Guillermo D’Andrea Professor IAE Business School Web Conference October 2010 Let Emerging Consumers Guide You Into Their Markets
Guillermo D’AndreaProfessorIAE Business School
Web Conference
October 2010
Let Emerging Consumers Guide You Into Their Markets
Guillermo D’Andrea
Differences with Developed Markets
Emerging Markets
Developed Societies
Discontinuous Societies = Discontinuos Segments
Inelastic Markets
Consequence: segmented – differentiatedstrategies
Guillermo D’Andrea
Revisiting the Traditional Brand Perspective…… to an Alternative Approach
5%
25%
24%
25%
10%
11%
20%
20%
30%
10%
10%
5%
5%
70%
30%
70%
30%
Developed Markets
Emerging Markets
SkimmingThe Market
At the Middle
Guillermo D’Andrea
Access to QualityUnilever Brazil
Ala Detergent
Rio de Janeiro: Powder Promotion: Telephone CardAdvertisement: Local singer
NE: solid bar -w/scrapP.O.P. Demos
Guillermo D’Andrea
Taking From Resignation to Access
Millicom: Cellular CommunicationsParaguay
Access to Emerging Consumers:Fractionable card recharge
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Pick n Pay offers products in the traditional way, but with an aspirational vision.
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Meat stew on sale, Bara market, Soweto
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Pick n Pay offers products in the traditional way, but with an aspirational vision.
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Meat stew on sale, Bara market, Soweto
Prepped & bagged foods in Bara Pick n Pay , Soweto
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Pick n Pay offers products in the traditional way, but with an aspirational vision.
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Meat stew on sale, Bara market, Soweto
Prepped & bagged foods in Bara Pick n Pay , Soweto
Modern merchandising at Pick n Pay store in Soweto’s new mall
Guillermo D’Andrea
"Belly of the Market": Consumers of “BETTER ” & “MORE”
* Urban consumption of food and beverages inside the householdSource:Target Marketing (2007); CCRRC shopper
interviews (2007/08)
49
10
13
13
Betterfood34
More food17
Leisure
Betterclothes
Electronics
Moreclothes Other
How would you spend a 10% household income increase?
100% = 1,900 respondents in LatAm
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Building the transition from traditional to modern shopping on the outskirts of Lima
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Page 16Page 16
Disruptive Changes
Continual Crisis
Emerging markets are exposed to frequent upheavals
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Disruptive changes and frequent crisesRequiring innovative ways from companies to create value for their customers
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OPPORTUNITIES!
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TANSAŞ asks some daring questions
• Large losses in 2002
• Customers asked “What do you most hate about supermarkets?”
• Creation of "Incredible Customer Rights" statement
Return guarantee
If you are not happy with the food products you have purchased, we guarantee that we will accept your return even if the product is partially consumed
Price guarantee
In case of a differencebetween the price shown on the labeland the price recorded in the cash register, the cheaper one will be accepted
Open cashiers
In case there are queues in other cash registers due to a closed one, the closed cashier will be opened to service within 3minutes or a discount will be granted
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Results: A Strong Operational Improvement
Net salesUS$ million
948756
506318
2002 03 04 2005
CAGR+44%
134123109113
2002 03 04 2005
CAGR+6%
Sales areaThousand m2
4.6
2002
5.3
03
6.1
04
7.1
2005
CAGR+15%÷
Sales per m2
US$ thousand
172.12002
2005 240.8
+40%
Daily tickets#, average
8.42002
2005 10.7
+27%
Average ticketUS$
Values available only until 2005, since the company was acquired in the following year
and values were not disclosed anymore
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…and a significant Increase in Profitability
-9.5
2002
-9.5
03
-4.5
04
1.1
2005
"The success of Tansaş is a testimony to the loyalty of our customers. But to earn that loyalty, we had to recognize that receiving customer loyalty is about giving customers a reason to believe that Tansaş deserves their loyalty"Servet Topaloglu, CEO of Tansaş
2.23.4
4.7
7.1
Market share by category%
EBITDA
Net profit
2.5
1.6
Food andbeverages
1.7
2.6
FMCG
1.7
3.3
Homecare
2.4
3.7
Personalcare
20022005
Margins% of net revenues
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Farmacias Similares offers a practical solution:Quick and affordable medical advice and prescriptions for cheap generic drugs
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Virtual stores to reach small town and low-income communities, where consumers shop from online catalogues.
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Magazine Luiza Loja VirtualFranca Brasil
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• 300 virtual stores• An oasis in small towns and poor
neighborhoods• No physical display• Home delivery in 48 hours
Guillermo D’Andrea
The Reality of Emerging Consumers
Inelastic markets = Discontinuos Segments
They want “Better” and “More”An appealing shopping experienceTrustDignityThey Value BrandsThere’s significant rentComplex Access: rural, urban and riskyIncreasing ConnectivityAdopt technologies
Guillermo D’Andrea
The Challenge of Emerging Consumers
Design Strategies Based on Business Models that Create Value for Emerging Consumers
A Call for the Most Experienced and Skilled Business Brains
A Broad Perspective that Creates Value Combining Business with Social Responsibility
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What we’ve learned
• Actively create a vision of the future• Keep an open mind• Enrich lives through customer-
based innovation• Find the opportunities within crises