Question

Case 8.2 page 268“Targeting Emerging Markets” at the end of chapter 8 of the “Global Marketing” textbook by Gillespie, K., & Hennessey, D.

Answer the following questions:

1. Why do companies such as P&G target emerging markets? Do you agree with this strategy?
2. What are the dangers of targeting emerging markets?
3. What advice would you give P&G for engaging competitor Unilever? What advice would you give Unilever?

Answer 1

Ans 1: Big companies such as Procter & Gamble target emerging markets because they are determined to grow. Their strategy is to capture as many customers as they can. Procter & Gamble had a goal of reaching a billion more consumers by penetrating the emerging markets with the most population and development such as India and China. By doing this, they are creating a profitable future, and it worked since by doing this their net sales grew ($82.6 billion) 5% for 2011. By P&G having most of the market in developed countries, gave them a low and slow growth in the long term due to market saturation. Investing in emerging markets provides new market share, be able to capture growing markets and increase revenues. I agree with this strategy due to that it’s essential for companies to keep on growing and conquering unknown lands or unexploited markets. As a businessman and future company owner, growth means prosperity.

Ans 2: Some of the dangers that can be encountered by targeting emerging markets can be the culture difference, poor infrastructure, or even the country’s GDP. A major problem that they can come upon is not being able to acquire the consumer’s acceptance of their products. In emerging countries, the consumers have different consumption behavior. For example, in China people washcloth with cold water and some even by hand, something that the regular products made by P&G for the developed countries such as the USA and Europe are not made for. Another problem that can be encountered is the poor infrastructure inside these emerging countries. This can create problems for their logistics department due to lack of well-made roads, high levels of traffic, busy ports or airports for cargo, and poor storage services. GDP is something very important to be taken into consideration since the PPP per capita is lower in emerging countries than developed ones. Products can become too expensive for consumers if nothing is done about it. An uncontrollable danger can be if commodities go up, this would increase costs as well as the price for products provoking consumer not being able to afford them.

Ans 3: My advice for P&G is to invest in marketing research, investigate in consumer’s behavior and lifestyle. Figure out what are the accommodations of the population, how they live, and by that they can alter their products to their specific needs. I would also recommend lowering their prices, they can start by changing their package method made for developed countries that consist of bigger size packaging and reducing it. For the infrastructure issue they could make manufacturing centers, this can help them with the access to the remote area, also anticipate saturated import channels and send inventory strategically.

Now for Unilever based on their strategy of offering different brands at different price points, I would advise them to do a study of the different market segments inside emerging countries. Some of these are very undeveloped and would not have much need for products that they cannot even use. Instead of positioning all products together everywhere, they should try to spread them in more consumer-targeted criteria. Higher end and more expensive products should be targeted to more urban areas, and simple, cheap and elemental products should be targeted to the more rural areas. This of course based on how much technology limited is the population in the area.