M: Business 3rd Edition by O. C. Ferrell, Geoffrey Hirt, Linda Ferrell

Exercise 35

Four billion global customers may seem like a lot, but for Procter & Gamble CEO Bob McDonald it’s just the beginning. McDonald intends to raise this number to 5 billion by 2015. The key to this growth is through targeting emerging economies like India and the Philippines. The company must therefore adapt its products to meet consumer needs in these countries. While P&G has built its profits on offering premium products in developed markets, economies in which income is as low as $1 per day require P&G to adapt its marketing strategy. To work within this constraint, P&G has begun offering single-serving, no frills packages to lowincome global consumers.

Of the countries targeted by P&G, McDonald sees India as a major opportunity for expansion. Currently, P&G counts one-third of India’s 1.2 billion consumers as customers. The company aims to expand this number by 500 million with an emphasis on needs-based innovation and new product introduction. For example, P&G introduced the world’s lowest-cost disposable diaper—at 12 cents each—in the hopes that its convenience and affordability will convince Indian mothers to switch from cloth to disposable diapers.

The second challenge for P&G is finding a way to get its innovative products onto shelves. With few large retailers in India, small stores with limited space can easily stock P&G items like razors and toothbrushes. Disposable diapers, however, take up more room. Competition is another problem. In India, P&G must fight against major competitors like Unilever and Colgate-Palmolive. P&G’s Indian sales have been growing steadily, but it lags behind Unilever with sales of $800 million versus $3.8 billion. The trick for P&G will be to balance its products with the needs of its Indian customers—both retailers and end users.

What are the marketing challenges of a large developing country with low consumer income?

Step 1 of 2

Selling product in a large developing economy with low consumer income is more than attractive opportunity. As these nations are making progress in solving its economic and social issues, penetrating such markets is profitable but extremely challenging. It is important to consumer the reason of making purchase decisions rather considering what they are buying.