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Article

Of note: Buy local (or not)

Of note: Buy local (or not)

How can multinationals or local companies succeed in the future? Winning brands pick their area of focus, and they stay the course.

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Article

Of note: Buy local (or not)
en
Vijay Vishwanath
Vijay Vishwanath
Leader, Global Consumer Products practice

Step into a store in a developing market—either a traditional or modern trade in an urban or a rural area—and you will find yourself in a battleground between local and multinational brands, whose products sit side by side on the shelf. For decades, in markets like India, China, Indonesia, Nigeria, Brazil and Turkey, multinationals relied on brands they had introduced years before, with little innovation and only modest marketing. But consumer goods spending started rising dramatically in these countries, just as home-market growth slowed. And multinationals upped their efforts, innovating at the right price points, investing in distribution and using marketing muscle to aggressively win over consumers. In Brazil, for example, Gillette offered consumers quality disposable razors at affordable prices and then created a ladder of products for consumers to trade up. In India, Cadbury’s strategy to grow the chocolate category included linking the treats to the Indian tradition of giving sweets to mark auspicious beginnings or new life events.

Just as multinationals gained more ground in the developing world, domestic companies relied more heavily on the weapons in their own arsenal—everything from superior knowledge of local tastes to established distribution networks to better government relations. And in some cases, they gained a boost by using a variant of the popular “buy local” mantra. In Nigeria, CHI Limited is the undisputed leader in the fruit juice category, in part because of its successful “My Chivita, My Country” campaign, which reminds consumers that its products are Nigerian. Havaianas in Brazil, Dabur in India and Tingyi noodles in China all created highly competitive and valuable local brands.

How can multinationals or local companies succeed in the future? Some will prosper by investing to develop the consumer insights that result in innovation that grows household penetration, and others will thrive by focusing on “hero” SKUs to win the war in the store. Successful brands will shun the temptation to alter their message every year or two, focusing instead on building memory structures. Whatever the approach, the battle among brands in developing markets will escalate as incomes continue to rise. Winning requires careful attention to the key components for growth, spelled out in the brief “Taking the mystery out of developing market brand growth.” Among the many lessons we’ve learned working with hundreds of companies on their brand-growth strategy, in places as diverse as Poland and Peru: There’s always ample room on developing market shelves for companies of any origin, but winning brands pick their areas of focus, and they stay the course.

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