ASSESSING GLOBAL MARKET

OPPORTUNITIES
EMERGING MARKETS

Newly Industrialized Countries (NICs)

Countries that are experiencing

rapid economic expansion and
industrialization.

NIC Growth Factors

1. Political stability in
development policies
2. Economic and legal reforms
3. Entrepreneurship
4. Planning
5. Outward orientation

NIC Growth Factors

6. Factors of production
7. Industries targeted for
growth
8. Privatization of stateowned enterprises (SOEs)
9. Accessibility of large
markets

Development of Information Technology

Investment in information technology

(IT) is important for economic growth.
Wireless technology reduces the need
for infrastructure
The Internet allows for inexpensive
services

Marketing Needs Infrastructure

Does

the Infrastructure exist?

Utilities
Communications
Transportation
Is the Infrastructure Reliable?
Countries
Countries begin
begin to
to lose
lose economic
economic development
development
ground
ground when
when their
their infrastructure
infrastructure cannot
cannot support
support an
an
expanding
expanding population
population and
and economy
economy

Emerging Markets
Emerging markets are nations with social or business
activity in the process of rapid growth and
industrialisation. Based on data from 2006, there are
around 28 emerging markets in the world (data from
2010 says there are 40 emerging markets
The economies of China and India are considered to be
the largest. According to The Economist, many people
find the term outdated, but no new term has yet to gain
much traction.
The ASEAN China Free Trade Area, launched on
January 1, 2010, is the largest regional emerging market
in the world.

Big Emerging Markets (BEMs)

Prominent BEMs include India, China, Brazil,
Mexico, Poland, Turkey, and South Africa
Different from developing countries in that they
import more than smaller markets and more than
economies of similar size
Because many BEMs lack modern infrastructure,
much of the expected growth will be in industrial
sectors such as, information technology,
environmental technology, transportation, energy
technology, healthcare technology, and financial
services

Big Emerging Markets

Traits of Big Emerging Markets:

1. Physically large
2. Significant populations
3. Considerable markets for a wide
range of products
4. Have strong rates of growth or the
potential for growth

Big Emerging Markets

1. Have undertaken economic reform

2. Are of major political importance in
their regions
3. Are regional economic drivers
4. Support growth in neighboring
markets

The Americas

Eastern Europe

Eastern Europe and the

Balkans
Country

GDP

Import Export

Life
expect

Pop.
(million)

6,400

4.8

1.5

77.8

3.6

Czech Rep. 26,800

145.1

150.5

76.6

10.2

Poland

17,800

213.9

190.5

75.4

38.5

Slovenia

30,800

38.1

34.3

76.7

2.0

Turkey

12,900

204.8

141.8

73.1

71.9

Ukraine

7,800

82.5

64.9

68.1

46.0

Albania

www.cia.gov/library/publications/the-world-factbook/

Asia

Asia
Country

GDP

Import Export

Life
expect

Pop.
(million)

800

4.9

0.33

44.2

32.7

Cambodia

2,100

6.4

4.6

61.7

14.2

China

6,100

1,156

1,465

73.2

1,330

India

2,900

288

178

69.3

1,147

Japan

35,300

696

777

82

127

Laos

2,100

1.28

1.03

56.3

6.7

Philippines

3,400

63.4

50.9

70.8

96

Singapore

52,900

307

349

81.9

4.6

Afghanistan

www.cia.gov/library/publications/the-world-factbook/

Africa

Africa

Country

GDP

Import Export

Life
Pop.
expect (million)

Burkina Faso

1,300

1.7

0.8

52.6

Egypt

5,500

56.4

33.4

71.9

15.3
81.7

Nigeria

2,200

46.4

83.1

46.5

146

700

0.56

0.22

40.9

6.3

10,400

87.3

81.5

48.9

48.8

Sierra Leone
South Africa

www.cia.gov/library/publications/the-world-factbook/

Strategic Implications for Marketing

1.

As a country develops:
1. incomes rise
2. population concentrations shift
3. expectations for a better life lead to higher
standards
4. new infrastructures evolve
5. social capital investments are made
2. When incomes rise, new demand is generated
3. New market segments are created.

