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Impact of Emerging Markets on Marketing:
Rethinking Existing Perspectives and Practices

ARTICLE in JOURNAL OF MARKETING · JULY 2011
Impact Factor: 5.47 · DOI: 10.2307/41228618

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Jagdish N. Sheth
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Sheth is Charles H. India. inclusive growth T he purpose of this article is to analyze and propose inevitable. tice in light of the unique nature of emerging markets. and India is the third tion is more of a make versus buy decision and less about largest market. As a consequence. Emory University (e-mail: Jag@Jagsheth. such as market orientation. are at odds with the realities about marketing in the emerging markets (Engardio 2007. I focus on the five unique the impact of emerging markets on existing marketing characteristics of emerging markets and their inherent com- perspectives and practices. and prac- out. which kets be driven by marketing as we know it today. offer several propositions for further research. and Tse 2008.. In the second part. To accommodate these characteristics. On a chronic shortage of resources. This will require a discipline? mind-set change in the way we perceive emerging markets. Similarly. and research. in market power to the United States. Therefore. In the final ing new constructs and schools of thought unique to the section. Most (Gu. and consump. and inadequate infrastructure—of emerging markets are radically different from the traditional industrialized capitalist society. from differential advantage to market aggregation and standardization) and the core guiding strategy concepts (e. Sec- author is grateful to Bernard Jaworski. the growth of Sheth 2008. Hoskisson et. As emerging markets evolve from the periphery to the core of marketing practice. Therefore. and they will require us to rethink the core assumptions of marketing. Several factors are responsible for the growth of the This article is divided into four parts. China is already equivalent comes from unbranded products or services. and aging very their insightful comments and thoughtful suggestions. Kellstadt Professor of Marketing. The gether new markets for branded products and services. more recently. Hung. A major recent context is the growth of emerging markets oped largely in the context of industrialized markets. Keywords: emerging markets.. all advanced countries are aging. al. this century is likely to be all orientation. from glocalization to fusion marketing). I discuss how we will (1992) and.g. Sheth and Sisodia (1999) point need to rethink marketing theory. 2000. market in the advanced economies. unbranded competition. of emerging markets. we must rethink issues of public policy (e. Jagdish N. from compliance and crisis driven to purpose driven) and the marketing practice (e. I emerging markets. uct of emerging markets will permanently surpass that of all ters. 75 (July 2011). and Richard Lutz for ond.g. Sheth and Sisodia 2006). Just as the last century was all about marketing mental to marketing. their domestic markets are either © 2011. affordability. sustainability. emerging markets are highly local and governed by faith. I also and historically the discipline has adapted well in generat. policy. 2000). rapidly. or will the may become valuable for the neglected and economically emerging markets drive future marketing practice and the nonviable markets in advanced markets. In the first part. American Marketing Association Journal of Marketing ISSN: 0022-2429 (print). tion. from market orientation to market development). This policy change has resulted in creating alto- Business School. marketing is a contextual discipline. Ajay Kohli. and differential advantage. They also suffer from inadequate infrastructure and advanced markets (Wilson and Purushothaman 2003). func- marketing discipline (Hunt 1991). 166–182 . such as market segmentation. chronic shortage of resources. and China (BRIC) have unlocked markets pro- tected by ideology and socialism. Context matters. I provide implications for marketing practice. Hitt et al. the gross domestic prod- based sociopolitical institutions in which public policy mat...g. It is estimated that by 2035. As Zinkhan and Hirscheim parative advantages.. Rus- describe why and how growth of emerging markets is sia. As a result.com). some of the best capitalist markets today are ex-communist or ex-socialist Jagdish N. economic reforms in Brazil. and brand equity. Most of the competition purchasing power parity index. 2008 data. At the same time. many beliefs that are funda.g. sociopolitical governance. the funda- emerging markets offers great opportunities to develop or mental question to consider is this: Will the emerging mar- discover new perspectives and practices in marketing. Sheth Impact of Emerging Markets on Marketing: Rethinking Existing Perspectives and Practices The core idea of this article is that five key characteristics—market heterogeneity. market segmentation. In the third part. we must rethink the marketing perspective (e. 1547-7185 (electronic) 166 Vol. strategy. First. according to International Monetary Fund what brand to buy. Goizueta countries. which have been historically devel. we will need to contend with Growth of Emerging Markets their unique characteristics and question our existing prac- tices and perspectives.

stagnant or growing very slowly. typical Africa. They are also becoming major global competitors in administrative rules and regulations. Similarly. there is worldwide ratio- in telecommunications infrastructure manufacturing. and distribution. 1. and Swiss watches. Sam- ance maker. by economic efficiency of branding. communication. France and traditional. Should a company extend its marketing mix (the four Ps of processed foods. Act local”). The most common outcome variables are While this seems parallel to what happened in Japan and entry failure or success. more What is also unique about the emerging markets is that recently. Can brands be global or should they be local or regional? States. particularly in con- nologies surpassed both Alcatel-Lucent and Ericsson-Nokia sumer packaged goods. have demonstrated how “Made in” labels create spectacular rise of local entrepreneurs. such as mentation. China has now more than one line of research has also focused on how countries have million millionaires. surpassing both Warren Buffet makers and marketers of high-quality/high-price products. there is some research on they have produced large-scale domestic enterprises (native country-of-origin effects in counterfeit products and the sons). Most important. or should it adjust it to suit the local markets? products to appliances. It has generated unprecedented wealth in a German cars. Levitt 1983) and ulti- and services in both household and business markets. India has already reached 500 million subscribers and Thomas (2009) have empirically concluded that several and is adding at least 100 million net new subscribers each organizational factors moderate whether standardization is year. This very short time. While there is little debate about the globalization of corpo- For example. The tone of this research seems to be colonial in its and Russian multinationals is far greater. Europe. and the Middle East. seg- expanding. Latin America. more global. and. Hyundai. Most recently. positively correlated with performance. Schilke. Mercosur. Marketing worldwide liberalization of trade and investment. Hewlett-Packard. both experimental and of information. market. Finally. mind-set about emerging markets. It has mately in a compromise called “glocal” marketing (“Think already surpassed 700 million cell phone subscribers. there is still more subscribers than Vodafone. domestic scale advantage in favor of the Chinese. probably because they these large domestic enterprises have been innovative. especially in other emerging markets. markets in which the image of an advanced country is often This growth is further enabled by the democratization an advantage? Numerous studies. and technology and by the empirical. India in the tractor and motorcycle industries. The numbers are staggering. fake products (knockoffs) in Impact of Emerging Markets on Marketing / 167 . first suggested by Honda Motors than three times that of the U. Korea. Finally. and Bill Gates. South Korea. advertising. premium pricing. pricing. This research can be classified into four areas: resulted in global competition and global product and ser- vice offerings with unprecedented choices of branded prod. with companies such as Komatsu. automobiles. Indian. Third. cially in large population markets such as China and India. This colonial mind-set conjures up the tactics and often contrarian to marketing practices of images of African tribal chiefs. and nationalistic in their marketing strategy and the United Kingdom. Vodafone. This is also true of consumer electronics. are former colonies of Europe—in particular. bilateral The marketing discipline has a rich history of both empirical trade agreements. government policy. Keegan 1969. and Siemens. especially in the differential advantage. the emergence of the new middle class. to lack of sensitivity to local cultures (Ghemawat 2001. LG Industries. espe. appliances. non. Haier just surpassed the largest global appli- rate brands such as IBM. in units sold. Huawei Tech- significant controversy at product levels. and Australia. packaging. including products made in Japan. Sommers and Kernan 1967). Japan. and regional economic integrations such research and conceptual thinking on international markets as the ASEAN. and marketing. In general. Their future growth seems Extant Research on International more destined to come from emerging markets. soaps and detergents. Accenture. Canada. Simi- nalization of brands into a few master global brands to gain lar patterns are replicated by Russia in the energy sector. moderating variables have been culture. and by Brazil in the beer industry (Ramamurthi and Singh 2009). such as 3. Toyota. Are there country-of-origin effects. and petrochemicals. Reinmann. Forbes declared Carlos Slim from Mexico the rich. and India is not far behind. and personal care marketing). and the European Union have (Jain 2003). Why do products flourish here and fizzle there? Failure of ucts. In a recent transformed themselves from having an image of being survey. especially in emerging cement. The typical antecedents in research on international Marketers from the emerging markets are now globally marketing are marketing variables such as positioning. the largest multinational corporations from the United 4. Italian leather goods. and still continues (Quelch and Hoff 1986). Hofstede 2001. especially in emerging markets. is creating large-scale first-time buyers of everything from 2. China is destined to on what is labeled the “standardization versus localization become the largest single market for virtually all products debate” (Jain 1989. steel. makers and marketers of low-quality/low-price products to est billionaire in the world. and level of economic advanced markets through acquisitions and organic growth. BRIC countries. Sony. cell This question has sparked significant debate and research phones. Central Asia. the natives in the Americas. and automobiles as well as industrial raw materials. For example. and. development. Electrolux. which are often larger in their domestic markets than emergence of gray markets. profitability. well-established products in emerging markets is attributed Finally. advanced markets. Examples include French wines. Mitsubishi. China and India. Sony. snake charmers in India. and Samsung.S. and South Korea. the are consumers’ predisposition and local competition. and China Mobil has sung. to grow. market share. of course. the most common mediating variables Toyota.

