Emergic: Rajesh Jain's Blog

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Esther Dyson on New Markets

October 18th, 2002 · No Comments

In a discussion with Fortune [part of the Brainstorm 2002 series], Esther Dyson says:

Most marketing represents investment in customers who already exist. In other words, we’re only hunting and gathering current customers, rather than coming up with new ones.

How can you create new customers? By turning people into effective producers, who can then earn enough money to become potential customers for the products of several companies. That’s the thinking that drove Henry Ford when he doubled his workers’ salaries early last century. He created customers not for himself but for the US economy, which in turn produced customers for Ford Motor. Keep in mind that usually only large companies can afford this kind of investment. Smaller companies still need to work like hunter-gatherers, investing in R&D or production. But they’re counting on these larger companies and employers. These firms are big enough to benefit from the growth of an overall economy and too big to grow much if the economy around them is not. In practical terms, the biggest supply of potential customers is in emerging markets. Take Russia, my favorite example. Right now, I’m working with a group of companies on the US-Russia Information Technology Roundtable. The group is led by the American Chamber of Commerce in Russia, the US-Russia Business Council and Russian counterparts, and will hold its kickoff meeting during the Bush-Putin summit meeting in Moscow later this month. The companies involved are all trying to build the Russian IT market. That, in turn, will make Russian business more efficient, Russian workers more productive, and Russian consumers better able to afford new products.

Although it’s not explicit, this joint approach addresses one of the basic issues of spending in developing markets: How can you ensure that you can capture those customers you create? You can’t. The trick is to join with other companies and invest in an entire economy rather than just a single company’s work force. Although this particular event is just an IT roundtable, the Chamber of Commerce has more than 650 members, and the presence (and investments!) of each of them benefits them all. That’s why AmCham in Russia–and indeed Chambers of Commerce around the world–are so active in many developing economies. Although they may not be thinking consciously of the ideas I’ve outlined, their efforts to improve conditions for producers also enrich the workers who become one another’s customers. More and more, I’m running into companies who are not simply selling abroad, but building markets. ITC, an Indian company, is putting Internet kiosks into soybean-farming villages, enabling its suppliers to operate independently of middlemen who control prices. BchinaB is helping Chinese plastics producers to reach markets in the West–and to buy other products from those same markets. BusyInternet Cafe in Ghana is selling Internet access not just to consumers, but to small businesses who use its wired offices to make their businesses more effective. These are just a few examples.

Instead of focusing on market share in mostly mature markets, companies need to focus on developing new markets. They can do that with new products, which are my regular focus. But they can also create those new markets–and whole lot more–by helping to create new consumers.

These are the ideas on which we need to build Emergic. Our new markets are the world’s emerging markets.

Tags: Emerging Enterprises

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