Strategic Implications for Marketing

1. Knowledge of the stage of market

development is important in helping to
develop marketing strategies that are
tailored to the level of economic
development.

Strategic Implications for Marketing

Country

Canada

Population
(millions)

GDP

Cars

per
capita

per 1000

33.4 35,700

TVs

PCs

per 1000 per 1000

581

655

460

China

1,321.9

7,800

306

19

India

1,129.8

3,800

58

Kenya

36.9

1,200

13

22

Mexico

108 10,700

151

241

69

It is suggested that
1. A person earning $250 annually in a
developing country can afford Gillette razors
2. At $1,000 a year he or she can become a
Sony television owner
3. A Nissan or Volkswagen could be possible with
a $10,000 income
4. Whirlpool estimates that in Eastern Europe a
family with an annual income of $1,000 can
afford a refrigerator, and with $2,000 they can
buy an automatic washer as well.

It is suggested that
1. At the $5,000 per capita mark, people are more
brand conscious and forego local brands for
foreign brands they recognize
2. At $10,000, they join those with higher incomes
who are exposed to same global information
sources. They join the Club of consumers
with homogeneous demands who share a
common knowledge of products and brands.
3. They become global consumers

Country

Land Lines Cell phones

Ukraine

12,858,000

55,240,000

0.23

Canada

21,000,000

18,749,000

1.12

Turkey

18,413,000

61,976,000

0.30

South
Africa

4,642,000

42,300,000

0.11

37,500

2,583,000

0.01

Cambodia

Land
line / Cell

https://www.cia.gov/library/publications/the-world-factbook/index.html

Objectives of
Developing Countries
Industrialization is the fundamental objective of most
developing countries
Economic growth is seen as the achievement of
social as well as economic goals

Better education
Better and more effective government
Elimination of many social inequities
Improvements in moral and ethical responsibilities

Privatization is the norm and currently a major

economic phenomenon in industrialized as well as in
developing countries

Marketings Contributions
Marketing (or distribution) is not always considered
meaningful to those responsible for planning
Marketing is an economys arbitrator between
productive capacity and consumer demand
The marketing process is the critical element in
effectively utilizing production resulting from
economic growth
Marketing is instrumental in laying the groundwork
for effective distribution

Marketing in a
Developing Country (1 of 3)
Marketing efforts must be keyed to each situation
and custom tailored to each set of circumstances
A promotional program for a population that is 50%
illiterate is vastly different from a program for a
population that is 95% literate

In evaluating the potential in a developing country,

the marketer must look at two areas:
Level of market development
Demand in developing countries

Marketing in a
Developing Country (2 of 3)
Level of market development
Marketer must evaluate existing level of market
development and receptiveness
The more developed an economy, the greater the
variety of marketing functions demanded, and the
more sophisticated and specialized the institutions
become to perform marketing functions
Part of the marketers task when studying an
economy is to determine what in the foreign
environment will be useful and how much adjustment
will be necessary to carry out stated objectives

Marketing in a
Developing Country (3 of 3)
Demand in developing countries - Three distinct
kinds of markets in each country
Traditional rural/agricultural sector
Modern urban/high-income sector
Transitional sector usually represented by lowincome urban slums

The Americas - NAFTA

North American Free Trade Agreement (NAFTA Canada, Mexico,
and the United States)

A single market of almost 500 million people with a 10 + $ trillion GNP

Ratified and became effective in 1994
Requires the removal of all tariffs and barriers to trade over 15 years
All tariff barriers dropped in 2008
Improves all aspects of doing business within North America
Creates one of the largest and richest markets in the world
Job losses have not been as drastic as once feared, in part because
companies have established maquiladora plants in anticipation of the
benefits from NAFTA (A maquiladora is a manufacturing operation in which
a factory imports materials and equipment on a duty-free and tariff-free
basis for assembly, processing, or manufacturing and then re-exports the
assembled, processed, or manufactured product, sometimes back to the
raw materials' country of origin. A maquila is also referred to as a "twin
plant", or "in-bond" industry. Most maquiladoras are in Latin America, but
such arrangements also exist in other countries with legislation in place to
enable them. Currently about 1.3 million Mexicans are employed in
maquiladoras)

