Corporate Responsibility, Marketing and Economic Development in Emerging Markets
In low-to-medium income emerging markets, savvy companies are using Corporate Responsibility (CR) principles to formulate innovative business strategies that also stimulate economic development.
Economists estimate that over the next few years, a significant portion of the world's growth will come from low-to-medium income emerging markets. However, companies in these regions face unique marketing challenges. Poor distribution systems, unreliable supply chains, limited market intelligence about consumer habits, and a lack of awareness about the true value of goods and services can negatively impact business development.
So, how can companies utilise CR to develop effective marketing strategies and expand their businesses while promoting economic development? Our experience indicates that marketing professionals can successfully leverage CR concepts and activities to:
1. Increase access to new consumers. Stakeholder engagement around CR issues can help marketers obtain valuable market intelligence about new customers, such as purchasing habits and products and services they value. Global telecommunications company Vodafone uses its CR strategy around the Millennium Development Goals (MDGs) to focus its marketing and business development efforts in emerging markets. Information gleaned from MDG stakeholder surveys has informed the selection of distribution channels, the development of mobile money transfer and healthcare services, as well as the creation of cheaper products like the US$15 handset. This strategy has been very effective. Last year Vodafone Ghana increased its customer base from 1.8 million to 2.8 million, while in India, Vodafone added 32 million new subscribers.
2. Expand consumer markets. CR initiatives that invest in developing local suppliers and distributors not only create more cost-efficient supply and distribution chains for companies, but also produce a new crop of consumers with additional income to purchase goods and services. For example, the Coca-Cola Company recently developed a partnership to maximise juice production and encourage small business creation in East Africa. When Coca-Cola realised it could no longer afford to import fruit juice concentrate, the company decided to source juice locally and reduce the cost for customers. However, there was no existing juice supply chain in the region. In collaboration with the non-profit TechnoServe and the Bill & Melinda Gates Foundation, $11.5 million was dedicated to developing this supply chain, which will provide training and increased inc ome to 50,000 small-scale fruit farmers in Uganda and Kenya.
3. Invent new ways to re-position products. By focusing on societal challenges, companies can identify and articulate a compelling value proposition for customers. In Ghana, where iodine deficiency was affecting brain development in children, Unilever successfully marketed salt as a "preventative" product. With a commitment to reducing iodine deficiency, Unilever repositioned its salt products by developing a low-cost iodised salt called Annapurna made available in small sachets for as low as six US cents a packet. The company also launched a full-scale marketing campaign to encourage the use of iodised salt. In three years Unilever captured 35 percent of market share and 50 percent of Ghanaian consumers switched to iodised salt.
These three examples are powerful illustrations of how CR can be used as a platform to enhance marketing strategies and promote sustainable development in low-to-medium income emerging markets. As companies rapidly adapt their business models to take advantage of new business opportunities in these markets, we suggest that their CR and Marketing teams start spending a lot more time together.
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