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Going to Market in Developing Economies: The Challenge of Channels

February 22, 2012 by Vaishali Rastogi, Amitabh Mall, and Jeff Walters
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In This Article
  • While channel management has become a common denominator in developed markets, it can be a great differentiator in developing markets.
  • Companies are faced with a unique opportunity to generate stronger ties with retailers, lower costs, and lubricate and speed their distribution channels in these countries.
  • To achieve the goals of channel management in developing markets, organizations must rely on a distribution model that balances reach, control, and complexity.
 

Developing markets represent the future for many businesses. Brazil, Russia, India, China, and Indonesia make up 60 percent of the world’s population and account for 40 percent of global GDP growth. But companies cannot treat these markets as fledgling versions of the developed economies that have been their mainstay. They must rethink how they go to market in these places, which frequently do not have a state-of-the-art marketing, distribution, or retailing infrastructure. This article is the second in a series on how consumer-facing companies can succeed in developing markets through excellence in consumer insight, channel management, and in-store execution.

Going to Market in Developing Economies

In developed economies, the rules for channel management are fairly straightforward. Companies can focus on the modern retail landscape of large hypermarket and convenience-store chains and rely on a limited number of partners to handle distribution and a lean sales force.

In developing markets, however, this familiar playbook will not fly. Modern retail—though growing rapidly—is a relatively new format and does not account for most of the market.

But if channel management has become a common denominator in developed markets, it can be a great differentiator in developing markets. Companies have a unique opportunity to generate stronger ties with retailers, lower costs, and lubricate and speed their distribution channels.