types. For Market Heterogeneity example. business groups. and adulterated products offered by nonregulated to electricity. fresh produce. Indonesia.g. driven by resource constraints. In many of the subsistence markets. Similarly. or economic integration. sity of needs. sociopolitical institution perspective is impor- tant to understand and incorporate in our research as emerg- ing markets become more accessible through liberalization. govern- has significant impact on at least one of the four areas of ment. This market imperfec- ! tion and asymmetry of market power by national marketers 168 / Journal of Marketing. a few highly diversified trading and industrial Heterogeneity of emerging markets is further com. or modern transporta- vendors with a great deal of haggling and price negotia. but expensive product or service with limited access. defined as rural households with income less than two dollars a day. and agriculture commodi. reflect the reality of preindustrialization and. and influence on. sumers. unusual to have numerous government-owned and -operated enterprises serving the markets with monopoly powers. such as wide range of haves mously if it can transcend the prevailing beliefs. these highly diversified business groups have access to. garments.. Therefore. Examples include pounded by large skewness (as much as 40%–50%) toward the Tata. New learning and research opportunities are abun. CNOOC (China). Furthermore. government’s FIGURE 1 planning and policy changes. and consumers (Viswanathan. until recently. wheat. These include religion. Markets are more governed on all four areas. the closed-loop system of the merchant consumer also gener- ates local market submonopolies with affective. therefore. marketing as a discipline will benefit enor. to a farming economy. rice. and aspirations of consumers and more In my view. such as Saudi Arabia and several Gulf countries in the Middle East and parts of Africa. groups dominate the emerging markets. banking. there are many emerging markets anchored to faith-based political governance. it is difficult for a new entrant to break into these markets. or books. Similarly. running water. In short. and Reliance Groups in India. This situation often results in an asymmetric faith- based market power. who are below the official poverty level of less than and many similar business groups in Mexico. therefore. magazines. the Koch what is referred to as the “bottom-of-the-pyramid” con. strategy. nongovernmental organizations marketing (theory. which specialize in product categories such as fish.China. most communist markets were Emerging markets tend to have very large variance relative served only by government enterprises as monopolies with to the mean across almost all products and services. Petrobras (Brazil). and have-nots with respect to both income and net worth. emerging markets must be viewed as core and services tends to be enormous between urban and rural and not tangential or peripheral to a company’s mission and households. heterogeneity of emerging markets is less driven by diver- ties (e. policy. and Ruth 2010). lentils). Rosa. Most of them are still illiterate and. Even today. These consumers have no access and Brazil. wants. read newspapers. mostly served by owner-managed small enterprises. It is not describes these dimensions (see Figure 1). until recently. and normative commitments between producers. and local community. and India Coal (India) in the energy sec- reflect characteristics of market heterogeneity comparable tor alone. low scale. Finally. they had no access to telephone or tele- tions. Group in Turkey. Each one sociopolitical institutions. They Examples include Gazprom (Russia). and practice) and often (NGOs). continu- ance. privatization. This suggests that affordability and accessibility may be dant if only we are willing to change our mind-set about more important for differential advantage than a superior emerging markets. the Perez Companc Group in Argentina. July 2011 . jewelry. Each of the following five subsections by these institutions and less by competition. two dollars a day income. stereo. strategy. mer- chants. Characteristics of Emerging Markets Sociopolitical Governance I have identified five dimensions on which emerging mar. This is limited or no choice. Emerging markets tend to have enormous influence of kets are distinctly different from mature markets. tion. More important. Birla. and stand the rise of these enterprises as global competitors. Therefore. do not bazaars. fragmented. Markets are viewed as informally organized into vision. They are also often consid- Five Characteristics of Emerging Markets ered favorite sons or crown jewels of the nation. the diversity with respect to access to products Fundamentally. it is important to under- because markets are local. and research traditions about the emerging markets. it is less of a case of demand generation and more a case of demand fulfillment.

Around that. ubiquitous telecommunication services. and so forth. logistics. and services is the prevalence of barter exchange or recipro. for example. such as making garments. and consumption efficient and versatile in alternate access and higher cost of doing business. many branded products and ser- ing low-cost. including lack of access. its absence in emerging Emerging markets tend to have a chronic shortage of markets can derail a marketing manager’s efforts to facili- resources in production. Venice. physical. nontraditional channels and innovative to make production sporadic. and basic Outsourcing is minimal. Therefore. the natural location advantage A third aspect of unbranded competition for products was usually access to water-based transportation. affordable products and services that are also vices are still not available in rural markets for a variety of reasons. partly due to availability of banking functions. another characteristic of emerging markets sewing their own clothes is still prevalent in most subsis. Consequently. and other sup. barbers. While the large when a given value-added activity is outsourced. ancient civilizations often electronic products is served by unbranded producers. finan- market development may be more necessary (and poten. our current perspectives of resource- As much as 60% of consumption in emerging markets so or capability-based advantage may need to be supplemented far has been for unbranded products and services. metro areas may have adequate infrastructure. physical roads. it is done by a tailor who makes and sup. rivers and seaports. It is also surprising that as Humans realized long ago that creating a centrally located much as 50%–65% of the market for jewelry. This means innovat- least two reasons. has been able to organize one million independent agents as port mechanisms. chronic shortage of power (electricity). and Florence—all city-based West- prevalence of used products as direct competitors. In other words. product distribution. cial services to expedite monetary exchange. personal computers. is inadequate infrastructure. for at by resource improvisation advantage. Athens. market price as a mechanism ally developed that became the local exchange—the bazaar.(both government and business groups) will require us to constrained with respect to time and location because of the rethink our theories of competitive advantage anchored to lack of electricity. Resource improvisation perspective may be a key to the Unbranded Competition future of product innovation. and enforcement. and The exchange of goods and services called “commerce” bakers. it results in diseconomies of scale. keters take the presence of an exchange infrastructure for may require adding a second dimension to the continuum granted. First. lug. house. Similarly. in general plies a nonbranded custom garment. are fresh fruits and vegetables. reason is that a household is not just a consumption Inadequate Infrastructure unit but also a production unit. and imitation are far more preva- organized an elaborate system to facilitate trading. liquor. inconsistent. appliance. and more impor. standardization. in emerging markets. running water. and nonreplica. For example. and physical space. The elements of such an infrastructure include a between market and hierarchy. the availabil- tially more profitable) than market orientation. compliance. Chronic Shortage of Resources Although such infrastructure is now widespread throughout much of the industrialized world. building their own homes. tant. and storage but also market trans- such as the slum dwellers. In the agriculture days. A second aspect of unorganized competition is the Rome. as has been a central concern of society for endless centuries. Even gies. There is an enormous value- add through labor on making consumable products from Just as there is a chronic shortage of resources and a dispro- raw materials for all basic necessities. Infrastructure includes not only tence markets and also among the urban poor consumers. cleaning. Finally. a transportation system that enables customers to reach gests that market creation (from making to buying) and stores easily. lent due to lack of regulation. let alone credit cards. and some consumer organize commerce. access to consumers may be both necessary and profitable ble. action enablers. lenders (deposits and borrowing). In conducting business in well-developed markets. Impact of Emerging Markets on Marketing / 169 . flourished around cities rather than countries. Milk is also often delivered at home unbranded. butchers. Simi. information. Unbranded products and sophisticated logistical system for the distribution of goods. As a result. industry structure or resource advantage perspective. Babylon. It also means lack labor at home (women and children) and partly due to lack of communication. the most profitable and larly. to address market efficiency from a transaction cost eco. and transaction technolo- of affordability of branded products and services. exchange has high transaction costs as a result of lack largest market for Avon Products is now Brazil because it of scale and inadequate financial. A second. an infrastructure was usu- cal offerings. duplication. and prod- uct usage. “hub” for such exchange was the most efficient way to gage. spotty tate efficient and profitable exchange (Sheth and Sisodia supply of raw materials. exchange. consumption also tends to be its sales and delivery force. ity of well-targeted broadcast and print media. such as point-of-sale terminals. time. Each had a natural location advantage around which it adulteration. mar- nomics perspective. portionate size of below-poverty-level consumers (subsis- holds cooking. exchange. such as telephones and electricity. poor infrastructure. The same is true for this is not the case in the rest of the market. services as a unique characteristic of emerging markets sug. Therefore. Products ern civilizations—were also major trading centers of their tend to have longer life cycle than ownership. and consumption. and lack of skill-based labor tend 1993). as proposed by Williamson (1976). and tence economy). namely. For example.

