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Jane Perrin
Global Services, ACNielsen
These days, marketers looking for a solid foundation of future growth are talking about BRIC. An acronym for Brazil, Russia, India and China, these markets represent areas of the world with growing populations and large Gross Domestic Product [GDP]. Understanding the nuances of each of these markets is no small task. The way the BRIC countries—and the rest of the world—are changing is important to understand. There are many opportunities for the smart marketer—in most all developing countries around the world.
Taking a look at some basic country information such as GDP, population and average age, we can see an evolution of a global “consumer”. And while we can chart overall trends, we must realize each country, market and shopper has their own particular make-up and needs.
The global population is now at 6.4 billion, and while overall population is growing, the rate of growth continues to decline. This has created a shift in population around the world. For example, by 2050, Europe will have 70 million fewer people than today, while Africa will have almost a billion more. See charts 1 and 2.
This worldwide population change has added to the diversity of our world, and signals a future where different cultures may become more prevalent than they are today. Many of today's “established” economies are aging, while new, growing economies skew younger.
First world becoming rest of world
In a number of countries, the older market already has a significant presence. Many of these are “first-world” countries, with a relatively high GDP and participation in global financial planning. The United States and Japan are examples of these. See chart 3.
The opposite holds true in other countries, though. Many growing economies have young workforces—Mexico and India come to mind. China is also relatively young, and is one country that many think of when discussing population. However, looking to the future, India will overtake China in population by 2050. See chart 4.
With a worldwide population growth rate of between 4 and 5 percent, retailers are rapidly entering these markets that are outpacing the average growth and that have a strong GDP. We will be looking at the BRIC countries as leading indicators for retail expansion in the next five years.
Finding a common thread
Marketers looking to develop in new countries understand these challenges. The goal is to uncover and understand the common threads that carry through different countries. Through our research, ACNielsen has noted some key themes that are fairly constant throughout all countries.
Most important, not surprisingly, is consumer confidence in their country's economy. ACNielsen has performed its own consumer confidence research around the world,
and in the countries surveyed, consumers had some major concerns going into 2006. Many of these concerns were common across countries. For marketers, these common themes represent opportunities for reaching consumers and addressing their needs.
After worries about the economy and job security, the first major consumer concern around the world is related to health and wellness, which ranked high across the top 10 global markets. See chart 5.
Interestingly, while consumer needs are different based on life stage, health and wellness is still a common theme. Those with aging populations have more significant concerns around age-related issues such as osteoporosis, diabetes and heart disease, while younger populations may have a bigger interest in staying fit. This plays out in the product categories showing growth—across the world, many of the fastest-growing categories can be considered “healthy.” See chart 6.
Items such as vitamins, antioxidants and new diet solutions are but some of the products consumers desire. In the U.S., where as many as one in four Americans view themselves as being on a diet, manufacturers have responded. One example is the “100 Calorie Pack”—calorie- and portion-controlled snack packs launched by both Nabisco and Procter & Gamble to help U.S. consumers control their calorie intake.
Value: The other driver
Value is another concept that is universal. Consumers around the world—not just in North America—are concerned with the economy and are looking for the combination of price, quality and convenience that adds up to “value.” By looking at the worldwide growth in private label brands, we can see not only that consumers are demonstrating their desire for value every day, but also that retailers have begun to see the value of differentiating themselves, positioning their private label brands as the premier products in the category.
Around the world, private label growth has outpaced that of manufacturer brands. In two-thirds of the countries studied in 2005, overall private label sales were stronger than manufacturer brands. Private label sales grew by 5% overall, while manufacturer brands grew by only 2%. And Europe, the most developed private label market, saw the greatest gain in share points with private label. See chart 7.
Anywhere there is a high retailer concentration with strong retailer private label programs, there is going to be a high private label share. Not surprisingly, in many cases, private label products have begun entering new categories and segments. While refrigerated foods and paper and plastic still rank highest in terms of share, categories like cosmetics and baby food are showing explosive growth. See chart 8.
In some cases, retailers are taking a page from manufacturers' line extension book and are segmenting their private label line to address specific consumer needs and categories—such as a value brand, a kid's brand, a healthy brand, an organic brand—all in addition to the “traditional” private label brand.
Markets differ significantly—Even when we don't expect it
So, how do we as marketers adapt to meet these global needs? In many cases, it's a situation of getting “back to the basics.” In your current marketplace, you may be familiar with the makeup of consumers and all the nuances of what and how they buy. On a global scale, there is this same need to understand your consumers, but also that they differ from market to market.
Some general themes are good to remember: older populations (in more developed economies) will have the health concerns related to this kind of demographic and will tend to be smaller families or empty nesters, with higher disposable income and planning for retirement. The younger populations (in more developing economies) may have more quality of life concerns around infant healthcare and nutrition and improving education, and will tend to be larger families. All will be looking for a perceived value.
However, to execute successfully, it is critically important
to operate from the premise that there is no “one solution.” One must understand consumers, market by market. Do your homework. Markets differ—even cities within markets differ. There is no one Russia…China…or India.
Next, it is crucial to understand the local consumer needs and tastes before finishing the product. Don't underestimate the unique needs of local shoppers. You will need to adjust your concept, products and marketing to meet local needs in order to be a success.
Finally, think like a global marketer, but adapt to the local consumer. Invest in your brand to shine around the world, but also understand that demographic and cultural differences can make a huge difference in the way you market to your consumers.
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