly, adapt them swiftly, and also create many variations on a basic theme. They will have to take more risks and tolerate a bit more failure. Goodbaby, China’s largest producer of children’s goods develops new products at the astonishing rate of one every twelve hours. Some of these are not successful but many are. Goodbaby is the global leader in their industry and is increasing its market share every year.

Most marketing spending has an impact basis that is, how much you are spending relative to your competition. So, if the competition is buying less advertising, the merchants who spend more get a greater share of exposure. Companies with enough cash to boost spending on marketing can use a bad time as a period in which to focus on gaining more market share.

On the retail side:

Retailers shouldn’t overlook the other aspects of their business, particularly service. Retailers need to go out of their way to provide friendly customer service because everybody is going to be out there screaming value. As complex as some of these adjustments might seem, retailers will adapt more quickly than in previous inflationary periods, such as during the 1970s oil shocks.

Retailers now have much more information because of bar coding and other technologies that allow them to track their goods from suppliers to the checkout line. Retailers are much more flexible and agile than they used to be. This economic slowdown is not something that one can expect to spiral out of control. There will be some new winners among the retailers who can adjust quickly.