It started off innocently enough.  Back in the 1980’s when the first Special Economic Zones were established there were only a handful of places you even dared talk about as “consumer markets” in China.

As a modicum of affluence appeared in Shenzhen, Guangzhou, Shanghai and Beijing, companies began making more concerted marketing efforts on a market by market basis.

Deng Xiaoping’s “Southern Tour” in the fall of 1992  unleashed (or ratified) individual efforts across China focused on the pursuit of wealth.  Soon, some people were talking about more markets than they could count on two hands.  Impressive.

Somewhere along the line in the run up to the turn of the century, discussion of “Tiers” emerged to facilitate sharing of information and depth of market penetration.  Where you only spending media in Tier 1?  Was your product showing up in Tier 3?  This was merely shorthand for talking about the big four markets, the other provincial capitals, and the rest.

The problem is that the rest is actually some amalgam of 361 official cities, 2,811 couties, and 34,171 townships.  Over the first decade of this century, some MNC’s were actually seeing their brands reach every corner of the country.  Others were managing points of sale across hundreds of cities.

Despite the blunt tool, business executives were stuck with tiers to discuss their market coverage.  These conversations could be quite frustrating.  We might all agree on Tier 1, and maybe had an 80% overlap for Tier 2, but then your Tier 3 was different from mine.  You had a tier 4, I had a tier 5.

The reocognized disconnect was that each company’s “Tier” definition was different.  And if I needed to create a market expansion plan to grow from 30 markets to 100 markets, which 70 were supposed to be my priority.   Some efforts started to appear that attempted to index all the markets in China by certain economic statistics, but if you’ve ever worked with Chinese economic statistics you know how you felt about that.

Well, I think the new decade is finally bringing around some sound thinking about how to talk about China market coverage without putting up a list of 600 cities:  Clusters.  Most recently advanced rather publicly by McKinsey, the concept was already in practice as executives looked at the total market and preceived newly defined regions that did not adhere to provincial boundries or other traditional market maps.

The cluster approach won’t surprise any practioner.  Afterall, who would ignore a neigboring market that absorbed your media, was easy to distribute to, and spoke the same dialect as your sales team?  Just because it was indexed 40 spots lower?

Talk of Clusters recognized not the indexing of cities, but the interconnectedness of markets that emerged in the wake of rapid infrastructure development, personal car ownership, and the reach of the internet.  Manageable in number (less than 30) these geographicly defined areas offer scalabilty and reach to brands that need efficiency.  Tackling 31 provincial capitals at the same time offers none.

With Clusters, executives can dismiss with talk of cities.  They can focus on reachable populations within defined geographies.  The market becomes manageable again – almost intuitive.  Distribution centers, media spend, and trade marketing investments scale up better.  Focusing on three or four clusters is naturally simpler than focusing on 50 or 75 markets.

Clearly, I’m a fan of clusters.  I recommend you adopt it in China.  Like all good ideas, this one isn’t new, but it sure feels good when you use it in a new location for the first time.

The Indian Retail market—ranked the fourth most attractive amongst 30 emerging markets—has caught the global market attention by storm in the last few years. Still heavily tilted towards traditional retail, times seem to be changing with the introduction of 100% FDI for single-brand retail and 51% (currently under debate) FDI in multi-brand retail. In fact, the organized retail market in India is expected to grow at 25% and reach a size of US$200 billion by 2020.

India’s retail boom is driven by a plethora of reasons–from increasing disposable incomes and changing lifestyles, to growing demand in rural areas and smaller towns, and the rise of the global consumer. Indeed, global retail giants are trying to tap into this vibrant market but their core business model seems to be failing their aspirations.

The reason behind this change—the unique purchase drivers of the Indian consumer. Think–Value for money (through deals and bargain-hunting), convenience (e.g., deep rooted system of home delivery of purchases) and relationship based customer service (legacy of “kirana” or corner stores).

