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Buy Low, Sell High?

Category: Andy Marken's blog Published on Monday, 08 November 2010

Business Must Constantly Look to, Plan for Tomorrow

“There must be alternatives. You must have some technology that could solve our problem.” – Professor Barnhardt, The Day the Earth Stood Still, 2008

Even though a few companies have sold 10M +/- tablets and phones in the US and are slowly, painfully rolling them out in other wealthy consumer markets (Japan, North America, Europe), that’s only a drop in the proverbial consumer population bucket.
There’s are 300 million potential consumers in the US and a whopping six billion plus around the globe.

Today, the Gross Domestic Product (GDP) growth in the wealthy countries is modest (at best), and the outlook for the next 10 years isn’t overly aggressive.
The “buy low, sell high” approach – buying components, manufacturing “somewhere” at the lowest possible price and selling them for optimum profit to folks in the wealthy areas is becoming more challenging.

That’s why businesses are becoming more serious about reaching, influencing emerging economy consumers.

Almost any senior executive worth his/her huge paycheck knows it’s “the place to be,” but according to McKinsey & Company research, less than one-third of the firms have taken any steps to get involved.

Some have taken the “bold move” of developing new, lower-cost products or services for the fast-growing, middle-income consumers in countries such as China and India.  These organizations identify themselves as global firms, but aren’t quite certain how to leverage their opportunities in the economic activities between and within regions.  

Brave New World

The solution?

A completely new strategy is needed that specifically targets sales in the emerging countries where there are more potential customers.

Some will hear Mr. Wu’s (James Hong) words ringing in their ears, “I had a dangerous assignment. This is hostile territory.”

There are a number of sound reasons for the urgency of the effort, according to McKinsey:
·         Retail sales in the BRIC (Brazil, Russia, India, China) are growing 10-15 fold and middle-class is not a short-lived phenomenon
·         The population of industrialized countries is aging.
·         Asian populations comprise more than half of the people on the planet with China, India  (lands of 1 billion–plus consumers)

The economies of Asia’s big four -- China, India, Malaysia and Singapore – are the epicenters of the PC/CE/communications world.

Because they are opening up with relatively few restrictions, these consumer markets represent the largest “niche play” opportunity in the history of world commerce.

Opportunity Ranges – While emerging countries have a wide range of restrictions and free operations, the opportunities in the PC/CE/content/communications industries are relatively open for companies.  The challenge is always a consistent policy.

So why are these emerging markets so important – to all of us?

Executives across the business spectrum agree that technological innovation, consumer goods, IT are the driving forces for your business and home life.



Frankly, we’ve cried “Uncle!” because our garage is crammed with stuff and there’s no more room for more stuff.

Our neighbors are in the same boat.

It used to be that if you wanted to sell high-end (read expensive) goods you sold them to the Japanese.

But the world’s second largest consumer market is now acting like its Western peers:
·         They were hit hard by the economic downturn and their economy has been weak for about two decades.
·         They are anxious, nervous about the future and have changed their buying/saving habits.
·         The kids (in their 20s) never knew the good times and have been nicknamed hodo-hodo zuko (so-so folks) shunning corporate life and more material possessions
·         They are less inclined to pay for convenience: to “spend time to save money,” rather than “spend money to save time.”
·         They are shunning department stores for outlets that satisfy their needs beyond shopping (big-box discounters like Best Buy, Wal-Mart and large-format retailers like Costco, Ikea).

Klaatu (Keanu Reeves) told the Japanese, “You've been out of contact for a long time.”

Shop for Tomorrow

As with almost everyone on the planet, they are online and they’!


No big deal you say?

English-language television, music, film, print, social media English is presently the lingual franca. About two billion speak it – half as a second language.

Most of the “new market” consumers (their number is expected to double in the next two years) don’t speak English.

The English-speaking Internet/Web is about saturated (like you didn’t notice?) so these countries represent most of the future online growth (Google, Facebook, others may have to start suckin up!).

You and we both know ecommerce is language-based.  According to a Common Sense Advisory survey:
-          52% will only buy from Web sites in their language.
-          64% would pay more to get product information in their language (Cripes, so would we!).
-          The majority of people will shun localized Anglocentric sites for ones that accommodate their language, writing systems, conventions.

Ask Web folks and they’ll tell you that ain’t easy.  It requires:
-          Smarter data intake processes, record storage, linkages in addition to IT expertise they need cultural, linguistic expertise software, systems that adapt quickly, easily for a non-English user base.

Looking at the task, Helen Benson (Jennifer Connelly) said, “We can change. We can still turn things around.”

A foothold and expansion in the emerging markets is important because they have a growing middle class and more disposable income.  As in the more mature areas, they lust for Internet, Web-enabled devices and applications.

While there is tremendous concern over the protection of IP (intellectual property), companies are proceeding – albeit cautiously – in the fertile emerging markets.

To do it, management has to:
  • retool existing business models
  • reconfigure price/value equations (often localizing even within countries)
  • closely monitor market volatility and have plans/options in place to respond to conditions, risks
  • combine the best, smartest local resources with access to the company’s overall knowledge base
  • maintain close, continual, open communications between the headquarters and the local company

The best way to ensure failure is to come in and announce as Regina Jackson (Kathy Bates) did, “I've been sent here to determine who or what you represent and what your intentions are.”

You may not like the answer…“It would only frighten you.”

New Challenges

The key for every player in the market is people.  That means innovative approaches to sourcing talented employees, either from the global labor markets or optimizing the use of older workers.

Technology will help organizations materially reshape consumer awareness, choice.  Organizations that do the best job of tapping that technology will significantly improve their competitive advantage.

The truth is, the worst is behind us and the world is moving again.

Now companies can shift their strategic planning from crisis mode to a consideration of short-term profitability and long-term strategic issues.

The road to product success and profits isn’t a straight line.

Mr. Wu was probably referring to those who know the challenge/opportunity but do nothing when he said, “They sense it. But they can't seem to do anything about it.”

If this orb we’re on isn’t going to stand still, we might as well plug away opening new markets, new opportunities around the globe.
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