Nielsen has an interesting article on finding pockets of growth.
Here are some key points and our perspective on them:
- Half of the world’s middle class population lives in Asia. So if you have products aimed at the middle class, but are not present and building your brands in Asia, you are missing out on a big opportunity. Think India, China, Indonesia, Japan, Bangladesh, Sri Lanka, Korea.
- Nielsen calls it where to grow, and how to grow. We call it ‘Where to Play’ and ‘How to Win’. These are two key elements of the strategic map we develop for the brands under our charge.
- For a brand aimed at middle class, being present in smaller format neighborhood stores is important if a significant percentage of consumers of the category shop there. A small store may be individually small, but collectively they are huge.
- The cost of servicing these stores will not be high if the right channel strategy is deployed. Such stores do not need to be serviced directly by the manufacturers.
- It is not enough for a foreign brand to be present only in large stores if a large percentage of the potential consumers of the brand shop in small stores.
- Return on investment considerations need to define how much to invest in a store. We however disagree that cherry-picking stores and spending disproportionately high is the way to go. Often such stores turn out to be unprofitable. That apart once the store is used to high level of investment, cutting that down to size is met with fierce resistance.
- We agree that frequently turning to price promotions for a quick win may not be the right strategy. As Nielsen mentions in the article a staggering 67% of promotions do not break even.
Let Omicus help you with your international expansion through brand building in Asia and the rest of the world.