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01-12-2015 | Research Article

Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets

Authors: Omar Rodriguez Vila, Sundar G. Bharadwaj, S. Cem Bahadir

Published in: Customer Needs and Solutions | Issue 4/2015

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Abstract

Extant marketing literature recognizes unique and varied aspects of marketing in emerging markets (EMs), and in this study, we also argue that significant market-structure changes within many EMs are creating new challenges and opportunities for managers. In particular, we propose that managers must simultaneously implement exploitation and exploration strategies to confront a high degree of dynamism in EMs reflected via changes in retail structures, competitive intensities, and category characteristics. The results from a panel dataset of 15 EMs across Africa, Asia, Europe, and South America find evidence for the critical nature of exploitation strategies aimed at expanding the affordability and availability of existing products. We also find support for the importance of exploration strategies, in the form of innovative product portfolio, as a way to mitigate the effects of changes in market conditions. The results indicate that marketing managers must emphasize ambidextrous marketing strategy in EMs instead of viewing EMs strictly as sources of horizontal growth for established products in developed markets.

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In terms of estimation options, we could use a random effects model, which requires the assumption that random error component and country characteristics included in the model are not correlated. Instead, in order to use a more conservative test of the relationships of interest, we use a fixed effects model. Adding time dummies would reduce the degrees of freedom significantly. However, we use three time-varying macro-level variables (change GDP per capita, inflation rate, and institutional quality) that directly or indirectly influence the purchase behavior of consumers in EMs.

We did not include consumer investment strategies because none of the interactions were significant. We also wanted to maintain model parsimony.

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Title: Exploration- and Exploitation-Oriented Marketing Strategies and Sales Growth in Emerging Markets
Authors: Omar Rodriguez Vila
Sundar G. Bharadwaj
S. Cem Bahadir
Publication date: 01-12-2015
Publisher: Springer US
Published in: Customer Needs and Solutions / Issue 4/2015
Print ISSN: 2196-291X
Electronic ISSN: 2196-2928
DOI: https://doi.org/10.1007/s40547-015-0053-0

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