Fast Developing Markets
Should we call them just “Developing Markets” now?
By Alejandro (Alex) Pinedo
We knew it was bound to happen. The global crisis, now re-branded “the Eurozone crisis,” has finally worked its way into even the largest fast developing markets (FDMs) around the world, bringing with it telltale signs of slower growth.
“Slowdown” has quickly become the catchword that best describes the economic situation in fast developing markets — or at least in most of them. China is “slowing quickly,” according to Thomson Reuters sources, and is reviewing GDP growth expectations, which still remain above 8% for 2012. Brasil is expected to finish 2011 with growth of only 3.2 %. For 2012, growth estimates have also been cut in half, from 7% down to 3.5%. According to Lloyds Bank analysts, the crisis in Europe was the main factor for these reviews. Similar situations are playing out in India, South Africa, and other traditional fast-developing markets around the world.
But slowing is not synonymous with stopping. In fact, reduced growth could give these countries the chance to reorganize and make necessary infrastructure adjustments, enabling them to continue their desired (and expected) development in a more sustainable way.
Larger countries such as the BRICs (an aging acronym, by the way) have internal markets that give them sufficient support to withstand external instability. But, even at home, the need to setup and invest in the right infrastructure to support growth is a clear necessity.
As wealth increases in these markets, we will see a predictable economic upward shift among social classes, gaining more access to education, jobs, and better living conditions. Such shifts have also changed the way brands approach these new consumer groups, from micro credit lines and retail financial products being offered by banks to new consumer products using innovative packaging solutions to creative logistics solutions that are able to reach vast territories with economic feasibility.
Though some aspects of economic expansion are predictable, consumers in today’s fast-developing markets are distinctly different from those of other eras: they can leverage instantaneous, widely accessible information and communication platforms.
So, what happens when you combine newly acquired buying power with broad access to information in a world that conveys a permanent sense of urgency?
One result is an immediate and increased level of desire. Consumers from emerging classes in fast developing markets are targeting their spending power toward items at the top of their wish lists, such as indulgence travel to foreign destinations and ownership of luxury branded goods. Luxury goods stores and premium hotels in popular destinations like Paris, Rome, and New York have hired or trained staff members to speak Russian, Chinese, Portuguese, Spanish, and other languages to cater to these avid consumers.
Customers who are highly informed are also highly demanding. Access to vast online information about products and brands, including reviews and personal experience stories, has fueled higher standards of quality in today’s consumers.
As wealthier consumers from fast developing markets travel the world and gain access to the premium goods they have always wanted, brands continue to play an even greater role. In these situations, brand name is often the most important driver of choice.
As we head into another exciting and challenging year—in which the only true certainty is change—fast developing markets will need to determine how to best absorb and respond to the impacts of the economic instability in the U.S. and Europe. While this will be a challenge, it also represents an incredible opportunity for these developing countries to make necessary adjustments that will ensure that growth continues at a sustainable pace for many years.