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How does a company based in the West adapt to emerging markets halfway around the world? How can it overcome fundamental differences in lifestyles and social challenges?
Unilever, a multinational company based in the Netherlands and the UK, faced this challenge as it worked to tailor its wares to South Asian markets. Sandeep Kohli, Vice President of South East Asia and Australasia Marketing Operations for Unilever, shares his insights.
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Steps to Emerging Market Adaptation: Unilever’s 4 Ps
Insights: What is the first step to adapting to emerging markets?
Kohli: It almost goes without saying that the first step is social awareness. Unilever aims to embody the creative capitalism that Bill Gates presented at the 2008 World Economic Forum. That is, improving the lives of people around the world through collaboration with innovators, companies, and governments.
Societal evaluation is a key element of Unilever’s corporate objectives—CSR is, in itself, our business model. Some of the questions we asked as we moved into South Asia included, “How can we lower the bacterial infection mortality rate of children in Myanmar?” and “How has the mortality rate of children under five decreased?”
Insights: So what comes after social awareness?
Kohli: That would be motivated resources. The more unstable the market, the more crucial it is to have capable organizers in charge. The key is to think beyond the company and instead approach the whole country as a project.
Doing business in emerging countries can actually be like creating societies. As you might expect, partners in such places are often limited. The decision to assign skilled resources from home or rely on a local presence could itself determine success or failure.
Then there’s the balance of skill and motivation to consider—this is extremely important. For example, with the Japanese market shrinking, many skilled people are eager to seek out work in the growing Asian market. However, the desire to simply find work will inevitably prove insufficient to succeed under the challenges of an emerging market.
Insights: We understand that 50% of Unilever’s revenue comes from emerging economies. What’s your secret?
Kohli: We approach emerging countries as emerging countries. Meaning, the way we operate at home (in the Netherlands and the UK) simply doesn’t apply to undeveloped markets. Having said that, Unilever has its own methodology for these emerging markets, which we call the four Ps:
- People: consumers in the target country. Naturally, we want to understand their lives.
- Partnership: vendors and distribution networks. We are constantly aiming to support our partners’ human resource development and system investment for mutual benefit.
- Purpose: In my opinion, this is particularly important in emerging countries. How many companies can clearly outline what they’re doing in Myanmar, and for what purpose? In order to create a successful new market and involve people, you must establish your objectives and achieve empathy.
- People: our employees. We have high standards for our employees in all locations and are committed to human resource investment. Whether we’re in Myanmar, the UK, or somewhere else, we want the best talent globally.
Putting Purpose Front and Center
Insights: So you think the third P—purpose—is really key. Can you tell us why?
Kohli: Sure. Take children’s health. In emerging countries, the mortality rate of children under the age of five is in the tens of millions, all because of unsanitary conditions and lack of public health. Therefore, when we started selling soap, our goal wasn’t really to sell soap, but to improve hygiene by educating children and their parents about how to wash their hands.
These kinds of things aren’t business activities or CSR—they’re business itself. Showing that we have these values at Unilever is an important part of our DNA, and we are very proud that students in Indonesia, Brazil, and other places rank us as the most desirable place to work.
This is all because we face consumers and communities with love and respect.
Insights: Some emerging markets have to be more challenging than others. How do you approach the tougher ones?
Kohli: Once you have chosen a market, commit to it completely and really show that commitment. The president of Unilever actually visits Myanmar several times a year. This is a top executive whose company offers products to two billion people every day across 180 countries. Why do it? Because it’s important for the people at the top to see.
And remember, an emerging market may be small, but sending inexperienced or young people is a clear mistake that many companies make. To communicate and organize best practices requires a lot of effort and skill. Emerging countries should benefit from the best talent available.
Insights: What is important for you, personally, when you work in in emerging countries?
Kohli: Most of what I do is to prepare the heart for the work involved. In many cases, it’s easy to make mistakes based on perceived common sense. Sometimes, it’s better to just forget what you think you know and sympathize with people when you talk to them. When you rely only on your head to make decisions, you tend to rule things out too quickly, which prevents you from seeing the market with fresh eyes.
Relying on your heart to make decisions, you can break down existing perceptions and find new ideas. I practice mindfulness to increase my sympathy. This not only helps me accept new environments and ways of thinking, but also promotes creativity in emerging markets.
Note: The above was adapted from two articles (1, 2) published on GLOBIS Chikenroku, written in Japanese by Toru Takahashi.
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