A maquiladora plant

The Americas DR-CAFTA

United States Central American Free Trade
Agreement-Dominican Republic Free Trade
Agreement (DR-CAFTA Costa Rica, Dominican
Republic, El Salvador, Guatemala, Honduras,
Nicaragua, and the United States)

Aimed at increasing trade and employment

between the seven countries by reducing tariffs

The Americas MERCOSUR

Southern Cone Free Trade Area (MERCOSUR
Argentina, Bolivia, Brazil, Chile, Paraguay, and
Uruguay)

The Treaty of Asuncion, which provided the legal

basis for MERCOSUR, was signed in 1991 and
formally inaugurated in 1995
Second-largest common-market agreement in
the Americas after NAFTA

Market of about 250 million with a combined GDP

of $3 trillion

The Americas Latin American

Progress
Most of the countries in Latin America have moved
from military dictatorships to democratically elected
governments in the last three decades
Protectionism has given way to privatization and
other economic, monetary, and trade policy reforms
Because of its size (population of 600 million is
nearly twice that of the United States and 100
million more than the European Community) and
resource base, the Latin American market has
always been considered to have great economic
and market possibilities

The Americas Latin American

Economic Cooperation
Latin American Integration Association (LAIA)
Its long term goal is a gradual and progressive
establishment of a Latin American common market
It allows members to establish bilateral trade
agreements among member countries

Caribbean Community and Common Market

(CARICOM)
Aim is to achieve true regional integration even
having a common currency for all members
It continues to seek stronger ties with other groups
in Latin America and has signed a trade
agreement with Cuba

Strategic Implications for

Marketing (1 of 2)
A vast population of the emerging market are viable
customers with expanding income
As a country develops
Incomes change
Population concentrations shift
Expectations for a better life adjust to higher
standards
New infrastructures evolve
Social capital investments made

When incomes rise, new demand is generated at all

income levels for everything from soap to cars

Strategic Implications for

Marketing (2 of 2)
The $10,000 Club is group of consumers with
homogenous demands who share a common
knowledge of products and brands
If a company fails to appreciate the strategic
implications of the $10,000 Club, it will miss the
opportunity to participate in the worlds fastestgrowing global consumer segment
Markets are changing rapidly, and identifiable
market segments with similar consumption patterns
are found across many countries

The Peoples Republic of China

(PRC) (1 of 2)
Aside from the United States and Japan, there is no
more important single national market than the PRC
The PRC with a dual economic system, embracing
socialism along with many tenets of capitalism, has
produced an economic boom with expanded
opportunity for foreign investment
Its GNP averaged nearly 10% since 1970 and is
predicted to be around 8 10% in the next 10 to 15
years, equaling that of the US by 2015

The Peoples Republic of China

(PRC) (2 of 2)
Two major events that occurred in 2000 had a
profound effect on Chinas economy:
Admission to the World Trade Organization (WTO)
US granting normal trade relations (NTR) to China on
a permanent basis (PNTR)

Two steps China must take if its road to economic

growth must be smooth:
Improving human rights
Reforming the legal system

Hong Kong
After 155 years of British rule, Hong Kong reverted
to China in 1997, when it became a special
administrative region (SAR) of the PRC
Hong Kong is given a high degree of autonomy. It
negotiates bilateral agreements (which are then
confirmed by the PRC0 and makes major
economic decisions on its own
Hong Kong is a free society with legally protected
rights as the PRC continues to pursue a generally
noninterventionist approach to economic policy that
stresses the private sector

Taiwan, The ROC

Both Taiwan and China continue to implement WTO
provisions between themselves
About 250,000 Taiwanese-run factories are
responsible for about 12% of Chinas exports
Trade helps out both countries: Taiwanese
companies face rising costs at home - China offers
a nearly limitless pool of cheap labor and
engineering talent; Chinas SOEs (State-owned
enterprises) are laying off millions and Taiwan
provides plentiful jobs

