“We have had many investors reach out to understand the report better, to get to know Bangladesh better, to really see how they can be part of the growth story. ”
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. Zarif Munir is a Partner and Managing Director with BCG. He is based in Kuala Lumpur, Malaysia. He focuses on operational improvement for large diversified companies. IBT recently approached him to get insight on the recent BCG report on Bangladesh titled “The Surging Market Nobody Saw Coming”.
What intrigued the The Boston Consulting Group about Bangladesh in the first place?
To be honest, there is nothing new about the tremendous potential of Bangladesh. In fact the title of our report “The Surging Consumer Market Nobody Saw Coming” is a little tongue-in-cheek humour. It is one of the few countries that have demonstrated solid growth over a long period of time and every time you visit Dhaka you can sense the energy and forward movement of the city.
What intrigued us about Bangladesh was the leapfrogging phenomenon among consumers. Leapfrogging straight to digital without stopping at analogue leapfrogging into mobile money without worrying about opening traditional bank accounts; leapfrogging into branded products at the first instance of sufficient disposable income. We wanted to understand this shift, particularly as the growing middle and affluent-class population (MAC) experience it.
In every developing market we see these consumers as the real bellwether for the underlying economic wellbeing of the country and a leading indicator for how consumers will react to big changes – technology to accelerate purchases, mobile solutions for education and health care, consumer debt and the like.
While the base is still small in Bangladesh (10 million people falling within the MAC population), the next layer immediately below the cut-off of USD$5000 per annum is significant, which makes Bangladesh comparable to much larger economies in Asia.
If Bangladesh continues to leapfrog, as it has done with technology, and finds another sector or two that grows rapidly like the Ready Made Garments Sector, in 10 years the total MAC population will be much larger.
What was the response from the households like during your research?
Most of the households that we spoke with were incredibly open and helpful. The key of course was getting our interviewees to discuss their hopes and aspirations. And that takes time and patience.
Overall it was a fantastic experience!
What methodologies were used during the process?
In addition to the traditional interview process we went through a comparative analysis to ensure the results made sense relative to what we had seen in other markets. The key for us was the inflection points not the trend lines. For this population pool, at some income level, at some comfort level, they start to ‘trade up’ and suddenly start buying a lot more, valuing quality over cost, convenience over discounts. It’s this inflection point that becomes really interesting to study. In some ways you can almost predict when a category will take off, which goods are likely to be successful, what structural enablers will be required.
What kind of response have you received from foreign stakeholders regarding the report?
The response has been overwhelming. We have had many investors reach out to understand the report better, to get to know Bangladesh better, to really see how they can be part of the growth story. As I mentioned earlier, Bangladesh is a country with significant potential, yet many investors still do not see how to create long-term value from opportunities. While some believe asymmetry of information creates advantage, our opinion is that the key first step for Bangladesh is to expand the pie, to make Bangladesh much more accessible, and middle and affluent consumers are certainly part of the answer.
What areas should both local and foreign investors focus on to help meet the demands of the growing MAC population?
Truthfully that varies by industry but the general guidance we would give is as follows – stress quality, establish your brand early, educate consumers on the value of your product, find creative ways to take advantage of the leapfrogging phenomenon, and build strong mobile-centric platforms.
