Speak of the consumer to executives from a global company, and the image is no longer likely to be a mother in some Midwestern suburb, but more likely one in China, India or Brazil.
The combination of more rapid economic and population growth and the emergence of rising middle classes in developing markets stands in stark contrast to the stagnation of the U.S. economy and erosion of the middle class.
Trouble is , many companies are still focused by business footprint and management structure squarely in the U.S. But that 's starting to change as marketers adapt to the market.
Kraft Foods addressed the issue squarely earlier this year with its plan to break into two companies -- one focused primarily on the U.S. and slower-growing food categories, the other focused primarily on a global snack business with far more potential in fast-growing developing markets.
Now some expect Procter & Gamble Co., if not taking a step quite so drastic, to reconfigure similarly for the growth of its consumer base outside the U.S. Chairman-CEO Bob McDonald helped fuel restructuring speculation when, during the company's August earnings conference call, he mused about P&G's shifting "center of gravity."
"I don't think there's any question, if someone looks back at our company 10 years from now, they'll wonder if the leadership of the company at this time took the right steps to move the center of gravity of the company more toward Asia, more toward Africa, where the babies are being born, where the new households are being formed, and certainly we've been in the midst of that ," Mr. McDonald said.
That statement was among the factors that led Sanford C. Bernstein to upgrade P&G on the belief that the company is preparing to slim down a North American-heavy organization that 's grown too big for the relative size and importance of the North American consumer market. Analyst Ali Dibadj wrote that the restructuring could reach $2 billion to $5 billion and involve thousands of layoffs.
Other analysts, however, believe the restructuring is likely to be more modest, and a person familiar with the matter said any restructuring is likely to be far more modest. P&G is likely to shift people to developing markets, though often giving existing executives the choice to move.
But another way P&G may look to shift its focus is by divesting some U.S.-centric businesses, such as tissue-towel, Mr. Dibadj said. Helping fuel speculation of a possible paper spinoff, Kirk Perry, who led a recent yet-to-be-implemented special project looking at how P&G should restructure, last month became president of the tissue-towel business. A P&G spokesman declined to comment.
Unilever's recent restructuring, in which it split up its global group that oversees product development and advertising into more product categories while organizing and downsizing its regional operations into eight multi-country "clusters," was also focused on reshaping the company to match its consumers. Today, 55% of Unilever's business comes from developing markets. It expects that number to rise to as high as 75% by the end of the decade. Reflecting that , of the eight new regional clusters given roughly equal weight by Unilever, six are wholly or mainly made up of developing markets.
Marketers such as Unilever and others are approaching the shift of consumer power to developing markets as a two-step process, said Marc de Swaan Arons, chairman of the global marketing consultancy Effective Brands. First, they're centralizing management of global brands at headquarters and trimming regional organizations, particularly in developed markets, to focus more squarely on sales, local marketing initiatives and "activation" or promotion, he said. Next, he expects more marketers to move global management of brands to the places where most sales are -- developing markets. But he said the overall revamping process is only about 40% complete today for global marketers.
It's not just the marketers that will have to adapt, however, said former P&G Global Marketing Officer, now marketing consultant, Jim Stengel. As marketers shift more marketing management to developing markets, ad agencies and other marketing-services firms will need to follow them, and he believes agencies are generally behind marketers in that regard.