How to reach emerging market consumers with new ... - Roland Berger

Study 27
Direct ordering reduces costs and saves time. On occasion,
companies will find it profitable to invest in novel distribution
methods that combine different products and services to
reach a particular consumer segment.
Getting it right – Some examples
Some companies are most definitely getting it right. Here are some
examples from across the developing world that can serve as an
inspiration to others.
Project Shakti, jointly created by Unilever and an Indian consulting
company, is an innovative delivery and procurement model. By
hiring women from microfinance groups as last-mile distributors
for Unilever household products, the initiative improves the rural
reach of fast-moving consumer goods. Bank loans are secured
through microfinance, with Unilever guaranteeing the loans
against default. The project currently employs over 45,000 female
partners in rural areas across 12 different states, and accounts
for 20% of Unilever's total rural sales.
On the other side of the world, Avon saleswomen travel the
Amazon and its tributaries in ferries, small boats and canoes to
serve remote Brazilian mining towns located up to 1,500 kilometers
from anything resembling urban civilization. The
saleswomen's persistence in overcoming distribution barriers
has helped propel Avon into a leading position in the Brazilian
cosmetics market. In South Africa, Avon delivers merchandise to
post offices for sales representatives to pick up. Where no bank is
available, Avon organizes payment through the post office or a
major retailer.
Coca-Cola has evolved a "hub and spoke" distribution model to
reach rural markets. Twice a week, the company depot supplies
large distributors who act as hubs for small distributors. Rural
markets frequently lack electricity and refrigerators, so Coca-Cola
also provides low-cost ice boxes – a tin box for new outlets
and a thermocol box for seasonal outlets.
Heineken and Guinness have developed new products for local
markets in emerging countries. A core part of their strategy is to
master lower-cost production and develop distribution systems
linking independent wholesalers, retailers and street vendors.
These networks provide products and income to millions of people.
Another strategy for many retail brands has been to secure a
strong local partner to help pave the way for international growth.
J.Crew, a retailer from the United States, has entered into a
partnership with Hong Kong-based specialty store operator Lane
Crawford to expand into Asia. From the end of 2012, their women's
ready-to-wear clothes and shoes, men's apparel, and accessories
collections will be available at certain Lane Crawford stores in
Hong Kong and China.
Samsonite also uses local distribution partners to supply its
products to remote areas. Recently the company opened a
flagship store at the airport in Urumqi, a tier-3 city in China.
Similarly, Procter & Gamble uses many local shops and employs
popular Bollywood actors to endorse its products. Half a year
after its release in October 2010, Gillette Guard held 50% of the
market for razors.