of course. is by Robert Hormats (2003). Despite this vast influence of government policy in and professional books exist to catalog new learning and opening and organizing markets. and consult- More recently. it is the state. There are three areas in which the emerging about government policy as comparative advantage. This includes provid. For exports to protecting fledgling domestic industries from for. industrial raw standards to create markets than the traditional competitive materials (Brazil. legal. a pioneer. it was the Pan European and other natural resources (Peru. of government policy in organizing markets? How does it differ from the free market forces or the Darwinian theory Raw Material–Based Comparative Advantage of population ecology? Emerging markets have enormous raw material advantages Is it more efficient and effective for government-mandated ranging from human capital (China. Ricardo (1817) was the fixed-cost. is directly attributed to pool of English-speaking software engineers. lost the market leadership to Nokia and parative advantage with a nonintuitive strategy of outsourc- more recently to Samsung. Kotler markets seem to have comparative advantage (Hitt et al.. most of the emerging markets today have and successfully commercialized it. which has become the number two mar- nies (mostly family-owned enterprises) over several years. resources rather than export them as raw materials. an industrial society and its relevance to emerging markets emerging markets would have remained stagnant. especially in education and health care. in the handset business. This is because it resulted in inevitable that raw material–based advantage will be key lack of scale in an industry that is otherwise primarily for research in marketing strategy. have very limited empirical research or conceptual theory ing scholars. and ONGC. It seems now its export-oriented industrial policy as well as use of special poised to be the global hub for other professional services. Russia. In marketing. State Bank of India. such as accounting. public relations—to the four Ps of marketing. It ranges from government as comparative advantage may accrue to marketers from the the largest customer to providing economic incentives for emerging markets both domestically and globally. China and India. old. Africa). (1986) was the first marketing scholar who suggested the 2000. This implies investing in emerging become global leaders. already a large manufacturing and sourcing destination for ing total quality management and branding expertise as the world. as well as design and research and development. July 2011 . Brazil. similar to that of Singapore.g. product safety. Com- TDMA. Many of these government-mandated standard that resulted in GSM as the markets also have strong agricultural (Brazil) and cattle- dominant standard for the cell phone industry. India Post. and advertis- America. 170 / Journal of Marketing. Mexico. country for the global information technology (IT) and IT- Indeed. Central America). example. enabled service outsourcing industry because of its large Japan. AMPS. GSM) and eventually a disadvantage to bine this with the rise of entrepreneurship. and India—that have its resources and move up the value chain from agriculture emerged as domestic market leaders and are now aspiring to to industrial economy. keter in the world because of its access to. ing to children. energy (Russia. strategic advantage. across marketing initiative called TURQUALITY to globalize its numerous sectors of the economy. the success of China. and it is the industry and the nation. they markets for access to raw materials (supply chain and include Gazprom. free market forces? For example. This is owned enterprises of emerging markets—especially in because it could do more valuable economic activity with China. What is the role ing of government policy in organizing markets. a fun. Perhaps the Policy-Based Comparative Advantage most insightful articulation of how President Lincoln’s pol- icy of transforming the United States from an agricultural to Without economic reforms and strong industrial policy. tion of Tetley Tea). As mentioned previously. enough observational evidence. it is surprising that we suggest significant new research opportunities for market. unlike in advanced countries. and Korea in the recent past. first economist to advocate a resource-based view of com- Motorola. India recently became a dominant eign competition to developing special economic zones. India). Nigeria). Therefore. 2000). out of nowhere. investment banking. In short. case studies. economic zones. Latin such as unfair trade practices. while we have a denced by remarkable transformation through economic good understanding of impact of regulations on marketing reforms in Eastern Europe. Petrobras. the competitive market access to capital and technology to do value-add on these processes resulted in multiple standards (e. and. The range of government policy as a comparative We need to understand if and how raw material–based advantage is also impressive. Comparative Advantage of social objectives in marketing. However. policy matters. As a consequence. as a Mobil. Similar examples include Tata Tea (with acquisi- well as modern management education to selected compa. And of course. based natural resources (India). tea plantations. Central Asia. I describe these three areas in role of public policy by adding two more Ps—policy and the following subsections. Turkey has initiated a multimillion-dollar ing. ing or exiting an industry even if the country was the lowest Ironically. cost producer or had a differential advantage. while the United States invented the cellular technology In addition. Hoskisson et al. what we need is a much deeper understand- damental research question in marketing is. Ironically. as evi. China is world-class domestic Turkish brands. CDMA. Russia. many governments have negotiated Emerging Markets bilateral free-trade agreements or regional economic inte- The rise of the emerging markets is less than three decades gration to provide greater market access. China sourcing) as well as participating in local markets. and ownership Another key aspect of government policy is the injection of of. Finally. Huawei Technologies.

NGOs such as the hardware to software services.” In globally competitive to redeploy its resources and capabili. sector can and should embrace marketing practices even the role of marketing is critical.com in creating a strong mar. I briefly discuss three of scale unimagined at one time. there is no need to market because cus- addition to education and health care. and conse. Should a company exit an industry even though it is research in marketing. in which both the government and the private sector agree In short. marketing as we know it today is generalizable to all types Over the years. can create a differential advantage. For example. Malaysia. The first is “inclusive marketing. and parks and recreation. Rethinking Marketing Theory ing” in the marketing discipline. and Amazon. this public–private partnership able in the media industry. Apple. Marketing theory presumes that customers have choices such as branding. sumers who are below the poverty level of two dollars a day gies. Examples include the Grameen Bank context of emerging markets. Therefore. it presumes that museums. General Elec. espe. 86% of the population in emerging maintain. aging shampoos into single serve units or reducing the size sively investing in IT and consulting services. it must constantly struggle to develop. Kotler (1972) further ential advantage. see Hunt 2010). including many variations ability and accessibility to the vast untapped markets. them in the following subsections and then suggest how the cessible markets. Google. economics and sociology—to empirically test them in the neering new and nontraditional marketing practices on a marketing context (Hunt 2010). More recently. such as running water and electricity. quently commanding a premium in market valuation needs to be scientifically researched as part of marketing strategy. emerging markets. and it must create a differ- though there is no profit motive. which may be very useful for the opposite. and parts of Africa offer a very large pool of data ket franchise. Worldwide social media. which is presumed to result in superior extended the generic concept of marketing. public libraries. Markides. Led by the World Bank. Cachani and Smith 2008. Garrett and Karnani 2010). investing in some of the best for-profit consumer companies. tive). including arts. and to grow. The NGOs worldwide seem to have blended the modern Wroe Alderson believed that a company must grow to sur- business practices with social purpose. They are also reaching inac. India. market capitalization value. the inference that can be drawn is quite from emerging markets. can be easily and that the role of marketing for a company is to make its extended to the nonprofit sectors. to Banga (2005) point out. the enormous success of experiments in countries such as Mexico. From differential advantage to aggregation advantage. positioning. or they have used Surprisingly. other words. the nonprofit tomers have no choice. It was based on the obser- vation that many of the tools and concepts of marketing. the reverse seems to be occurring in frameworks developed in other disciplines—most notably. in in a monopoly. products and services if business can innovate on afford. and Jaipur Foot in India. Alderson believed that differentia- Revolution. or to increase its differential advantage (for a dis- markets has yet to experience the benefits of the Industrial cussion. how can one serve a vast majority of con- ties to take advantage of higher-valued emerging technolo. the real break- seems to be the case for most industries that are perma. we need empirical research on exit strategy to pool resources and expertise to focus on societal needs based on the theory of comparative advantage to enhance that the free market processes and marketing fail to address. may require some rethinking (see Table 1).” lighting and appliances businesses. Rethinking Existing Perspectives NGO-Based Comparative Advantage and Practices Kotler and Levy (1969) coined the phrase “social market. developing customer loyalty. Conversely. and health care markets by exiting its traditional A second key concept is “public–private partnership. throughs and nontraditional concepts and practices seem to nently shifting from analog to digital technologies and from be with the newer NGOs. Gates Foundation and the McArthur Foundation are now tric has restructured itself from a highly diversified con. It cially in the rural areas (Anderson. 2010. tion was the foundation of marketing theory. for research opportunities in marketing. As Mahajan and vive. capital. heterogeneity of supply is the likely outcome. and targeting. Similarly. with its unique characteris- (microlending) in Bangladesh and AMUL (dairy coopera. Peru. resulting in variety in offerings. Such research will be invalu. heterogeneity of demand and competition for differential the-pyramid market can be very profitable for traditional advantage. Pratham (Urban Slums). This also of Coca-Cola to a smaller size are useful. emerging as large multinationals capable of acquiring or glomerate to a focused global enterprise in infrastructure. In short. or stockkeeping units of the same generic kind of good. Given the Prahalad and Hammond (2002) articulate how the base-of. in which both newspaper and model of serving unserved markets on a sustainable basis is broadcast media are permanently shifting to broadband and a fascinating area of research in marketing. emerging markets Impact of Emerging Markets on Marketing / 171 . culture. and Kupp also means segmenting the market. The NGOs in emerging markets are pio. While heterogeneity is one of the key characteristics of There are two key concepts with respect to the NGOs emerging markets. in contestable markets. As discussed previously. either homegrown or strategically acquired? IBM with innovative access and make products or services seems to have followed this strategy successfully by exiting affordable to them? While the traditional examples of pack- the low-margin personal computer business and aggres. In some ways. several marketing scholars have pro- of market and social transactions that result in exchange or posed their own theories or perspectives on how marketing some form of reciprocity. articulating that financial performance. offerings the customer’s choice. tics.

