Emerging Market Growth Expectations High; Misconceptions, Disappointments Linger: Deloitte

News provided by

Nov 01, 2011, 09:05 ET

NEW YORK, Nov. 1, 2011 /PRNewswire/ -- The focus on emerging markets to fuel growth continues to intensify but success has been mixed, according to a new Deloitte survey. While many companies generated revenues from emerging markets in the past year, 31 percent report that revenues from them fell short of goals during the same period.

"There is no 'one-size-fits-all' solution for companies looking to achieve success in emerging markets," said David N. Martin, principal, Deloitte Consulting LLP and U.S. emerging market growth strategies leader. "Consumers in emerging markets are increasingly sophisticated--they know if a product or service is simply a cheaper version with inferior attributes. Offering a lower-priced product or service matters in emerging markets, but it requires customer insight and corporate ability to address unique hurdles in each of those markets."

The primary challenges to increasing revenues in emerging markets, according to respondents doing business in emerging markets are:

Providing products and services at affordable prices that meet customer needs (43 percent)
Competition from local businesses (40 percent)
Brand awareness in the market (40 percent)
Navigating protectionist policies and government bureaucracy (39 percent)

"Introducing a new product that responds to customer needs while educating customers and their governments about the offering is complex," said Simon McLain, also with the Deloitte emerging market growth strategies practice. "To increase the likelihood of long-term success, executives should customize their strategies to meet the specific demands of each country, even regions within a country. It's time to stop focusing on emerging markets as a group and start focusing on specific countries individually."

Companies surveyed with current emerging markets operations say successful strategies to generate revenues include:

Using local sales/service support centers (62 percent)
Employing company-owned sales and/or distribution (60 percent)
Designing products/services specifically for the country or region (60 percent)
Offering a different value proposition for customers/consumers (59 percent)
Employing a company-owned supply chain (56 percent)

"Putting operations on the ground where you plan to expand and learning the regulatory and cultural nuances of each country will help you serve your customers better," continued Martin. "Emerging market success is typically greatly compromised when companies don't focus on those crucial steps to market entry."

To see the research report, visit www.deloitte.com/us/emergingmarketgrowthsurvey.

About the Survey

Deloitte conducted the survey to gain greater insight into the strategies companies are using to grow sales revenues and the key issues they face in emerging markets. The online survey was completed by 628 executives from companies headquartered in 34 countries.

Participating executives in the survey include corporate CEOs (32 percent), other C-suite executives (16 percent) and directors (20 percent), among others. Participating companies are headquartered in Asia (36 percent), Europe (30 percent) or the U.S. (20 percent) and Canada (5 percent). Among participating companies 62 percent generated revenues in emerging markets compared to 38 percent which did not. Annual revenues among participating companies ranged up to $500 million (57 percent), $500 million to $1 billion (10 percent), $1-$5 billion (16 percent) and over $5 billion (17 percent).

Industries represented in the survey included manufacturing (38 percent), technology, media and telecommunications (18 percent), financial services (13 percent) and energy and resources (8 percent).

As used in this document, "Deloitte" means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.