Creating New Consumer Markets in Emerging Markets – Part I

“We’ve been in China since 1988. We’re only in about 14 categories. We lead all of them but one. But the spending per capita in China is only $3 a year on Procter & Gamble products. That compares to the United States, where we are in over 25 categories, and the per capita spending a year is $100.”

The above quote is excerpted from a recent interview with Proctor & Gamble’s CEO, Robert McDonald. McDonald’s ambitious plans for P&G call for adding 1 billion new customers over the next five years – that’s 200 million customers each year – or 500,000 new customers EACH DAY for the next five years. The vast majority of these customers will come from emerging markets, especially in China and India.

One of the things that interests me about China’s many markets and emerging markets in general, is observing Western consumer goods companies take a proven product from overseas and introduce it in an emerging markets with no prior knowledge of the products’ use or existence. I’m not talking about “reverse innovation” or “glocalization”, I’m talking about taking a product and literally changing consumer behavior to create a market for it.

For example, let’s look at P&G’s Pampers disposable diaper brand. P&G had a terrible time launching Pampers in China, because Chinese consumers simply did not see a need for disposable diapers. Between traditional cloth diapers and kaidangku, Chinese mothers felt that they had their babies covered. After P&G did some research to identify the winning qualities of a disposable diaper in China, they put their marketing machine to work:

“Pampers launched the “Golden Sleep” campaign in 2007, which included mass carnivals and in-store campaigns in China’s biggest urban areas. A viral campaign on the Pampers Chinese web site asked parents to upload photos of their sleeping babies to drive home the study’s sleep message. The response was impressive: 200,000 photos, which P&G used to create a 660-square-meter photomontage at a retail store in Shanghai. The ad campaign boasted ‘scientific’ results, such as “Baby Sleeps with 50% Less Disruption” and ‘Baby Falls Asleep 30% Faster’.”

Pampers now ranks number one in a product category that barely existed just a few years ago.

Campbell’s Soup is another great example with a slightly different twist. While Chinese are already big time soup drinkers, the majority of soup is homemade. The challenge for Campbell’s is to take existing soup consumer habits and prove that their canned soup is better tasting, more convenient to consume and more cost effective.

You created the market – here comes the competition…

(Keep a look out for: Creating New Consumer Markets in Emerging Markets Part II)