However according to Canadian CEOs, the US remains their primary focus
TORONTO, Feb. 14, 2012 /CNW/ - Globally, businesses are now looking at
the 'Next 4 Billion' nations for growth, they include India, China,
Indonesia and parts of Africa and Latin America, where over 4 billion
of the world's 7 billion people live. Businesses in these markets have
traditionally focused on the middle and upper middle income segments
but according to a new report from PwC, the next big opportunity will
come from the Global Emerging Middle (GEM) - just below the middle
The GEM market already accounts for 2.3 billion people globally and is
growing fast as large numbers of consumers are making their way up from
the bottom of the economic pyramid to form an Emerging Middle class. By
2021, this market is expected to represent annual spending power in
excess of US$6 trillion.
Though they still earn modest sums - US$1.70 to $5 per capita per day in
India, for example - these consumers collectively have large purchasing
power. In India about 470 million people were in the Emerging Middle
class in 2010. PwC estimates that this will grow to 570 million by
2021. At that time, the segment, sandwiched between the lowest-income
group and the middle class, will constitute about 42% of India's total
population. India's Emerging Middle spending power is expected to be
over US$1 trillion by 2021 alone.
The US remains focus for Canadian business
However when it comes to international growth prospects, the US is still
the primary focus for Canadian businesses. According to PwC's 15th Annual Global CEO Survey, 52% percent of Canadian CEOs said the US was one of the three most
important countries to their business, while 22% said China, 8% said
Brazil, and 8% said India.
Globally, China was selected by the most CEOs (30%), while 22% said the
US, 15% said Brazil, 14% said India and just 3% said Canada.
"Canadian companies seeking growth can't afford to ignore the
opportunity and potential benefits offered by the Emerging Middle
segment," says Tracey Riley, PwC's National Consulting & Deals Leader. "Many companies will have to enter this increasingly important sector
during the coming decade but will need to innovate to meet customer
requirements and serve them profitably."
Riley continues, "Once a company has established itself in the Emerging
Middle, customer loyalty will remain with them as the consumer
continues to increase their income. Companies can use the capabilities
they have built in the Emerging Middle in one country to compete in
other markets with similar segments. The innovations developed in these
emerging countries can also be exported to more developed economies to
help spur growth."
According to the report, companies seeking to succeed in this
challenging environment should consider three important factors:
Value propositions: Companies must develop a nuanced understanding of the aspirations and
tradeoffs of customers in the GEM segment and develop solutions based
on these needs. While low-cost is important, solutions must be
positioned beyond low cost and be designed as "platform" products which
can be customized to cater to the wide diversity of the GEM.
Innovative Business models: Companies need innovative business models and processes to address this
segment profitably, to overcome institutional weaknesses and gaps -
from everything from credit systems to supply chains. PwC's report
argues that while smart technology-based reach is essential to
penetrate this market, businesses must still focus on offline
interventions and achieving scale from the beginning..
Shift in mindset: Companies need to adjust both their external approach to the market, and
internally. This requires a strong leadership presence, a bold approach
that embraces disruptive solutions, and a willingness to adopt new
values and metrics to drive growth and measure success.
For more information, please contact Kiran Chauhan at 416-947-8983 or firstname.lastname@example.org. A copy of the report is also available from the media contacts.
Follow PwC on Twitter at @PwC_Canada_LLP and on Facebook at www.facebook.com/pwccanada.
Notes to editor:
For the report, 'Profitable growth strategies for the Global Emerging Middle - Learning
from the 'Next 4 Billion' markets, PwC conducted in-depth interviews with a number of CEOs and leaders of
major corporations, as well as grass-roots organizations and innovation
experts. PwC also conducted a consumer study with individuals and
families from the Emerging Middle class to develop a deep understanding
of their needs and demands.
The Next 4 Billion nations are defined as having average per capita
income of between US $1,000 and US $4,000 per year and are home to 4
Billion people or more than half of the world's total population of 7
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