Consumer behavior in global markets: the A-B-C-D paradigm and its application to eastern Europe and the Third World P.S. Raju
Introduction In the marketing literature a considerable amount of attention has been devoted to two groups of countries: the Third World countries and the former socialist countries of eastern Europe. Although there is no one term that precisely describes all the countries in this combined set, most of these countries are characterized as “less developed countries” by the International Development Association (IDA) and as “developing markets” in prominent textbooks of international marketing (Cateora, 1990). Hence the term “developing countries” is used in this article when alluding to both groups of countries jointly. New markets Over 40% of US exports of manufactured goods are to developing countries, and prominent companies in the USA, Europe and Japan have made countries like South Korea, Taiwan, Thailand and Poland their top priority for the future (Business Week, 1994a; Cateora, 1990, p. 289). Despite this trend, consumer behavior in global markets is a topic that is not well understood by marketers. The focus of this article is to provide a comprehensive view of consumer behavior in global markets, especially in relation to the countries of eastern Europe and the Third World. Third World countries, like Brazil, South Korea, Taiwan, Hong Kong, Singapore and India, have made considerable progress in the last few years. The market growth between 1981 and 1986 for selected Third World countries was 24.3% for Brazil, 44.9% for China and 41.3% for India, as compared with 8.4% for the USA and 12.3% for Japan (Cateora, 1990, p. 321). Several companies such as PepsiCo, Procter & Gamble, Unilever, Sony and Nestlé already operate in Third World countries, and others, like GE, see their entry into Third World markets no longer as a matter of choice (Business Week, 1993a). Eastern Europe, with a population of approximately 430 million, is also an emerging new market. The eastern bloc accounted for 15% of the world gross national product (GNP) in 1989 and the combined GNP of Hungary, Czechoslovakia and East Germany alone was more than that of China (Quelch et al., 1991). In a recent survey, 67% of US executives expected eastern Europe to rival western Europe as a major market in about 20 years (Alpert, 1990). Companies like PepsiCo, Coca-Cola, Procter & Gamble, and McDonald’s have already established themselves in eastern Europe and the conversion to a market-oriented economy in these countries is bound to offer many more future opportunities. While many articles and books have focussed on marketing in the Third World (Dawson, 1988; Kaynak, 1982) and eastern Europe (Naor, 1986; JOURNAL OF CONSUMER MARKETING VOL. 12 NO. 5 1995 pp. 37-56 © MCB UNIVERSITY PRESS. 0736-3761 37
Quelch et al., 1991), it is questionable whether marketing findings from the West are directly generalizable to these countries (Akaah et al., 1988). Consumer behavior, in particular, is likely to be somewhat different in developing countries since it is largely influenced by social, political and economic conditions. While research in consumer behavior is a top priority for marketers both in the Third World (Albaum and Peterson, 1984; Kanwar, 1993) and in eastern Europe (Kaynak and Samli, 1986), most researchers have studied only selected aspects of consumer behavior in one or a few cultures. While such ad hoc studies are no doubt useful, there exists a great need for a comprehensive examination of consumer behavior in order to provide generalizations and recommendations to those wishing to market in the Third World or eastern Europe. However, such a comprehensive examination is made especially difficult in the absence of a framework to study consumer behavior in global markets. The objective of this article is therefore threefold. The first objective is to develop a framework that can be used to study consumer behavior in global...
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