Impact of Emerging Markets on Marketing

Topics: Marketing, Economics, International trade Pages: 43 (15107 words) Published: August 27, 2011
Jagdish N. 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, sociopolitical governance, chronic shortage of resources, unbranded competition, and inadequate infrastructure—of emerging markets are radically different from the traditional industrialized capitalist society, and they will require us to rethink the core assumptions of marketing, such as market orientation, market segmentation, and differential advantage. To accommodate these characteristics, we must rethink the marketing perspective (e.g., from differential advantage to market aggregation and standardization) and the core guiding strategy concepts (e.g., from market orientation to market development). Similarly, we must rethink issues of public policy (e.g., from compliance and crisis driven to purpose driven) and the marketing practice (e.g., from glocalization to fusion marketing). Keywords: emerging markets, affordability, sustainability, inclusive growth

T

he purpose of this article is to analyze and propose the impact of emerging markets on existing marketing perspectives and practices. As Zinkhan and Hirscheim (1992) and, more recently, Sheth and Sisodia (1999) point out, marketing is a contextual discipline. Context matters, and historically the discipline has adapted well in generating new constructs and schools of thought unique to the marketing discipline (Hunt 1991). As emerging markets evolve from the periphery to the core of marketing practice, we will need to contend with their unique characteristics and question our existing practices and perspectives, which have been historically developed largely in the context of industrialized markets. Most emerging markets are highly local and governed by faithbased sociopolitical institutions in which public policy matters. They also suffer from inadequate infrastructure and chronic shortage of resources. Most of the competition comes from unbranded products or services, and consumption is more of a make versus buy decision and less about what brand to buy. Therefore, many beliefs that are fundamental to marketing, such as market segmentation, market orientation, and brand equity, are at odds with the realities of emerging markets. At the same time, the growth of emerging markets offers great opportunities to develop or discover new perspectives and practices in marketing, which may become valuable for the neglected and economically nonviable markets in advanced markets. This will require a mind-set change in the way we perceive emerging markets. This article is divided into four parts. In the first part, I describe why and how growth of emerging markets is Jagdish N. Sheth is Charles H. Kellstadt Professor of Marketing, Goizueta Business School, Emory University (e-mail: Jag@Jagsheth.com). The author is grateful to Bernard Jaworski, Ajay Kohli, and Richard Lutz for their insightful comments and thoughtful suggestions.

inevitable. In the second part, I focus on the five unique characteristics of emerging markets and their inherent comparative advantages. In the third part, I discuss how we will need to rethink marketing theory, strategy, policy, and practice in light of the unique nature of emerging markets. I also offer several propositions for further research. In the final section, I provide implications for marketing practice, function, and research.

Growth of Emerging Markets
A major recent context is the growth of emerging markets (Gu, Hung, and Tse 2008; Hitt et al. 2000; Hoskisson et. al., 2000). It is estimated that by 2035, the gross domestic product of emerging markets will permanently surpass that of all advanced markets (Wilson and Purushothaman 2003). On a purchasing power parity index, China is already equivalent in market power to the United States, and India is the third largest market, according to International Monetary Fund 2008 data. Just as the...

