International Marketers, Don’t Forget the Low End of the Market

<!--StartFragment-->

In product development we are typically working to provide more value, to add more features and functions to simplify the user experience and provide additional product value. But in many cases the task is slightly more complicated when developing products for emerging markets. In these markets the value of a person’s time is not nearly as dear as is reducing the outlay of cash for things that low priced employees can do on their own.

There is not such a strong emphasis on the efficiency of people’s time, but instead the limiting factor is often the outlay of cash. Anything that can be done in emerging markets to reduce expenditures is often the first choice when the value of human capital is so much less expensive than what we are used to in the US. Take a look at these Matrix of Key Economic Factors in the Top 20 Economic Powers - such as the average GDP per capita (this is typically the closest approximation of average annual salary) and you’ll get an idea of how much it costs to get an employee to perform a task – or on the other side of the equation, how much disposable income an average consumer may have to spend, by country.

I’ve done a great deal of market research within the US as well and I can tell you that the same operating theory is at work in companies with employees of vastly different incomes in the US as well. In companies where the environment is full of lower paid employees, management is less likely to make significant cash outlays in order to save a few minutes of time for a lower paid employee. However, at the other end of the pay scale (with doctors, or attorneys for instance) management will make great expenditures to save just a few precious minutes of an employee who may be paid $150K to $250K a year. It’s only logical that the value of an employee’s time should be balanced against the cost to the company for a certain task to be automated v. done manually. A great example of this tendency is a new phone which is targeted at emerging markets.

The Herald Tribune recently reported on the People’s Phone, which is made by Spice Limited, out of Nodia, India. “Wireless, No Flips, no Folds – Just a Phone”. The “People’s Phone” selling for just under $20 is a very simple phone with only one function sending and receiving cell phone calls. Nokia and LG are also looking into Emerging Market phones with the most basic features. However, this doesn’t mean that an emerging market product is simply a stripped down version of an American or Western European product. In many cases international markets have unique needs or preferences that can be a showstopper just as quickly as an over-feature/over priced product.

That will be the topic of another blog soon. Here’s the whole Herald Tribune article if you’re interested: Herald Tribune: "No flips, no folds - just a phone"

Know Thy Customer,

Chris Hawkes<!--EndFragment-->

Market Research Resources