Despite all the changes in the international economy, emerging markets will remain critical to growth in most global industries. But such markets aren’t monolithic—companies will need a differentiated approach in each one.
GDP growth in many emerging markets will continue to outpace that of developed markets for the foreseeable future. But while the appeal of emerging markets is great, so too are the challenges that they present to even the world’s most experienced companies.
The growth prospects, consumer behavior, social and political context, and local competitive environment differ widely from one market to another, as well as among product categories. Adding to the complexity, building businesses in emerging markets often requires operating in data-dark environments, with little insight into consumer preferences or purchasing behaviors.
Boston Consulting Group’s emerging-market consultants have their fingers on the pulse of these economies, and we partner with clients to capture the opportunities that emerging markets present.
Population Growth. The combined population of emerging markets is projected to swell by about 1 billion over the coming decade, and in many countries these populations remain relatively young. Roughly half of India’s nearly 1.4 billion people are younger than age 25, for example.
The Rise of the Consumer Class. Annual household private spending in emerging markets is rising nearly three times faster than in advanced markets as hundreds of millions of households enter the middle and affluent classes. And while disposable incomes remain low by world standards, our research shows that consumer optimism and aspirations are high in most key markets.
Rapid Urbanization. More than 500 million people have moved from the countryside to urban areas in emerging markets since 2007, and this trend is continuing. This shift is fueling surging demand for services and housing, and trillions of dollars in infrastructure investment.
Digital Leapfrogging. More than 2.6 billion people in emerging markets use the internet, and consumers in many emerging markets are among the world’s most digitally savvy. Smartphone penetration is soaring, and many consumers are leaping directly from cash to digital payment.
BCG has cultivated a powerful, experienced, and well-connected presence on the ground in the world’s rising Hot Spots.
As a leader in emerging-markets consulting, we bring a global team of local-market experts. We mobilize this vast network to collaborate on critical topics including go-to-market strategies, digital ecosystems, and joint ventures in emerging markets.
Our broad expertise in emerging-market strategy consulting is supported by the BCG Center for Customer Insight, one of the world’s richest sources of data. Covering 4 billion consumers in 35 markets, CCI provides us with a nuanced understanding of evolving behavior, sentiment, spending habits, and consumption patterns.
BCG conducts proprietary research that delves into the strategies and models that drive success among leading domestic and regional competitors in emerging markets. For more than a decade, we have tracked the rise and development of “global challengers” that are becoming multinationals in their own right, rising “local challengers” such as multilatinas and African Lions that are emerging as regional players, and hard-charging, up-and-coming “local dynamos.”
Global Growth Hot Spots
Emerging markets may be divergent in their growth rates, but opportunities with higher-than-average growth rates—global growth hot spots—are still well worth pursuing.
When one of the world’s biggest steel companies ran into a crisis, it successfully launched a major change initiative—and integrated the ability to change into its DNA.
BCG collaborated with Celcom Axiata, one of Asia’s largest telecommunications companies, to create an e-wallet and lifestyle app called Boost. In less than two years, it became Malaysia’s leading cashless platform—a digital ecosystem of 17 banks and a growing list of more than 125,000 participating merchants.
BCG conducted an end-to-end customer experience transformation for a leading cinema operator in India. The team leveraged deep consumer insights to reimagine the cinema-going journey for consumers—physically and digitally—and built a top-five loyalty program with a first-in-market personalization engine.
Much of the action in the technology sector is moving to emerging markets.
The Indian connected consumer is already a very different individual (or group of individuals) than he or she was a year or two ago. And the universe of users only a few years from now will be far more varied than users today.
The ability of nations to innovate is becoming ever more critical. Digital technology and disruptive business models are transforming industry after industry, shifting economic growth to new sectors.
Winning MNCs invest in attracting and developing local talent at all levels. In addition to training, some MNCs offer programs to encourage the personal growth and long-term success of employees.
A powerful new force—the rapid adoption of digital technologies by the region's businesses and increasingly affluent consumers—is complementing government efforts to make a common market a reality.