References: Anderson, Jamie L., Constantinos Markides, and Martin Kupp (2010), “The Last Frontier: Market Creation in Conflict Zones, Deep Rural Areas and Urban Slums,” California Management Review, 52 (4), 6–28. Burgess, Steven Michael and Jan Benedict E.M. Steenkamp (2006), “Marketing Renaissance: How Research in Emerging Consumer Markets Advances Marketing Science and Practice,” International Journal of Research in Marketing, 23 (December), 337–56. Cachani, Sushil and N. Craig Smith (2008), “Socially Responsible Distribution Strategies for Reaching the Bottom of the Pyramid,” California Management Review, 50 (2), 52–84. Comstock, Beth, Ranjay Gulati, and Stephen Ligouri (2010), “Unleashing the Power of Marketing,” Harvard Business Review, 88 (10), 90–98.
180 / Journal of Marketing, July 2011
De Figueiredo, Rui J.P. (2010), “Institutions, Politics and NonMarket Strategy,” California Management Review, 52 (2), 123–31. The Economist (2010), “The World Turned Upside Down: A Special Report on Innovation in Emerging Markets,” (April 17), 3–18. Engardio, Pete (2007), Chindia: How China and India Are Revolutionizing Global Business. New York: McGraw-Hill. Fornell, Claes, Sunil Mithas, Forrest V. Morgeson III, and Mayuram S. Krishnan (2006), “Customer Satisfaction and Stock Prices: High Returns, Low Risk,” Journal of Marketing, 70 (January), 3–14. Garrett, Bernard and Aneel Karnani (2010), “Challenges in Marketing Socially Useful Goods to the Poor,” California Management Review, 52 (4), 29–47. Ghemawat, Pankaj (2001), “Distance Still Matters: The Hard Reality of Global Expansion,” Harvard Business Review, 79 (September), 3–11. Gu, Flora F., Kineta Hung, and David K. Tse (2008), “When Does Guanxi Matter? Issues of Capitalization and Its Dark Side,” Journal of Marketing, 72 (July), 12–28. Hitt, Michael A., M. Tina Dacin, Edward Levitas, Jean Luc Arregle, and Anca Borza (2000), “Partner Selection in Emerging and Developed Market Contexts: Resource-Based and Organizational Learning Perspectives,” Academy of Management Journal, 43 (3), 449–67. Hofstede, Geert (2001), Culture’s Consequences, 2d ed. Thousand Oaks, CA: Sage Publications. Hormats, Robert (2003), “Abraham Lincoln and the Global Economy,” Harvard Business Review, 91 (8), 1–10. Hoskisson, Robert E., Lorraine Eden, Chung Ming Lau, and Mike Wright (2000), “Strategy in Emerging Economies,” Academy of Management Journal, 43 (3), 249–67. Howard, John A. and Jagdish N. Sheth (1969), The Theory of Buyer Behavior. New York: John Wiley & Sons. Hunt, Shelby D. (1991), Modern Marketing Theory: Critical Issues in the Philosophy of Marketing Science. Cincinnati: South-Western Publishing. — — (2010), Marketing Theory: Foundations, Controversy, — Strategy, Resource-Advantage Theory. Armonk, NY: M.E. Sharpe. Immelt, Jeffrey R., Vijay Govindrajan, and Chris Trimble (2009), “How GE Is Disrupting Itself,” Harvard Business Review, 87 (October), 3–10. Jain, Subhash (1989), “Standardization of International Marketing Strategy: Some Research Hypotheses,” Journal of Marketing, 53 (January), 70–79. — — (2003), Handbook of Research in International Marketing. — Northampton, MA: Edward Edgar Publishing. Keegan, Warren J. (1969), “Multinational Product Planning: Strategic Alternatives,” Journal of Marketing, 33 (January), 58–62. Kerin, Roger A., P. Rajan Vardarajan, and Robert A. Peterson (1992), “First Mover Advantage: A Synthesis, Conceptual Framework, and Research Propositions,” Journal of Marketing, 56 (October), 33–52. Kohli, Ajay and Bernard J. Jaworski (1990), “Market Orientation: The Construct, Research Propositions, and Managerial Implications,” Journal of Marketing, 54 (April), 1–18. Kotler, Philip (1972), “A Generic Concept of Marketing,” Journal of Marketing, 36 (April), 46–54. — — (1986), “Megamarketing,” Harvard Business Review, 64 — (March/April), 117–24. — — and Sidney J. Levy (1969), “Broadening the Concept of — Marketing,” Journal of Marketing, 33 (January). 10–15. Kumar, V. and J. Andrew Peterson (2005), “Using Customer-Level Marketing Strategy to Enhance Firm Performance,” Journal of the Academy of Science, 33 (Fall), 504–519.
