Secret for selling successfully in emerging markets

Consumers in the emerging markets are some of the best customers in the world. They have represented more than half of Coca-Cola Co.’s global revenue for the past nine years.

Coca-Cola’s three largest markets outside the United States today are in Mexico, China and Brazil.

Large consumer packaged goods companies say that reaching these markets remains a formidable challenge, i.e. selling successfully in those regions is not easy.

According to new research, different combinations of price, package sizes and merchandising work more effectively, depending on whether the goods are moving through large, self-service chains or smaller corner shops.

Consumer Brand MarketingSKUs = Stock Keeping Units (Image: Journal of Retailing)

A team of Brazilian and American researchers carried out a study in southeastern Brazil. Their article – “Consumer Brand Marketing through Full- and Self-Service Channels in an Emerging Economy” – has been published in the Journal of Retailing (citation below).

The authors are Marcos Fava Neves of the School of Economics and Business, FEARP, University of São Paolo; Leandro Guissoni of the São Paolo School of Business Administration, Fundação Getulio Vargas (FGV); and Rajkumar Venkatesan & Paul Farris of the University of Virginia’s Darden Graduate School of Business.

They gathered and analyzed data on the sales of all brands of soft drinks, as well as related advertising, promotions and in-store merchandising for over four years in a mainly urban region in southeastern Brazil.

The area included small independent shops and large retail chains. The researchers were able to construct a complex pattern of what kind of merchandising, packaging and price worked best in the different retail outlets.

The effectiveness of marketing mix elements, the authors say, varies with the channel format.

For example, mass advertising is less effective where full-service, mom-and-pop stores predominate, but package size variety is especially important to the marketing mix, and brands’ channel relationship programs support price rises without harming sales.

The authors wrote in an Abstract in the journal:

“Our study highlights that marketing mix strategies popular in the self-service-dominant channels of developed economies are not as effective in the full-service formats that remain important in emerging economies.”

Citation: “Consumer Brand Marketing through Full- and Self-Service Channels in an Emerging Economy,” Rajkumar Venkatesan, Paul Farrisb, Leandro A. Guissonic and Marcos Fava Neves. Journal of Retailing. DOI: 10.1016/j.jretai.2015.04.003.