Association Growth in Emerging Markets, Part II
Last month’s MGI Tipster was the first of two examining association growth in emerging markets. Erik Schonher, Vice President of Marketing General Incorporated, and Terrance Barkan, CAE of GLOBALSTRAT, have collaborated on a recently released white paper that shares important tips on how associations can get a foothold in the global marketplace. Together, the two authors have more than 50 years experience in international association strategy and membership recruitment, retention, and recovery.
Last month, we saw that the five-step Membership Lifecycle applies in both domestic and international recruitment and learned why emerging foreign markets need associations.
This month’s MGI Tipster looks at market gaps, transparency, and questions associations should ask when considering entry into an emerging market.
Emerging Market Gaps and How Associations Can Benefit
Emerging markets are often highly fragmented with numerous small, local players. In the absence of reputable major brands, associations are ideally suited to provide a level of quality assurance through membership, credentials, standards, and certification.
By bringing market participants together, associations foster much needed transparency. By identifying market players, measuring the market, and conducting market research, associations can become important to the profession or industry they serve. This applies across all sectors, whether a professional society or a business-to-business trade association.
Associations bring buyers and sellers together at conferences and exhibitions, in membership networks and directories, and through advertising and sponsorship opportunities. Associations are traditionally event organizers for the sectors they serve. Emerging markets often lack this, providing real opportunities for associations to step in.
Transparency, Laws, and Disputes
Emerging markets are often dominated by buyers and sellers who have developed person-to-person relationships over many years. These private networks are neither transparent nor easy to access. Conversely, associations offer open and transparent platforms where buyers and sellers can find one another and, at the same time, make markets more efficient, such as an online job marketplace provided as a member benefit.
The rule of law and, more importantly, the ability to enforce it are key features of mature economies. Emerging markets often have weak, bureaucratic, and sometimes corrupt civil and criminal legal systems. Civil cases can often be settled through alternative dispute resolution, such as arbitration and mediation. The decisions of the American Arbitration Association are enforceable in a large number of countries.
Typically, emerging markets are heavily involved in developing new regulatory structures to comply with free trade agreements or to gain access to Western markets. This regulatory development often offers opportunities for associations to help craft new regulations and develop fairer business policies. Associations can be major influencers and educators for these new policy makers and regulators.
Key Questions for Associations in Emerging Markets
If you are an investor in a developing country, should you replicate your domestic business model or adapt it for the local market? If you adapt, at what point do you lose the advantages of scale and the efficiencies you have built into your current business model? The answers to these questions depend upon how unique local conditions may be.
(2) Avoid or Attack Market Voids?
There are many service and industry gaps in emerging markets. Do you navigate around them, or are these voids opportunities that your association may fill? If there is a lack of information and transparency, can your association exploit this by providing the platform to address this need?
Many markets are simply not ready to support investments in sustainable or profitable ways. Associations should consider whether it is premature to enter these markets. Also, how long do you remain if your strategy is failing? It is far better to recognize when entry is too early and to focus on other opportunities than expend resources where there is little hope of a reasonable return.
(4) Compete or Collaborate?
When entering new markets, associations often opt to partner with local associations, but does it make greater sense to enter as a more direct competitor? There are usually no right or wrong answers to these questions, but they should be considered nonetheless.
Leading with Membership?
It seems logical that most membership-based organizations would lead with membership as their primary service in a new market. However intuitive or logical this might seem, it is often the wrong approach in new international markets where associations do not yet have a minimum, critical mass of members.
Membership is usually a bundle of services and benefits, but many may be either nonexistent in an international market or seen as irrelevant compared to members’ needs in the home market.
International membership services are almost always more expensive to deliver than they are at home, requiring a higher revenue stream from other sources to offset the added costs. In overseas markets, associations may be wise not to lead with membership, but instead to promote and present a product, service, or event that can be delivered profitably and will establish a positive brand perception with participants and prospects in the international target market.
Have a Strategic Plan
To achieve measurable long-term results, international growth requires a thoughtful international strategy together with intelligent day-to-day marketing programs. Because of the complexity inherent in international markets, associations are wise to obtain expert guidance to avoid common pitfalls and identify the most promising opportunities.
For More Information
This edition of the MGI Tipster consists of excerpts from the recently released white paper entitled, How to Grow Your Association in Emerging Markets Using Strategy and Tactics, by Erik Schonher of Marketing General and Terrance Barkan, CAE of GLOBALSTRAT. To contact the authors for more information:
Erik Schonher, Vice President, Marketing General Incorporated
703.706.0358 and Erik@MarketingGeneral.com
Terrance Barkan, CAE, Chief Strategist, and CEO, GLOBALSTRAT
202.294.5563 and TBarkan@Globalstrat.org