The 86 percent solution

Immigrants from developing to developed nations often maintain strong ties with their families back home, commonly supporting them through remittances.

In 2003, the World Bank reported that foreign workers sent approximately $93 billion home, making it a significant income source for developing economies. These immigrants frequently join social networks of fellow expats, facilitating the transfer of funds through both official and unofficial channels. This scenario presents several business opportunities.

Firstly, there's potential in systems that allow immigrants to pay for goods and services in one country that their relatives can access in another, simplifying cross-border transactions.

In the competitive landscape of global markets, brands face the challenge of resonating with diverse consumer bases. Success in developing markets often hinges on the ability to blend global and local strategies. Global brands must navigate fragmented markets, where local brands with deep market understanding often have the upper hand. To thrive, global entities must adapt, tailoring products and messaging to local tastes and cultural nuances. For instance, MTV has found success by featuring local artists and embracing regional languages, rather than solely promoting American pop culture.

Companies like Coca-Cola have strategically acquired regional brands, easing the transition to their global products. This approach lays a foundation for customer familiarity and loyalty. Similarly, expanding successful local brands into new, locally relevant products can leverage existing market insights and brand trust.

The developed world is grappling with an aging population, which is straining pensions, healthcare systems, and the labor market. In contrast, emerging countries are experiencing a surge in their youth populations, which is beginning to fuel economic growth. The United Nations estimated that over 100 countries had more than 40% of their population aged between 15 and 29 in 2000. By 2015, India's population under 20 years old was projected to reach 550 million. In 2004, half of Nigeria's population was under 15, while only 14% of Japan's population fell into this age group.

The growth of the population in developing countries is expected to be a major driver of global economic expansion through the 2020s. This demographic shift presents both challenges and opportunities for businesses. To capitalize on the burgeoning youth market, companies should focus on products and services that appeal to young consumers, such as mobile devices, entertainment, fashion, and fast food. In China, for instance, $2.4 billion is spent annually on plastic surgery, highlighting the value placed on youthful appearance. Additionally, understanding the influence of elders in these societies is crucial, as they often hold sway over social norms and purchasing decisions.

Rather than supersizing products, companies should consider right-sizing them for developing world markets. This involves reducing package sizes, offering small payment options, and catering to just-in-time ordering systems.

While consumers in developed nations may prefer supersized products, success in emerging markets often requires small, affordable packages. To achieve growth in developing countries, companies need to sell products in small quantities for just pennies apiece. Tiny package sizes that take up minimal shelf space are essential. Selling inexpensive sachets helps consumers develop a habit, and firms earn normal profits when buyers later upgrade to family-size versions. This approach allows companies to grow markets from the ground up.

Rather than viewing infrastructure gaps as barriers, consider them opportunities to build businesses providing missing resources. Develop and provide generators, inverters, water purification systems, and other necessities to support companies entering developing markets. With some creativity, you can profit by filling infrastructure voids.

In nations with unreliable power grids, undrinkable water, poor roads, and large informal economies, gaps exist in basic infrastructure. While some avoid these markets due to lack of infrastructure, you can view these voids as chances to meet unmet needs.

Provide the lacking resources yourself, and you may find great opportunities to grow businesses catering to companies eyeing these developing markets. Some ideas on seizing these prospects include importing generators and inverters so people can create their own electricity. Many locals already understand the demand for these fundamentals. Help budding entrepreneurs establish businesses offering basic resources that are scarce.

Similar opportunities exist for providing clean water through imported bottled water or local purification systems. Creative approaches are also essential. For instance, Visa partners with a cell phone company in China to enable customers without bank accounts to make purchases through their phones. This allows Visa to grow by providing payment infrastructure to those lacking credit cards. Many collaborative concepts are arising to seed and expand new markets in emerging nations.

The lack of legacy systems in developing countries presents an incredible opportunity to create entirely new systems using the latest technology, without any switching costs for customers.

Many developing nations offer a "greenfield" chance to leapfrog directly to more advanced equipment generations rather than getting locked into outdated legacy systems. This allows emerging countries to build new systems from scratch, without worrying about the costs of replacing old ones.

To capitalize on these leapfrog opportunities, it's essential to ride the wave of rapid adoption. Be prepared for pent-up demand to be unleashed, triggering steep adoption curves. By 2004, developing countries had more cell phones in use than developed nations. Gear up for large volumes when selling into these markets because growth can happen seemingly overnight.

Digitizing as much as possible is also crucial. It's typically easier to move digital information around developing countries than physical goods. E-learning and telemedicine are taking off in many developing regions, bringing knowledge and expertise to remote areas. Digitization provides access to information for those with no access to books.

In developing countries, distribution channels are often informal and fragmented, relying on small kiosks, bicycles, and temporary markets rather than established networks. The key to selling products in these markets is leveraging existing channels creatively. Neighborhood stores, or "paanwalla" shops in India, are central to distribution, despite their small size. These shops are more accessible for essentials and can drive more sales than larger supermarkets.

To extend reach, companies should create multiple distribution layers, including larger city retailers and smaller village distributors using motorcycles or carts. Direct-to-home outreach and temporary channels like stalls at local markets or popup shops in vans are also effective.

In developing markets, companies must adapt strategies to keep up with changes and seize emerging opportunities. Recognizing consumption pattern shifts as countries hit GDP per capita milestones like $1,000 or $10,000 is crucial.

Companies should adjust their positioning, direction, and distribution to align with local contexts. Collaborating with governments, NGOs, and other stakeholders can address common challenges and uncover new insights and opportunities, as these entities are often eager to attract more investment and support business success.

Transferring successful solutions from one developing market to another can be effective, as products designed to be rugged and low-maintenance for one market may be suitable for many others. Leveraging historical ties, such as colonial legacies and language commonalities, can also create unique opportunities.

For instance, English proficiency in former British colonies has facilitated IT outsourcing and software exports, while Macao's Portuguese heritage aids Chinese companies in reaching Portuguese-speaking markets.