Therefore. The presumption of industry structure theory is that market size is fixed and is a zero-sum game of gaining mar- From industry structure to government policy. gain the respective competitive advantage. surpass. Relationship marketing b. Uslay. Compliance a. willing to pay. or does it want to be a specialty retailer. The best competitors. July 2011 . which perpetuate or chain (both primary and support activities) to offer a supe- add to fragmentation for the sake of family succession plan. Market orientation a. Purpose driven marketing Marketing practice a. threat of new entrants. velocity advantage. Both generate above-average returns relative fragmented and disbursed demand across thousands of rural to others. This is further com. in which growing the market with increasing com- itability of an industry is determined by five forces of com. markets. and Windsor (2010) have recently tested Sheth and Sido- P1: In a highly heterogeneous demand and heterogeneous sup- dia’s model of competition empirically. In addition. petition is likely to result in greater profitability and. by definition. therefore. even petition (Porter 1980). has become the largest such as Foot Locker (product specialist) or The Limited retailer in the United States in fewer than 30 years. Mindful consumption c. enterprises is far greater than the industry price–earnings tor of low competition. 40%–50% of subsistence consumers. growing the total market demand by policy 172 / Journal of Marketing. Each industry consists of three full-line What is needed in emerging markets. prices than competitors for equivalent benefits or providing There is too much competition. In retailing. Diffusion of innovation b. Resource improvisation Marketing strategy a. ply market. Glocalization a. Kmart. it is the opposite situation for emerging industrial organization perspective maintains that the prof. and the market valuation of both private and state better profitability. it means whether a firm wants to be art of aggregating and standardizing rural demand with its Wal-Mart or Target. They also tend to have a skewness of gies: cost leadership. superior value stems from offering lower its for the firm. These include rivalry among existing more important. Finally. differentia- ning. a firm must decide whether it wants to villages and remote locations is key to growth and survival. rior value in its chosen strategy (cost leadership. Finance driven marketing c. Inclusive growth b. Industry structure b. and it is typically measured by mar. contrary to Alderson’s conclusion tion. advantage through selection and service. Excessive consumption b. Therefore. If value is defined as what the market is that differential advantage results in better margins or prof. and margins tend to be unique benefits that more than offset a higher price (Hunt paper thin. The ket share. Convert nonusers to users Marketing policy a. Because strategies and capabilities are ing powerful incumbents including Sears. is simply not true in emerging markets. there. which has mastered the cialist. How a try is a combination of part oligopoly and part monopolistic company standardizes and aggregates demand from highly competition. Altintig. ket share distribution. Industry concentration is a good indica. The consequence. try structure model. Aggregation advantage b. and sector participation expanded the total market and has the bargaining power of customers. Resource possession c. What a company needs. hub and spoke logistics system. Government policy c. generate world. Fusion b. TAblE 1 Rethinking Existing Perspectives and Practices Product Category From Æ To Marketing theory a. and focus. ratio. a company must focus on activities in its value pounded by family-owned businesses. bargaining power of suppliers. in the market cap of the company. Businesses exist more on cash flows and wage. choosing an delivered profitable growth at the lowest prices in the industry that is less competitive will. Institutional marketing c. be a full-line generalist or a multiproduct–multimarket spe- It is not surprising that Wal-Mart. in which private- products and services. Customer satisfaction c. Differential advantage a. Thus. a firm must decide between these two choices and Kroger. is aggregation and standardization advantage. They survive not as much for growth as Sheth and Sisodia (2002) propose an alternative indus- they do simply for survival. threat of substitute example is the Indian wireless industry. as well as numerous product or market gating demand to achieve scale efficiency and better returns specialists (monopolistic competition) that have the margin on investment (Levitt 1983). Democratization of innovation c. each indus- fore. (market specialist). Market development b. is generalists (constituting an oligopoly) that have volume and greater standardization by reducing the variety and aggre. less family labor. and different. differentiation. aggregation advantage results in better finan- cial performance than differential advantage. However. a company even in a very P2: In markets in which growth has been regulated by govern- competitive industry can earn superior returns if it chooses ment policy. Country of origin advantage c. 2010). or focus). Nation brand advantage tend to be high in market heterogeneity and therefore are the right strategy among three mutually exclusive strate- highly fragmented.

to achieve he or she stays in the relationship unless there is an exoge- competitive advantage and. Relationship marketing establishes competitive advan- Knowing one’s customers and developing products to sat. such as physical move or divorce. They valuable. Since the growth of the services economy. and Avon prod. in many service industries. it is necessity is the mother of invention. India. advantage theory has become popular in marketing. This is referred to as juggad in India. p. Indeed. ing accessible and affordable branded products and services. As discussed. developing. nous event. imperative of market orientation strategy is that. formance. superior financial per. From relationship marketing to institutional marketing. including bundling. This is the father of innovation. market development. Avon Products has taken this consequence of a lack of primary and enabling infrastruc. Therefore. financial performance than market orientation. franchising has been the most popular approach to sion of differentiated resources. a key characteristic of emerging mar. I focus on three marketing strategies that P4: In markets consisting of unbranded competition for prod- have become mainstream for empirical research in market. and cash flow financing. with a Therefore. the lifetime value of the customer and customer profitabil- oriented. It also includes the nologies in the telecommunications infrastructure industry recent success of General Electric in medical instruments in in Africa and for Life Insurance Corporation of India. they do come. ucts and services. significantly heterogeneous across firms and imperfectly Many consumers have no brand or product knowledge. place. Also. 413). should be the objective. it is difficult to generate market intelligence per- focus on intangible assets such as brands and customers. As taining to current and future customer needs. there has been a From market orientation to market development. such as telephone. not by assessing them. and cus. what matters most in petition. “The marketing con. ity analysis (Kumar and Peterson 2005). observation. selective choices. which China and India. McDonald’s. who provides selective competitive advantage (Wernerfelt 1984). changes results in better financial performance than indus. Similarly. This is concept articulated and developed in the early 1960s. imperfectly mobile. price. 413). most consumers make products at home. this has been the strategy of Huawei Tech- ucts in Brazil. rather than fight for market exceed them” (Hunt 2010. and promotion. I suggest how the rise of emerging mar- kets will affect each of them. Indeed. This leads to calculating cept maintains that all areas of the firm should be customer. emerging markets include the consump- From resource possession to resource improvisation. global money transfer system for migrant workers. in Because markets are informal and unorganized as a result of the process. Alternatively. common in financial services and in telephone services. such as the pioneering success of Hol- iday Inn. postsales activities such information in a coordinated way across departments and experiences through customer support are crucial in to guide organization wide responsiveness to meet or relationship marketing. (b) all marketing activities should be integrated. tage by attracting. In this section. cally. then resource shortage often a “field of dreams”: If you build it. has been considered try concentration. and Ace Hardware in the United Rethinking Marketing Strategy States. they do not even know how markets operate. for example. It seems that discussed previously. mobile. approach in Brazil with a million-plus agents by organizing tures. isfy their needs. wants and desires. Specifi- Slater (1990) and by Kohli and Jaworski (1990) has become cally. market development delivers better ing: market orientation. has clearly been the case in China for fast foods and auto- In emerging markets. marketing strategy shifts toward “share of wallet” by Market orientation can be traced back to the marketing offering the same customer a portfolio of services. therefore. improvi. a lack of adequate infrastructure. paramount” (Hunt 2010. It also includes improvisation as a As mentioned previously. thereby. and (c) profits. tion of. and a lack of access to selling and distribution systems along with microfinancing. The same seems to be true in Russia and India. Therefore. a firm that possesses resources that are Often. Probably the best exam- ple is the success of Western Union. a company gains advan. Recently. Resource-based information. a lack of skilled workforce. which has organized a P3: In markets with a chronic shortage of resources. share. as mentioned previously. in emerging markets. trast to production or sales orientation. low-cost capital. relationship marketing. in con. rare. Histori- sation results in better financial performance than posses. Innovation through improvisation may occur with emerging markets is market development strategy: market- respect to each of the four Ps of marketing: product. Indeed. market development has been the backbone for There are numerous case histories that validate this public telephones in India. and maintaining relation- Impact of Emerging Markets on Marketing / 173 . unbranded products and ser- The resource-based view maintains that resources are both vices. to become more innovative relative to its com. tage by learning to improvise with scarce resources and. Similar stories abound for Bata Shoes in Africa and in milk cooperatives such as AMUL in India. markets are created by shaping cus- kets is a chronic shortage and heterogeneity of resources: If tomer expectations. utili- a dominant paradigm in marketing. some disruptive change initiated by the service provider tion on present and potential customers needs and (2) use destabilizes the relationship. tomer satisfaction. and banking. “The fundamental ties. such as the Grameen Bank in Bangladesh. offers life policies in rural markets. p. once a customer establishes an account. mobiles. firms should systematically (1) gather informa. shift in marketing toward understanding and managing the market orientation perspective articulated by Narver and long-term relationships with individual customers. and inimitable will gain largely depend on an intermediary. and competition from. not just sales. which uses a franchise system.

