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Opportunity: the "next billion" market

All of these factors—the emergence of an unprecedented low-income consumer cohort, increases in infrastructure expenditures, and the growth of the global middle class—will keep pushing commodity prices higher.

So what should you do?

First, realise that recessions come and go, but the forces driving the global economy are ongoing and inexorable. U.S. executives need to focus less on commodity prices, which they can influence only marginally, and more on how to benefit from globality. A billion new consumers around the world are hungry for goods and services as the middle class expands. For many companies, this demographic shift will define the future.

Second, focus on the desires and needs of these consumers. Selling to the "next billion" market is not necessarily a matter of scaling back versions of products previously designed for U.S. or European consumers. They may need entirely new products or designs.

Third, if your company can afford to do so and you think you can anticipate future demand, purchase commodities that you will need for future growth while prices are still relatively low. As economic growth increases globally, prices for raw materials and commodities have only one way to go: up. Buy now if you can, while the global economy is still recovering from recession.

Emerging multinationals in China, India, Brazil, and other developing economies—what we at BCG call the "Global Challengers"—are on a mission to convert the growing middle class, new entry-level consumers, and governments in the developing world into loyal customers. That's what U.S. companies need to do as well. Commodity prices will go along for the ride.

(Courtesy: Businessweek; http://www.businessweek.com/managing/content/jan2010/ca20100112_522798.htm)

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