As companies operating in North America and Europe well know, today’s volatile macroeconomic environment and gloomy outlook presents a massive challenge: how do we meet our financial targets and continue to grow? The answer for many western multinationals has been unanimous: “emerging markets”.
We believe these markets have already “emerged”, so we prefer to define them as Rapid Growth Economies (RGEs). Specifically, these include Asia’s Rapid Growth Economies; China, India, Indonesia, and Malaysia, in addition to the UAE and Brazil.
For several years now, these markets have been squarely in the crosshairs of CEOs’ business development radar screens, and why not?
After a contraction in 2009 and with modest GDP growth expected in 2012 and 2013 in the U.S. and Europe, it has been impossible to ignore the tectonic economic shift afoot in the RGEs:
- China’s GDP grew 9.1% in 2009, and is expected to grow roughly 8.7% in 2012 and 2013
- India is expected to enjoy robust 8.4% growth in 2012 and 2013
Translated to an individual consumer level, the numbers are equally impressive and no doubt get the hearts of CEOs racing with optimism:
- Malaysia’s national GDP per capita has reached US$9,700 – up from US$6,700 just two years ago
- Indonesia is on a similar upward trend, with GDP per capita having reached US$3,500 – up from US$2,299 two years ago
- Brazil’s per capita GDP (PPP) has reached $11,845 with a 2011 anual growth rate of 3.5%
While each of these markets are vastly different on a number of levels – from government policy, to competitive landscape, to consumer and cultural preferences – here is one consistent (possibly counterintuitive) business and brand imperative in RGEs that transcends unique geographical business drivers: their consumers are bullish on Purpose.
This means that RGE consumers – which make up what we are calling the new “Purpose Bull Markets” – have much higher expectations of and engagement with corporations and brands on societal issues.
Based on Edelman’s 2012 goodpurpose® survey, here are two key reasons why a Purpose-led strategy is vital for any company or brand that wants to take advantage of the growth opportunities in RGEs:
1- 89% of Purpose Bull Market consumers believe it is important for business in general to address societal issues
Counter to the perception of days gone by, today’s Purpose Bull Market consumers do care about businesses’ impact on the natural environment, local communities, and broader society in their local markets. And while Purpose Bull Market consumers believe it is important for business to address, communicate, and engage them on societal issues, only 40% of them rate business’ performance in addressing societal issues in their markets as good or excellent. This suggests that there is a quite a gap between expectations and perceived performance in this area.
As a result, there is an outstanding opportunity for companies to benefit from demonstrating that they are taking on these tough issues and to let their Purpose Bull Market consumers know about how they are addressing them.
Perhaps this is why Apple CEO, Tim Cook, recently made a trip to southern China to see how strategic supplier, Foxconn, was managing its labour issues, or why Asia’s largest power company, CLP (disclosure: client), has been discussing the challenges of reducing carbon emissions in a region in which energy consumption is expected to double.
2- Purpose Bull Market consumers are taking action on social purpose issues
From buying, to sharing, to donating, to volunteering, to praising and punishing businesses or brands that do not address societal issues, Purpose Bull Market consumers are far more apt than those in Western Europe or the U.S. to take action when it comes to societal issues.
In fact, 78% of consumers in Purpose Bull Markets were personally involved in supporting a good cause, compared to only 48% in the Purpose Bear Markets (e.g. U.S., Western Europe, Japan).
This too presents an outstanding opportunity for businesses and brands to provide a vehicle for their consumers to address societal issues.
The secret to an “emerging market” growth strategy?
There is no doubt that Purpose Bull Markets will continue to be a source of great opportunity for western multinationals, as they further develop their businesses and increase their investments in those markets.
As companies and brands look to Purpose Bull Markets for their next stage of growth, it will be vital for them to show tangible evidence – through initiatives, programs, communications and engagement – that they are aware of and invested in domestic societal issues.
By: Ashley Hegland, Regional Practice Chair, Business + Social Purpose, AsiaPac