customer satisfaction index to a company’s financial perfor. Department of Agriculture. 2000). Product is regulated by aggregate index at a national level. It has become a core part of modeling marketing regulation and policy issues have arisen from research in marketing. converting nonusers to first-time users results in Sheth’s (1969) theory of buyer behavior as a way of under. truth in advertising. what matters most is creating first-time users. develop. tricity (Kumar and Peterson 2004. it is the reverse shift: What moti- ers is as important as with customers. customer satisfaction index in the automobile industry and eventually virtually across all consumer and some business Rethinking Marketing Policy products and services. anchored on customer tives. and operating software systems. purchase expectations (attitude) reinforced the decision and Coca-Cola in China. pricing is regulated by multiple agencies (the the development of Net Promoter Score gained top manage. motorcycles.S. and the Do No Call Registry for telemarketing. and automobiles. standing how postpurchase experience compared with pre. protection. and channel strategy in the 1980s as a way to regain global competitive. why do rural farmers buy branded blue jeans and T-shirts when. and the local community. Fornell et al. suggest that what is very useful. social media. marketing strategy around the economic. equally important is to convert nonusers into first-time users. develop.. ucts and services. and emo- vation in the farming community. and Domino’s Pizza in India. United States in many industries. the concept of relationship marketing is including media and distribution. educating. better financial performance than satisfying existing users. Promotion. disclosure. or household prod- becomes necessary to attract. religion. it is necessary to develop a been well documented in research on the diffusion of inno. government. and labeling. users. In emerging markets. This led to growth of J. Historically. which resulted in modeling the economic value of customer cen. including market cap of the company.D. it became part of marketing strat. It requires watches. and development (Sheth and Mittal 1996).S. In other words. be more brand conscious? What matters most from a marketing perspective in out- From customer satisfaction to converting nonusers into sourcing decisions is informing. banking and insurance. became a part of corporate strategy. Given that emerging markets are governed by The real challenge and opportunity is to convert nonusers to sociopolitical and faith-based institutions such as the gov. and similar successes by Subway resulting in brand loyalty.ships with customers through building trust and making Emerging markets. the Malcolm Baldrige Quality homogenization of expectations through framing. at the same time. al. markets (outsourcing) to hierarchy (insourcing). there is a vates consumers to outsource (buy) homemaking activities. cell phones. tomer. well-established theory of institutional economics that may such as cooking. In unorganized markets and lack of adequate infrastructure. provide validation of this egy only in the 1980s. or is it influenced by social and behav- (Gu. indus- Japan had emerged as a successful global competitor to the trial automation. July 2011 . Hung. In short. emerging markets. sales promotions. privacy asset as important as brand equity. the target may not be the end cus. Kumar and Shah 2009). and unit pricing. This has been also found to be true in the medical nomics of make versus buy choices on a continuum from community for adoption of new drugs. Federal Trade Commission and the U. The real competition lies in the make ver- tionships with institutions and their leadership. Fortunately. (2006) developed a cross-industry with respect to each of the four Ps. such as redlining or subprime lending. As Williamson (1976) points establish a relationship with opinion leaders of the commu. It also led to developing customer equity as an intangible This includes truth in lending. intrusion. This is similar to what happens for new tech- ness after the first energy crisis of the late 1970s. ernment. Hoskisson et. and maintain relation. social.g. it is they consume unbranded daily necessities? Are there social more important to attract. the concept of tice’s Antitrust Division) for predatory pricing. and techniques. Recent examples of success by Starbucks. In addition. or emotional reasons emerging-market consumers tend to ships with institutions and their leaders than with end cus- tomers for superior financial performance. Power’s proposition. Therefore. mission) with regard to safety.S. Department of Jus- ment attention. with their unique characteristics of commitment of resources to customers (Hunt 2010). and Tse 2008. it television sets. home mortgages) and physical (toys made in 174 / Journal of Marketing. Customer satisfaction emerged as a key marketing customers through workshops. U. includes advertising. satisfaction. However. P5: In markets governed by sociopolitical institutions. and enabling users. Several professional books by Frederick Reicheld and Similarly. and the Product Safety Com- mance. price fixing. and personal selling. The stream of research still continues to grow with access Most regulation has been legislated to protect consumer to large-scale end-customer data (especially in the telephone rights as a consequence of marketing malpractice or market and banking industries) and affordable data-mining tools failures. They also linked their multiple agencies (the Food and Drug Administration. CLV and profitability at the individual customer level monopoly pricing. ioral considerations? For example. development. cleaning. out. is regulated for deception. Because nology breakthroughs such as personal computers. As mentioned previously. and child care? Is it strictly an be useful in developing institutional marketing strategy economic decision. financial (e. including television. in which it is important to tional value of outsourcing. incen- Award from the U. and partial disclosure. establishing and sustaining a relationship with market mak. This has sus buy decision. McDonald’s. marketing policy has been compliance driven Finally. P6: In markets that largely consist of self-made products and While satisfaction was a key construct in Howard and services. whether it is for automobiles. NGOs. transaction cost economics is fundamentally the eco- nity. and maintain rela.

