At the Advertising Research Foundation's Re:think conference in New York yesterday, discussion revolved around emerging markets such as China, India, and Brazil.
John Forsyth, principal at McKinsey & Company, presented data showcasing the growth in these markets.
"If you look at the growth over the next 15 years, three-fourths of the global growth is going to come from emerging markets," he said. "If you focus on consumption, there will be $30 trillion in consumption in emerging markets by the year 2025. If you're looking to grow, you have to figure out how to make that work."
He spoke about 10 crucial capabilities that companies, and their research teams, must have as they look to expand into emerging markets, highlighting three key capabilities: anticipating moments of explosive growth; targeting urban clusters; and building brands that resonate and inspire trust.
"Typically, many people follow others into these fast-growing markets. But by that time, lots of times, that is too late," he said. "You need to recognize the continuities that predict growth." He emphasized that market research professionals should expand how they view their position to see how they can support senior executives who need to know more about these areas.
"There are opportunities for broader services, especially in the developing world, and new ways to think about supporting top management and the decisions they need to make in these emerging markets," he said.
Matthias Hartmann, CEO of GfK SE, noted that a deep understanding of local cultures and consumers in these countries—including getting out and visiting these places often—gives brands a leg up. For market research firms to be global powerhouses, they must be able to "scale out offerings while looking at local differences and providing real insights into local consumer behavior."
Mobile phones and smartphones figure centrally in emerging markets. GfK predicts 950 million smartphones will be sold worldwide this year, up from 720 million in 2012.
"Next to the opening of these [emerging] markets over the past 20 to 25 years, technology is a main driver for that globalization," he said, mentioning that the innovation in mobile technology has helped some emerging markets leapfrog over more mature ones when it comes to mobile use and innovation. "The implication for us is that this technology not only brings access to data, it brings a completely different level of speed and availability," including real-time data.
This issue of speed of change was prominent as the last general session panel of brands took the stage to discuss how they are expanding in China specifically. Diane Hessan, president and CEO of online consumer insights company Communispace, moderated the panel, which featured Paul Caswell, senior manager of global consumer insights at Walt Disney Destinations LLC; Diane Kosobud, director of consumer and customer insights at HJ Heinz; and Anthony Michelini, global director of strategy and insights at Citigroup.
"It's almost impossible to follow the pace of change there," Caswell said, adding that Disney is starting new research every other week in order to keep up. "You have to keep a constant pulse on the consumer there."
Kosobud added that the research a company should do really depends on their objectives and which audience they are trying to target. Urban areas are important, especially with big cities like Shanghai and Beijing constantly expanding.
"Migration to urban centers is huge," she said, "so what you knew about a city last year has already changed." And when it comes to how Chinese consumers view brands, foreign brands in particular, their overall opinions also ebb and flow. In particular, Michelini said, younger consumers often find themselves balancing between a desire for history and tradition versus innovation and technology.
"We find that consumers in China are leaning into big brands and there is an opportunity to connect with their hearts and minds as a big brand," Michelini said. "But the expectations that brings can be powerful. You need to be able to connect that locally in a relevant way. You have to understand that context and then you can succeed."