Marketing Timed Quiz!
BOP Markets
12-Oct-18
M3553 International Marketing, Dr. Jean Wilcox
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Marketing in a Developing Country
Bottom-of-the-pyramid markets (BOPMs) – consisting of the 4 billion people with incomes of less than $1,200 across the globe
Most often concentrated in the LDCs and LLDCs
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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.
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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M3553 International Marketing, Dr. Jean Wilcox
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Country by proportionate wealth
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Poor
Basic
Sewer Systems
Lack of Sanitation
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Marketing Opportunities in LDCs
Characterized by a shortage of goods and services
Long-term opportunities must be nurtured in these countries
Look beyond per capita GNI
Consider the LDCs collectively rather than individually
Consider first mover advantage
Set realistic Deadlines
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M3553 International Marketing, Dr. Jean Wilcox
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One of marketing’s roles in developing countries is to focus resources on the task of creating and delivering products that are best suited to local needs and incomes. Appropriate marketing communications techniques can also be applied to accelerate acceptance of these products. Marketing can be the link that relates resources to opportunity and facilitates need satisfaction on the consumer’s terms.
Dynamic Transformation of BOPM Clusters
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M3553 International Marketing, Dr. Jean Wilcox
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Exhibit 11.2 represents the ingredients and processes involved in establishing a viable industry cluster in a LLDC. Craftsmen must network and collaborate to attain efficiencies in production, domestic and international distribution, and other marketing activities. Key to the vibrancy of the industry cluster will be a series of cluster characteristics, external inputs, and macroenvironment factors. The scheme presented might serve as a checklist for stimulating economic development through marketing in bottom-of-the-Pyramid Markets (BOPMS). Entrepreneurial activities that are networked appear to be perhaps the best way to stimulate economic development and growth from within developing countries. And marketing is key.
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Standard of Living
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M3553 International Marketing, Dr. Jean Wilcox
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In Exhibit 11.3, we can see how the income of the Japanese dominates and the dearth of data in Bangladesh.
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Infrastructures
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M3553 International Marketing, Dr. Jean Wilcox
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In Exhibit 11.4, we see the infrastructures in these eight countries. The Japanese rail system is the best in the world, while in the Philippines, people travel by boat and bus. The Vietnamese have few cars, and there most travel by motorbike
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M3553 International Marketing, Dr. Jean Wilcox
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Mistaken Assumptions About LDCs/BOPs
The poor have no money
The poor are too concerned with fulfilling basic needs to “waste” money on non-essential goods
The goods sold in LDCs are too inexpensive to make a profit
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M3553 International Marketing, Dr. Jean Wilcox
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One of marketing’s roles in developing countries is to focus resources on the task of creating and delivering products that are best suited to local needs and incomes. Appropriate marketing communications techniques can also be applied to accelerate acceptance of these products. Marketing can be the link that relates resources to opportunity and facilitates need satisfaction on the consumer’s terms.
Mistaken Assumptions About LDCs/BOPs
People in LDCs cannot use advanced technology
Global companies that target LDCs will be criticized for exploiting the poor
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M3553 International Marketing, Dr. Jean Wilcox
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One of marketing’s roles in developing countries is to focus resources on the task of creating and delivering products that are best suited to local needs and incomes. Appropriate marketing communications techniques can also be applied to accelerate acceptance of these products. Marketing can be the link that relates resources to opportunity and facilitates need satisfaction on the consumer’s terms.
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Mobile phones
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M3553 International Marketing, Dr. Jean Wilcox
Banking
Strategic Implications for Marketing
As a country develops:
Incomes change
Population concentrations shift
Expectations for a better life adjust to higher standards
New infrastructures evolve
Social capital investments made
When incomes rise, new demand is generated at all
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M3553 International Marketing, Dr. Jean Wilcox
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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.
Summary
Marketing in developing countries requires an understanding of needs
Just because BOP markets are “poor” does not mean there are no opportunities
As economies improve, new demand is generated at all income levels for everything from soap to cars
12-Oct-18
M3553 International Marketing, Dr. Jean Wilcox
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Let’s summarize what we learned in Chapter 9. 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. As nations develop their productive capacity, all segments of their economies will feel the pressure to improve. The impact of these political, social, and economic trends will continue to be felt throughout the world, resulting in significant changes in marketing practices. Further, the impact of information technology will speed up the economic growth in every country.
Summary
Marketing in developing countries requires an understanding of needs
Just because BOP markets are “poor” does not mean there are no opportunities
As economies improve, new demand is generated at all income levels for everything from soap to cars
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Let’s summarize what we learned in Chapter 9. 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. As nations develop their productive capacity, all segments of their economies will feel the pressure to improve. The impact of these political, social, and economic trends will continue to be felt throughout the world, resulting in significant changes in marketing practices. Further, the impact of information technology will speed up the economic growth in every country.