Globalisation is the biggest challenge facing big business today, although the potential it holds for companies to expand and prosper is unparalleled.

However, many companies are only acutely aware of the intricacies of entering a new market. It is not uncommon to see a large business use the same marketing strategy that’s worked for them in one area and applying it in another, totally different market. This is a mistake.

Realistically, the appropriate strategy approach ought to depend on the characteristics of a national market, including its stage of urbanisation amongst many other factors, as well as a company’s size, position and aspirations in that market and nation.

Companies that choose new markets systematically often use tools like country portfolio analysis and political risk assessment, which chiefly focus on the potential profits from doing business in developing countries but leave out essential information about the soft infrastructures there.

The quality of the market infrastructure varies widely from country to country. In general, less developed economies have unskilled intermediaries and less effective legal systems. Because the services provided by intermediaries either aren’t available in emerging markets or aren’t very sophisticated, corporations can’t smoothly transfer the strategies the employ in their home countries to those emerging markets.

When companies tailor strategies to each country’s contexts, they can capitalise on the strengths of particular locations. But what is the best method for a company to both contextualise and conceptualise a country’s specific localities and their respective potential?

Let’s take the Chinese market for an example. Most companies enter the Chinese market through a tiered strategy, categorising cities by size and affluence. What is perhaps more suitable is segmenting Chinese cities according to such factors as industry structure, demographics, scale, geographic proximity and consumer characteristics into city clusters.

More specifically, this approach can help companies to address opportunities in attractive smaller cities cost effectively and to spot opportunities for, among other things, expanding within rather than across clusters – a strategy that requires a less complex supply chain.

Another benefit of localising marketing activity in China results from the limited reach of national media. China has thousands of TV channels, but just a few are available across the country. Other media, such as newspapers and radio, are even more localised.

Another emerging market, India, is less urbanised than China. As such, their major clusters won’t cover as much of the economy as those in China. However, a hub-and-spoke approach should provide similar opportunities to optimise supply chains, as well as sales and marketing networks.

Let’s also consider Brasil, which is slightly different to India and China as it has been more open to multinationals for decades. Many global companies have made the mistake of doing their consumer research in Sao Paulo, the most affluent part of the country, when they are designing new products or national marketing campaigns for Brasil. In actuality, Sao Paulo has more cultural commonalities with New York than many other areas in Brasil.

Of course, companies can change contexts in factor markets too. As multinationals set up subsidiaries in these countries, they needed global-quality audit firms. In Brasil, for example, few firms could provide those services, so the big 4 audit firms – Deloitte, Ernst & Young, KPMG and PWC – decided to set up branches there. The presence of these companies quickly raised financial reporting and auditing standards in Brasil.

The more open a country’s economy, the more likely it is that global intermediaries will be allowed to operate there. Multinationals, therefore, will find it easier to function in markets that are more open because they can use the services of both the global and local intermediaries.

Executives would do well to identify a country’s power, such as its bureaucracy, media and civil society and figure out if there are checks and balances in place. Political and social systems, as well as openness, shape the market contexts. If a country’s capital markets are open to foreign investors, financial intermediaries will become more sophisticated.

Market and research companies are generally in their infancy in developing countries, so it’s difficult to find the deep databases on consumption patterns that allow companies to segment consumers in more developed markets. However, the advertising landscape is also changing rapidly in these countries. Advertisers are figuring out how to deliver relevant, measurable advertising to their consumers.

Brand origination is a matter of considerable importance in emerging markets. The ‘country of origin’ effect means that people associate particular countries with certain product characteristics. Consumers worldwide, for example, frequently associate German products with quality, reliability and durability.

Homegrown competitors have several built-in advantages, including consumer loyalty and lower costs. But by taking the time to learn and master local market complexities, multinationals can gain a competitive edge.

For example, religious values are important for many consumers, and many of the emerging markets have theistic consumers. Increasing numbers of religious people will drive the market for ‘values-oriented’ products.

Buying socially responsible goods has already gained prominence in already developed economies and is growing in importance in emerging markets. Values in a broader sense -religious, environmental and social – will play a major role in consumers’ purchase decisions and brand loyalties.

In a number of emerging economies, more people have access to the internet and are also using it more frequently. Consumers in the emerging markets are looking for greater choice, convenience and informed purchasing. More and more they are finding their needs met by online shopping.

Rising incomes in emerging countries encourage consumers to change their brand purchasing behaviour. A welcome consequence of this for Western companies is their increasing preference for established Western brands. Local brands are often left behind in the competition.

By 2030, developing countries and emerging markets are expected to be home to an estimated 80% of the world’s middle class. Rising incomes, progressive urbanisation and better availability of goods are fundamentally changing consumption habits.

Conclusion

In the immediate past and coming decades, consumers in emerging countries have, and will continue to, experienced change at rates unparalleled in economic history. The range of goods and services available, the extent of the urban environment and, for many, the size of disposable incomes will grow at a rate surpassing that seen in all previous major economic phases.

To succeed, multinationals must modify their business models for each nation. They may have to adapt to the voids in a country’s product markets, its input markets, or both. There is no one-size-fits-all strategy for capturing consumer growth in emerging markets. Nonetheless, it appears that traditional country strategies and other aggregated approaches will likely miss the mark because they can’t account for the variability and rapid change in these markets.

Products must be delivered not only to emerging middle-class consumers in cities but also to consumers in rural regions. Having a thorough understanding of the potential of city clusters and sub-clusters would be essential to this. It is estimated that in 2030 the share of the rural population will still be 45%. Companies will need to adapt their distribution and marketing strategies so as to fit local conditions.