— — and Denish Shah (2009), “Expanding the Role of Market— ing: From Customer Equity to Market Capitalization,” Journal of Marketing, 73 (November), 119–36. Levitt, Theodore (1983), “The Globalization of Markets,” Harvard Business Review, 61 (May/June), 92–102. Mahajan, Vijay and Kamini Banga (2005), 86% Solution: How to Succeed in the Biggest Market Opportunity of the Next 50 Years. Upper Saddle River, NJ: Wharton School Publishing. Narver, J.C. and S.F. Slater (1990), “The Effect of a Market Orientation on Business Profitability, “Journal of Marketing, 54 (October), 20–35. Prahalad, C.K. and Allen Hammond (2002), “Serving the World’s Poor Profitably,” Harvard Business Review, 80 (September), 48–58. Porter, Michael E. (1980), Competitive Advantage. New York: The Free Press. Quelch, John A. and E.J. Hoff (1986), “Customizing Global Marketing,” Harvard Business Review, 64 (May/June), 59–68. Ramamurthi, Ravi and Jitendra Singh (2009), Emerging Multinationals in Emerging Markets. Cambridge, UK: Cambridge University Press. Ricardo, David (1817), The Principles of Political Economy and Taxation. London: John Murray. Schilke, Oliver, Martin Reinmann, and Jacquelyn S. Thomas (2009), “When Does International Marketing Standardization Matter to Firm Performance?” Journal of International Marketing, 17 (4), 24–46. Sheth, Jagdish N. (2008), Chindia Rising: How China and India Will Benefit Your Business. Delhi: Tata/McGraw Hill. — — and Banwari Mittal (1996), “A Framework for Managing — Customer Expectations,” Journal of Market-Focused Management, 1 (2), 137–58 — — and Atul Parvatiyar (1995), “Ecological Imperatives and — the Role of Marketing,” in Environmental Marketing: Strategies, Practice, Theory and Research, M.J. Polonsky and T. Mintu-Wimsatt, eds. New York: Haworth Press, 3–20. — —, Nirmal Sethia, and Shanthi Srinivas (2010), “Mindful Con— sumption: A Customer Centric Approach to Sustainability,” Journal of the Academy of Marketing Science, 39 (1), 21–39. — — and Rajendra S. Sisodia (1993), “The Information Mall,” — Telecommunications Policy, (July), 376–89. — — and — — (1999), “Revisiting Marketing’s Lawlike Gener— — alizations,” Journal of the Academy of Marketing Science, 27 (1), 71–87. — — and — — (2002), The Rule of Three: Surviving and Thriv— — ing in Competitive Markets. New York: The Free Press. — — and — — (2006), Tectonic Shift: The Geoeconomic — — Realignment of Globalizing Markets. New Delhi: Sage Publications. Sisodia, Rajendra, David Wolfe, and Jagdish N. Sheth (2007), Firms of Endearment. New York: Wharton School Publishing. Smith, Craig N., Minette E. Drumwright, and Mary C. Gentile (2010), “The New Marketing Myopia,” Journal of Public Policy & Marketing, 29 (Spring), 4–11. Sommers, Montrose and Jerome Kernan (1967), “Why Products Flourish Here, Fizzle There,” Columbia Journal of World Business, 2 (2), 89–97. Teece, David J. (2010), “Williamson’s Impact on the Theory and Practice of Management,” California Management Review, 52 (2), 167–76. Uslay, Can, Z. Ayca Altintig, and Robert D. Windsor (2010), “An Empirical Examination of The Rule of Three: Strategy Implications for Top Management, Marketers, and Investors,” Journal of Marketing, 74 (March), 20–39. — —, Robert E. Morgan, and Jagdish N. Sheth (2009), “Peter — Drucker on Marketing: An Exploration of Five Tenets,” Journal of the Academy of Marketing Science, 37 (1), 47–60.
Impact of Emerging Markets on Marketing / 181
Viswanathan, Madhu, Jose Antonia Rosa, and Julie A. Ruth (2010), “Exchanges in Marketing Systems: The Case of Subsistence Consumer Merchants in Chennai, India,” Journal of Marketing, 74 (May), 1–18. Wernerfelt, B. (1984), “A Resource-Based View of the Firm,” Strategic Management Journal, 5 (2), 171–80. Williamson, Oliver (1976), Markets and Hierarchies: Analysis and Antitrust Implications: A Study in the Economics of Internal Organizations. New York: The Free Press.
Wilson, Dominic and Roopa Purushothaman (2003), “Dreaming with BRICs: The Path to 2050,” Global Economics Paper No. 99, New York: Goldman Sachs. Yadav, Manjit S. (2010), “The Decline of Conceptual Articles and Implications for Knowledge Development,” Journal of Marketing, 74 (January), 1–19. Zinkhan, George A. and Ruby Hirscheim (1992), “Truth in Marketing Theory and Research: An Alternative Perspective,” Journal of Marketing, 56 (April), 80–88.
182 / Journal of Marketing, July 2011
Copyright of Journal of Marketing is the property of American Marketing Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder 's express written permission. However, users may print, download, or email articles for individual use.
Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Reflection on Impact of Emerging Markets on Marketing: Rethinking Existing Perspectives and Practices Essay
  • Marketing In Emerging Markets Essay
  • Emerging Markets and Turbulent Markets Essay
  • Global Marketing
  • P&G entering emerging markets Essay
  • Emerging Markets Essay
  • Essay about Emerging markets in latin america
  • Emerging Markets Essay

Become a StudyMode Member

Sign Up - It's Free