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How Mobile Brands Can Penetrate Emerging Markets

March 24, 2016 / by / 0 Comment
  • SumoMe

Mature markets did not have a lot of difficulty surging past the one billion-mark of smartphone users back in 2012. With the United States and European markets on the verge of saturation, many smartphone carriers are looking for growth outside of these countries and towards emerging markets, dubbed as “the next five billion mobile consumers.”

According to a December 2014 survey by eMarketer, more than a quarter of the global population will use smartphones by the end of 2015, and by 2018, the marketing firm estimates it to increase by 2.56 billion, or over one-third of consumers worldwide. By this time, over half of mobile phone users worldwide will be on smartphones, making feature phones a minority.

Emerging markets like China, India, Russia, and Brazil are among the top 10 countries leading the number of smartphone users all over the world. Indonesia, South Korea, Mexico, Turkey, the Philippines, Nigeria, Thailand, and Vietnam also made the top 20 cut.

But it is a different story when it comes to mobile spending, as many of these developing economies are not yet too keen on spending on mobile apps. App Annie Index statistics for the first quarter of 2014 showed that the United States was the only country to outperform Brazil, Russia, South Korea, and India in the number of apps downloaded on Google Play. Yet in terms of app revenue for the same period, the top five countries are Japan, United States, South Korea, Germany, and the United Kingdom. Brazil, Russia, and India did not even make the list.

Developing nations need to get past all the barriers of mobile adaptation before it can be considered at par with more sophisticated markets like the United States and Canada. The dynamics involved in getting them onboard the mobile spending bandwagon are far different than those of the first billion smartphone users. Emerging markets are challenging environments to navigate, and only companies that understand the barriers of mobile service usage in emerging countries are well positioned for future growth and for shaping future user behavior.

Barriers to entry

One of the biggest obstacles in emerging markets is the lack of access to sophisticated technological infrastructure so common in developed countries. For example, many mobile networks in Brazil and India still rely on 2G and 3G, in contrast to the support of 4G and 5G in the West. Brands must learn to continually adapt to these connectivity limitations if they are to effectively reach consumers in emerging markets.

Complicated payment structures are another entry barrier, as majority of app stores require access to credit payment, as that is the norm in developed countries. However, one in five consumers in developing nations do not have access to credit or banking facilities. Furthermore, most potential mobile users do not have ready access to credit card accounts, meaning they couldn’t use Google Play or the App Store if they want to.

Price points of mobile content are also a problem, since more than a third of emerging market consumers find mobile content too expensive to access, and 32 percent are not even aware of promotions or incentives for making easier purchases.

But what many brands do not understand is that most emerging markets are both emerging and maturing at the same time. The affordability gap for different segments is a lot bigger than in classic mature markets. For instance, in an emerging market, there is a small percentage of smartphone heavy spenders, who can contribute a huge share in terms of customer revenues. However, this user segment is often underserved, thus being unable to reach its full market potential.

On the other hand, Internet services companies often underestimate the growth journey from a free rudimentary service to a paid, fully-featured version, hence failing to guide customers through a better user experience as affordability and willingness to spend increases.

Getting into the market

Adapting to a particular nation’s needs through localization is an essential strategy in overcoming all the impediments in gaining entry into developing nations. One of the easiest ways to do this is through translation, as 20 percent of consumers in emerging markets cannot find mobile content in their local language.

An example of an app that tries to avoid this problem is Born2Invest, which delivers business and finance news from around the world in 80-word summaries. The emerging market opportunity is specifically attractive to my company, M6 Ltd., the creator of the app, as we plan to build a foundation of loyal users in specific markets where customer acquisition costs are still relatively low. We intend to become a dominant content player in developing economies, including sub-Saharan African economies. By translating the content of the Born2Invest app into 54 languages, we expect to break into more than 150 markets within a period of 24 months.

Aside from translating an app to a nation’s preferred language, it is also important to tailor apps on the people’s preferred kind of mobile content. For instance, consumers in Brazil, Vietnam, China, Nigeria, and India prefer social networking, music, and news apps above all else. These types of apps have better chances to sell in the market than health or educational services. Also, changing the look and feel of an app so that it has localized themes and music further pushes the appeal to the masses.

Still, when it comes to app monetization, offering subscription bundling can increase the number of trials and overcome initial cost barrier, since users perceive that they are receiving a much greater value for their money. The “pay-as-you-go” mindset of these consumers would take comfort in low subscription fees based on shorter daily or weekly cycles rather than expensive monthly fees.

Since many users do not have access to electronic payment, carriers are looking to partner with specialized local app stores that want to leverage their distribution and prepaid billing capabilities. A usage-based formula could provide recurring revenue for premium app developers. They can also benefit from app stores without data usage fees, since most emerging countries’ smartphone users have limited access to 3G and 4G data packages due to high costs and their limited available income. Additionally, premium app developers should consider creating smaller versions of apps to shrink their download size just enough to function well on free Wi-Fi or low-speed 2G.

Aligning brands with culture-specific factors like language and aesthetics helps them increase their chances of not only targeting customers, but also retaining them. Addressing pertinent issues like payment mechanics and Internet connectivity can help mobile brands and companies practicing localized strategies unlock success in emerging markets.

 

ABOUT THE AUTHOR

Sharon Harris, 28, likes tech and biz. Any technology topic from analytics, the Internet Of all Things, to digital devices is enough to send her Muse into overdrive. The lady from Canberra was also born with one foot in the business world, thanks to entrepreneurial parents who built a business from literally nothing. One of Sharon’s life goals is to put up her own start-up one day. And what would be a better way to start than do what she’s doing now: covering the finance, investments, business, and digital beats?