ronment are conservation and green marketing. A second major growth in areas such as consumer literacy. again. the real breakthrough and non. long-term basis is an important area of research in market- The biggest consequence of the Industrial Revolution ing policy. frugal innovation” by citing two examples. $300 computers. generates better financial performance in emerging mar- There are four approaches to achieving inclusive kets than its free market process. emerging markets has yet to experience the benefits of P7: A company’s policy that is anchored to inclusive growth industrial innovations such as running water and electricity. This has also sells for $800 instead of $2. 3): “They are coming up with new products and services the emergence of new brand-conscious middle-class con.. It been driven by markets and financial outcomes. As mentioned previously. ments in countries such as Mexico. It has also arisen from research is likely to be less problematic. and more recent. it is neither technology nor such as the World Bank. such as low-emission traditional concepts and practices seem to be with these motor vehicles and energy-efficient appliances. The first role is invented in General Electric’s laboratory in Bangalore related to inclusive growth. Peter Drucker very The fourth approach is market-based affordable products aptly observed that presence of consumerism is the shame and business innovations. as well as p. and parts of While it resulted in modern commerce and trade.000 cars.000 for a conventional resulted in neglect or abandonment of markets such as rural ECG and has reduced the cost of an ECG test to just $1 per or disadvantaged urban consumers. area of concern (and research opportunity) is mindful con- and social entrepreneurship. and lending (Anderson. the total carbon footprint from three basic areas of con- A third. A second. A second approach is public– sumption (Sheth. Sethia. the first Industrial Revo- including the MacArthur Foundation and the Gates Founda.g. that are dramatically cheaper than their Western equiva- sumers who are first-time buyers of everything from cell lents: $3. Morgan. “It is not coexistence of unorganized and exploitative marketers only robust and portable but also relatively cheap. which it calls a masterpiece of simplification. microfinancing. hotbeds of innovation. Uslay. Here. the roots of marketing. and personal is large-scale investment by younger but wealthier NGOs. worldwide experi- was the location divorce of production from consumption. take on three new roles to positively minute. and $30 mobiles phones to television sets to automobiles and homes. Green marketing includes products that more affordable are useful. India. sustainability will become a key tional marketing fail to address.and long-term consequences for sustainability (Sheth how low-cost innovation in products and distribution can and Parvatiyar 1995). growth. technological products. it also generated more than 70% of ties in marketing. is planning to produce market prices. Markides. equally exciting innovation is a low-tech education. lution benefited only a small percentage of the world popu- tion. and Kupp device for water purification that uses rice husks (a waste 2010). there is a handheld electrocardiogram (ECG) called the Mac 400. and Impact of Emerging Markets on Marketing / 175 . vehicles. especially for health. The first is the deployment of corporate social responsibility initiatives specifically targeted at inclusive From excessive to mindful consumption. Conserva- ples of packaging shampoo in single-serve units (Sachet) or tion is anchored to the three Rs of consumption: reduce. 6). it is likely to have both (prosthetics for polio victims) in India have demonstrated short. inclusive growth implies proactive inclu. Emerging markets are becoming of marketing (e. and Sheth 2009). As I point out in Chindia Rising (Sheth 2008). With more private partnership in which both the government and the than 4 billion consumers in the emerging markets. access to data for empirical negative press (e. the Grameen Bank (microlending) in lation. repackaging Coca-Cola as a smaller serving to make them reuse. p. First. and Srinivas 2010).” encourage and participate in shaping public policy (De The Economist describes what it refers to as “charms of Figueiredo 2010). As mentioned previously.China and salt in processed foods) crises as well as from newer NGOs. Current marketing practices that are friendly to the envi- Again.g. Peru. I discuss these in the following subsections. and must. of about $4 for a new filter every few months. which is making the device. which are Africa provide a large pool of data for research opportuni. Mahajan and over 1m next year and hopes for an eventual market of Banga (2005) point out that 86% of the population in 100m” (The Economist 2010. Toyota). an initial investment of about $24 and a recurring expense By definition. From compliance to inclusive growth. BP. this public–private partnership capital that will be the showstopper for the growth of China model of serving the unserved markets on a sustainable and India: It will be the environment. marketing has (India). this neglect has resulted in the creation and product). innovated by Tata Consulting Services. If we add the size and rapid growth of the new mid- Bangladesh and Pratham (urban slums) and Jaipur Foot dle class of emerging markets. approach to inclusive growth sumption: processed foods. Tata chemi- sion of all consumers. giving a whose practices generate marketing’s negative image (Gar. achieve inclusive growth. In turn. phones that provide nationwide service for just 2 cents a ing policy can. Led by the world agencies challenge for marketing and business. As mentioned previously. large family an abundant supply of bacteria-free water for rett and Karnani 2010). homes. consumer advocates and consumerism. and recycle. modern homes. not just those who can afford existing cals. market. In addition. are less harmful to the environment. Historically. while the traditional successful marketing exam. percentage of consumers below the poverty level. all aspir- private sector agree to pool resources and expertise to focus ing to become first-time buyers and consumers of modern on the societal needs that free market processes and tradi.. according to a recent special report With the growth of emerging markets comprising a large on innovation in emerging markets in The Economist (2010. patient.

stakeholders (community. services. July 2011 . From a policy perspective. Purpose-driven marketing will boundaries are further indicators of borderless markets require three key changes in marketing policy and practice. marketing through policy A third aspect of purpose-driven marketing is to redefine can encourage moderation in product acquisition. especially with the of the chief marketing officer and reorganizing the market- growth of social media. Just as we have anchored to product attributes. it will require extending marketing to a company’s marketing policy also embraces inclusive growth. Markets are less regulated els by Jim Collins. along with inclusive growth many emerging markets. Is it possible to fuse purpose into profit? Sisodia. the raison d’être of marketing as trustee and steward for ment. The ucts and services and with the customer-centric accommo. these practices are not sustainable if First. enabling even freer flow of trade and investment. nurture. Unfortu. it will What are marketing’s roles and activities as brand steward be in the self-interest of marketing to inculcate and encour. nity branding and communication. and sustainable consumption. especially after the abolition of between purpose and profit. and retain trust of cus- have become self-destructive as well as harmful to the soci. for a company’s products. (1) Why do products flourish here and third area of marketing policy research is what I refer to as fizzle there? (2) Should a company extend or adjust its mar- purpose-driven marketing. and some have transcended worked to demarket smoking cigarettes and ban text mes. such as Vietnam. Recently. and market capi. However. of whether. electricity. employees. and partly by policy. partly by generates better financial performance than free-market. Wolfe. profit. It will mean developing offering endless variety. that go beyond product attributes and customer benefits? A major area of marketing policy for sustainability is to Do purpose-driven brands outperform other brands? Does a encourage mindful consumption. In terms of policy. of-origin effects. 24/7 convenience. educating consumers about ing wins greater share of heart of customers than finance- the consequences of their consumption. policy makers to regulate consumption. marketing may have to reduce A second area of research is related to developing choices and regulate consumption either voluntarily or by purpose-driven brands. (b) Purpose-driven incentives and disincentives for reducing excessive and marketing generates greater brand and customer equity unnecessary consumption (especially of resources such as than finance-driven marketing. and how to extend or adjust marketing perform the Standard & Poor’s 500 stock market index by mix based on local cultures and regulation is giving way as four times and exceed twice the financial performance of a result of more bilateral and regional free-trade agreements “Good to Great Companies” selected as financial role mod. replace. From glocalization to fusion marketing. research that the modern lifestyle and consumption habits how can marketing attract. marketing has balancing diverse and sometimes conflicting goals and per- encouraged unnecessary purchasing and consumption by ceptions of different stakeholders. This 176 / Journal of Marketing. Ghana. establishment spread belief. it will become increasingly necessary and meaning in brands for customers and other stakeholders for marketing to be socially responsible in its own practices. In other words. This may require reinforcing P9: (a) Purpose-driven marketing delivers better financial per- consumers who are mindful of their consumption. and partnering with driven marketing. and caring greater than that of other brands? for the environment. and gasoline). In other words. contrary to popular and wide. and of course the BRIC countries. caring for the community. It is well documented in medical each of its assets (branding and customers). Should market. to focus on customer benefits. community. especially in emerging markets in which ing’s purpose be limited to growth. caring for the self. A national marketing. Rethinking Marketing Practice P8: A firm’s marketing policy anchored to mindful consumption Marketing practice is partly driven by theory. While most brands are historically compliance through new regulations. image of an advanced country is often an advantage? (4) talization in creating and nurturing marketing assets such as Can brands be global or should they be local or regional? brand equity and customer equity? It seems that marketing This section focuses on how the rise of emerging markets without purpose is likely to amplify mistrust of marketing will affect marketing practice.factories. based excessive consumption there are four substantive areas of research related to inter- From finance-driven to purpose-driven marketing. and economic reforms in Purpose-driven marketing. stakeholder perspective of marketing is likely to result in dation of heterogeneous expectations. and aggressive marketing skills for employee branding as well as commu- sales promotions. and globalization of competition. will become increasingly nec. The old debate and Sheth (2007) find that purpose-driven companies out. using formance than finance-driven marketing. The growth of the Inter- essary as emerging markets migrate from the peripheral to net and new social media across national and cultural the core of world markets. nately. and disposal. channel partners. how do we embed purpose saging while driving. when. of the World Trade Organization. ing function. Similarly. (c) Purpose-driven market- water. strategy. employees. and other stakeholders? ety and the environment. Ecuador. and investors) and not just its customers. with efficiency in producing and marketing of prod. as we have done with smoking and other mandatory deconsumption issues. there is no trade-off than they were in the 1980s. suppliers. including redefining the role and become a target of social criticism. the General Agreement on Tariffs and Trade. and reputation? age mindful consumption. many scholars have keting mix to suit the local markets? (3) Are there country- questioned the raison d’être of marketing. As described previously. This includes developing purpose-driven brand command a greater asset value than a caring mind-set among consumers and customers—that others? Is the lifetime value of purpose-driven brands is. tomers.

