Brand owners change models

26 January 2012

NEW YORK: Almost three-quarters of brand owners believe it is essential to heighten their presence in emerging markets, and most plan to "rethink" current business models to achieve this goal.

Accenture, the consultancy, estimated that household income in fast-growth economies would rise by over $8.5tr between 2010 and 2020, some 57% of the total global expansion on this measure in real terms.

In a bid to gauge how firms are tapping this trend, it partnered with the Economist Intelligence Unit, the research provider, to survey 588 senior executives in 85 countries, and from 22 different industries.

Overall, 73% of respondents asserted it was absolutely necessary to ramp up efforts at building market share in these nations, although many also feared it "may already be too late".

When picking target countries, 75% of the sample assessed purchasing power, 41% looked for similar business and policy environments, and 18% used groupings deployed by economic analysts, like the "BRICs" – Brazil, Russia, India and China.

Another 57% cited the need to "reassess" or "fundamentally rethink" their models and capabilities if they were to progress.

Some 71% of companies agreed that shopper segmentation within or across developing economies would be critical for success, but only 59% are paying "adequate attention" to this activity at present.

Elsewhere, 78% of the panel were trying to anticipate the arrival of competitors from other sectors and nations. In evidence of the changing landscape, 117 emerging market firms featured in the Fortune Global index in 2011, versus 47 in 2005.

Precisely 63% of corporations suggested sophisticated statistical and analytical techniques covering areas like forecasting and market sizing would be key given the absence of reliable data in numerous markets.

For 75% of interviewees, creating structures to share and scale innovations is assuming vital importance, while 72% said the same for rapidly mobilising people worldwide, standing at 62% for allocating capital.

"Many companies are holding healthy cash reserves that could be used to expand," said Mark Spelman, managing director, strategy, at Accenture. "Yet companies continue to hesitate, which could be one of the greatest risks in today's competitive environment."

Data sourced from Accenture; additional content by Warc staff