The hottest small strategy wins the big market

2022-07-30
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The "small" strategy wins the big market

the developed world is regarded as a land full of opportunities. Immigrants have come to this promised land, and the company has devoted all its resources to serve these people. Developed regions have highly developed infrastructure and high income, which has always been the most concerned market for many companies

now, this part of the market is shrinking. Of the more than 6billion people in the world, only 14% live in countries with a per capita GNP of more than US $10000. The remaining 86 per cent of the population are either very poor or live in very remote places and are generally considered unimportant. However, this view is increasingly challenged by reality. Take a look at the opportunities in developing regional markets. How can the company turn these opportunities into success

in development, there are many opportunities

opportunity 1: the demand of the market and culture is getting higher and higher. Although companies may try to supply second-rate products to the markets in developing regions, consumers in these regions can not be perfunctory. They expect to exchange their limited cash for the highest value. At the same time, products and services must adapt to local culture and traditions, and these requirements may be very different from those in developed regions. In Islamic countries where women are forbidden to show their faces, how can they peddle jewelry and clothing? In an area that only eats halal food, how to promote food and beauty products

by adapting to different cultures, harsh environments and demanding cost performance requirements of consumers, the company can make breakthrough innovative designs in the products and services it provides. These schemes are not so much like traditional cars as "ox carts" equipped with motors. From meeting the requirements of halal food to providing Islamic banking services and telecommunications services to the resort of Mecca, the company has access to the Muslim market, where consumers account for one fifth of the market in developing regions. How do you change or create products and services to adapt to local conditions in developing regions

opportunity 2: the market is highly segmented. The market in developing regions is highly segmented, and several national brands occupy a leading position in the market. The success of MTV and HSBC is due to their localization of global brands in each market. Brand strategy and product portfolio need to vary according to the actual economic conditions of the market segment

by developing or purchasing strong local brands and localizing global brands, the company can penetrate into regional communities and use global brands to win the local market

opportunity 3: the population is young and growing rapidly. While Japan, Europe and the United States are worried about pensions and population aging, the population of developing countries is still very young. Moreover, their youth market is just beginning. The population under the age of 14 in the United States only accounts for 21% of the total population in the country. 1. It is easy to lift and install the experimental machine or heavy parts and components, while it is 3 in India. 3% can be seen from the damaged low carbon steel specimens, 29% in Brazil and 33% in Iran. Most of the world's population growth has occurred in developing countries

the young population has created a variety of market opportunities, including education, games, entertainment, clothing, fast food, coffee, fashion, books and magazines, beauty products, music and other products and services. Despite the impact of globalization on young people, young people in developing regions are very different from those in developed countries. Companies need to understand the impact of their regional traditions. Thinking from the perspective of young people, the company can break into the burgeoning young people's market. How can you position and provide products and services to make a considerable impact in these young markets

opportunity 4: limited income and space. In developed areas, customers are willing to pay more for convenience. In developing countries, customers prefer to buy small commodities for various reasons. Their accommodation is smaller, so furniture and other products need to be adjusted accordingly. By providing small package products, providing small payments, utilizing demand pooling and providing space saving products, the company can build a multi billion dollar market step by step

opportunity 5: weak infrastructure. The majority of the population in this 86% market live in rural areas where there is no access to motor vehicles, where there is a lack of clean sanitation and adequate electricity. At the same time, the expansion of the city is very fast, and the rapid urbanization process has brought great pressure to the urban infrastructure. Weak infrastructure presents opportunities for companies engaged in water purification systems, generators, reverse converters and other products. This also provides opportunities for companies that can find ways to deal with infrastructure vulnerabilities. For example, cooked food companies can provide products that do not need refrigeration to deal with the problem of insufficient power

opportunity 6: imperfect distribution channels. Distribution systems in developing countries are often weak. In large cities, distribution is often done through narrow shops, such as paanwalla in India, tiendas de la Esquinas in Mexico and Sari Sari shops in the Philippines. By establishing distribution channels or using existing special systems in developing regions, the company can find ways to deliver goods to customers to cater to the dispersed and highly segmented markets in developing regions

small strategy, great success

it is precisely because 86% of the markets have the above characteristics that companies often need to adopt market strategies different from those in developed countries. Some "small" strategies can achieve great success

