This content relates to : EMERGING ECONOMY – INDIA
HIGHLIGHTS
Serving low-income consumers in emerging economies like India can be very profitable.
Data from India show that low-income consumers are motivated to adopt new products.
Marketing innovations (e.g., packaging, pricing, distribution) are critical to innovation adoption by such low-income consumers.
Sundar Bharadwaj
University of Georgia
There is evidence that serving low-income consumer (LIC) segments in emerging markets can be very profitable because these segments are highly populous. Against this background, this paper explores the factors that affect the acceptability, awareness, availability, and affordability of new products for LIC segments.
To achieve the research aim, two studies were undertaken. Study 1 used a qualitative grounded-theory approach involving in-depth interviews of 140 firm managers and 111 low-income consumers across India and Chile. In Study 2, we tested an integrated multilevel empirical model of several factors identified in Study 1, along with country-level factors drawn from the literature.
The analysis was conducted on a 12-year longitudinal panel dataset of new product introductions in 27 emerging market countries from Africa, Asia, Eastern Europe, and South America.
Critical factors that motivate the adoption of new products by LICs include:
Consumer Aspirations:
LICs are motivated to buy premium and branded products and will do so if they are affordable.
Region-based versioning:
Firms need to address regional heterogeneity by versioning offerings.
Innovative/visible packaging:
Visible and attractive packaging enhances product awareness and acceptability and consumers’ motivation to buy new products.
Product demonstrations:
LICs are located primarily in rural areas that are not covered by media networks. This heightens the need to educate consumers on the innovation’s benefits and usage via product demonstrations.
Critical factors that motivate firms to introduce new products for LICs in emerging markets include:
Consumers’ knowledge of the product category which reduces the investments needed to understand needs and develop suitable innovations.
Concentration of branded products which implies that firms have the necessary capabilities to innovate.
Availability of global brands which indicates that there are MNCs operating in the market; these MNCs can leverage their global scale and resources to target LICs.
Presence of traditional retail stores which signifies well-functioning marketing channels.
Author:
Sundar Bharadwaj
Professor, The Coca-Cola Company Chair of Marketing, Terry College of Business, University of Georgia
https://www.terry.uga.edu/directory/marketing/sundar-bharadwaj.html
To learn more, read:
S. Arunachalam, S. Cem Bahadir, Sundar G. Bharadwaj, and Rodrigo Guesalaga (2020) “New product introductions for low-income consumers in emerging markets” Journal of the Academy of Marketing Science, 48, 914–940.