Japan
Japans fast growth in the 1970s and 1980s amazed
the world. Then came the early 1990s, and Japans
economy produced a stunning surprise: it slowed,
sputtered, and stalled
Four explanatory themes have emerged:

Faulty economic policies

Inept political apparatus
Disadvantages due to global circumstances
Cultural inhibitions

Global Circumstances
Japanese population is shrinking faster than the
U.S. In 2005, while American baby boomers were at
their peak of productivity, the Japanese were about
10 years ahead to population declines and graying
hair
Serious disadvantage in the information age: its
complex language (three alphabet system) hindered
software innovations
With historically low real prices of oil and the U.S.
peak consumption level of SUVs, Japan was late to
tap this market

The Cultural Explanation

The lack of a national goal for Japan plagued them
after successfully building themselves from the ruins
of World War II
The Japanese management culture such as, lifetime
employment, job promotion based not on merit but
on length of service, reciprocal
contractor/subcontractor loyalties, hindered their
adjustment to the new economic era
Japan is expected to continue its slow-growth
economy; Toyotas 2010 quality problems may have
disrupted its contributions to the economy

India
The following steps have already been taken:
Privatizing state-owned companies ; reducing stake to
about 51%
Recasting the telecom sectors regulatory authority and
demolishing the monopolies enjoyed by SOEs (Stateowned enterprises)
Signing a trade agreement with the U.S. to lift all
quantitative restrictions on imports
Maintaining momentum in the reform of the petroleum
sector
Planning the opening of domestic long-distance phone
services, housing, and real estate and retail trading
sectors to foreign direct investment

India
India still presents a difficult business environment
Tariffs are well above those of developing world
norms
Inadequate protection of intellectual property rights
Anti-business attitudes of Indias federal and state
bureaucracies continue to hinder potential investors
and plague their routine operations
Delay by policymakers on selling money-losing SOEs,
making labor laws flexible, and deregulating banking
Widespread corruption and ingrained bribery

India
But India presents a lot of opportunities
Massive market (over 1 billion, second in size only to
China)
Cheap and qualified labor
Knowledge of English
Educated middle class numbering 250 million (college
graduates, scientists, engineers, etc)
Supplier and exporter of expertise in all areas of
information technology
Time zone puts India in a competitive position with
their European counterparts (they work while
Americans sleep)

Asia Pacific Trade Associations

Once a source of inexpensive labor for products
shipped to Japan or to third markets, countries in
the Asia Pacific region are now seen as viable
markets
Three free trade associations in this region:
Association of South East Asian Nations (ASEAN)
ASEAN+3 (ASEAN members plus ministers from
China, Japan, and South Korea)
Asia-Pacific Economic Cooperation (APEC)

Association of Southeast Asian

Nations (ASEAN)(1 of 2)
Goals of the ASEAN
Operating within a free trade area
The ability to sell in an entire region without differing
tariff and nontariff barriers
Distribution can be centralized at the most costeffective point rather than having distribution points
dictated by tariff restrictions
Pricing can be more consistent, which helps reduce
smuggling and parallel importing
Marketing can become more regionally and centrally
managed

Asia-Pacific Economic
Cooperation (APEC)
APEC was formed in 1989
Provides formal structure for major governments to discuss
mutual interests in open trade and economic collaboration
Includes all major economies of the region and the most
dynamic, fastest-growing economies in the world

Common goal and commitment to:

Open trade
Increase economic collaboration
Sustain regional growth and development
Strengthen the multilateral trading system
Reduce barriers to investment and trade without detriment to
other economies

Marketing Opportunities in
Greater China
Across this vast land of opportunity, there are extreme
differences in economic wellbeing, cultures, and
political structures
The following sectors are great for American exporters:
Automotive components, cleaner coal, construction
equipment, education and training services, machine
tools, marine industries, healthcare, water and
wastewater treatment, rail equipment, renewable energy,
and green building

Finally, the influence of national government policies

and regulations of marketing will often be minor
compared with that of their local counterparts