Erik van Vulpen

Many companies are banking on emerging economies for future growth. There is a lot of potential, but the key to unlock that may be different than you think. A new balance between western thinking and “emerging economy” thinking is required. We debunk some of the myths about emerging economies:

Emerging economies – Lower sophistication

When you read this, probably you will think “I am not like that, I don’t think emerging economies are less sophisticated”. But be honest with yourself: don’t you deep down think you know things better, coming from a developed world? Well, if you work in FMCG, check your own company against this: Does your company have a fully automated wireless distribution and sales force solution, enabling to see at any time from your desk who is making transactions where? Can you check stocks up until individual outlet level and SKU from behind your desk in the office, real time? Tigo Sri Lanka – a leading Telco provider with 2 million plus subscribers, operating under mother company Millicom – has developed this on its own account.

Emerging economies – Bad Advertising

Just as the Cannes film festival is representing more and more countries (40 countries including Egypt and Tunisia this year), good advertising is no longer the monopoly of western

countries. Still, much of the advertising work in developing countries meets with some disdain on an international stage, why is that?

The key to good advertising is to recognise local consumption drivers, the ad literacy level and drama language of the local market. 80% or more of content enjoyed in emerging Asian economies (music, TV) is still local, so why take western materials as a benchmark? Keep basic principles such as a clear idea, a focused customer benefit, message relevance and relevant drama, but definitely lose some of the other “high brow” conventions.

Heineken used to look at countries in terms of “ad-literacy levels” and make advertising in line with that. If you look at Guinness advertising in Africa, you’ll miss the cleverness it has in European countries. That’s because that kind of cleverness doesn’t motivate African drinkers to drink Guinness. Even in a first world country like Singapore, Guinness has associations with

Chinese herbal traditions among the older consumers: Guinness makes you “heaty” – some times understood as “horny”. While Guinness is building its international premium position, it wouldn’t be wise to tap into this insight. However, using the same approach as in Europe surely would fail to connect too.

Isn’t there room for improvement? Sure, practice and being coached makes the master and that’s most of time what advertising talent in emerging economies crave: good accounts that provide practising ground and coaching to hone their skills. How many international agencies are really developing local talent, rather than counting on western expertise?

Emerging economies – No brand building

Business growth in emerging economies has largely been driven by 3 factors: low cost/efficient manufacturing, high technology development (IT and electronics) and, in Asia, through service standards (tourism, airlines). Marketing and branding have recently become board issues, but those have not been the key success factor of most of these companies.

Brand concepts and vocabulary are less ingrained in the system and industry in emerging economies. While in Europe – and especially the UK – brand vocabulary probably comprises enough words to fill a good size dictionary, in emerging economies, that awareness and nuanced understanding hasn’t been developed yet. The question is: Aren’t Europeans over-intellectualising the whole matter? Don’t they love this intellectual challenge of filling in a good brand key or other brand frameworks, aren’t many consultancies thriving on providing even more intellectual brains to help fill in the blanks of these strategic frameworks?

At Tigo Sri Lanka, we know that our Net Promoter Score is the highest in the market.

We also know that this is due to refusing to give direct price cuts, but instead basing our pricing on principles such as “Pay only for what you use” and “The longer you are with the network, the more bonus you receive”. Despite competitors either following Tigo or attacking Tigo, through persistence “Per second billing” has become a top brand association, thanks to the CEO who understands the value of brand principles.

One more example of a common sense brand strategy developed in an emerging economy: People who have lived in Eastern Europe and former Yugoslavia will know the brand Vegeta.

It is a seasoning mix, many kids in Poland, Hungary and especially home country Croatia have grown up with, now sold in more than 40 countries. Being plagued by cheap look-alikes, we worked with the management to expand the mono product/mono brand into various product variants. Even if those variants wouldn’t be all profitable by themselves, they would increase visibility and brand leadership. It was common sense brand strategy, which however did take some courage. Compare it for example with Heineken launching a “light” version. They have deliberated quite some time over launching a “light” version, before launching it successfully in the USA.

In one consultancy, we used to speak of the “communication prism”. Using the brand prism as metaphor, we would evaluate choices in brand positioning and strategy on their implications for the business and vice versa look at business actions to see how we would communicate it or impact the brand. In emerging economies, all words tend to be evaluated more directly on their potential for action and business impact. What matters is a direct link between action, business impact and brand principles. And, most importantly, senior level understanding of that. Isn’t that more important than having the whole brand vocabulary at ones disposal?

The challenge going forward for many telcos – and most other companies for that matter – is to differentiate without using price as a major competitive factor. In Sri Lanka, we have recently launched a giant customer care initiative to improve our already strong perception of customer service. Because customer service ranked high in importance and because opportunities to differentiate are limited, it was the most likely to influence our Net Promoter Score. This initiative does not provide the whole solution: challenges are posed for marketing and the sales force who now need to acquire new subscribers , without being able to play price.

Even though more and more non-western brands are showing the way up, and top-management is more and more seeing the need of following brand principles to drive business profitability, this is a game that certainly has been tested more in western markets.

Emerging economies: talent and motivation?

Looking at the growth of many emerging economies, one would expect a ready eagerness to learn and change. If as an expat, that’s your expectation when walking into a new company in an emerging economy, you may be in for a surprise. Firstly: Following from my first point, emerging economies are not emerging economies because they lack access to knowledge or tools. Much of the latest knowledge and tools are already tested and adopted. Secondly: Climbing up the ladder in a emerging economy, isn’t the same as climbing the ladder in a western economy. Staff that have made it have made it through even tougher competition, they have learned lessons of more volatile and brutal market conditions, they have most probably weathered fiercer storms. “Change” may at this point of their career not be on the top of their priority list. In Europe marketers are sometimes accused of jumping on the latest trend; in emerging economies it takes a clear, more convincing, more substantiated approach to achieve change.

A new balance between the “sophisticated” West and “pragmatic” emerging economies will evolve. Because in the end what matters most, is talent, education and experience. If you have an opportunity to work in an emerging market, you’ll find the following: double the ambition to do better, double the motivation to obtain a better life, double the pride of success, double the competitiveness and, double the effort employees put in additional education such as MBAs. If you just add some experience to that, you have a better idea of why emerging economies will be the growth engines of the future.

Erik van Vulpen works at Tigo Sri Lanka. He has worked in Singapore at Asia Pacific Breweries, in Pan Asia for Samsung/Cheil Communications and across Eastern Europe as a consultant based in Amsterdam.

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