That reality has forced corporations to reinvent their pricing-strategy formulas in emerging markets—and often to re-reinvent them. Newly affluent consumers in emerging markets are an attractive niche, but overall standards of living remain lower than in the West, gaps between the rich and the very poor notwithstanding. Even high-end shoppers have different spending behaviors from those in developed markets. Marketers and product designers cannot ignore affordability.

Wider populations in emerging markets need simple solutions with the right price point. When Procter & Gamble introduced disposable diapers into the Brazilian market, it went in with its top-end model, which failed to sell. Only after offering a less-sophisticated diaper, half the price of the top-end version, was the company able to grow the market [ 9].

With its booming economy and exceptionally price-sensi-tive market, India has taught some of the most prominent multinationals just how elusive the upper end of emerging markets can be. Levi Strauss brought its American jeans to India in 1995, not only designed but also priced as is—$65. They were considered exorbitant, especially compared with generic jeans that seemed to offer equivalent quality. After three miserable years of rampant

counterfeiting and flat sales, Levi’s had to change its pricing and design strategy [ 8].

Affordability is a double-edged sword,. Lo barato sale caro, goes the saying in Latin America—“what is cheap ends up being expensive.” If not designed with sensitivity to the market, low-cost products may strike target users as low-qual-ity compromises and detract from the company’s brand appeal. That appeal, regardless of price, is in the confidence it inspires. With limited incomes, “emerging consumers” are more cautious than their counterparts in the West; they would rather pay more for quality than risk product failure. The relative financial loss from an underper-forming product would be far more serious.

For users in emerging markets, streamlining or eliminating complex features, without reducing core quality, results in a more attractive and affordable product—particularly when features are added with careful consideration of the market con-

text. “Getting the right product at the right price is the biggest challenge,” says FutureBrands CEO Santosh Desai. “The usual approach is to strip the product of features until a semblance of affordability is attained. The trouble is that the emerging consumer, for whom every act of discretionary consumption is an act of sacrificing something essential, is looking to be seduced rather than patronized [ 10].”

For that reason, mobile phones loaded with games, music, and other extra features appealing to the U.S.’s youth-driven market have not succeeded in emerging markets. Feature creep, driven by the seemingly limitless appetite of developed markets for add-ons and customization, has no place in emerging-market design.

Nokia, the leading manufacturer of mobile phones in developing economies, puts years of research into the markets in which it sells. It keeps a full-

[ 9] Gingrich, J. “Five Rules For Winning Emerging Market Consumers.” strategy+business, Second Quarter 1999. < http://www.strategy-business.com/press/ 16635507/16583>

[ 10] Desai, S. “Fendi Fashion Is Not Enough to Entice India’s Poor” Media, 25 Sepember 2008. < http://www.brandre-public.asia/Media/ newsarticle/2008_09/ Fendi-fashion-is-not-enough-to-entice-Indias- poor/32717>