Winning over Emerging Consumers: the Digital Imperative

“Serve thy emerging market consumer”. This should be etched in stone on the side of every consumer products (CP) company global headquarters, considering that these markets will account for 80% of growth till 2025. Yet as EY’s recent global survey of senior executives in CP and retail shows, a mere 18% feel confident in their ability to get deep consumer insights in Emerging Markets (EMs). So how can CP companies get to know their EM consumers?

As I wrote in a post late last year, rapid advances in social listening and predictive analytics of an exponentially expanding consumer digital footprint mean that marketers today need a comprehensive digital playbook to develop consumer insight at the individual level, or as close to that as possible. They then need to use this insight to build their brands with individual consumers through carefully orchestrated usage experiences. What’s more, it is increasingly feasible not only to tailor the marketing messages to the individual (“segment of one” marketing) but even to customize the product or service to cater to the individual’s specific needs, i.e. mass customization.

Having sharp consumer insights is good, being able to act on them is a whole lot better! Alarmingly, only 4% of CP executives believe that they are able to customize their operations to consumer demand! The stark reality is that even leading CP companies are simply not set up today in EMs to develop consumer insight at the individual level, let alone being able to act on them in the way I describe above.

Meanwhile, local upstarts or startups are stealing a march. A Southeast Asian e-commerce marketplace that has recently achieved a multi-billion valuation makes for a strong example, even succeeding in markets like the Philippines and Indonesia where most of the digital consumer experience takes place over basic phones and spotty mobile networks. And where most consumers don’t even have a bank account, let alone a credit card!

Yet, it delivers a seamless consumer experience from browsing to buying: it provides a dynamic and fresh assortment, convenient payment and rapid fulfillment. It manages returns efficiently and engages shoppers well through near real-time feedback. By doing so, it has won over a wide and growing demographic of aspiring consumers.

On the supply side meanwhile, this company has recognized that sellers are often less digitally enabled in these regions, so it has invested in seller facilitation and education – online and offline – to make the seller experience as smooth as possible on its platform.

Much of this magic is enabled by what we at EY call agile innovation. For instance, this player collaborates with telecommunications companies to use innovative mobile payment solutions enabled via m-wallets. And underlying its success is a very analytically driven and flexible supply chain operation. Using a “Demand Response Network”, it embeds artificial intelligence and transparent business rules to optimize resources in real-time. In practical terms, this allows the business to read consumer demand and decide how to modify and respond to it with unique market actions, ultimately ensuring efficiency and quick delivery.

As this example shows, not only is it possible to deliver a new-age consumer experience in emerging markets, but also that businesses that really get to grips with understanding and serving their consumers individually can thrive.

This is yet to happen on a larger scale, partly because most corporate environments are too focused on cost efficiency at the expense of long-term growth, and partly due to what I call ‘relative inertia’, i.e. the phenomenon whereby EM consumer aspirations – turbo-charged by digital technologies – are changing faster than organizations can adapt to that change.

Inertia kills, however, and companies urgently need to start investing in a digital and advanced analytics playbook to optimize their consumer response. But investing in technology alone is not enough: businesses also need to invest in creating consumer-centric processes and even more importantly, in educating their people and enabling them to empower actionable insights. Cultivating these skillsets in emerging markets is far from straightforward, and developing skills in-house is time-consuming and can be hit-and-miss. If it isn’t embraced, however, bigger CP companies are going to be outmanoeuvred by start-ups and emerging market challengers that, while smaller, are also closer to their customers and hungry to take market share.

I hear from emerging market CEO’s every day that getting the right people in place to build these capabilities is their biggest challenge. I heard the same from the global CEOs at the CGF Global Summit in Cape Town recently. Yet, short-term pressures seem to continue to drive decision-making. Businesses need to build a culture that shows long-term commitment to local talent development and business development in EMs, and they need to invest real money and time in doing so. And the time to make this pivot is now.