So, to survive and grow in such a market what are retailers doing? Tweaking their business models and making their stores locally relevant. Take a look at how global and local companies are adapting and innovating for the Indian consumer in the organized market. Read More »

“Uh, ‘Tiger-Goat’ isn’t what your modern day brand consultants would come up with for a tea brand.  What’s the story?”  So began my recent conversation with Yogesh Shinde, the General Manager in charge of Marketing for Gujarat Tea.   Yogesh explained the origin of the name roughly as follows:

Over 100 years ago, the founder of Wagh Bakri wanted to create a tea that would unite all Indians.  ‘Wagh’ means ‘Tiger’, standing for Indian upper classes.  ‘Bakri’ means ‘Goat’, and represents the lower classes.  The idea is to bring the Tiger and Goat together over tea, an important and shared ritual. Read More »

In western countries, economic and business history have interacted to create a certain kind of consumer environment – the people that buy your products have certain expectations and ideas as to how those products will work and what the buying experience will be like.

But it’s important to recognize that this history isn’t universal, consumer expectations and experiences are very different elsewhere, and stepping out of the context of your own market is an awesome way to generate innovation and growth.

Last year, we looked at the ways that western companies are repositioning and localizing their product mix for the growing Chinese market. It was a collection of very cool ways that companies incorporated local knowledge and preferences into their product and marketing efforts. But the land of even crazier consumer products is just across the East China Sea – Japan.

We collected five cool, unusual, or surprising things you can buy in Japan – hopefully these will jog your imagination a bit:

1) Odori-don

Odori-don is a Japanese word that means “dancing squid”, and it’s a dish that lives up to its name: a (very) fresh squid is placed atop a bowl of fish roe and steamed vegetables. When soy sauce is poured over the squid, the salt in the sauce activates still-live nerve endings in the squid’s tentacles – leading to the spectacle you see in the video above.

2) Mobile Television

In 2006, the Japanese government worked with broadcasters and mobile phone makers to create a broadcast standard capable of being streamed live to cell phones. It’s a little different than video on American phones: in the States, video is delivered over wireless data networks, and is typically downloaded first (although a few live-streaming services exist).

In Japan, videos is delivered over a network similar to free-to-air television in the States, resulting in better picture quality, less risk of dropped service, and a more…James Bondian viewing experience.

3) Robots. Everywhere

Remember the bit about economic history above? That’s a big reason why Japan, as a society, generally relies more on robots than other advanced countries: a very low birth rate, combined with a traditional resistance to immigration, has led to a bigger role for automation and robot workers.

Robots perform all sorts of roles in Japan: there are robots for cleaning up nuclear waste, robots for taking care of the elderly (although they don’t seem too popular), robots to help around the house, and even a robot suit that helps farmers work harder and faster.

4) Stuff from vending machines

Going along with Japan’s love of automation, vending machines occupy a central role in consumer life, particularly in big cities like Tokyo. Vending machines sell things like flowers, umbrellas, and even fresh eggs:

5) Fighting Obama toys

When President Obama was inaugurated in January 2009, Japan’s Gamu-Toys (link  in Japanese only) released an absurdly-detailed action figure of the new US leader. Complete with a machine gun, a pistol, two brightly colored ties (red and blue), and an outlandishly-oversized American flag, this cool figurine is ready to bring hope and change to the world – by force, if necessary.

While doing some research on an unrelated topic a few days ago, I came across a string of articles, blog posts, and analyst reports about the retail scene in China. I promptly forgot about the research I was meant to be doing and dug in (isn’t the internet great?)

As I read, the key dynamic that I think was being captured is how unsettled the retail market is – and what a giant opportunity marketers have to experiment with product, customer experience, and market research strategies. China’s middle and wealthy classes – the groups most amenable to western-style consumer culture – are growing at phenomenal rates. That means, every year, millions of new consumers enter an environment where they have little in the way of habits, routines, or loyalties. That’s reflected on the retailers’ end, too: Chinese grocery market share, for instance, is remarkably diffuse. The leading chain – Shanghai Bailian – only comprises 11% of the total grocery market.

