Emerging Markets Business Summer 2016 | Page 40

NON-CONSUMPTION IS YOUR FIERCEST COMPETITION—AND IT IS WINNING T   he Oxford dictionary defines competition as the person or people with whom one is competing, especially in a commercial or sporting arena; the opposition. For businessdictionary.com, it stands for rivalry in which every seller tries to get what other sellers are seeking at the same time. Bringing these definitions to life, a 2013 Fortune article titled: ‘The 50 Greatest Business Rivalries of All Time,’ highlights competition between some of the world’s most well-known companies, pitting Coke against Pepsi; Ford against GM; Nike against Reebok; Airbus against Boeing; Procter & Gamble against Unilever. These examples embody the way we view competition. But the view is flawed. The way we define competition and the method employed by companies to assess the competitive landscape, leaves out the most important competitor of all: non-consumption. And nowhere is this feisty competitor more prominent than in emerging markets. According to research from McKinsey & Company, leading companies in the developed world earn just 17 percent of their total revenues from emerging markets, despite the fact that they represent 36 percent of global GDP. Non-consumption is the inability of an entity (person or organization) to purchase and use (consume) a product or service required to fulfill an important job-to-be-done. This inability to purchase can arise from the product’s cost, inconvenience and complexity, along with a host of other factors none of which tend to be limitations for the rich, skilled, and powerful in society. For its part, a job-to-be-done arises when an entity is struggling to make progress in a particular circumstance, such as when someone gets sick and tries to recover. If there are not adequate facilities that can aid their speedy recovery, then that person is a non-consumer of basic health services. Health, of course, is just one in a long line of sectors and industries plagued by lack of consumption. Consider the markets for airconditioners, refrigerators, and automobiles in Nigeria. According to market intelligence firm, Euromonitor, only 2.5 percent of households have access to air-conditioners, compared to 2.3 percent in 2010, while just 19 percent of households have access to refrigerators, up from 17 percent; and only 9 percent of households have access to cars a mere one percent increase on the 2010 figure. Compare these numbers with those in the United States, where 83.4 percent of households have air-conditioners, 99.9 percent have refrigerators, and 86.5 percent have automobiles. NON-CONSUMPTION IS THE INABILITY OF AN ENTITY (PERSON OR ORGANIZATION) TO PURCHASE AND USE (CONSUME) A PRODUCT OR SERVICE REQUIRED TO FULFILL AN IMPORTANT JOB-TO-BE-DONE. If non-consumption were a company in Nigeria, or in almost any other emerging market, it would have a monopoly in most industries. Let us consider the ownership of the three products mentioned above in ten emerging markets and eight frontier markets (those undergoing significant development yet considered too small to be emerging). The statistics below show the ownership percentages per household for both refrigerators and air-conditioners and the number of passenger vehicles per household in these different countries. Emerging Market Data * ** Argentina 96.5% 38.3% 0.7 Brazil 98.1% 13.8% 0.8 China 87.6% 72.7% 0.3 India 23.8% 13% 0.1 Indonesia 44.2% 8.3% 0.2 83% 12.9% 0.8 Mexico South Africa 73.4% 5.3% 0.4 Turkey 99% 18.4% 0.5 Egypt 96.9% 6.6% 0.2 Iran 87.6% 16% 0.5 78.98% 20.53% 0.45 AVERAGE * % of household - * * number per household Frontier Market Data * * ** COUNTRY Cameroon 16.5% N/A 0.1 Croatia 98.8% 27.2% 0.9 Kenya 8.6% 1.7% 0.1 Macedonia 97.8% 26.1% 0.6 Morocco 86.6% 15.4% 0.3 Nigeria 19.0% 2.5% 0.1 Tunisia 96.0% 21.6% 0.3 Vietnam 55.0% 10.0% 0.1 59.8 14.9% 0.31 AVERAGE * % of household - * * number per household Source: Euromonitor 38  Emerging Markets Business  Summer 2016 • Issue No. 1 * COUNTRY