CHAPTER 9 Global Perspective p 245 Stages of Economic Development p 247 (Do not need to memorize each stage, just be familiar with) Used for opportunity analysis; each market will generally have their own stage, can be different The traditional society (little productivity/system), the preconditions for takeoff (agriculture/production science, infrastructure develops), the takeoff (industry development), the drive to maturity (international and economic progress), the age of high mass consumption Functions driving each stage (see 9 bullets) Movement/timing of growth from one stage to another Need to continue monitoring market, generally stages are moving, or trying to move up Need to consider time to enter market; generally wrong, either late or early Advantages to both entering early and late, before and after competitor Early- Establish infrastructure, brand loyalty, market share; more risk, may fail, more expensive Late- Less risk, learn from mistakes of competitor, less expensive; harder to gain brand loyalty, less market share Relationship between economic development and consumer/industrial demand NIC (Newly Industrialized Countries) Growth Factors p 249-251 Experience rapid economic expansion and industrialization but do not exactly fit LDC or MDC; up in exports and less restrictive trade practices 9 Bullets: Indicators that show the economy is moving to a higher economic stage p 50 1,2,3,5,9 Important (be familiar with) 1) political stability in policies affecting development 2) Economic and legal reforms. Poorly defined and weakly enforced contract and property rights are features of the poorest countries have in common 3) Entrepreneurship; in all of these nations, free enterprise in the hands of the self-employed was the seed of the new economic growth 5) Outward Orientation; production for the domestic market and export markets with increases in efficiencies and continual differentiations of exports from competition was the focus 9) Privatization of State Owned Enterprises (SOEs) that placed a drain on national budgets. 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 Large markets, with low tariffs, most successful; large accessible markets Marketing in a Developing Country p 256 -261 Level of Market Development Exhibit 9.4 p 259 Analyzes infrastructures in place for proper marketing techniques; computers, TVs, Radios even types of stores to display and sell products Demand in a Developing Country Sectors Traditional Rural/Agricultural: bare necessities are much different Modern Urban/High-Income: in cities, access to technology, able to spend money on array of products Transnational Sector (Low-Income): urban slums Bottom of the Pyramid Markets (BOPMs) p 259 Dealing with the BOP is the only successful, long term way to move people out of poverty Too big to ignore, hard to handle BOP Videos Salt BOP people need better technology, ?watered-down? technology hurts the population Inefficient iodine consumption (iodine deficiency) causes birth defects; iodine was not stable in the salt previously sold in area For Profit corporation (MNC) address problem, more efficient, more resources The market is very large, can make a lot of profit, little competition People establish product loyalty very quickly; Annapurna, asking for that product, distributes from her house Soap Diarrheal diseases top killers of children; washing with soap reduces disease by over 40% Leveraging health issues in brand promotion; campaigns in both rural and urban areas to demonstrate the benefits of soap Category Promotion: then provide the products The BOP Markets 6.1 Billion people in the World 100 Million at the top of the pyramid >$20,000 annual income 2 Billion in middle of Pyramid $2,000-$20,000 Annual Income 4 Billion at Bottom of Pyramid <$2,000 Benefits MNCs and raises standard of living Myths/Rebuttals about BOP Markets Poor Have no Money, Thus they are not a target Market Aggregate buying power of poor communities can be quite large Poor are only concerned with fulfilling basic needs Not savers, spend $ on things that can improve their lives now; little improve can be substantial gain Prices to the poor must be low, hence little profit to be made Poor pay a premium because there is little competition Premium: poor pay more for same products rich buy, less competition, can raise prices Make total profit on volume, not individual profit margins Poor can use old technology Because of literacy, energy, and remoteness, poor need cutting edge technology; less resources, technology needs to compensate for this; less education, needs to be extremely user friendly; extreme climates, tech needs to work in these Trickle up, not trickle down Marketing Managers see no future in serving BOP Markets MNCs Need New Markets BOP population is growing fastest; where future markets are Once penetrate one BOP market, easier to do others BOP Markets Case As long as MNC makes profit in this area, will stay in that area; market needs to be sustainable; cannot just sell to, that would just suck wealth out of the area; need to invest there (or joint venture) Google: sets up internet in these areas, charges for access; these people have access to information to improve Standard of Living (better agriculture techniques) Over $14 trillion in untapped markets Must appeal to these markets (price, product, quantity); not all products will be able despite of change MNC need to build infrastructure; do more than just sell to them Can pay in installments/over time (willing to pay higher price due to no competition); are very reliable to loans
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