SYDNEY: Emerging Asian nations will account for around a quarter of global consumer products markets by 2016 and brands will have to develop localisation strategies to take the fullest advantage, a new study has said.
Ernst & Young, the global accountancy company, canvassed the opinion of 276 Asia-based senior executives of leading consumer products companies and retailers in eight markets and found that 69% thought emerging markets would be the main driver of growth and profit over the next three years, reported Inside Retail Asia.
Kristina Rogers, global consumer products emerging markets leader at Ernst & Young, said that these markets would also account for 37% of total consumer products growth.
She noted that those global businesses looking for growth in the region were finding tough competition from well-established local and multinational players.
"Global companies need to be agile and light on their feet, by putting consumer value first and foremost, in order to win over the increasingly sophisticated and demanding Asian consumer," she said.
She also suggested they would need to "adopt a highly disruptive approach to managing their business through selective localisation and above all, flawless execution".
The report outlined an approach to localisation that involved greater local autonomy, granularity, focus and agility.
Andrew Cosgrove, Ernst & Young global consumer products lead analyst, echoed this requirement.
"Global CP companies need to adopt a selectively localised portfolio approach across all the elements of the supply chain from conception to consumption," he said.
"Whilst this approach incurs higher costs in terms of time and resources, versus a universal approach, it is a price that companies must be prepared to pay in order to capture profitable growth."
Companies should also note that the concept of localisation extends beyond the national level to apply within countries as well.
A recent McKinsey study observed that consumer buying habits varied greatly across Indonesia, and said brands should consider localising products and value propositions down to the regional level.
Data sourced from Inside Retail Asia; additional content by Warc staff