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| Marketers and Economic Development |
Marketers must focus on devising marketing plans designed to respond fully to each level of economic development. China and Russia continue to undergo rapid political and economic changes that have brought about the opening of most socialist-bloc countries to foreign direct investments and international trade.
And though big emerging markets present special problems, they are promising markets for a broad range of products now and in the future.
Emerging markets create new marketing opportunities for MNCs as new market segments evolve. |
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blairstonecipher Mon, 06 Feb 2012 03:58:27 GMT |
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| As Nations Develop.. |
As nations develop their productive capacity, all segments of their economies will feel the pressure to improve. |
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blairstonecipher Mon, 06 Feb 2012 03:58:27 GMT |
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| Foreign Marketers Must Be Able To |
The ever-expanding involvement in world trade of more and more people with varying needs and wants will test old trading patterns and alliances. The foreign marketer of today and tomorrow must be able to react to market changes rapidly and to anticipate new trends within constantly evolving market segments that may not have existed as recently as last year. Many of today’s market facts will likely be tomorrow’s historical myths.
Along with dramatic shifts in global politics, the increasing scope and level of technical and economic growth have enabled many nations to advance their standards of living by as much as two centuries in a matter of decades. |
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blairstonecipher Mon, 06 Feb 2012 03:55:56 GMT |
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| Emerging Competition |
. Perhaps the most visible sign of growing global competition comes from the automobile makers surging onto the world scene from China, Russia, and India. But, this new competition is actually arising across broad categories of products – computers, space technology, appliances, and commercial aircraft.
Moreover, firms in emerging countries are making substantial investments in many regions around the world, even the most affluent ones. While we see this new competition as simply a growing opportunity associated with the growth of these emerging markets, we do recognize that others do not share our views. Indeed, the emerging competition deserves, and is now getting, close attention.
And, there is little doubt that the global market will be revitalized and reorganized by these new corporate powerhouses. |
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blairstonecipher Mon, 06 Feb 2012 03:55:56 GMT |
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| Strategic Implications for Marketing |
Surfacing in the emerging markets described earlier is a vast population whose expanding incomes are propelling them beyond a subsistence level to being viable consumers. As a country develops, incomes change, population concentrations shift, expectations for a better life adjust to higher standards, new infrastructures evolve, and social capital investments are made. Market behavior changes and eventually groups of consumers with common tastes and needs (i.e., market segments) arise.
When incomes rise, new demand is generated at all income levels for everything from soap to automobiles. Incomes for the middle class in emerging markets are less than those in the United States, but spending patterns are different, so the middle class has more to spend than comparable income levels in the United States would indicate.
More than one billion people in the world now have incomes of $10,000 or better. Therefore, if a company fails to appreciate the strategic implications of this club, it will miss the opportunity to participate in the world’s fastest-growing global consumer segment. Companies that look for commonalties among this one billion consumers will find growing markets for global brands. |
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blairstonecipher Mon, 06 Feb 2012 03:55:56 GMT |
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| BEMs |
Big emerging markets share a number of important traits. They’re all physically large, have significant populations, represent considerable markets for a wide range of products, have strong rates of growth or the potential for significant growth, have undertaken significant programs of economic reform, are of major political importance within their regions, are regional economic drivers, and will engender further expansion in neighboring markets as they grow.
Because many of these countries lack modern infrastructure, much of the expected growth will be in industrial sectors such as information technology, environmental technology, transportation, energy technology, healthcare technology, and financial services. |
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blairstonecipher Mon, 06 Feb 2012 03:55:56 GMT |
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| Developing Countries and Emerging Markets |
As mentioned earlier, the U.S. Department of Commerce estimates that over 75 percent of the expected growth in world trade over the next two decades will come from the more than 130 developing and newly industrialized countries; a small core of these countries will account for more than half of that growth. |
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blairstonecipher Mon, 06 Feb 2012 03:49:40 GMT |
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| BOPMs |
C. K. Prahalad and his associates introduced a new concept into the discussion of developing countries and markets bottom-of-the-pyramid markets (BOPMs) consisting of the 4 billion people across the globe with annual incomes of less than $1,200.
