EMERGING MARKETS

Chapter 9

Global PerspectiveCompanies establish presence in “Emerging Markets” worldwide

Wal-Mart• Superstores are successful in China

Proctor & Gamble • Tide offered in bulk amounts in China was not a

success– Humidity issues

• Paper towels and diapers were not successful– Paper towels were in large packages which caused

problems for consumers to store in smaller apartments

– Diapers were too expensive and seen as a luxury

Marketing & Economic Development

Economic level of a countryMost important environmental element for foreign marketers to consider and adapt

Stages of Economic DevelopmentWalt Rostow’s 5 stage model:

• 1. The Traditional Society (economically underdeveloped)

• 2. The Preconditions for take-off (underdeveloped)• 3. The Take-off (underdeveloped)• 4. The Drive to Maturity• 5. The Age of High Mass Consumption

Marketing & Economic Development

Stages of Economic DevelopmentThe United Nations 3 stage model (based on level of industrialization)• 1. MDCs (more developed countries)• 2. LDCs (less developed countries)• 3. LLDcs (least-developed countries)

– Exhibit 9.1 pg. 246 “Economic and Social data”

Marketing & Economic Development

Stages of Economic DevelopmentNIC’S:• 1. Some countries do not fit the UN model

exactly (not an MDC or LDC). These countries are commonly referred to Newly Industrialized Countries (NICs)

• 2. What factors contribute to the economic growth of NICs?

Economic growthFactors influencing economic growth:

1. Information technology, internet• Crossing Borders 9.1 pg. 251 “The Benefits of

Information Technology in Village Life”2. Investment in the Infrastructure

• Communication, transportation systems, energy sources…

• Exhibit 9.2 pg. 252• Crossing Borders 9.2 pg. 253 “Infrastructure:

India”3. Marketing Contributions

• Countries that are more “marketing” driven vs. “production” driven are better poised for economic development and foreign investments

Marketing in a Developing Country

What things to consider when marketing in developing countries

1. Level of Market Development • Parallels Stages of Economic Development

– See Exhibit 9.3 pg. 255

2. Level of Demand • “Economic Dualism” - Consider differences in

demand between modern sectors and traditional sectors within a country’s economy

Developing Countries and Emerging Markets

Consider the “BEM’s” (Big Emerging Markets)BEM’s share these characteristics:

• Physically large• Significant Populations• Represent considerable markets with wide range of

products• Strong rates of growth • Undertaken significant economic reform programs• Major political importance within their region• Considered to be “regional economic drivers”• By their growth, will create further expansion in

neighboring markets– (Exhibit 9.5 pg. 259 – the BEM’s)

Understanding Opportunity and Challenges

Every country or group of countries has its opportunities and challenges:

1. The Americas (ex. 9.6 pg. 261)• North America, Latin America

2. Eastern Europe and the Baltic States • Exhibit 9.7 pg. 262• Exhibit 9.8 pg. 263 “Eastern European Markets”

Understanding Opportunity and Challenges (con’t)

3. Asia– Pacific rim, China, Hong Kong, Taiwan, India

– Exhibits 9.9 and 9.10

Newest Emerging marketsVietnam• Growth due to in part the NTR status with

U.S.

South Africa • Growth due to ending of apartheid

Strategic Implications for Marketing

Consider opportunities to market products and services in emerging markets:

• As countries develop, incomes increases, populations shift, expectations for a “better life” adjust to higher standards

– See ex. 9.11 and 9.12 pgs. 272 & 273)