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People in international growth markets usually tweet, like, upload and share information much more intensively than consumers in Europe or the US. In the digital sphere, where most of them were socialized, they communicate not only about their personal lives, but also about products, brands and companies. Digital media have a great influence on how they act, communicate and make purchasing decisions. This is not only due to digital socialization, but also has political reasons, for example the limited freedom of print media in China. China and India have become real epicenters of the explosive growth of the digital world. The biggest growth opportunities in e-commerce, the most widely used apps and the world’s leading social platforms – including extensive brand information – can be found there. This is described in detail in our new Springer publication “Successful brand building in the large emerging markets” (written in german) by Dr. Niklas Schaffmeister (Managing Partner Globeone) and Florian Haller (CEO Serviceplan Group).
Digital media are advertising and consumer drivers
According to the industry magazine Campaign Asia, more than half of media consumption in Asia is already in the digital sphere. In view of the extreme price increases for advertising in traditional media, it is obvious that Internet advertising is growing at double-digit annual growth rates. Growth will focus primarily on mobile communications. China’s mobile advertising market is already larger than the entire Latin American advertising market. The People’s Republic has long been one of those countries where spending on digital advertising exceeds spending on television advertising. In its BRIC Branding Survey, Globeone has shown that Internet search engines, social media and company websites are among the most important tools for obtaining information about foreign brands in the major growth markets. Chinese online retailing accounted for 13% of total retail sales in 2016, compared with 8.1% in the US. According to the latest estimates, about 40% of e-commerce consumption in China is additional consumption. Internet retailing enables hundreds of thousands of Chinese to purchase products to which they previously had little or no access.
Digital channels significantly reduce costs
The use and exploitation of e-commerce relieves local and international brands in large countries such as China and India considerably, as opening new stores in the hinterland can be costly there. The US manufacturer of high quality handbags, Coach, ran stores in 47 cities in China when the company began to open a Chinese e-commerce site. Just a few months later, Coach shipped its products to more than 110 cities in the country. In recent years, many Western brands such as Puma and Hugo Boss have set up e-commerce sites in China.
Precise target group determination: making the marketing messages work
In major growth countries, the digital middle class is as diverse as the population overall. Therefore, the target groups must be precisely defined. Otherwise the marketing messages will not have the desired effect. Careful market positioning results in different age groups and income segments that can be considered as target groups. At the center of attention for digital campaigns is the growing segment of wealthy, younger Internet users, for brands across the consumer spectrum, from accessories to food and beverages to hair care and skin care products.
Often a problem: physical distribution of online goods
However, building up an Internet presence does not only offer opportunities. Western retailers often underestimate how complex and costly it can be to transport goods within countries such as Brazil, India or China. India may still be several years behind China, but it is catching up quickly. Internet grocery stores and the idea of having fruit, vegetables, rice or sugar delivered to their homes has long been beyond the imagination of most Indian consumers. But online trading has been growing at an explosive rate for years. Almost one in seven Indian consumers shops over the Internet once a week. And almost one in five spends more than half of the disposable income on the Internet. Banks have long been attached to online business. The strong expansion of the digital sphere also offers major advantages for international brands in procurement and distribution. Thanks to online channels they are now able to bypass the often dominant physical networks in the target markets. They are only one click away from their customers.
These figures and developments have transformed the international markets into a strong Internet market for brands. This has created immense opportunities for foreign brands – given that they are aware of local characteristics and that they flexible enough to adapt to local rules of the game.
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