Recipe for Growing Sales in Emerging Electronics and High-Tech Markets

Former World Bank economist Antoine van Agtmael coined the phrase “emerging markets” in 1981 to describe business and market activity in industrializing or emerging regions of the world. More than a quarter century later, these emerging markets accounted for roughly one-half of the world’s gross domestic product. These markets are well past the point of being bold new adventures for corporate expansion. They have become key factors in whether companies can achieve high performance on a global scale.

Even though the opportunities for growth seem boundless, there are a number of core challenges for electronics and high-tech companies attempting to tap into them. To prosper, companies must deal with huge geographic areas and populations, differing eco¬nom¬ic and infrastructure capacities, and, in some cases, dramatic differences in cultures and customs.

Selling successfully to these markets requires a sales approach tailored to each market’s unique characteristics. That means it is necessary to understand: what kind of operating style to use; how to grow sales channels that help achieve high performance; how to sell to low-income customers; and how to deploy simple, standardized and global processes.

‘Personal’ over ‘process’ in operating styles
When dealing with emerging markets, the individual customer is king. Operating styles tend to be personal rather than process-driven. Therefore, to produce that extra dollar of profit, companies must be willing to supply the manpower and investment needed to bring about a “personal touch.”

In emerging markets, strong collaboration with other regional players to develop and leverage strong local networks is also essential. This means cooperating with channel collabor¬ators and suppliers, and, in many cases, working with competitors in non-competing areas. Hostile competition can be disastrous in developing markets. For example, it can create higher costs of operations resulting from the need for extra marketing and sales efforts, and exclusive infrastructures. Cooper¬ation can reduce costs and, if used efficiently, can also reduce product or service product time-to-market deliveries. These are crucial to delivering high performance.

Select the sales channels that suit each market best
It’s frequently a struggle for companies, especially in emerging markets, to find the right balance between direct and indirect routes to market. In most cases, end customers would rather receive service from a company directly than indirectly from its collaborators. Establishing some form of direct sales organization also demonstrates a company’s commitment to governments and large corporations operating within their region.

So setting up some form of direct sales force has become vital. However, directly reaching an entire market can be costly and time consuming, at least in the initial stages of business development. Given the size and dispersed nature of markets such as India and China, leveraging indirect channels emerges often as the most economical and timely way to reach a broad swath of customers.

Establishing indirect channels in emerging markets requires more than simple plug-and-play solutions. Poor infrastructure, limited channel knowledge or sophistication, disabling regulatory conditions and lack of supporting payment mechanisms are just a few challenges to developing an indirect ecosystem. To help motivate channel partners, many companies have found success by promising a particular return on investment in exchange for adherence to specific investments and processes. Companies invest in other companies they collaborate with, building relationship confidence. They do this through the following methods:

Deployment of channel-financing mechanisms to tide over poor payment cycles;

Training of channel partners through classroom programs, certifications, hands-on training and field-level deployment of global best practices; and

Investment in channel marketing support.

Managing channel collaboration requires a high level of hands-on support including deployment of additional manpower, finances and processes. To be successful, companies must be willing to invest heavily, because effective collaboration requires a steep learning curve and only proves worthwhile after several years of experience.

Find smart ways to reach low-income customers
Success in emerging markets depends on how corporations reach out to low income customers, including retail buyers and small and medium-sized businesses. This means selling products to unsophisticated buyers in geographically dispersed locations. In these situations it is key to consider specific characteristics of the customer, as well as access methods. For example, “small ticket size” or monthly payments on high-value products have proven effective. And localized, high-intensity promos, rather than sustained national advertising, have proved more effective when it comes to reaching the low-income customer.

Strive for the right mix of local and global processes
In emerging markets large transnational corporations often find it hard to strike a balance between a global and local strategy. Although there is considerable conventional wisdom that suggests local is best, a blending of the two is actually the key to efficiency and high performance. Local works best with companies. Global works best with more behind-the-scenes administra¬tive processes. Therefore, distribution channels should use a local approach, whereas “global standards” should be imple¬mented for many of the back-office procedures, sales methodologies, and supporting technologies. Efficiently combining both methods creates flexibility within the sales process. This blending also can enable companies to scale to support rapid growth as well as handle systems sufficiently robust to function in a dynamic business environment.

Electronic Business, a sister publication of EM Asia