Looking for the next big opportunity to grow your business? It might just be thousands of miles away–but instantly reachable through low-cost digital technology.
Globalization has destroyed middle-class jobs in developed economies but it is also creating whole new groups of customers that U.S. businesses can serve. The action is in emerging markets, where millions of people have finally escaped grinding poverty and can now afford what is considered a middle-class lifestyle. But entrepreneurs need to figure out how to capitalize on that opportunity in order for it to create more jobs here.
Deloitte’s new Business Trends 2014 report offers a very interesting look at the growth of the middle class around the globe and other changes that have picked up seismic energy in recent years. Every entrepreneur needs to be aware of them, because they affect virtually every business. The findings are based on interviews in November with 423 executives at firms in a variety of industries and revenue sizes who do business in North America, Europe, Asia and South America. (Unlike many reports that I get, it’s very well written and worth reading in its entirety if you’re working on business strategy).
Make this the year that you think about how to make the most of these key trends to find new customers and insulate your business from complete dependence on any one market. We all need to diversify in a more global world–and the time to do it is right now if you want the first mover advantage.
The middle class is growing exponentially. This is happening very rapidly in Asia, Africa and Latin America. As the report notes, there will be 3.2 billion middle class consumers across the planet by 202o. That’s six years from now! In 2009, there were only 1.8 billion middle class consumers. One reason is that people in emerging markets are increasingly getting college degrees.
If your business depends on marketing to consumers, the best growth opportunities may be in these distant markets. You’ll have to be creative in breaking into them, though. As the report points out, middle class consumers in emerging markets tend to be younger and less affluent than counterparts in developed economies–and they are very diverse. The old strategy of looking at them as being the same as consumers in developed economies–but just “late adopters” of products already released in richer nations–hasn’t held up well. Yet customizing a product to every distant market may not be cost-effective, either, Deloitte notes. The solution is probably somewhere in between.
Trying to do business in a far-away market is obviously trickier than, say, expanding your business from Boston to New York. You don’t necessarily have to go it alone, though. Leaders in emerging markets collaborate more frequently with other businesses than those in developed markets do. Two-thirds of emerging market leaders expect to increase such arrangements, Deloitte found. In developed markets, only one-half of leaders plan to do so. How do you pull this off? I have seen some U.S. businesses piggyback on a big client’s expansion into a new country by serving them there. That can lead to other business.
Cities are more important than ever. As the report points out, we’re now experiencing the largest wave of urbanization ever. Many of the people moving to cities live in Asia and Africa. Established hubs such as Shanghai and Mumbai are important, but most of the growth will take place in smaller cities, with a population of less than one million people, according to Deloitte’s research.
If you want to venture into these markets, it’s important to visit them, said Eamonn Kelly, director of Deloitte Consulting LLP, in an interview we did last week. “We all have to get out a bit more,” Kelly says . “It’s hard to understand what’s happening in so-called emerging markets until you’ve spent time there.”
Kelly says that virtual reality technology is likely to make overseas communication even easier than tools like Skype in the future. That will level the playing field somewhat for small firms without giant travel budgets. “This will feel like truly meeting a person when 5,000 miles away,” he says. “That will be a very democratizing force, in terms of small business.”
Don’t blow off social media. We all know it can be a time suck, but if used strategically, it can really help to expand the reach of a small firm. Deloitte found that in emerging markets, 69 percent of leaders say their firms deploy social business technologies, compared with 40 percent of their counterparts in developed economies. Emerging-market leaders rely more heavily on social media for spotting customers’ needs, with 66% reporting they do so, vs. 46% of developed-market leaders. ”I would have probably expected developed-economy companies to be more aggressive in that arena,” says Kelly. “It proved to be the opposite.”
Many of the world’s new middle class consumers use mobile phones now. “That access has democratized the value and benefits of connective technology,” says Kelly. If you want to reach them, take a cue from business leaders in emerging markets and ramp up your efforts to use social media. It’s the easiest step to take toward going global.
This entry passed through the Full-Text RSS service — if this is your content and you’re reading it on someone else’s site, please read the FAQ at fivefilters.org/content-only/faq.php#publishers.
Powered by WPeMatico