- Spending power, psychology, culture, and buying habits are completely different in developing nations and LDCs than in developed countries
- There are currently 46 LDCs, and they are highly vulnerable to economic and environmental shocks
- A B2B International study found that 80%-90% of buyers in Russia or China are happy to buy products that last 18-24 months. Whereas, their Western counterparts demand a lifespan of 6-7 years or more
- Use local partners to get products to rural areas and out of cities. By using this strategy, many Western consumer-facing companies are making huge profits in rural cities for shampoo and cosmetic products
Multinational companies are selling more products in developing nations and Less Developed Countries (LDCs) that are now easier to access because the world is becoming more connected and globalised. Companies often make the mistake of using the same marketing strategies to target customers in developing nations and LDCs. And CEOs, particularly in North America, Europe, and Japan, are aware that it is has become tougher during the past decade to identify internationalisation strategies, including those for marketing.
Spending power, psychology, culture, and buying habits are completely different in developing nations and LDCs than in developed countries. Businesses and entrepreneurs must understand these differences to market their products successfully.
Before we move onto the top tips, lets first look at what exactly are developing nations and LDCs
What are Less Developed Countries (LDCs) or Third World Nations?
The UN defines Less or Least developed countries (LDCs), often called Third World Countries, as low-income countries facing severe infrastructure obstacles to sustainable development. There are currently 46 LDCs, and they are highly vulnerable to economic and environmental shocks. Below is the UNs exact definition.
What are Developing Nations or Emerging Markets?
Developing Nations or Emerging Markets are not part of LDCs. According to The IMF, there are 96 emerging markets. They have stronger and more diverse economies than LDCs, with customers that have more income. Brazil, China, Russia, and India (BRICS) are the most notable. Check out CNBC’s video for a better definition of emerging markets.
Here are the top tips for marketing in developing nations and LDCS
Determine the target market segment
LDCs and some Emerging nations generally have three types of market segments. First, the rural or agricultural segment is made up of the poorest customers. They generally live on basic goods like soap, coffee, sugar, and clothes, but they are not concerned with material goods due to their agricultural lifestyle.
Second, there is a new modern segment. These customers generally have the highest incomes and live in cities where goods are more readily available and more exposed to European or North American cultures. Third, some customers are middle-class or in-between the modern and agricultural segments but crave the goods available to the modern segment. Companies should target their marketing efforts towards the second and third segments who have greater spending power and access to different products or services.
Consumers in LDCs and emerging markets are hungry for well-priced products over durability or quality. A B2B International study found that 80%-90% of buyers of pump and instrumentation products in Russia or China are happy to buy products that last 18-24 months. Whereas, their Western counterparts demand a lifespan of 6-7 years or more.
If your product is good quality and affordable range, people will get drawn to it quickly. For example, Amazon’s Prime subscription is among the cheapest in India. People pay only US$14 while their counterparts in the US spend US$119 for the same service.
The distribution chain is the backbone
There are many options to export, import, and deliver products to retailers and wholesalers in cities. Once in the LDC or emerging country, it can be difficult to distribute to customers as the infrastructure is usually poor outside of cities. Market channels can be fragmented and highly dependent on local knowledge and networks.
Use local partners, distributors and retailers to get products to rural areas and out of cities. By using this strategy, many Western consumer-facing companies are making huge profits in rural cities for shampoo and cosmetic products.
Connect with the locals
You cannot overestimate how important it is to use local partners and networks, especially for reaching customers in isolated and rural areas. There are two ways to understand the local markets. Either spend money on surveying the market or connect with the already established businesses and foster them to grow with you.
Companies can also use local partners to help promote their products. Relationship-focused advertising like trade shows, site visits, and exhibitions are much more common ins LDCs and emerging markets than direct mail or digital marketing. They can help build trust in brands. By helping local suppliers, distributors or vendors, companies can quickly penetrate the market and raise their brand awareness.
Create and justify added-value
Middle-class income groups are the highest spenders in such countries. They are willing to spend entire monthly incomes on products with added value and luxury brands, which are often considered status symbols and desirable. Electronics, clothing and accessories, and cars are the most sought after.
Apple iPhones and world fashion brands penetrated the African contentment as a status symbol. Nokia 1100 phones became the world’s best selling phone with the highest sales in LDCs because it offered exceptional durability, so could last longer for LDC customers. By altering its wafer-to-cocoa ratio, which made the chocolate cooler and less likely to melt in the heat, Nestle was able to sell its RMB1 wafer in China to millions as an everyday product rather than a luxury. Creating added-value for the specific LDCs or emerging market will clearly lead to massive success.
Use traditional and online marketing
Traditional marketing channels like TV, radio, SMS, voice, posters, and billboards are more commonly used in LDCs, especially in rural areas where the internet is not available. However, internet penetration in LDCs and emerging markets is increasing rapidly and becoming more affordable. LDCs were on target to reach universal, affordable internet connection by 2020, but the pandemic has somewhat slowed this. This improving internet means that companies can now use more digital marketing strategies to reach customers.
It is not just about the conversion
On a quick note, people living in developing countries often bond with local sellers on a personal level. They expect large corporations to do the same when delivering services. If companies just concentrate on converting customers and not the conversation, their marketing efforts are unlikely to succeed. Campaigns must personally connect to customers.
Often the marketing strategies that work like a charm in western nations fail miserably in developing countries. The market structure is different. It is essential to have country-specific marketing strategies to launch products or services in such markets.