Understanding International Marketing Demographics

1. 4.01 Understand the importance of demographics, and the effect of population and social class on international marketing

2. Going Global… • Shoprite in Africa • https://www.youtube.com/watch?v=Nbl_EHHy11w • Shoprite group – Africa’s largest retailer • http://www.shoprite.co.za/ • In Store • https://www.youtube.com/watch?v=_HPHmI95DPY • Why would they choose to expand to lesser developed countries?

3. Why are demographics important? • Demographics provide a picture of what a country looks like • Age, gender, income, education, marital status, race, etc… • When expanding to an international market a company must consider 3 things: • Is there a need for the product? • Can the potential market pay for the product?* • Is the market large enough?* *These steps require a lot of market analysis that focuses on a countries demographics

4. Developmental Categories Some countries have mixtures of both categories with rural and urban areas.

5. Income Distribution • Need to know who can pay for your product • The USA & Western Europe have the highest incomes • Low income countries shouldn’t be ignored • A lot of times average income is a misleading statistic • Income is not evenly distributed • The Lorenz Curve provides a clearer picture of a countries ability to pay for a product

6. Lorenz Curve https://www.youtube.com/watch?v=0CfBXjsEvHc Sweden has the most equality of income South Africa has the least equality of income • Lorenz Curve is a graphic representation of how income is proportionally distributed • Looks at the distribution of income in a population in fifths • The Line of Absolute Equality means that income is spread evenly throughout a nation • The Line of Absolute Inequality means that a small percentage of the population has all of the national income • The farther the curve is to the right, the less equally a nations income is distributed

7. Lorenz Curves • The average Income in South Africa is $2,780 • The top 20% have almost 65% of the national income & have a lifestyle similar to the United States Top 65% Top 20%

8. Role of Education • One of strongest links to higher income • Most countries require 12 years (USA) • Some require 13 years (Canada) • Less developed countries require 7 to 9 years (Mexico) • Best Education System in the World: http://youtu.be/0__9s3A2pcA

9. Benefits of Education • Educated workforce makes it easier for international company to expand into a market • Educated managers can design, build & sell products • Higher education levels in China & India resulted in economic booms. • India graduates 2 million English speakers from universities annually. • Work in call centers, software firms, engineering companies & other businesses. • Individuals with higher educational levels more likely to purchase same types of products. • Ex) Medical doctors need same types of supplies, tools, medicine & training. • Ex) Managers purchase computers technology equipment & transportation for office/home.

10. Population • Current World population is 7.286 Billion • http://www.worldometers.info/world-population/ • Growth is about 1% annually • By 2050, projected population is over 9 billion • Most growth occurs in developing countries • Growth in developed countries typically declines • Family size shrinks • Lower infant mortality rate • Dual-income families • Desire for higher standard of living • Both Europe & Japan are projected to see a dramatic decline in GDP in the next 40 years • Younger citizens have less disposable income because of tax burdens for elderly

11. Population Trends • Growth in Developing Countries leads to larger population of younger citizens • With shrinking family sizes, younger people have higher disposable incomes • Great potential for international marketers • Example: Eno or SkiAustralia

12. Population Pyramid • Shows number of males & females in different age groups of population • Age groups make up layers of the pyramid • Age increases as you move up the pyramid • Wide base with narrow top indicates high birth and high death rate. • Wider top with narrow base indicates lower birth and lower death rate. • Some developed countries, like Germany & Japan expect an upside-down pyramid by 2050.

13. Market Segmentation By Social Class • A Social Class is a group distinguished from others in society based on criteria such as Income, net worth, education, family history, political power, or lifestyles. • In America, how do we distinguish between our social classes? • The value of social classes varies amongst countries • International marketers find that top social classes of any culture have shared interests & purchasing behavior. • Lower social classes may be more traditional in their purchasing behavior with less experience & contact with other cultures & media.

14. Social Classes of Great Britain • Great Britain has traditionally had three classes • Upper class- those with inherited wealth & families that are titled aristocrats • Middle class- majority of industrialists, professionals, business people and shop owners. • Working class - laborers, such as agricultural, mine & factory workers. • Social class differences reinforced by education individuals receive; spoken accents, interests and even type of food eaten.

15. Social class (con’t) • India’s class structure is based on a 3,000 year-old view that 4 groups sprang from body parts of prehistoric man created by God Brahma. • Brahmans - highest class that provided for intellectual & spiritual needs. • Kshatriya - rule & protect others • Vaishyas- businessmen & merchants. • Shudras - farmers & manual laborers. • Untouchables - worked only menial jobs related to bodily decay & dirt. *Only way to move to another class is through reincarnation

16. Class Mobility • Class Mobility is the ability of an individual to change social classes • Marketers look at opportunities for class mobility • In developed countries movement is achieved through education & increased income. • In culturally bound countries, less social mobility, consumers less likely to purchase products related to higher classes. • Mobility important because marketer sell products that allow individuals to appear to belong to higher social classes. • What do we assume about people who drive a Mercedes-Benz?

17. 4.01 Activities • Population Pyramid for your country in 2015 • 3 facts that the population tells you • Impact the pyramid design has on your company • Social Classes • What social classes are used in your IBP country • Create 2 ads that advertise to two separate groups • CIA Factbook Comparison of developing countries • Compare the 3 categories of countries based on factors in chart