Richard Gottlieb

The Rise of the Mega-Megalopolis: Part 2

In my last blog I spoke about the incredible growth rate of cities in Asia and South America over the last 100 years. I also expressed my belief that, in part, the growth of the toy industry can be traced to the urbanization of Europe and America and the rise of the consumer population that comes with such growth. Simply put, people in big cities buy more stuff than do people in rural areas.

The question, however, is that’s all well and good but just how does one go about successfully (and that is the key word) selling products to someone who lives in Mumbai or in Shanghai, for that matter? How do you sell toys to people who come from different cultures and, though willing and able to buy consumer goods, have less money to spend?

A good place to begin answering that question is to read an excellent book entitled: The 86% Solution: How To Succeed In the Biggest Market Opportunity of the 21^st Century.

Authors Vijay Mahajan and Kamini Banga make the point that most companies focus on selling the developed world which accounts for only 14% of the world’s population. This means that there is an enormous population that is not being served.

The challenge, however, is how to sell to populations with different tastes, habits and customs. Most companies who do attempt to enter these markets do so by trying to sell the same products that they do to their more affluent customers. Most companies therefore fail.

So how do you go about entering these markets successfully? This book has some excellent and thought provoking answers. 

To give you a flavor for what the authors have to say, consider a subject that hits close to home in America and Europe: The movement of populations back and forth between developed and developing countries. When someone moves from a developing country to the US, they maintain close contacts with those they left behind. They do this via mass communications and by frequent trips home. This means that they are not only bringing a taste for products from their country of origin but are bringing and sending back knowledge of products they discover in their new home. 

So, for example, say you are a company that does a great deal of business in Southern California or Texas. You should be looking to sell your products in Mexico. Why? It’s because there is a fluid population moving back and forth across the border that is carrying your brand equity with them. You have a market already established. You just have to feed it.

Another point that the authors make is that the developing countries are experiencing explosive birth rates. As a result, their populations are much younger than those in the developed countries. This is, of course, very meaningful to those who market to children.  

The authors make a number of recommendations about how to go about capturing the youth market but one that resonated with me was the hunger for educational toys. 

These parents recognize that the way out of poverty is through education. Therefore, they are hungry for anything that helps their children compete. It seems like this could be a major opportunity for companies that make basic, ink on paper educational products like work books and readers. Math in particular would be a great place to start as it demands less in the way of language and culture translation.

There are plenty of other great concepts in this book. It’s an entertaining read. I think you will enjoy it.

Posted by Richard Gottlieb on July 15, 2008 | Comments (0)