We are consistently looking at the use of mobile in emerging markets and how it is helping brands to move forward with their international expansion plans. It remains a tremendously exciting realm of opportunity for businesses looking to grow in new regions. While securing market share in the West is an increasingly challenging exercise, mobile models in emerging markets are still maturing and so the opportunity for brands to grab market share in these regions is therefore a realistic proposition.
That said, a recent story that came out of India pointed to mobile progression in emerging markets contending with a backward step. Some of the largest bricks and mortar stores in the country have decided not to stock Android One smartphones. This is surprising given that this handset has been specifically designed for emerging markets. Google worked with a number of device makers, who have built products that are budget-friendly, to create the handset to cost about £60 but still run on the Android operating system.
The most widely touted reason for retailers snubbing the handset lies in the fact that Android One was only initially available to buy online via Amazon, Flipkart and Snapdeal. What however must also be considered is that during this time, sales of the handset were also quite low. Hype originally had suggested that Android One would become the choice smartphone for millions of emerging market consumers. But perhaps it is therefore worth discussing the premise of what it takes to successfully create a handset in these parts of the world.
The existing Western smartphone world has not been set up to cater for emerging markets. Even if consumers in these parts of the world do get their hands on a smartphone, once they’ve reached the App Store rich with thousands of applications, they need banking facilities to access the content. This is a major issue given the low penetration of financial services (credit and debit cards) in regions such as sub-Saharan Africa. Data from the World Bank shows that the US has a penetration of 72% whereas Nigeria has 19% and Ghana only 11%.
So for people that don't have credit or debit cards, it’s not possible to readily access content through the ‘App Store’ model that has become so prevalent in the West. An opportunity instead lies with mobile manufacturers to work with mobile network operators to open the door to a new world of content. Our data showed that MNOs are more trusted than third parties in developing regions and are best placed to offer content and services which do not require credit or debit cards - as part of their existing post or prepaid agreements with customers.
Also worth noting beyond pricing pain points, the results highlighted the marked difference in how global and local brands are perceived. Even though the handsets were built by local vendors, Google’s heavier than normal presence in the OS may had a negative effect for Android One. Local brand preference is borne out of the fact that 78% of emerging market consumers place greater trust in companies that use a local language or dialect, while 76% say they want content to include cultural references expressed in a way they can understand.
This only serves to underline the difficulties these tech giants face in engaging consumers in these regions. A whole shift in mindset will have to be delivered if brands are to succeed in emerging markets. Captivating consumers there will require a fresh approach born out of responding to local conditions rather than Western mechanics.
By Marco Veremis, CEO of Upstream.
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