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LONDON,
ON, June 1, 2009 - There is enormous
potential for businesses to thrive in
developing countries but it requires a
different approach than in developed
markets.
Through his
research, Srinivas Sridharan, Assistant
Professor of Marketing, Richard Ivey
School of Business, has discovered a few
key differences.
Instead of
dictating prices, firms have a greater
chance for local buy-in if they seek
input from local communities in pricing
their products, according to Sridharan.
"Although
economic theory argues that local input
will drive prices down, that is not the
case in subsistence markets," he said.
"Very poor people don't have time or
appreciation for game theory. If you
sell a product they really value, they
will likely agree with your price, or
even reward you with a higher one."
It's also
important for firms to provide
opportunities for local employment, such
as involving small local businesses in
their product production.
In fact,
local entrepreneurs, with their rich
social networks, may have a better
understanding of customers and be more
customer-focused, which can boost
business, he said.
Businesses
should also try to understand their
markets in developing countries so
they'll have insight into unexpected
ways their products might be used and
how to engage consumers with marketing
materials.
"For
business to successfully engage the
enormous markets at the base of the
pyramid, it needs to better understand
the rich and complex relationships
between consumer behaviour and
entrepreneurship," Sridharan said.
"Although very low income imposes
consumption constraints, it also
produces an undying entrepreneurial
spirit – a strong foundation for
economic progress."
Details of
Sridharan's research were released today
in the June edition of impact, an
online monthly publication featuring new
research from faculty at the Richard
Ivey School of Business. Read the
full article in the
June issue of impact.
Roger More,
Associate Professor of Marketing, Ivey
Business School, also discusses the
importance of market focus, and how a
lack of market focus has hurt General
Motors Corp., in the Faculty Focus
feature. For the
full article, refer to the June
issue of impact.
About the Richard Ivey School of
Business, The University of Western
Ontario
The Richard Ivey School of Business at
The University of Western Ontario (www.ivey.ca)
offers undergraduate (HBA)
and graduate degree programs (MBA,
Executive MBA and
PhD) in addition to non-degree
Executive Development programs. Ivey has
campuses in London (Ontario),
Toronto, and Hong Kong. Ivey
recently redesigned its curriculum to
focus on
Cross-Enterprise Leadership – a
holistic issues-based approach to
management education that meets the
demands of today's complex global
business world.
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For more
information, please contact:
Dawn Milne, Communications Specialist,
Richard Ivey School of Business,
519-850-2536,
dmilne@ivey.ca
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