Emerging MarketsChapter 7

Matakuliah : J0474 International MarketingTahun : 2009

Bina Nusantara University 3

Learning Outcome

• Marketing and Economic Development.

• Marketing in a Developing Country.

• Developing Countries and Emerging Markets

Bina Nusantara University 4

Marketing and Economic Development

The sage of economic growth within a country affects the attitudes toward foreign business activity, the demand for goods, the distribution systems found within a country, and the entire marketing process.

Economic development presents a two-sided challenge. 1. A study of the general aspects of economic development

is necessary to gain empathy regarding the economic climate within developing countries.

2. The state of economic development must be studied with respect to market potential,

including the present economic level and the economy’s growth potential.

Bina Nusantara University 5

Marketing and Economic Development

Economic development is generally understood to mean an increase in national production that results in an increase

in the average per capita Gross Domestic Product (GNP).

Economic development as commonly defined today, tends to mean rapid economic growth and increases in consumer demand-

improvements achieved rather than centuries.

Bina Nusantara University 6

1. Stages of Economic Development

Stage 1. The traditional society

Stage 2. The preconditions for takeoff

Stage 3. The takeoff

Stage 4. The drive to maturity

Stage 5. The age of high mass consumption

Bina Nusantara University 7

1. Stages of Economic Development

The United Nations classifies a country’s stage of economic development based on

its level of industrialization.

MD Cs (more-developed countries)

LD Cs (less-developed countries)

LLD Cs (least-developed countries)

Bina Nusantara University 8

2. NIC Growth Factors(Newly Industrialized Countries)

1. Political stability in policies affecting their development.2. Economic and legal reforms.3. Entrepreneurship.4. Planning5. Outward orientation.6. Factors of production.7. Industries targeted for growth.8. Incentives to force a high domestic rate of saving

and to direct capital to update the infrastructure, transportation, housing, education, and training.

9. Privatization of state-owned enterprises (SO Es) that placed a drain on national budgets.

Bina Nusantara University 9

3. Information Technology, the Internet, and Economic Development

A country’s investment in IT is an important key to economic growth.The cellular phone, the internet, and other advances in IT

open opportunities for emerging economies to catch up with richer ones.

Internet uses :1. Accelerates the process of economic growth by speeding up the diffusion of new technologies to emerging economies.2. Facilitates education, a fundamental underpinning for economic development.3. The internet allows for innovative services at a relatively inexpensive cost

Bina Nusantara University 10

4. Objectives of Developing Countries

Industrialization is the fundamental

objective of most developing countries.

Many countries have deregulated industry, opened

their doors to foreign investment,

lowered trade barriers and begun privatizing SO Es.

Bina Nusantara University 11

5. Infrastructure and Development

Infrastructure represents those types of capital goods that serve the

activities of many industries

Included in a country’s infrastructure are paved

roads, railroads, seaports, communications,

networks, financial networks and energy

supplies- all necessary to support production and

marketing.The quality of an infrastructure

directly affects a country’s economic

growth potential and their ability of an

enterprise to engage effectively in

business.

Bina Nusantara University 12

6. Marketing’s Contributions

The marketing process is the critical element in

effectively utilizing production resulting from

economic growth, The marketing can create a balance between higher

production and higher consumption.

The marketing is instrumental in laying

the groundwork for effective distribution.

Bina Nusantara University 13

Marketing in a Developing Country

External Inputs:•Foreign direct investment (FDI)

•Resources from external partners•Communication with/access to

external markets.

Cluster Characteristics :,•Efficiency in supply, distribution and transportation.•Specialization of labor.•Efficiency of training.•Ongoing links to local markets, suppliers and inputs.•Retention of authenticity/distinctiveness of indigenous products.•Effective boundary-spanning leader.•Effective mobilization of embedded ties•Shared normative governance

Vibrant Industry Cluster :•Growth in output

•Enhanced product diversity•Improved product quality

Agglomeration of related craft and marketing entities

Dynamic Transformation of BOPM Clusters

Bina Nusantara University 14

Developing Countries and Emerging Markets

Big Emerging Markets (BE Ms) share a number of important traits. They :1. Are all physically large.2. Have significant populations.3. Represent considerable markets for a wide range of products.4. Have strong rates of growth or the potential for significant growth.5. Have undertaken significant programs of economic reform.6. Are of major political importance within their regions.7. Are regional economic drivers.8. Will engender further expansion in neighboring markets as they grow.

How with emerging markets in Latin America, Eastern Europe and the

Baltic States,Asia Pacific Rim , China,

etc?

Bina Nusantara University 15

Summary

• 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.

• As nations develop their productive capacity, all segments of their economics will feel the pressure to improve.

• Emerging markets create new marketing opportunities for MN Cs as new market segments evolve.