With a lot of business areas in developed markets and industries becoming saturated, many companies are starting to look into newer product categories in emerging markets. A key driver in making this transition into emerging markets successful is implementing a diversified strategy. Companies need to be innovative in these new markets, as existing capabilities are not often in line with the wants and needs of the newer prospects.
It is never easy to enter into a new product category, as associated risks and costs can be very high. For companies to be successful in implementing new and existing products in an emerging market, being equipped to create a different perspective for each category, geography, and consumer is imperative. Each emerging market is different from the next, and as a whole they differ from markets in developed economies. Implementing products the same way across all borders is not an effective strategy.
Key aspects that make a diversified strategy effective in emerging markets include understanding buying behavior, developing a lean supply chain, having an effective distribution model, and putting a major focus on sustainable growth. Keeping these strategies in mind, while implementing new products in a new market, will help companies avoid loss and failure. It is also vital for companies to evaluate where they have gaps in the understanding of distinct segments in a product category, in order for a company’s approach to diversification to be successful.
To learn more on a particular three-phase approach to successful diversification read EY’s article: Unlocking Growth Potential in Emerging Markets: Diversification Success in Consumer Products. Also check out globalEDGE’s emerging market resources to learn more about doing business in these countries.