The merits of emerging markets

Emerging markets have more resilient business opportunities than mature markets. When demand exceeds supply, immature products can find a market, early entrants can charge premium prices and the vendors have a greater capacity to recover from mistakes.

Markets take some time to stabilise and to decide on leadership positions, thus most firms can earn decent profits during this settling in period. The best survive and capture long-term market share. The others fail or move on to new markets.

Even if you only take a short-term view of an emerging market, you can generate quick revenue and premium profits during this period. If you are lucky, you may end up with a long-term share.

If your competitors prove stronger or better than you, you can move on to the next one. New markets are emerging all the time and so the business which understands the dynamics of such markets can do very well.

However, to optimise this situation for yourself you do need to pick your markets. What you need to do is to have a lot of things going for you which give you an edge out of the box.

If you have intersection between a new product, a new marketplace and a new distribution channel, you don’t really want to find all three. The optimal situation is where you only need to work on one of the three, usually the new product. If you already have an existing customer base to work with and an established channel to them, you have broken the back of the problem. It can take years to build knowledge of a new market and the same can apply to developing a distribution channel.

If we simply restrict our emerging market problem to new products into existing markets, the problem is highly manageable. We then either develop new products or go find them.

Since the world is littered with new inventions, innovations and new business concepts, finding them is not difficult if you know where to look.

However, even after we have found something which can generate revenue, what we really need is a competitive advantage – that is, some exclusive rights over the solution within our geography for some period of time. What this suggests is that our search should be directed overseas where we can secure distribution rights.

We can start either by seeking out new products and then asking our customers if they need them, or by searching for solutions to problems which our customers tell us they need to resolve.

By connecting to our counterparts overseas we can find new products or newly available solutions. We can attend industry exhibitions and conferences to find out about newly announced products or new solutions.

Many innovative products are created by small firms who seek overseas representatives and distributors. Basically, there are lots of good opportunities waiting to be seized.

If you stick to new products which solve long-standing difficult problems or new products which provide significantly increased benefits to existing solutions, the market will be very receptive.

Tom McKaskill is a successful global serial entrepreneur, educator and author who is a world acknowledged authority on exit strategies and the former Richard Pratt Professor of Entrepreneurship, Australian Graduate School of Entrepreneurship, Swinburne University of Technology, Melbourne, Australia.