An emerging market is a country that has some characteristics of a developed market, but does not meet standards to be a developed market. This includes countries that may be developed markets in the future or were in the past. Examples of emerging markets are Brazil, Russia, India and China also known as the BRIC countries.
A business such as Unilever may want to target these countries because the people living there may be earning more money than they used to so they may be more inclined to buy a more modern or well renowned product, this offers businesses like Unilever more opportunities for growth for example Unsilvers underlying sales in emerging markets rose 2.8% in the first three months of the year, compared with analyst estimates of 2.1%. Unilever say that emerging markets now account for 57% of their total business.
Another reason large businesses may want to target emerging markets may be that current domestic markets may be mature or saturated which may encourage companies to increase product life cycle by targeting these emerging markets. However it is sometimes difficult to understand how these emerging markets so they may spend huge amounts of money on research and development to see how these markets work and to put together strategies on how to be successful in these markets. This can be very costly for big businesses and they can potentially suffer if their business plans fail.
There is always a risk when targeting these markets as there is never a certainty that a business plan will be successful. A disadvantage of trying to do business in emerging economies is the challenge in overcoming cultural risks. Cultural perspectives, rituals and product usage vary around the world and when new economies emerge, they may have different expectations than ones in which a business is established.
Emerging markets often have a growing upper-class population. These consumers are sometimes interested in purchasing luxury goods previously unavailable in the region. A small business could benefit if it took advantage of the opportunity to reach customers who have never had the opportunity to purchase them before. Additionally, the scarcity of a product or service could make it easier for a brand to be seen as a status symbol.