To thrive in rapidly changing economies in regions such as Asia and Africa, multinationals need to take new approaches to gathering and using market intelligence.

Multinational corporations have invested huge sums in emerging markets — more than $3 trillion since 1998, by one estimate.1 Returns from these investments, however, have sometimes been disappointing. The Economist, for example, has reported that the return on emerging-market investments for the average multinational corporation has been “mediocre” and that some companies “have lost a ton of money.”2

Even when managers think they are performing well in emerging markets, they often are not because they have set low expectations.3 Executives at multinationals, for example, may be pleased with double-digit growth in revenues or being at their target profitability in emerging markets, yet their emerging-market operations may contribute only a tiny fraction of their overall business.4 With emerging-market companies rapidly gaining competitiveness, time for Western multinational companies to build market share in these countries is running out.5

A frequently mentioned reason for the underperformance of multinational corporations in emerging markets is that these markets are different, and that multinationals need to adapt their products and operations.

The following three observations are typical of a long line of research that makes this point.

“Many multinationals simply import their domestic models into emerging markets. They may tinker at the edges, lowering prices — perhaps by selling smaller sizes or by using lower-cost labor, materials, or other resources. Sometimes they even design and manufacture their products locally and hire local country managers. But their fundamental profit formulas and operating models remain unchanged, consigning these companies to selling largely in the highest income tiers, which in most emerging markets aren’t big enough to generate sufficient returns.”6

“For developed-market companies, winning consumers in these new high-growth markets requires a radical change in mindset, capabilities, and allocation of resources. The value consciousness of emerging-market consumers, the diversity of their preferences, and their sheer numbers mean companies must rethink every aspect of operations, including product portfolios, research and development, marketing, supply-chain management, and talent development.”7

“[In emerging markets, Western multinational companies] have tended to gear their products and pitches to small segments of relatively affluent buyers — those who, not surprisingly, most resemble the prototypical Western consumer. They have missed, as a result, the very real opportunity to reach much larger markets further down the socioeconomic pyramid.


1. “Emerge, Splurge, Purge,” Economist, March 8, 2014.

2. “Submerging Hopes,” Economist, March 8, 2014.

3. R. Venkatesan, “Conquering the Chaos: Win in India, Win Everywhere” (Boston: Harvard Business Review Press, 2013).

4. “Interview with Ravi Venkatesan: Winning in India Can Help Companies Win Globally,” June 12, 2012,

5. Accenture, “Fast Forward to Growth: Seizing Opportunities in High-Growth Markets,” (Chicago: Accenture, 2012); and J. Bughin, S. Lund, and J. Manyika, “Harnessing the Power of Shifting Global Flows,” McKinsey Quarterly (February 2015): 1-13.

6. M.J. Eyring, M.W. Johnson, and H. Nair, “New Business Models in Emerging Markets,” Harvard Business Review 89, no. 1-2 (January-February 2011): 88-95.

7. Y. Atsmon, P. Child, R. Dobbs, and L. Narasimhan, “Winning the $30 Trillion Decathlon: Going for Gold in Emerging Markets,” McKinsey Quarterly (August 2012),

8. C.K. Prahalad and K. Lieberthal, “The End of Corporate Imperialism,” Harvard Business Review 81, no. 8 (August 2003): 109-117.

9. This article is focused on multinational corporations with their own organizations in emerging markets rather than those that operate through joint ventures or arm’s-length arrangements, such as licensing.

10. T. Khanna, “Contextual Intelligence,” Harvard Business Review 92, no. 9 (September 2014): 58-68.

11. S. Tamer Cavusgil, “Measuring the Potential of Emerging Markets: An Indexing Approach,” Business Horizons 40, no. 1 (January-February 1997): 87-91.

12. “Gum in China,” July 2016,

13. T. Crowell, “A Billion Jaws Chewing,” Asia Times, August 13, 2005.

14. Venkatesan, “Conquering the Chaos.”

15. “How Nokia Has Emerged as Leader in Crowded Dual Sim Market,” Economic Times, April 11, 2012; and Venkatesan, “Conquering the Chaos.”

16. J. Reingold, “Can P&G Make Money in Places Where People Earn $2 a Day?” Fortune, January 17, 2011, p. 86.

17. A. Doland, “Why Millions in China Downloaded L’Oreal’s Makeup Genius App,” August 25, 2015,

18. V. Walt, “Amazon Invades India,” Fortune, January 1, 2016.

19. P. Bishop, A. Hines, and T. Collins, “The Current State of Scenario Development: An Overview of Techniques,” Foresight 9, no. 1 (2007): 5-25; and P. Schwartz, “The Art of the Long View: Paths to Strategic Insight for Yourself and Your Company” (New York: Random House, 1996).

20. D.M. Szymanski, S.G. Bharadwaj, and P.R. Varadarajan, “Standardization Versus Adaptation of International Marketing Strategy: An Empirical Investigation,” Journal of Marketing 54, no. 4 (October 1993): 1-17.

2 Comments On: Mastering the Market Intelligence Challenge

  • Vijay Srinivas Vittalam | December 29, 2016

    Dear Murali,
    I read your article and saw the interesting statistics. One classic example I will give w.r.t. India and this recently I thought and was noticed.NESTLE, Switzerlands Noodle packet which is the best example I can give. Lot of noise happened w.r.t. Noodles and now NESTLE came up with the Market Intelligence and purchasing parity model. Very Effective and Dynamic. Kindly do a little R&D on this you will come to know how NESTLE made it
    Lot of insight on this
    Thanks & Regards,

  • Dave Miller | March 6, 2019

    Another example was Brazil during the economic expansion period of 2011-2014, prior to its subsequent economic implosion. Foreign investment in the country was attractive given the strengthening Real, growing wealth profile of the citizenry and inability to export to the market due to its protectionist import duties.

    Most global firms relied on generic assessments from traditional consulting groups that demonstrated growing incomes, a large population, and little product competition. Companies saw great potential to locally generate products for a large untapped market that surveys showed there was a great interest for novel internationally-proven product offerings.
    There were two major caveat, though, that slipped through the analyses:

    1. Yes, the product may be desired and have wide appeal, however, the vast majority of the expected purchasers simply did not have enough disposable income to be customers.
    Wealth increases accrued to the top 10-25% of the population only. These people were the market, as even the “middle class” only earned about $800 per month. Thus, even if the foreign firm were able to sell to all of the upper income people, their predicted sales were unrealistic.
    Most products introduced were one-time purchases or memberships. So, once a sale was made, the customer would need not make any further purchases, meaning ramp up would be successful but sales would quickly diminish as saturation was achieved.

    2. Unfortunately, these multinationals spent dearly to set up operations, profits could not be repatriated and the market was a mirage. To further add insult to injury, the Brazilian miracle was itself short-lived, with the value of the Real dropping over 50% by 2016, leaving the firms with huge asset value losses. Consulting firms overlooked economic cycle risk in their enthusiasm to convince firms to make significant FDI in Brazil between 2009-2012.

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