Emerging markets are becoming the catalysts for new product and service innovation. Long-term success, however, will take far more than simply making minor adjustments to existing products, lowering prices and developing new sales channels. Successful companies are looking beyond traditional strategies to meet the needs of markets with significantly lower per capita GDP. 

This report highlights that companies will need to acquire a new set of competencies and organizational structures to generate a continuing stream of innovative products tailored to the needs of consumers and industrial buyers in emerging markets. They will need to take advantage of their parent company’s governance, business processes and management expertise to offer these products at dramatically lower prices that match the lower purchasing power of most buyers in emerging markets.

Deloitte’s new research identifies five characteristics of companies that are able to grow profitably in emerging markets. These companies:

1. Develop tailored product offerings for the local market at cost structures, price points and business models that match GDP per capita economics.
2. Build research and development capabilities in emerging markets and connect with local commercial managers.
3. Leverage global value chain competencies to maintain margins and effectively manage costs.
4. Acquire deeper customer knowledge and localize marketing strategies to reach customers and capture market share.
5. Win the war for talent by tailoring strategies that effectively deploy, develop and connect people.

Other areas addressed in the research:

• Executives' outlook about revenue growth in emerging markets over the next three years.
• The extent to which companies vary product offerings (e.g., features, models and pricing) in emerging markets as compared with their home market.
• The growing trend towards in-country research and development in emerging markets.

About the research
Deloitte's research into the topic of innovation in emerging markets examines what is required for global manufacturers to realize the enormous market potential of the developing economies of Asia, Eastern Europe, and Latin America.  Key markets examined include: China, India, South Korea, Russia, Poland, the Czech Republic, Argentina, Mexico and Brazil. The research includes a global online survey that has been completed so far by nearly 300 executives, in-depth case studies and the extensive experience of Deloitte member firms in advising major manufacturers operating in emerging markets.  The executive summary report, "Laboratories of Innovation: Leveraging Emerging Markets for Commercial Success," highlights the preliminary findings of the research.  In June 2006, Deloitte will release a full report with detailed findings. To receive a copy of the final report, please send us your name, company and email address. Email us today.

Learn more from the executive summary, available as a PDF file attachment in the link below: