Developing Business Strategies for Emerging Markets

Developing Business Strategies for Emerging Markets
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Developing Business Strategies for Emerging Markets
Modifying business models to reach customers at the base-of-the-pyramid
Firms need to modify their business models and appeal to the target audience and reach other customers at the customers of the base-of-the-pyramid. Understanding customer needs, preferences, and expectations are helpful when modifying the business models. Customers at the base of the pyramid want quality products, but the lack of financial resources limits what they can purchase. When modifying the business model, it is necessary to consider what influences purchasing decisions of the targeted customers and the company's strengths and challenges. In doing so, there will be more focus on distributing and marketing products that are right for customers, including those at the base of the pyramid. It is helpful to prioritize sustainability competence to improve sustainability and social performance in economically underdeveloped countries.
Customers at the base of the pyramid are price-sensitive, and it is necessary to introduce innovative consumer products that are affordable and reach the mass market. For instance, companies can sell products in smaller quantities and maintain low-profit margins to appeal to customers. However, the products should be close to whether the target market is as it is not enough to be price competitive as the products should be easily accessible. Considering options such as packaging and what consumers consider as value addition can help remain competitive in the target market (Reynoso & Cabrera, 2019). A well-established retail network and distribution ensure that products are accessible and services to customers at the bottom of the pyramid.
Besides selling in small sizes, it is potentially beneficial to sell products in a bundle, especially when the target market is aware of the marketed products and services. Bottom of the pyramid, customers are low-income and tend to purchase small-sized products. Larger products are more cost-effective for customers, but at the bottom of the pyramid, customers lack the financial means to buy products in bulk or large quantities. Each market has unique needs and demands, and companies should be innovative, allowing them to adapt to changing markets. As such scalable operations, inclusive channels, and creating value for the target customers are essential to remaining competitive.
Businesses should not merely focus on low prices but on the affordability of high-quality products with feasible payment options. Adding features that do not add value to the core product elements increases the costs and reduces the likelihood of the target consumers purchasing the product. Value creation has the potential to improve the needs of various stakeholders while improving profitability (Dembek et al., 2018). Competing based on price alone is not enough, and growth in product supply is associated with lower prices. Thus, modifying the business model requires considering other facts such as availability, access, and awareness with products tailored to meet the target customers' needs. Still, there is a challenge in creating new markets with loyal customers as selling to the bottom of the pyramid consumers requires appealing to a wide target market.
Reaching customers at the base of the pyramid often requires a high penetration rate since products are affordable, but the target market is wider and should be segmented. Segmenting the target market into more manageable segments will allow enterprises to focus on products that are best suited to different markets. However, segmentation should be aligned with value creation, so the target customer segments get value for their money and are more likely to be loyal. The economically underdeveloped countries have subsistence markets, and there is more focus on inclusive business and sustainable development when targeting consumers at the base of the pyramid. It is beneficial to integrate local networks and distributors after segmenting the market while also focusing on the unique needs of the sub-groups.
Companies should go beyond profit-making when marketing and selling to consumers' bottom of the pyramid by looking at ways to empower local communities. Thus, the business model should incorporate the interest of various stakeholders. Still, this is challenging as there is a lack of infrastructure and capabilities in low-income communities and countries. Creating social value will likely spur socio-economic development while also providing the target market with various consumption choices (Lashitew et al., 2021). Enhancing capability development at the local level and creating collaborative business ecosystems would also support social value creation efforts. In doing so, the business model would address social empowerment and business growth without excluding the local communities.
Considerations when choosing the type of entry mode in emerging markets
Understanding the target market is a top priority when choosing the best mode of entry into emerging markets (Zekiri & Angelova, 2011). Knowing the target market makes it easier to identify the most effective market entry strategy, considering factors such as demographics, location, and factors influencing purchasing decisions. Conducting market research helps identify factors influencing the market situation, trends, and competitors while also considering the influence of local laws and regulations on business operations. Market barriers influence competitiveness, and foreign enterprises that fail to adapt to the local conditions are less likely to thrive (Surdu et al., 2018). Distribution can be intensive, exclusive, selective, and both exclusive and selective distribution limits where the products can be sold and are ineffective when selling fast-moving products. What has worked in the developed market may fail to work in emerging markets because of local conditions, market barriers, and consumer preferences.
There are different risks and barriers in each market. Considering this before entering the emerging market is helpful in evaluating market attractiveness, including the potential for growth and supply factors. It is essential to consider the socio-political environment as political risks scare investors and can interfere with business operations, as fluctuations in the business environment linked to the market and political risks in the emerging markets further cause uncertainty and challenges in achieving the business objectives. Furthermore, the risks affect the enterprises' competitiveness and the business climate. Unwanted government interference leads to uncer...