Academic journal article Journal of Small Business Management

Marketing to Less Developed Countries

Academic journal article Journal of Small Business Management

Marketing to Less Developed Countries

Article excerpt

MARKETING TO LESS DEVELOPED COUNTRIES

Smaller firms that have adopted a strategic business perspective are continually searching, with a global outlook, for new market opportunities. Their best opportunities exist in markets(1) that are generally shunned by larger firms, and (2) that have success requirements better matched by the small company's distinctive competencies.

Developing country markets uniquely meet both of these criteria.

The attractions of markets in lesser developed countries (LDCs) are multifold:

* Nations of Africa, Latin America, and Asia constitute the world's premier growth market. During the decade of 1970-80, the five fastest growing economies of the world were Saudi Arabia, South Korea, Brazil, Turkey, and Algeria.

* Growth markets mean higher profit return. In 1982, LDCs accounted for 24 percent of U.S. direct investment, but 37 percent of income.

* LDCs typically abound in strategic resources, including a cheap, and increasingly skilled, supply of labor.

* LDCs, anxious to attract capital and technology, offer varying trade, investment, and tax incentives not to be found in developed-country markets.

* LDC markets are characterized by less intensive competition and lower levels of product saturation.

Despite these and other advantages, LDC markets provoke little more than lukewarm interest on the part of large multinational corporations (MNCs), which devote less than one-quarter of their direct investment to these markets. A prime reason is the long list of failures by MNCs in third world countries, often accompanied by substantial loss of property. Understandably, many smaller enterprises conclude that if large firms have such a poor success record in LDC markets, the risks are simply too great for the small company.

Yet, in nearly every case where an MNC has come to grief in a third world country, examination of the facts shows that the firm itself bears a strong measure of the blame. Common reasons for such failures are:

* Insensitivity to a host country's developmental aspirations and real needs.

* Unwillingness to make product or marketing adaptations.

* Failure to provide for local enterprise participation.

* Insistence upon total control and ownership.

* Failure to recognize undesirable social and economic consequences of product introductions.

To a large extent, these stumbling points reflect inherent conflict between the operating philosophies and practices of the large corporation and the requirements for success in third world countries. Standardization, formalized decision-making, and rigid control are hallmarks of large enterprise. Such characteristics do not match well with LDC desires for flexible approaches, personalized attention, and--above all--a significant "piece of the action."

By contrast, the distinctive competencies of small enterprise are much better fitted to the requirements for success in LDC markets. For example, small enterprise can provide:

* More personal attention to customer needs.

* Quicker decision-making and response to market change.

* Focus on market niches as opposed to mass markets.

* Emphasis on quality rather than standardized mass production.

* Tailoring of products and services to individual customer needs.

* Capability for effective teamwork with other firms.

Such characteristics create far more favorable opportunities for the small firm to sell profitably in third world countries. At the same time, prevailing conditions in LDC markets require special marketing approaches if risks are to be minimized and the probabilities of success enhanced. Careful evaluation of market opportunities and entry alternatives will enable small firms to devise the types of marketing programs that capitalize most effectively on their differential advantages. …

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