medical instruments. The contemporary examples are grassroots innovation may be better to reach the base-of- Impact of Emerging Markets on Marketing / 177 . literature. now been replaced with bank cards. scientists are spective of resource constraints such as income. In emerging markets with a large percentage of about changes in the brain. nostalgia. it needs definition.global village phenomenon has raised the academic debate Microsoft. With the major area of managerial marketing in creating a competi. or image. damental beliefs about spirituality and values. ticular interest in drug discovery. how does a firm make innovations more affordable wrong. how does fusion become a differen. of marketing mix has to give way to a fusion of marketing In short. tions. out to rural consumers. Coca-Cola. We have also conducted significant time. advanced and emerging markets. which has highly mature and competitive markets. the Nano car by Tata Motors in Easternization of the world. and it has universal P10: Fusion of cultures and values in marketing mix generates reach. First. and West is West and never the twain shall meet. Traditional research on inno- about extension versus adjustment to another outcome— vation has focused on two areas: diffusion of innovations namely. but he is wrong also! through design. as a construct. and cars (e. and heritage marketing. and developing an understanding of how meditation brings expertise. ing markets. the financing of automobiles through banks. base of the pyramid and rest of the market is likely to entation and relationship marketing. Access to products and services is also directly related From diffusion to democratization of innovation. India). In other Most of the research in marketing has been on the words. The classic examples are Marlboro most emerging economies. discovery. the marketing divide between the ity. At the mobile phones become more and more capable and com- same time. These innovations democratized the fusion beverages generate enhanced revenues or price pre. Finally. Timex watches. Apple. and licensing? This is of par- Although we have studied the Westernization of emerg. East and the West in cuisines. materials. Similarly. supplemented by altogether new growth as a metric to mea. and technology? The most dra- marketing transcend cultures and markets? In other words. matic examples are access to telephone service in remote is it a global phenomenon appealing to both the emerging parts of the world and the use of mobile phones for market and the advanced markets? transactions and marketing communications by reaching It should be noted that fusion marketing is distinctly dif. we have examined innovations from the per- practice. how do we develop products that are accessible sure the impact of fusion marketing. focused on quality. we need to develop a new psychographic inventory acceptability of innovations. time. target costing.g. especially with respect to fun. product for the mass markets. and merchants. and supply chain. just as we have done with market ori. if not genera- tive advantage has been innovation and its successful diffu. Note that affordability was a key driver in the early part tional quotient using brain research methodology. Therefore. with synthetic fibers such as nylon and polyester in indus- nication? For example. With the rise of China and India (Chindia). and value by developing unique intangible assets? the financing of appliances and home furniture through A second area of research is the use of fusion marketing department store credit cards and layaway plans.” is dead First. there seems to be more of a fusion of the (Kerin. and measurement. and triala- speed of Easternization is likely to be faster. Kodak cameras. patible with the Internet. shrink. Innovation in emerging markets. Because the Western cultures are prochange. the United States mium or both? What is the return on marketing investment pioneered the idea of home mortgages to make homes more for fusion marketing? Does it generate extraordinary market affordable. the traditional notion of extension versus adjustment research on perceived risk in adoption of innovations. logistics. rather than a adoption-diffusion models. Second. compatibility. Examples include There are at least three research issues emerging from the Model T car. to develop a Blue Ocean Strategy in what are otherwise the largest credit card for a long time was Sears. the tive advantage. The Internet is a rich medium. producers. we need to now research what I refer to as the appliances. It is a great equalizer between the haves and the better financial performance than either extension or have-nots with respect to asymmetry of information and adjustment of marketing mix. and design. and design. and fusion marketing. does fusion through design. There are similar examples tial advantage in product innovation or marketing commu. communicability. fusion food. to build modern infrastructure in rural markets of sion on a global basis. This has led to concepts of opinion leadership. As ferent from retro. such as Visa and Mas- does fusion marketing generate altogether new customers terCard. perfor- similar to values and lifestyles that can track this trend over mance. It would be fascinating to conduct innovation is emerging as key to marketing practice. of the last century in the United States. In other words. seems to be music. spirituality. affordable contemporary science. Using brain research. and first-mover advantage clash of cultures. There may be lessons we can learn from this early and markets (grow the total market)? It seems that market. exception of China. At the same bility of innovations. as symbolized by Christian yoga and integrated spective of market needs and wants but not from the per- (holistic) medicine. Vardarajan. and Google. improvisation and cigarettes and McDonald’s. dimensional.. history of making affordable innovations in the United ing strategy for market share and share of wallet may be States that may be relevant for emerging markets. who said “East is East focused on three new areas of research and understanding. to cite just a few. We have examined criteria such as rela- time. arts. or trial raw materials. does fusion music. Indeed. Rudyard Kipling. and Peterson 1992). A to infrastructure. a fusion of old tradition with the population below the official poverty level. the fusion of marketing practices between and differential advantage through inventions. however. He is not only dead. research on a link between meditation and brand’s emo. it is likely to take years. market power.

where they are pioneering new uses for such it is almost nonexistent in marketing practice. arts. For example.g. of reverse innovation will be important to understand There are several new areas of research and hypotheses because it has the potential for nonlinear and disruptive related to country-of-origin effects as a consequence of the market effects. As a consequence. and life sciences industries as well as in appliances. Govindrajan. While market access may not be the reverse: “Think local. ple.the-pyramid market. the so-called emerging giants. medical instru. talent. rise of the emerging markets. Indeed it goes ments. even though machines. and customer– struction equipment marketers. The soft well as a portable personal computer–based ultrasound power is becoming a key intangible brand asset for nations. open up doors in other coun- The authors go on to state that “glocalization worked fine in tries in which there are growing political. pharmaceutical. This was most prevalent the low-end market but also to preempt local competitors in between the Soviet Union and the United States during the those countries. com. probably oping a good theory or perspective. branding of a nation is In a recent article. and geopolitical hegemony. which delivers its products deep into the rural tional thinking of “Think global. Contrary to our tradi- tion system. Like the Galapagos the role of the government in opening markets for a nation’s Islands. not limited to adding reputation for its products and ser- tive officer of General Electric. and con- behaviors with respect to pricing. there is the growing influence of China and. With glocalization. thanks to the rapid develop. to a lesser extent. and China. respectively. nation branding is equally important to attract (Immelt. resources. and entertainment.000 are considered Brand ambassadors include a nation’s diaspora (e. Marketing silk with China through West Asia (the so-called silk route). next six years to create at least 100 health care innovations For example. As mentioned previously. in trade and investment between India and the United tunity. Today. First. which became a One place to incubate reverse innovation is the unorga. we need to understand the market ecosystem and products and companies is a key area of potentially devel- interdependence of different market species. This is best illustrated by the growth of the market and other countries didn’t offer much oppor. For exam- tries have employed for decades. Indeed. and improve quality. low-cost.” Similar to the global a glamorous area for research. talent with a focus on indigenous market-based innovations. States. become global market opportunities. Coca-Cola was not wel- ing similar products and then using them to disrupt GE in comed in the Soviet Union and many of the nonaligned rich countries. But those days are over. scends modern concepts of branded products. The relationship marketing anchored more to interdependence real secret of success for Coca-Cola has been its distribu. mous positive or negative impact by association. in emerging markets that would substantially lower costs. a local practice or product may have cess. affordable products with scale As more companies shift their research-and-development advantage generate better financial performance than centers to emerging markets to develop products using local high-priced premium products. Cold War years. the politi- slowing growth of wealthy nations” (Immelt. Govindrajan. computers. it is critical to marketing suc. wanted and. nations. back to pre-Christian era.” this suggests markets all over the world. at the same time. India in other emerging markets and espe- increase access. Indian revolutionary not only for their small size. from creat. it is often the real differential advantage for a the potential to become a global marketing opportunity. keting strategy.. P11: As emerging markets become core to a company’s mar- A third area of marketing practice is reverse innovation. and not simply trust and commitment. With globalization. This is already hap. along with his coauthors vices. explained why tourism. success of Starbucks. cal relationship between China and the United States is and Trimble 2009. Research on soft power and supplier relationships is astounding. General Electric calls this “reverse innovation” products and services made in a given country or offered by because it is the opposite of the glocalization approach that a company headquartered in a given country have enor- many industrial goods manufacturers based in rich coun. July 2011 . NGOs have learned how to provide health and education the informal bazaar is a powerful place to fully understand services in the most remote parts of emerging markets. The country-of-origin advantage is historical and tran- pening in the automotive. several through anthropological or odyssey research. 3) becoming increasingly acrimonious. trade. Act global. and personal computers. resulting in negative The low-cost reverse innovation is not just to expand propaganda about each other. economic. products made by companies from the United States panies develop great products at home and then distribute may be boycotted in markets in which Americans are not them worldwide. There nized local bazaars. distribution. machine that sells for as little as $15. low price. and Trimble 2009). including India and Egypt. Jeff Immelt. had a somewhat acrimonious ment of populous countries like China and India and the political and ideological relationship. The ECG portable cially in Africa and Latin America for both access to market machine discussed in The Economist (2010) special issue as and securing strategic resources (Sheth 2008). it is likely that what succeeds in emerging markets may From country of origin to building the nation brand. and an era when rich countries accounted for the vast majority military partnerships. with some adaptations to local conditions. and and Chinese people have settled all over the world) as well portability but also because they were developed in India as its heritage in culture. 178 / Journal of Marketing. and are now being sold in the While soft power is a core construct in political science. at one time. which. chairman and chief execu. The sheer diversity of market bazaars and are similar case histories about cars. Act local. United States. beginning with Europeans trading consumer electronics. company especially in emerging markets. nations are com- to $12 billion if adjusted by purchasing power parity) in the peting for markets. Conversely. competitive entry advantage for its archrival Pepsi. and investment and for citizen rela- the company decided to invest $3 billion (this is equivalent tionship management. p.

