Marketing in Emerging

Economies

Week 3

• Chattopadhyay (2012), Chapter 9 – Key takeaways

• Dr. Karen Gorissen
Where are we?

Chattopadhyay et al. (2012), The new emerging market

multinationals

Knowledge clip 1 and webinar

- Introduction
- Chapter 1

Individual assignment: knowledge clips peers (check canvas

for ‘The Best Of’)
- Chapter 2

Knowledge clip 2:
- Key takeaways, Chapter 9
Key Takeaways

Case studies show that EMNCs

Go through two challenges:

1. building global businesses and
2. building global brands.

Have 4 reasons for international expansion:

1. historical accident,
2. simply growth,
3. portfolio management, and
4. vision.

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Strengths and weaknesses of EMNCs

Strengths:
1. High quality with low cost
ü suppliers to OEMs and trade buyers, and re-labelers
ü frugal (economical) ways of doing-business
2. Good market understanding
ü developing markets’ wants (low-price and functionality)
ü requirements of tough business environments

Weaknesses:
1. usually not high-skilled R&D human talent
2. accessibility of low-cost resources not sustainable
3. no global scale or history of knowledge base
4. negative country of origin effect

4 Tata Tea Learnings: https://www.youtube.com/watch?v=2AEA1WtRK4g

Key Takeaways

The book advises aspiring EMNCs and challenger businesses

to:

While expanding internationally

1. first choose segments and then explore countries
2. fly below the radar, use limited resources to exploit low
competition and attractive markets, and then move up price
tiers

Focus on competency building (selection of which depends on four

strategies) before getting all started.
Sustainability of strategies

1. Cost Leader Strategy

o Country specific asset: Reliance on low cost
o Firm specific asset: Creative operational / business models

Easy or hard to copy?

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Sustainability of strategies

2. Knowledge Leverager
o Firm specific asset: Mastery over geographically expandable
capabilities
o Capability: Deep, historical knowledge on customers at home and a
product portfolio that best serves them

How long can this be sustained?

How long can this be sustained?

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Sustainability of strategies

3. Niche Customizer
o Firm-specific advantage in markets ‘peripheral’ to TMNCs
o More advanced capabilities e.g., outlocalize customer knowledge
and outcustomize products/services

Is this still open to attack?

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Sustainability of strategies

4. Global Brand Builder

o Main capability: gather insights and build innovations
o Developing patented and disruptive technology is easier said than done
o Acquisitions fail due to e.g., timing/resource issues, lack of growth
potential / positive brand perceptions

The key to long-term success?

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Identify the four EMNC strategies
• They follow the most difficult, long-term strategy.
• They build their name and make it distinguishable for
a narrow yet global market segment via
1. assertive innovation investments and higher new
product development rates and
2. international acquisitions to bring in the technologies,
recognition, and channels (i.e., supply chain/
distribution) they currently lack.
• This is the new class of EMNC.s by which TMNC.s are •
threatened the most.
• These EMNC.s focus on other EEs.
• They take advantage of their structures to adapt, given
their
1. own flexible manufacturing facilities and
2. own limited-budget innovation abilities, on a small
geographic scale.
• Such EMNC.s seek to reduce complexity and the need
for new knowledge by beginning with geographically
close and culturally similar consumers, who know
10 about their brands.
• These EMNCs are applying to other emerging
market environments their home-grown insights of
EE conditions and the needs and limits of poor EE
consumers.
• They meet the needs of consumers in these
markets of low-priced, functional, rugged, and
durable product and service brands with a
particular, ethnic, or regional character.
This is a relatively easy, short-term strategy.
• EMNCs like these have created large-volume
operations in their home countries by serving their
large domestic markets and doing contract
operations (i.e., OEM) over the years for overseas
buyers
• They have huge economies of scale on top of low
manufacturing and assembly labor efficiencies of
their home countries.
• The focus is on dissimilar developed markets.
Overview of lessons

For challenger businesses and aspiring EMNCs:

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How should the TMNCs compete with the EMNCs?

Exploiting TMNC Strengths and EMNC Weaknesses Learning from EMNCs

Cut costs relentlessly and across all levels of the

Strengthen the superior brand and marketing
value chain, outsourcing or relocating all value chain
capabilities and harness the power of vastly higher
elements to where they can be done at a world-class
budgets to deploy “shock-and-awe” campaigns
level but lowest cost

Focus more on emerging markets. They are fast

Deploy a brand architecture strategy that leverages
growing and in some cases are already the largest
the superior brands of TMNCs to compete against
markets in the world. They are the future of
the outlocalizing product strategy of EMNCs
business growth
Exploit superior customer and market knowledge to
Leverage frugal innovation capabilities of emerging
generate superior insights and bring superior
markets
products, services, and experiences to market
Leverage organization structure and processes to
deploy global marketing initiatives and transfer Develop a light touch in acquiring and integrating
products, insights, and learnings speedily across new businesses
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markets
 Recap

Brief overview of
- Strengths and weaknesses EMNCs
- The 4 strategies and their sustainability
- Lessons for EMNCs
- Lessons for TMNCs

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