Are You Thinking BIG Enough? New Rules For Success In Emerging Markets (Part 2 Of 3) 

Last week, I talked about how the rules for entering emerging markets are changing, and that there are three simple rules to help you achieve success by reaching the lucrative market of new customers that will propel your business to the next level. Rule #1 was Don't export your domestic model. Today, I'll discuss the second rule...

Rule #2: Think Bigger Than Big

Bad math is another common practice misguiding companies' emerging market strategies. Many companies mistakenly assume that emerging markets are a pathway to exponential growth, where "opportunity" equals "product times population" and "cost savings" are a given thanks to the significant difference in labor and materials costs.

It's easy to understand why companies are tempted to think big when deciding to enter an emerging market. India and China alone are home to a third of the world's population - that's billions of potential workers and consumers. However, all these big numbers don't necessarily add up in practice. There is no easy pathway to billions of new consumers, and there is no guarantee that low operational costs can be easily obtained.

Companies should shift their big thinking away from the end results and focus it on planning. Success depends on how extensively a company develops a solid, evidence-based plan for tackling an emerging market. If a company is looking for customers, it should first determine the true extent of the opportunity and understand existing price structures in the market.

Going forward may require significant product development, a new view of who target customers are, who the competitors are and how the company projects profitability. A solid emerging markets strategy must also include a comprehensive assessment of government regulations and incentives, talent development, capital investments, supplier sourcing and distribution logistics.

The next step is for a company to reassess whether a specific emerging market is still promising and, if so, what level of investment is required to reach the company's business goals. From here, a company can begin to plan and build its presence in the market.

Stay tuned for the final post discussing rule 3. Visit our site for more information on how to grow your business in emerging markets.

-Harsh Koppula, Managing Partner