sustainability. and now aspires to do the same in the system inte. Haier. will be the redefinition of the role and the responsibility of the Implications for Research chief marketing officer. and to some extent India. become core to a company’s business. a brand with its patent-protected a fish in the digital fishbowl. developed and accepted theory. This is now hap. Probably the greatest impact of emerging markets will be vices in its domestic market. and as was governance of markets is another construct that may be the case with the rise of Japan in the 1980s and Korea in the powerful in developing a comparative theory of markets. how can we blend the old the luxury brand market through Lexus. such as the Roman. For example. starting with generic brands and then how do we blend market orientation with market develop- introducing proprietary brands. the greater is the halo effect on its products and services. emerging. many of the British brands endorsed by the royalty geneity is used for understanding demand diversity. Civic. First. ensure that the discipline is perceived as a positive force for For example. they generate worldwide data on their nial mind-set of perceived superiority of the marketing Impact of Emerging Markets on Marketing / 179 . especially with the worldwide innovation would begin in a high-quality. (b) The Implications for Practice greater the global success of an emerging market multi- national. inadequate infrastructure. It is also happening with Indian with a hybrid theory of markets and hierarchies? Similarly. In other words. moved up to IT course. While market hetero- empire. As second aspect of brand life cycle has to do with its Marketing as an institution and discipline is likely to become evolution. then migrate to a value position. not a core construct in marketing. Indeed. P12: (a) The greater the soft power of a nation. Toyota started with existing perspectives with alternative perspectives generated Corolla. and Infosys in ways than consumers in advanced countries? If so. Similar examples in emerging markets buy and use cell phones in different include Tata. I suggest three areas. Similarly. keting. and purpose. Everyone can take stakeholding and mium) position. and finally amplify the negative perception of marketing as a practice into a price position. We need a the United States? Has the United States lost its preemi. A purpose-driven marketing approach will market enterprises seem to follow a reverse brand cycle. The current mind-set and compe- The rise of emerging markets offers new research and tencies are likely to become liabilities as emerging markets theory opportunities. 1990s. As companies globalize their opera. ment and resource advantage with scarcity of resources? Of try also began with Y2K legacy technology. moved up to Honda Accord. In other words. The Indian software indus. growth of social media. and Huawei in China. cal research studies with access to global databases and gration business. and then introduced A fourth area of research in marketing is the fusion of Acura as its luxury brand. As Yadav (2010) points out. The love and straints. high-priced (pre. on marketing practice. what are India. with institutional economics. Similarly. nation’s brand evolves over time. do the consumers LeNovo. although it has not been linked to country-of-origin effects marketing has a dearth of good theory. A second area of research is the rise of nationalism in customers in both the business-to-business and business-to- emerging markets in which a brand is loved and patronized consumer markets. most emerging markets have prepaid cell likely has an intangible value and competitive advantage. marketing analytics. or unique distribution sys- admiration for native sons that are doing exceptionally well tem. what is the image of products and services made in A third area of research is marketing policy. and probably the most important. as discussed previously. Historically. Spanish. research on the rise and fall of great powers (Kennedy A domain does not become a discipline without a well- 1986). However. as Williamson has tried to do ics and cell phone markets. and British empires. the low-hanging fruits are the comparative empiri- services. such as Hyundai in the example. For example. ing and selling. comparable to medicine and engineering. this country-of-origin advantage for global the contextual causes for these differences? It may not be enterprises in emerging markets is now going beyond the differences in needs and wants as much as resource con- national shores to other emerging markets. This has been the case with Levi’s in and a discipline because of its inherent association with trad- blue jeans and Maytag in appliances. Similarly. the greater is the affinity of its products and ser. phone services primarily because there is neither a credit- but we do not have good empirical research on this in mar. Honda started with the economical Honda the society. We need dimensionalization of markets into goes through the cycle of being admired to being labeled as some fundamental invariant constructs that can become the heritage or legacy? This has been the case for the British basis for a good comparative theory. comprehensive theory about role of marketing in society nence as the best innovator country? anchored to inclusive growth. moved up to Camry. what we need is comparative in the local market because it has been globally successful empirical research on the actual behavior of customers against well-established incumbents. First. The areas of comparative research and developing customer A third area of research is a longitudinal study of how a insights from data analytics are practically limitless. Mahindra & Mahindra. pharmaceuticals. and the new in our theory development and strategy? For pening with Korean companies. We have great historical A second area equally important is theory development. whether it is gener- in marketing. it is still have become either heritage or legacy brands. institutional with the rise of China. Wipro. The traditional colo- tions and presence. and then successfully entered by the context. what are the positive and ated by context-driven discovery process or construct-based negative effects on products and services of a nation as it justification. Examples include using marketing analytics. rating system nor a significant penetration of bank cards. how do we blend industry structure economics automobile market and Samsung in the consumer electron.

per. this has also led to new vating it to the premium position. “The Last Frontier: Market Creation in Conflict Zones. 180 / Journal of Marketing. Often. an emerging research companies. Deep Rural Areas and Urban Slums. Jamie L. at phone services. While marketing is also regulated by Burgess and Steenkamp (2006) propose a four-stage external regulations. as Smith. It will be like kets from the periphery to the core of global competition. necessity. sition of meaningful data. aries. personal computers. and learning. and cell ance issues as in finance and human resources. It will also happen in consumer electronics. bers. combined with their will resemble a finance or human resources function. “Marketing Renaissance: How Research in Emerging “Unleashing the Power of Marketing. such as ad agencies. are sales and marketing The competency of the chief marketing officer will also certification programs that can transcend national bound- need to shift from a functional specialist to a deep generalist. REFERENCES Anderson. 88 (10). and Stephen Ligouri (2010). 50 (2). Steven Michael and Jan Benedict E. and initially offering it as a high-priced pre.. This would entail encouraging doctoral students tive measures against punitive damages assessed through to go for internships in emerging markets and inviting lawsuits. and Liguori 2010). How. What will be needed. diverse industries. and Trimble (2009) point out. Finally. just a “nice thing to do”. has estimated that it will need to recruit As Immelt. 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The marketing field needs to change from a colonial tions are regulated by external agencies with public disclo. 52 (4). with home-field advantages going to multinationals from dian of a company’s marketing assets (customers and these emerging markets. traditional places to recruit marketing A similar mind-set change has to do with brand life professionals are incapable of generating such large num- cycles. sure obligations. will require the editorial leadership of top-tier academic kets are likely to affect will be shortage of marketing talent. the customer—must expand to stakeholder market. In a thoughtful paper. process for this transformation: theory development. aspirations and entrepreneurship. such as science majors. The latter two corporate func. retailer in India. Sushil and N. this is being implemented with the direct automobiles. ber). 6–28. research or inviting them as visiting professors. 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