Chapter 9Emerging Market By: Maria MechaellaDoromal
Emerging markets - is used to describe a nation's social or business activity in the process of rapid growth and industrialization. Currently, there are approximately 28 emerging markets in the world, with the economies of China and India considered to be by far the two largest.
Marketing and Economic Development
Marketing is constantly faced with the challenge of detecting and providing for new levels of consumption, and marketing efforts must matched with ever changing marketing needs and wants.
Economic development presents a two double sided challenge.
A study of the general aspect of economic development is necessary to gain empathy regarding the economic climate within developing countries. The state of economic development must be studied with respect to market potential including the present economic level and economy’s growth potential.
Economic Development – is generally understood to mean an increase in national production that results in an increase in the average per capital gross domestic product or GDP. Stages of Economic Development by Walt Rostow Stage 1: The traditional society Stage 2: The precondition for take off Stage 3: The take off Stage 4: The drive to maturity Stage 5: The age of high consumption
Consumer Spending Health and Education
MDCs – More Developed Countries – industrialized countries with high per capital incomes, such as: Canada, England, France, Germany, Japan and the United States. LDCs – Less Developed Countries – industrially developing countries just entering world trade, many of which are in Asia and Latin America, with relatively low per capital incomes. LLDCs – Least Developed Countries – industrially underdeveloped, agrarian, subsistence societies with rural populations, extremely low per capital income levels, the little world trade involved. LLDCs are found in central Africa and parts of Asia. NICs – Newly Industrialized Countries – countries have rapid industrialization of targeted industries and have per capital incomes that exceeded other developing countries. These countries are Chile, Brazil, Mexico, South Korea, Singapore and Taiwan.
NIC Growth Factor
Political stability in policies affecting their development
Economic and legal reforms
Factors of Production
Industries targeted for growth
Incentives of force a high domestic rate of savings and to direct capital to update the infrastructure, transportation, housing, education and training.
Privatization of state-owned enterprises (SOEs) that placed a drain of national budget.
Information Technology, the Internet, and Economic Development
The information technology (IT) is an important key to economic growth. The cellular phone, the Internet, and other advances in IT for emerging economies to catch tainable future for developing nations.
The Internet accelerates the process of economic growth by speeding up the diffusion of new technologies to emerging economies. Unlike the decades it took before many developing countries such as: Asia, Latin America, and Easter Europe.
- The economic development and marketing should begin with a brief review of the basic facts and objectives of economic development. Objectives of Developing Countries
Industrialization is the fundamental objective of most development of most developing countries see in economic growth. The economic growth is not measured solely in economic goals but also in social achievements.
Infrastructure and Development Infrastructure represent those types of capital goods that serve many activities of many industries. Included in the country’s infrastructure are paved roads, railroads, seaports, communications networks and energy supplies. Marketing Contribution’s Marketing is an economy’s arbitrator between productive capacity and consumer demand. The marketing process is the critical element in effectively utilizing production resulting from economic growth.
Evolution of the Marketing Process
Marketing in a Developing Country Level of market development
The level of market development roughly parallels stages of economic development.
The more developed economy, the greater the variety of marketing function demanded.
Demand in a developing country
Economic dualism - the countries with dual sectors, there are at least two different market segment each can be profitable, but each requires its own marketing program and products appropriate for its marketing characteristics.
Developing and emerging Markets BEMs – Big Emerging Markets Big emerging markets share a number of important traits.
are all physically large
have significant population
represent considerable markets for a wide range of product
have strong rates of growth or the potential for significant growth
have undertaken significant programs of economic reform
are of nature political importance within their regions
are “regional economic drivers”.
will engender further expansion in neighboring markets as they grow
Some Countries of Emerging Markets
The Advanced Emerging markets are: Brazil, Hungary, Mexico, Poland, South Africa, Taiwan.
The Secondary Emerging markets are: Argentina, Chile, China, Colombia, Czech, Republic, Egypt, India, Indonesia, Malaysia, Morocco, Pakistan, Peru, Philippines, Romania, Russia, Thailand, Turkey.
Big Emerging Markets
Largest and most populous country in South America.
5th largest country by geographical area.
5th most populous country in the world.
4th most populous democracy in the world.
Moderate free market and export-oriented economy.
Nominal per capita GDP has surpassed US$10,500 in 2008, due to the strong and continued appreciation of the real for the first time this decade.
10th largest economy in the world, 2nd largest in the Americas measured by purchasing power parity, in the Americas, after the United States.
Attracted $248.9 billion worth of FDI - 16th biggest recipient of FDI, ahead of countries like Japan & South Korea.
Asian Markets on Selected Countries
World's most populous and third largest nation
Fastest increases in income levels
World’s factory- World’s #1 Exporter of IT Goods
Communist party-led state.
One of the strongest economies in the world
3 forces for economic growth :
The communist government continues to open up the country to free markets and privately owned businesses.
China has entered the global markets by joining the WTO . Foreigners can invest money there to build plants and take advantage of the cheap labor.
The country continues to spend to build out infrastructure, like new highways, power plants and phone networks which is good for the economy.
2 nd fastest growing economy.
2 nd most populous country.
4 th largest economy in purchasing power.
Worlds 12 th largest economy at market exchange rates.
Has most populous democracy in the world.
Before 1991: Semi- socialist approach - strict government control over private sector participation, foreign trade and foreign direct investment.
Since 1991: India has gradually opened up its markets through economic reforms and reduced government controls on foreign trade and investment.
Privatization of publicly owned companies and the opening of certain sectors to private and foreign participation has continued amid political debate.
Average GDP growth rate of 5.7% for the past two decades.
Living Standards in Selected Countries
Implications for Marketing Challenges
Difficulty to develop a product market
The capital and financial markets in developing countries are remarkable for their lack of sophistication.
In spite of emerging markets large populations, multinationals have trouble recruiting managers and other skilled workers because:
The quality of talent is hard to ascertain.
There are relatively few search firms and recruiting agencies in low-income countries.
It is difficult to develop a product market:
Because the data sources and credit histories that firms draw on in the West don't exist in emerging markets.
Market research and advertising are in their infancy in developing countries, and it's difficult to find the deep databases on consumption patterns that allow companies to segment consumers in more-developed markets.
The capital and financial markets in developing countries are remarkable for their lack of sophistication:
There aren't many reliable intermediaries like credit-rating agencies, investment analysts, merchant bankers, or venture capital firms.
Like investors, creditors don't have access to accurate information on companies
Businesses can't easily assess the creditworthiness of other firms or collect receivables after they have extended credit to customers
Because of poor corporate governance, transnational companies can't trust their partners to adhere to local laws and joint venture agreements.