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The World Bank Stages of Market Development Model

The World Bank Stages of Market Development Model

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Published by Atiqah Ismail

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Published by: Atiqah Ismail on Oct 07, 2012
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Atiqah Ismail 20111
The World Bank’s Stages of Market Development Model
 
1.
 
Outline the World Bank‟s stages of market development model.
 2.
 
Using the Global Marketing Information Database for:
India
 3.
 
Summarise the marketing implications of its socio-economic demography i.e. whichmarkets are favoured by trends in per capita real income and demography?4.
 
Identify and describe organisations which target the country with products andservices.The World Bank has developed a classification system that uses per capita Gross NationalIncome (GNI)
 – 
 
World Bank‟s stages of market development model:
 Stage GNI per capitaMeanGNI per capita% of WorldWealth% of WorldPopulationLow Income < $935 $649 3% 37%Lower-middle Income $936 - $3,705 $2,038 10% 35%Upper-middle Income $3706 - $11,455 $5,913 10% 12%High Income >$11,456 $36,608 77% 16%India is located in Southeast Asia and is the second most populated country in the world afterChina. It is a developing economy, which falls under the lower-middle income country, withUS$1,220 Gross National Income (GNI) per capita. India is a very highly populated economywith a population of 1.2 billion at the beginning of 2011, which grows at a rate of 1.4% (CIA,2011).Although poverty has been reducing, it still remains a major challenge for the economy, with26% of its population live under the poverty line (World Bank, 2005) whilst 37% is poorwhich accounts
to around 410 million people, making India home to 1/3 of the world‟s poor 
people --
40% of India‟s population are eligible
for subsidised food (BBC, 2010).Slightly more than half (50% <) of the workforce is in agriculture, but services are the major
source of economic growth, accounting for more than half of India‟s output, with only one
-third of its labour force.Marketing implications of its socio-economic demography:Market opportunities:
 
Market for service providers and software developers
 
Market for wine
 
Markets for cars and motorbikes
 
Market for premium products (niche market)
 
Atiqah Ismail 20112
Market for service providers and software developers
With the increase in the penetration of PCs and the internet, usage of e-commerce isincreasing and thousands of users in the 21 to 35 years old age group play social games on adaily basis on portals such as ibibo.com.More than 33 million Indian internet users, who form 84% of the total internet audience,visited a social networking site in July 2010. This ranks India as the seventh-largest globalmarket for social networking. The arrival of low cost mobile handsets with connectivity tothe internet, along with general packet radio services (GPRS) provided by telecom operatorsat very competitive rates, have contributed to the popularity of social networking in India,allowing a growing number of people to access these sites from their mobile phones.Broadband is also a key growth market and is projected to rise from a 2.8% householdownership to 21.2% in 2020. The main opportunities for the sector lie in the mobile phonesector. This will be sparked not only by the launch of 3G services in the short-term, but alsothe gradual migration to 4G in the longer-term.There will be great opportunities in the mobile phone market for service providers andsoftware developers who can create applications which are tailored to the Indian marketplace.
Market for wine
- Changing drinking habits as wine grows in popularityThe appeal of wine was limited to the urban, high-income, 30 to 50-something population.However, the domestic production of wine has resulted in wine becoming more affordable, aswhen compared to imported varieties. To help wine shed its elite image and generate greaterdemand among middle-income, twenty-something consumers, since 2010, coffee chains havestarted selling wines throughout their outlets across India.As more youngsters enter the workforce wine consumption is expected to increase with aCAGR of about 7% (constant value terms) between 2010 and 2020. Bangalore, the IT capitalof India and home to thousands of young techies with high disposable incomes, is now fastturning into the wine capital of the country. According to the Karnataka Wine Boardstatistics, sales of wine rose to 2.5 million litres per annum between 2008 and 2009, asopposed to 1.3 million litres in 2006-2007.Interest in wine consumption in India has also fuelled a growing demand for internationalwines.
Markets for cars and motorbikes
Rising disposable income and a wide array of choice
 – 
 
from the world‟s cheapest car or bike,
to the most luxurious, has made India the second fastest growing auto market in the world.
 
Atiqah Ismail 20113With easy availability of finance, people with two-wheelers have increasingly started toswitch to four-wheelers. Small cars are the most popular among Indians as they are moreaffordable.The growth in the population of those in their twenties and thirties, and a rise in theirdisposable income, there is now a niche consumer segment for luxury motorcycles.Since the slowdown in the economy, Indian car and bike manufacturers have witnessed
impressive growth in 2010, with some firms clocking their „best ever' monthly sales. This
growth is expected to continue and is driven by the increase in the number of urban middleclass households and their increasing disposable income.With increased concerns about car security, demand for in-car security systems, such asPassive Keyless Entry (PKE), has increased significantly in India. This has contributed to a
32% volume growth in “other in
-
car electronics” in 2009.
 
Market for premium products
The number of US dollar millionaires in India rose to 51% on a y-o-y basis with the totalfigure being around 127,000 US dollar millionaires. Even people with fairly high incomes,which fall just below the US dollar millionaires, also travel abroad on either work or businessat least once in two years.These rich Indians gain exposure to luxury services and products such as premium foodswhile travelling abroad. Various lifestyle channels and niche programmes focus on premiumservices and products, adding to further exposure and making richer Indians demand the bestof what is available around the world.Recognising the growing importance of India as an emerging, and one of the fastest growingluxury products/services market, leading worldwide luxury brands such as Armani, Noraletto,Raymond Weil, and Burberry have entered into India over the last couple of years through joint ventures with Indian retail players.Travelling abroad has developed a taste for international brands of clothes and other personalgoods such as perfumes and watches. As discussed earlier in the report, luxury cars and bikeshave already found takers among a niche consumer segment.
A very brief and incomprehensive example of organisations which target India withproducts and services:
Harley Davidson offers motorcycles to the India market, along with other brands such asDucati, Suzuki and Hyosung have already established their presence in India. In July 2010,Harley Davidson opened its first dealership outlet in Hyderabad. According to the Director of 

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