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The impact of emerging markets on marketing: rethinking existing…
The impact of emerging markets on marketing: rethinking existing perspectives and practices
Why and how growth of emerging markets is inevitable
Why
Economic reforms(BRIC) have unlocked markets protected by ideology and socialism
All advanced countries are aging, and aging very rapidly
Worldwide liberalization of trade and investment, bilateral trade agreements and regional economic integrations have resulted in global competition and global product and service offerings with unprecedented choices of branded products
The emergence of the new middle class, especially in large population markets, is creating large-scale first-time buyers of everything from processed foods,soaps,and detergents......
How
Five unique characteristics of emerging markets and their inherent comparative advantages
Unbranded Competition
[not available in rural markets; household is not ust a consumption unit but also a production unit; used products; barter exchange or reciprocal offering]
Chronic Shortage Of Resource
[it results in diseconomies of scale; consumption also tends to be constrained with respect to time and location ]
Sociopolitical Governance
[Monopoly powers; Highly diversified; difficult for new entrant to break into these markets]
Inadequate Infrastructure
[nontraditional channels and innovative access to consumers may be both necessary and profitable in emerging markets]
Market Heterogeneity
[More driven by resources constraints; demand filfillment]
How we will need to rethink marketing theory, strategy, policy and practice in light of the unique nature of emerging markets
Implications for marketing practice, functions and research
Advantage
[The new global challengers benefit from emerging market]
Low-cost labor
Training ground for competing with global incumbents
Rapidly growing markets,some of which are large
Complex operating environments, which produce some very capable firms
Policy-based comparative advantage
Raw material-based comparative advantage[human capital, industrial raw materials, energy, other natural resources]
NGO-based comparative advantage
Key Concepts
Developing economies
Emerging market economies
Advanced economies
What makes it attractive
target market
[huge middle classes]
Manufacturing bases
[low-wage,high-quality labor]
Sourcing destinations
[call centers;technological functions;investments lead to new jobs and production capacity, transfer of technology, and linkages to the global marketplace]
estimating the potential
Market potential indicators include: GDP growth rate, income distribution, commercial infrastructure, umemploynment rate, and discretionary spending
Purchasing Power Parity[PPP]
Estimations are challenging[Limited availability and reliability of data; Market research can be very costly and less precise when compared to the advanced economics]
Key Crieria
Market consumption capacity
[income of the middle class]
Commercial infrastructure
[Density of telephone lines and paved roads, number of personal computers, population per retail outlet, and other such characteristics]
Market growth rate
[The country's real GDP growth rate]
Economic freedom
[The degree to which government intervenes in business activities]
Market size
[The country's population(urban areas)]
Country risk
[The degree of political risk]
Challenge
Weak intellectual property protection
Bureaucracy, red tape, and lack of transparency
Political stability
Partner availability and qualifications
Poor physical infrastructure
Dominance of family conglomerates