These markets are not necessarily defined by national borders, but rather the pockets of poverty across countries. These 4 billion consumers are, of course, most often concentrated in the LDCs and LLDCs, as defined in the aforementioned UN classification scheme. |
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blairstonecipher Mon, 06 Feb 2012 03:49:40 GMT |
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| Marketing in a Developing Country (Cont.) |
Tomorrow’s markets will include expansion in industrialized countries and the development of the transitional and traditional sectors of less-developed nations, as well as continued expansion of the modern sectors of such countries
The traditional sector offers the greatest long-range potential, but profits come only with a willingness to invest time and effort for longer periods
Market investment today is necessary to produce profits tomorrow.
The companies that will benefit in the future from emerging markets in Eastern Europe, China, Latin America, and elsewhere are the ones that invest when it is difficult and initially unprofitable.
In some of the less-developed countries, the marketer will institute the very foundations of a modern market system, thereby gaining a foothold in an economy that will someday be highly profitable. The price paid for entering in the early stages of development may be a lower initial return on investment, but the price paid for waiting until the market becomes profitable may be a blocked market with no opportunity for entry. |
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blairstonecipher Mon, 06 Feb 2012 03:49:40 GMT |
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| Demand in a Developing Country |
Estimating market potential in less-developed countries involves additional challenges. Most of the difficulty arises from the coexistence of three distinct kinds markets in each country:
1) the traditional rural/agricultural sector,
2) the modern urban/high-income sector, and
(3) the often very large transitional sector usually represented by low-income urban slums. The modern sector is centered in the capital city and has jet airports, international hotels, new factories, and an expanding westernized middle class, while the traditional rural sector tends to work in the countryside as it has for decades or centuries. |
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blairstonecipher Mon, 06 Feb 2012 03:49:40 GMT |
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| Marketing in a Developing Country |
A marketer cannot superimpose a sophisticated marketing strategy on an underdeveloped economy. Marketing efforts must be keyed to each situation, custom tailored for each set of circumstances. An efficient marketing program is one that provides for optimum utility given a specific set of circumstances.
In evaluating the potential in a developing country, the marketer must make an assessment of the existing level of market development and receptiveness within the country, and the firms own capabilities and circumstances.
The more developed an economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions. |
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blairstonecipher Mon, 06 Feb 2012 03:44:05 GMT |
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| Infrastructure and Development |
-Infrastructure represents those types of capital goods that serve the activities of many industries
-The quality of an infrastructure directly affects a country’s economic growth potential and the ability of an enterprise to engage effectively in business
-The less developed a country is – the less adequate the infrastructure is for conducting business
-Countries begin to lose economic development ground when their infrastructure cannot support an expanding population and economy |
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blairstonecipher Mon, 06 Feb 2012 03:44:05 GMT |
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| Privatization as a Major Economic Phenomenon |
Experience with state-owned businesses proved to be a disappointment to most governments. Instead of being engines for accelerated economic growth, state-owned enterprises were mismanaged, inefficient drains on state treasuries. Many countries have deregulated industry, opened their doors to foreign investment, lowered trade barriers, and begun privatizing SOEs. The trend toward privatization is currently a major economic phenomenon in industrialized as well as in developing countries. |
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blairstonecipher Mon, 06 Feb 2012 03:44:05 GMT |
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| Economic Growth as an Achievement of Social as well as Economic Goals |
. Most countries see in economic growth the achievement of social as well as economic goals. Better education, better and more effective government, elimination of many social inequities, and improvements in moral and ethical responsibilities are some of the expectations of developing countries. Thus economic growth is measured not solely in economic goals but also in social achievements. |
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blairstonecipher Mon, 06 Feb 2012 03:44:05 GMT |
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| Fundamental Development of Developing Countries |
A thorough assessment of economic development and marketing should begin with a brief review of the basic facts and objectives of economic development.
Industrialization is the fundamental objective of most developing countries |
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blairstonecipher Mon, 06 Feb 2012 03:37:32 GMT |
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| NIC Economic Growth Factors |
Political stability in policies affecting their development.
Economic and legal reforms. Poorly defined and/or weakly enforced contract and property rights are features the poorest countries have in common.
Entrepreneurship. In all of these nations, free enterprise in the hands of the self-employed was the seed of the new economic growth.
Planning. A central plan with observable and measurable development goals linked to specific policies was in place.
Outward orientation. Production for the domestic market and export markets with increases in efficiencies and continual differentiation of exports from competition was the focus.
