To grow its global business Volvo Truck has announced several initiatives including creating products for developing markets. If you find yourself planning to enter a developing market, consider the following:
- Relevant Products: In retrospect it may seem obvious, but countless times even redesigned products miss the mark when being introduced in developing countries. They might be too expensive. Other times it’s due to not understanding the relative importance of features. In a developing country extra heavy-duty packaging might be required. Go in starting with the assumption that everything you assume is wrong—then adjust from there.
- Not Enough Price Points: In developed countries, price points tend to converge over time as competitors consolidate and products become similar. That is almost never the case in developing countries. There, given the earlier stage in their economic development, a much wider range of products at vastly different prices points almost always exist. To become a significant player be prepared to overhaul your brand strategy, pricing and product lineup.
- Local Giants: Developing markets have seen an explosion of local giants—companies that got their start by mostly copying products from western companies and then offering them at lower prices. These brands have grown rapidly by providing superior value and can drive down your price points and reduce profitability. But you might be surprised on where they are going next. They are creating improved or entirely new features and are getting them to market faster than global companies. And they are starting to expand beyond their own borders—into places where you might already be operating or where you want to expand. To succeed, a market entry strategy must look at the local giants from several different angles beyond just their products and prices.
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