How to win emerging consumer markets

What must global consumer businesses do in emerging countries that is radically different? How should consumer goods multinationals target the right markets? What sort of business model is needed for emerging markets, and how does it differ from the model to which multinationals are accustomed? What strategies and organizations work most effectively in countries such as Indonesia, Brazil, India and China?
The most important lessons for what it takes to build a large and profitable presence in emerging markets can be summarized in five rules:
1. Reach the masses: Manage affordability
Structuring their product lines for the emerging-market consumer requires that multinationals challenge their product development process and investments.Reaching the masses frequently means that consumer goods companies need to rethink their product lines with a sharp eye on the price/performance equation. In India, Unilever was ambushed by a local detergent maker, Nirma, that captured a substantial portion of the market with a low-cost alternative to Unilever's premium brands.
2. Be ubiquitous: Invest in distribution
Distribution is one of the most challenging problems for consumer-products businesses in emerging markets. While supermarket and hypermarket retailers are increasingly present in major capital cities, consumers living on the peripheries of these cities and in the countryside continue to purchase the large majority of goods through local shops.
Interestingly, despite the limited financial means of the emerging market consumer, branding could well be more important in these markets than it is in markets such as the United States or Western Europe. In part, this is due to the aspirational attraction that strong brands have for lower-income consumers, particularly in "badge" categories.
4. Play to win: Pick your fights well
Multinationals must play to win in the emerging markets. Too many companies fool around in the high end of these markets and remain timid about investment. Rather than shielding these companies from losses, this flag-planting strategy only exacerbates them.
5. Be local: Foster emerging-market entrepreneurs
The extreme volatility and unconventional business methods in emerging markets require different management skills than are needed in mature, Western markets. For emerging market managers, raging inflation, currency swings, new taxes, continually changing business regulations and interest-rate instability are all part of the normal macroeconomic environment.