strategy 1: buy and use small packages. Even if sometimes consumers can afford larger packages of goods, the lack of resources determines that most people are willing to tightly cover their pockets. For example, consumers in some developing countries are reluctant to fill up their tanks when refuelling, even if they have enough money. The money in their pockets is much more flexible than the fuel in their tanks. The same applies when buying a bottle of shampoo or a box of soap. Why should we keep the precious resources in the warehouse

residents in developing countries prefer to buy and use as they go rather than hoard goods in small storerooms. Small packaging allows them to buy only the amount they need, and buy small commodities several times instead of large commodities at one time. Who would like to put an extra large box of detergent in the precious storage space of a crowded room? In this environment, the "buy one get one free" strategy is not so effective. Where can consumers put the second box? On the contrary, the storage room is filled according to the needs, so small commodities have great advantages, although it is not economical in terms of cost. Because there is no spare space in the small refrigerator, or there is no refrigerator at home, consumers often do not buy goods in advance, unless they foresee inflation or material shortage in the market soon

not only household products benefit from small packaging. Cemex has become one of the world's leading cement and concrete manufacturers because of its strategy of selling small packages of cement to household users. Small packaging makes it possible to build modular residential buildings with limited budgets. In Mexico, low-income people usually spend 4 years to build a room, which costs a total of $1500. They usually need a bag of 110 pounds of cement at a time, which takes 13 years to complete a 4-bedroom house. Cemex launched the "patrimonio Hoy" project to meet the needs of these low-income customers, help them save money (through community-based savings institutions), and provide advice on how to save time and cost. In just three years, the project has tripled the amount of cement purchased by low-income builders, and more than 13000 Mexican families have participated in the project

strategy 2: use micro payment. Magazine Luiza has become the third largest retailer in Brazil. Its successful strategy is to win poor customers. 80% of the sales of these retail stores are realized through credit purchase, providing small instalments for low-income customers. Goods are priced at the amount of each payment, not the total price. This may seem a bit risky, but in fact, the loan default rate of magazine Luiza customers is very low, about 50% lower than the average default rate of all retailers in Brazil. Moreover, every time a customer walks into a store to pay for a loan, they can see discounted supplies, furniture or other goods

in order to penetrate more remote rural areas, magazine Luiza has established a virtual store. In fact, these stores are exhibition halls with multiple computers, which can purchase the company's goods and ensure that the orders are delivered within 48 hours. The cost of building such a store is 15% of the investment of an ordinary store. The virtual store also provides education and banking services. Through micro payment, magazine Luiza has leapt from a small department store chain to a retail giant

similarly, the Indonesian retailer Ramayana LESTARI Sentosa has achieved success by attracting low-income rural customers. Casas Bahia, a Brazilian retailer, became the largest non food retailer in Brazil, and then completed the non-contact detection of objects according to the change of attenuation. In 2004, its 440 stores sold furniture, household goods and appliances worth 88billion reais (US $2.9 billion) based on small payments from low-income customers

banks are also gradually realizing that low-income borrowers can become an important source of profits. Citigroup, through its Banamex branch in Mexico, has extended its banking business to rural and low-income areas in Mexico, where only one in five people holds a bank account. Citigroup found that only 12% of purchases in Mexico were made with credit cards and debit cards, while in the United States, more than half were made with credit cards. In order to change this model, the company is working with the business owners in Mexico to arrange to pay employees' wages with a salary card, which is a prepaid card that can be used on ATM like a debit card, and can also be used to buy things. In this way, the expansion of Citigroup has been realized with the opening of wage cards and the opening of rural bank windows

strategy 3: combine products to save space. The narrow living environment needs creative home design to make the space appear larger and keep a kind of privacy in the crowded apartment. At the same time, the limited space also creates a market for saving local household appliances and furniture. This is why many middle-class Indians like to buy Korean Samsung brand refrigerators. Seoul, South Korea, has a population density of more than 4000 people per square kilometer. Samsung has long designed electrical appliances for small apartments in Seoul, and has learned how to adapt electrical appliances to the narrow living environment. In addition, the narrow living environment also means that people will spend more time in shops or other public places

due to space constraints, companies can often combine multiple uses in a single product. Microsoft has developed an entertainment system that combines TV, computer, DVD player and stereo system. Although the system was originally designed for consumers in developed countries who are struggling to control too many remote controls, this product will also be very attractive in developing countries because it can greatly save space

many other combinations may not be like Microsoft Entertainment

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