Procter & Gamble executives say it was striking the first time they witnessed a man shave while sitting barefoot on the floor in a tiny hut in India.
He had no electricity, no running water and no mirror.
The 20 US-based executives observed the man in 2008 during one of 300 visits they made to homes in rural India. The goal? To gain insights they could use to develop a new razor for India.
"That, for me, was a big 'a-ha,'" said Alberto Carvalho, vice president, global Gillette, a unit of P&G. "I had never seen people shaving like that."
The visits kicked off the 18 months it took to develop Gillette Guard, a low-cost razor designed for India and other emerging markets. Introduced three years ago, Guard quickly gained market share and today represents two out of every three razors sold in India. The story of how Guard came to be illustrates the balance companies must strike when creating products for emerging markets: It's not as simple as slapping a foreign label on an American product.
To successfully sell products overseas, particularly in developing markets, companies must tweak them so they're relevant to the people who live there. And often, that means rethinking everything from the product's design to its cost.
More companies will have to consider this balancing act as they increasingly move into emerging markets such as India, China and Brazil to offset slower growth in developed regions such as the US.
For its part, P&G has doubled the percentage of its roughly USD 20 billion in annual revenue coming from emerging markets since 2000 to about 40 per cent. Ali Dibadj, a Bernstein analyst who follows P&G, said the Guard razor, which has been used by more than 50 million men in India, serves as a roadmap for companies seeking to court emerging markets.
"It made P&G realize how much investment it really takes to be successful in India," he said. "That's the art of emerging markets."
India long has been an attractive country for US companies looking for growth. It has 1.24 billion people. And its economy is bustling: India's annual gross domestic product growth was 3.2 per cent in 2012, according to the World Bank, compared with 2.2 percent in the US the same year.
Still, India's widespread poverty presents challenges for companies used to customers with more disposable income. India's per capita income is just about USD 124 a month, compared with USD 4,154 in the US, according to the World Bank.
