A marketer cannot take initiatives and introduce a state-of-the-art marketing system on a developing country or economy. Marketing efforts must match to each situation and made for each set of circumstances. A sales promotion campaign for a population that is 50 per cent illiterate is vastly different from a program for a population that is 95 per cent literate. Pricing in a market where goods produced are insufficient poses different problems from pricing in a surplus situation. An efficient marketing program is one that provides for adequate utility given a particular set of circumstances. In evaluating the potential in a developing country, the marketer must make a survey of the existing level of market development and acceptance within the country.
The scope of market development will go with of economic development. Economic cooperation and assistance, technological change, and political, social and cultural factors can and play a role in market development. The more developed an economy, the greater the variety of marketing functions demanded and even if required a local marketing agency (reputed) can be contracted for some time to perform marketing functions to penetrate the local market.
As countries develop, the distribution and channel systems develop. In the retail sector, specialty stores, supermarkets, and hypermarkets are established and small grocery and General stores give way to larger establishments. In short, the number of retail stores decline and the volume of sales per store increases. A channel network from manufacturer to wholesaler to retailer develops and replaces the import agent that traditionally assumed all the functions between importing and retailing.
Advertising agencies, facilities for marketing research, repair services, specialized consumer financing agencies, and storage and warehousing facilities are facilitating agencies created to serve the particular needs of expanded markets and economies. These facilitating agencies do not come about automatically, and the necessary marketing system does not simply form or function. Part of the marketer’s task when studying an economy is to determine what in the foreign environment will be useful and how much adjustment will be necessary. In some developing countries it may be up to the marketer to lay the marketing channels.
An important feature in the speeding up of market development is that countries or areas of countries have been propelled from the 18th to the 21st century in the span of two decades by the influences of borrowed technology.
It is not unusual to find traditional marketing retail outlets functioning side by side with advanced, modern markets. This is especially true in food retailing, where a large segment of the population buys food from small produce stalls while the same economy supports modern supermarkets.
Demand in a developing country:
Estimating market demand in less developed countries involves a number of challenges. Most of the difficulty arises from the coexistence of three distinct kind of markets in each country:
- The rural / agricultural sector.
- The modern urban / high income sector, and
- Very large transitional sector usually represented by low-income urban slums.
The modern sector is located in the posh areas of the city and has airports, star hotels, new factories, and an expanding westernized middle class. The traditional rural sector tends to work in the countryside as it has for decades or centuries.
Production and consumption patterns vary across the three sectors. India is a good example. One of the largest industrial economy in the world, India has a population of approximately 1 billion, of which 200 million to 250 million are considered middle class. The modern sector demands products and services similar to those available in any industrialized country. The remaining 750 million are in the transitional and rural sectors.
A rural Indian can live a sound life without many products. Toothpaste, sugar, coffee, washing soap, bathing soap, kerosene are all bare necessities of life to those who live in semi-urban and urban areas. One of the greatest challenges of the 21st century is to manage and market to the transitional sector in developing countries. The large city slums perhaps present the greatest problems for smooth economic development.
Developing countries thus have at least three different market segments. Each can prove profitable, but each requires its own marketing program and products and services appropriate for its market characteristics. Many companies market successfully to both the traditional and the modern market segments but often have problems in the transitional segments, where, for example, advertising targeting high income consumers reaches low-income consumers.
Tomorrow’s markets will include expansion in industrialized countries and the development of the transitional and traditional sectors of less developed nations, as well as continued expansion of the modern sectors of such countries. The traditional sector offers the greatest long range potential, but profits come only with a willingness to invest time and effort for longer periods. Market investment today is necessary to produce profits tomorrow.