Factors of production. If deficient in the factors of production land (raw materials), labor, capital, management, and technology. In environment existed where these factors could easily come from outside the country and be directed to development objectives.
Industries targeted for growth. Strategically directed industrial and international trade policies were created to identify those sectors where opportunity existed. Key industries were encouraged to achieve better positions in world markets by directing resources into promising target sectors.
Incentives to force a high domestic rate of savings and to direct capital to update the infrastructure, transportation, housing, education, and training.
Privatization released immediate capital to invest in strategic areas and gave relief from a continuing drain on future national resources. Often when industries are privatized, the new investors modernize, thus creating new economic growth. |
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blairstonecipher Mon, 06 Feb 2012 03:37:32 GMT |
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| NICs |
newly-industrialzed countries
Countries that are experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs are more typically referred to as newly industrialized (NICs).
These countries have shown rapid industrialization of targeted industries and have per capita incomes that exceed other developing countries. They have moved away from restrictive trade practices and instituted significant free market reforms; as a result, they attract both trade and foreign direct investment. |
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blairstonecipher Mon, 06 Feb 2012 03:37:32 GMT |
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| LLDCs |
least-developed countries
Includes industrially underdeveloped, agrarian, subsistence societies with rural populations, extremely low per capita income levels, and little world trade involvement. LLDCs are found in Central Africa and parts of Asia. Violence and the potential for violence are often associated with LLDCs. |
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blairstonecipher Mon, 06 Feb 2012 03:37:32 GMT |
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| LDCS |
less-developed countries
– Refers to industrially developing countries just entering world trade, many of which are in Asia and Latin America, with relatively low per capita incomes. |
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blairstonecipher Mon, 06 Feb 2012 03:33:47 GMT |
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| MDCs |
more-developed countries
Includes industrialized countries with high per capita incomes, such as Canada, England, France, Germany, Japan, and the United States. |
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blairstonecipher Mon, 06 Feb 2012 03:33:47 GMT |
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| Stages of Economic Development |
The United Nations classifies a country’s stage of economic development based on its level of industrialization. It groups countries into three categories:
MDCs, LDCs, LLDCs |
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blairstonecipher Mon, 06 Feb 2012 03:33:47 GMT |
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| Economic Development |
Economic development is generally understood to mean an increase in national production that results in an increase in the average per capita gross domestic product (GDP). Besides an increase in average per capita GDP, most interpretations of the concept also imply a widespread distribution of the increased income
Economic development presents a two-sided challenge. First, a study of the general aspects of economic development is necessary to gain empathy regarding the economic climate within developing countries. Second, the state of economic development must be studied with respect to market potential, including the present economic level and the economy’s growth potential. |
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blairstonecipher Mon, 06 Feb 2012 03:33:47 GMT |
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| Dynamic Economies |
In a dynamic economy, consumption patterns change rapidly. Marketing is constantly faced with the challenge of detecting and providing for new levels of consumption, and marketing efforts must be matched with ever-changing market needs and wants. |
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blairstonecipher Mon, 06 Feb 2012 03:30:07 GMT |
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| Static Economies |
In static economies, consumption patterns become rigid, and marketing is typically nothing more than a supply effort. |
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blairstonecipher Mon, 06 Feb 2012 03:30:07 GMT |
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| Marketing and Economic Development |
The economic level of a country is the single most important environmental element to which the foreign marketer must adjust the marketing task. The stage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country, and the entire marketing process. |
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blairstonecipher Mon, 06 Feb 2012 03:30:07 GMT |
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| Global Perspective of Economic Development and International Markets |
According to U.S. Department of Commerce estimates, China and other emerging markets throughout the world will account for 75 percent of the world’s total growth in the next two decades and beyond.
As countries prosper and their people are exposed to new ideas and behavior patterns via global communications networks, old stereotypes, traditions, and habits are cast aside or tempered, and new patterns of consumer behavior emerge.
A pattern of economic growth and global trade that will extend well into the 21st century appears to be emerging.
It consists of three multinational market regions that comprise major trading blocs: Europe, Asia, and the Americas. Within each trading bloc are fully industrialized countries, as typified by Germany, Japan, and the United States; rapidly industrializing countries such as Mexico, Poland, and South Korea that are close on the heels of the fully industrialized; and other countries that are achieving economic development but at more modest rates. |
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blairstonecipher Mon, 06 Feb 2012 03:30:07 GMT |
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