Abstract
Historically, scaling for mass markets worked when emerging markets were characterized as low-cost-sourcing destinations, when commodities were the end product, and when local competition was insignificant. In the current environment, affluent middle-class sectors in emerging markets are found to have different consumption patterns, tend to be more brand-conscious, but can also be less secure in their preferences. Local competitors have bolstered their abilities to attend to these segments. Without changing mindsets, MNCs have experienced difficulties in mass merchandising strategies in emerging markets. Using illustrations and case studies, the chapter discusses inflection points that depict a shift from cost-driven to demand-enhancing competition. Instead of a logic based on mass manufacturing, attention has been directed at entering propitious market niches based on broad differentiation strategies.
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Notes
For a good reading on why firms fail in emerging markets and what can be done, see Tarun Khanna, Krishna Palepu, and Jayant Sinha, “Strategies that fit emerging markets,” Harvard Business Review, June 2005, https://hbr.org/2005/06/strategies-that-fit-emerging-markets.
For a good exposition and critique, see K. E. Meyer and Y. T. Tran, “Market penetration and acquisition strategies for emerging markets,” Long Range Planning, 2006. 39 (2): 177–197.
See Maria Letelier, Fernando Flores, and Charles Spinosa, “Developing productive customers in emerging markets,” California Management Review, Summer 2003. 45 (4): 77–103.
Jamie Anderson and Costas Markides, “Strategic innovation at the base of the pyramid,” MIT Sloan Management Review, Fall 2007. 49(1):83–88, and p. 84 in particular; also see Shankar et al., “How to Win in Emerging Markets,” 18–24.
Andrew Grove, Only the Paranoid Survive: How to Exploit the Crisis Point That Challenges Every Company (New York: Random Books, 1999).
Attributed to Christopher Buckley, “How a Revolution Becomes a Dinner Party: Stratification, Mobility, and the New Rich in Urban China.” In Culture and Privilege in Capitalist Asia. Michael Pinches, ed. (New York: Routledge, 1999). Cited by
John Osburg, Anxious Wealth: Money and Morality among China’s New Rich (Stanford: Stanford University Press, 2013), p. 127.
Li Zhang, In Search of Paradise: Middle-Class Living in a Chinese Metropolis (New York: Cornell University Press, 2010), p. 9.
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© 2015 Seung Ho Park, Gerardo R. Ungson, and Andrew Cosgrove
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Park, S.H., Ungson, G.R., Cosgrove, A. (2015). Problematique. In: Scaling the Tail: Managing Profitable Growth in Emerging Markets. Palgrave Pivot, New York. https://doi.org/10.1057/9781137538598_3
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DOI: https://doi.org/10.1057/9781137538598_3
Publisher Name: Palgrave Pivot, New York
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