let emerging consumers guide you into their …. between the . ... fmcg. 1.7. 3.3. homecare. 2.4....

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


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


Access to QualityUnilever Brazil

Ala Detergent

Rio de Janeiro: Powder Promotion: Telephone CardAdvertisement: Local singer

NE: solid bar -w/scrapP.O.P. Demos


Taking From Resignation to Access

Millicom: Cellular CommunicationsParaguay

Access to Emerging Consumers:Fractionable card recharge

http://en.wikipedia.org/wiki/Image:Tigo.JPG

Companies are shaping the future by creating a compelling vision

Page 6

Serving the underserved

Pick n Pay offers products in the traditional way, but with an aspirational vision.

Page 8

Meat stew on sale, Bara market, Soweto


Page 9


Prepped & bagged foods in Bara Pick n Pay , Soweto


Page 10


Prepped & bagged foods in Bara Pick n Pay , Soweto

Modern merchandising at Pick n Pay store in Soweto’s new mall


"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

Transition from street selling to modern retail

In the store, Boxer, Durban

On the street

Emerging consumers rapidly adapting to the modern world

Building the transition from traditional to modern shopping on the outskirts of Lima

Page 14

Disruptive Changes

Continual Crisis

Emerging markets are exposed to frequent upheavals

Disruptive changes and frequent crisesRequiring innovative ways from companies to create value for their customers

Page 17

OPPORTUNITIES!

Turkey 2002 Hyperinflation: Challenge: How can we help customers cope?

Page 18

Result:2010 – Customers from all segments still trust BIM to always have the lowest prices

Also in Turkey, TANSAŞ navigated the same crisis. Different solution. Similar result

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

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

…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

Farmacias Similares offers a practical solution:Quick and affordable medical advice and prescriptions for cheap generic drugs

Page 24

Virtual stores to reach small town and low-income communities, where consumers shop from online catalogues.

Page 25

Magazine Luiza Loja VirtualFranca Brasil

• 300 virtual stores• An oasis in small towns and poor

neighborhoods• No physical display• Home delivery in 48 hours

Brides get “Royal” treatment on their wedding day

Free hair styling in the store


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


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

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

Thank you!

Guillermo D’AndreaProfessorIAE Business School

Web Conference

October 2010

Let Emerging Consumers Guide You Into Their Markets

let emerging consumers guide you into their …. between the . ... fmcg. 1.7. 3.3. homecare. 2.4....

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