Doing Business in the Developing World’s Toughest Markets
Wednesday, August 19, 2009
The developing world is home to some of the most challenging markets for any business: Urban slums. Rural backwaters. Lawless regions and battle zones.
But hundreds of millions of potential customers live in these places, and a few pioneering companies are thriving there. Their success offers lessons on how to tap these complex environments for profits and growth.
All of these markets share certain challenges. They often lack functioning legal systems, so contracts are rarely enforceable. Theft, vandalism and physical violence are common. Skilled workers are hard to find.
The widespread poverty in these areas makes it difficult for many people to afford whatever a company is selling. Marketing is challenging because conventional advertising media like television and radio don’t reach many of the people in these environments, and more-direct approaches can be dangerous. And winning the acceptance of the people living in these communities, for companies and their products, is tricky because these societies are often a patchwork of religious, linguistic and cultural diversity.
Little wonder, then, that to succeed in the face of such challenges, companies first must recognize that traditional business strategies won’t work. Instead, companies need to find local partners familiar with the terrain, and rely on those partners to help guide their operations and develop strategies unique to each market. And to sustain a business in these environments, companies need to assert their value to their employees, partners and the broader community by supporting their development.