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Design For Emerging Markets

July 13, 2007
Successful product development efforts get up close and personal with the cultures they seek to engage.

Many manufacturers want to break into emerging markets in a major way to develop and sell their goods, but simply making minor adjustments to their existing products isn't the best route to long-term success.

That's the conclusion drawn by Deloitte Touche Tohmatsu in a study of the opportunities presented by emerging markets. Unfortunately, the study notes, "too many manufacturers have attempted to serve these markets by simply offering their existing products with minor modifications, or often older products at somewhat lower prices."

That's not the path taken by Nokia, which in 2006 sold approximately 40% of its handsets, by volume, in the Middle East, Africa, China and Latin America, all of which have large numbers of emerging market economies. In May Nokia introduced its latest cellphone products for emerging markets. The global manufacturer tailors its phones for the entry market to include such features as a flashlight, dust-resistant keypads for rural mobile phone use, and call-time tracking and multi-phonebooks -- two technologies developed for mobile phones that are shared among families and even villages.

Indeed, "think globally, act locally" seems an appropriate phrase for this multinational firm, which takes a distinctly local approach to its product development efforts. Not only does Nokia devote years of research to understand both the people and cultures in which its product will be distributed, but more specifically it also has within its design organization a staff focused on studying how people live, work and play in many cultures (visit to read the blog of one such researcher).

Nokia's Entry Business Unit, specifically created to address the needs of the emerging markets, began operations in 2002.

Other firms are taking a similar route to success in emerging markets. The Deloitte study -- "Laboratories of Innovation: Leveraging Emerging Markets for Commercial Success" -- shows that some 40% of surveyed executives who sell to emerging markets said their products were designed locally. Not only are major manufacturers locating R&D facilities in emerging markets to reduce expenses, "but just as important to better incorporate local needs and expertise into product design," the report noted.

Other critical success factors cited by Deloitte for success in emerging markets include mastering the complexity of global supply chains, adapting marketing and sales approaches, and rethinking employee management strategies.

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