I found myself geeking out reading this McKinsey Quarterly article and wanted to share its insights and conclusions with y’all.
Full article here. Nothing ground-breaking, but great anecdotes, mini-case studies, and big-picture thinking. Particularly like Coca-Cola’s “picture of success”.
I’ve also clipped to my public Evernote notebook (where I share every online article that I read and highlight).
Here are the 10 main points with supporting excerpts. Enjoy!
#1. Target urban growth clusters
Walmart opened first store in Rogers, Kansas and actively avoided highly competitive metropolitan markets
#2. Anticipate moments of explosive growth
While refrigerators and washing machines are often lumped together as white goods, consumption data show that in Beijing, purchases of the former start to take off at annual incomes of $2,500 a year and slow above $6,000, while the take-up for the latter doesn’t begin until incomes approach $10,000 a year
#3. Devise segmentation strategies for local relevance and global scale
A careful segmentation strategy helped Frito-Lay capture more than 40 percent of the Indian branded-snacks market. The company tailored global products, such as Lays and Cheetos, to local tastes. Frito-Lay also created Kurkure, a cross between traditional Indian-style street food and Western-style potato chips that represented a new category in India and is now being sold in other countries. Critical to Kurkure’s success: attractive pricing and combining local feel with scalable international packaging.
#4. Radically redeploy resources for the long term
Emerging-market companies are built for speed. They are designed to serve the rapidly changing needs of middle-class consumers in their home markets and other emerging societies. They know that they must innovate or die. It helps too that these upstarts aren’t burdened by legacy issues
#5. Innovate to deliver value across the price spectrum
For rural customers, China’s Haier makes extra-durable washing machines that can wash vegetables as well as clothes, and refrigerators with protective metal plates and bite-proof wiring to ward off mice. The company is no less ingenious in developing products for urban users, such as smaller washing machines and refrigerators designed for tiny, cramped apartments
#6. Build brands that resonate and inspire trust
emerging consumers are novice shoppers for whom buying a car, a television, or even a box of diapers may be a first-time experience
Our research indicates that Chinese consumers, for example, consider an average of three brands and end up purchasing one of them about 60 percent of the time. In the United States and Europe, by contrast, consumers consider at least four brands and end up selecting one from their initial consideration sets only 30 to 40 percent of the time
#7. Control the route to market
Coca-Cola, long active throughout the developing world, goes to great lengths in those markets to analyze the range of retail outlets, identify the highest-priority stores, and understand differences in service requirements by outlet type. For each category of outlet, Coca-Cola generates a “picture of success”—a detailed description of what the outlet should look like and how Coke products should be placed, displayed, promoted, and priced
#8. Organize today for the markets of tomorrow
IBM, for instance, radically revamped its functions in Asia, moving human resources to Manila, accounts receivable to Shanghai, accounting to Kuala Lumpur, procurement to Shenzhen, and customer service to Brisbane
#9. Turbocharge the drive for emerging-market talent
In China, barely two million local managers have the managerial and English-language capabilities multinationals need. A recent McKinsey survey found that senior managers working for the China divisions of multinational firms switch companies at a rate of 30 to 40 percent a year—five times the global average. Increasingly, local stars prefer working for local employers that can offer them more senior roles. In 2006, the top-ten ideal employers in China included only two locals— China Mobile and Bank of China—among the well-known global names. By 2010, seven of the top ten were Chinese firms.
#10. Lock in the support of key stakeholders
Amway’s success in China illustrates the benefits of effective stakeholder management. In the early 2000s, the US-based direct-sales giant was almost declared an illegal business in China for violating a 1998 ban on direct selling. Amway’s senior executives made numerous visits to Beijing to get to know senior leaders and explain the company’s business model. The company also demonstrated its commitment to China by opening stores countrywide, while investing more than $200 million in China-based manufacturing and R&D centers. In 2006, the Chinese government reshaped the regulation of direct sales. Today Amway is China’s second-largest consumer product business