Given the relative parity between retailers, and the relative lack of hard-wired brand and experience preferences, retailers in China are experimenting with different approaches – some with the opportunity to make their way back to the US, Europe and Australia. Read More »

The one truism that seems to have weathered the downturn and on-again, off-again economic “recovery” is that the globalization of markets will continue at a steady forward pace and, therefore, so must our marketing capabilities to reach them. Just this past week, AdAge even proclaimed that a “tipping point” had been reached in the number of CMOs having a true global scope of responsibility.

Whether or not we are in fact at a watershed moment in global marketing leadership is up for debate, but most of us as marketers can agree that the decades-long trend of expanding into new markets is increasingly set against the backdrop of trying to create a more tightly knit global marketing organization. More and more marketer roles with a pan-geographic focus are surfacing in our conversations with members. Marketing processes are incorporating a more diverse range of inputs from across organizations’ geographic footprint. Resource allocation post-credit crisis tends to be more reflective of countries’ future opportunity versus simply our historical habit of investment.

But amid all of this progress, marketers tell us that they still struggle to see substantial gains in global marketing integration. One member recently commented, “the discussion internally has clearly shifted toward capitalizing on the scale of our international marketing operations but, if anything, it seems that we’re moving further and further apart.”

So, what’s getting in the way? Read More »

 By Whitney Satin

When it comes to icons of American culture, few would dispute the global recognition enjoyed by McDonald’s golden arches or the Coca-Cola bottle.  But thanks to the constantly evolving world of pop culture, it may be time to add a new icon to the list: the poof.

And by poof, I’m of course referring to the signature coif sported by Nicole “Snooki” Polizzi of MTV’s Jersey Shore.  What started as a one-off exposé of Italian-American culture has morphed into what is today a gorilla juicehead-sized juggernaut for the cable network, with episodes of the third season currently averaging nearly 9 million viewers a pop.  More crucial from an advertising perspective is the fact that nearly 7 million viewers in the highly-coveted 12-34 year old age group tune in each week to watch Snooki and friends fist pump and GTL their way across New Jersey’s Seaside Heights.  (And by the way, that’s “Gym Tan Laundry” for those not fully fluent in the rapidly expanding Jersey Shore lexicon.) Read More »

Drum roll please… many of you noticed our recent poll asking where we should focus our research efforts in 2011.  Thanks to you (and particular thanks to those who offered up time to talk to us about your areas of interest) we have our major themes of our research for next year: Read More »

By Erin Lynch-Klarup

Opportunities in developing economies are attracting a lot of interest across our membership these days.  Thanks to growth in emerging markets and slowdowns in the US, Europe and Japan, a number of folks we’ve spoken with are expanding their international growth goals.

This focus on markets that were previously on the back burner has triggered questions about how to best organize marketing internationally.  Our conversations with members have revealed a few key tensions every company’s global marketing structure needs to balance:

1. Local Customization vs. Global Consistency: Vesting decision-making power with regional marketing teams through a decentralized org structure allows for greater customization and responsiveness to local conditions.  However this structure can lead to inconsistent branding and variable Marketing quality across regions, as well as unnecessary rework.
2. Budgeting: Global Prioritization vs. Local Accountability: Central budgeting has the benefit of enabling big bets on the best new opportunities.  Alternatively, allocating budget regionally allows for profit and loss accountability at the regional level.  Many companies have opted for accountability in the past, but with greater interest in emerging markets, global investment optimization is becoming a higher priority.
3. Flexibility vs. Continuity & Expertise: Most organizations need some amount of flexibility to respond to new priorities and changing strategies.  At the extreme, a project-based organization is structured around teams that form and dissolve according to shifting priorities.  However, more staid structures with continuity of roles and responsibilities allow for in-depth organization knowledge and expertise.
4. Collaborative Decision Making vs. Organizational Simplicity: A matrix structure with dual or dotted line reporting keeps multiple stakeholders involved in decisions – for better or for worse.  Organizations need to be sure that the benefits of each additional reporting line aren’t outweighed by the loss of agility and costs of coordination.

MLC members, for more on organization structure, check out our archetype org structures and other resources.

‘Glocal’ branding – as the neologism hints – involves a tension. Strong brands should be consistent, wherever in the world they are, but they must also be responsive to their customer base, which will differ from region to region. How should marketers reconcile this? Read More »