Consumer Behavior Consumer Behavior in in

Developing and Emerging MarketsDeveloping and Emerging Markets

Sabrina FruehaufEric JohnsonDan Kopelow

References• 2011 COLLOQUY Cross-Cultural Loyalty Study

– Sponsored by Epsilon & LoyaltyOne– The study revealed stark contrasts in optimism between:

• Three developed nations (U.S., Canada and Australia) • Three emerging markets (India, China and Brazil)

• Organized Retail Comes of Age in India– McKinsey & Company

• How Half the World Shops: Apparel in Brazil, China, and India– McKinsey & Company

Consumers in emerging markets respond differently to new brands and

product opportunities than do their counterparts in developed nations.

FACTFACT

Outline• One size does not fit all• Developed vs. emerging markets• In depth: The emerging Indian market• In depth: The Brazilian apparel market

One size does not fit all

• "Consumer sentiment is incredibly important bellwether. While there are many imminent concerns for business on the horizon, corporations, especially those that are banking on loyalty for growth, would be wise to heed two strong prevailing themes: Success in North America requires a rewrite of the rules of engagement, and emerging markets will not be won with a one-size-fits-all mentality."

- LoyaltyOne President Bryan Pearson

• Colloquy Managing Director Kelly Hlavinka

One size does not fit all

• "There is vast loyalty opportunity to evolve how we engage customers in the developed markets. We've also uncovered a strong desire for special services & privileges in the emerging markets. Marketers would be well served to understand these trends and deploy strategies to capitalize on them.”

- Colloquy Managing Director Kelly Hlavinka

Developed vs. Emerging Markets

• Foreign vs. domestic brands– Preference– Chinese statistics• Foreign trustworthiness• Likeliness to be favorable about foreign competition

• Category management implication

Developed vs. Emerging Markets

• Credit card usage: BRIC Countries vs. USA/Canada

• Category management implication

Developed vs. Emerging Markets

• Privacy Concerns: Brazil USA China

• Category management implication– New credit card systems will have to be installed– Potential issues getting consumers to subscribe to

loyalty programs

Developed vs. Emerging Markets

• Brand loyalty

• Category management implication– Marketing strategies need to be oriented towards this word of mouth

means of information distribution

• Canadian and American opinions on loyalty– Only 12% of Americans and 10% of Canadians strongly agree that it

pays to be loyal to your favorite brands

The emerging Indian market

$450 billion retail market by 2015 ( = Italy)

$450 billion retail market by 2015 ( = Italy)

300 million shoppers300 million shoppers

Add $3-4 billions in GDP of five years

Add $3-4 billions in GDP of five years

Lower consumer price 3-5%Lower consumer price 3-5%

Lower waste via more efficient supply chains

Lower waste via more efficient supply chains

Larger tax baseLarger tax base1.6 millions retail

jobs1.6 millions retail jobs

The Brazilian Apparel Market

Worlds 5th Largest

Worlds 5th Largest

7% AnnualGrowth

7% AnnualGrowth

Fashion ranks in the top 3 attributes at preferred stores

Fashion ranks in the top 3 attributes at preferred stores

60% of Sales come from Domestic

Retailers

60% of Sales come from Domestic

Retailers

Lessons for Multinationals

• Hire Locally• Promotions• Private-Label Credit Offerings

Thank You!Thank You!