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Journal of the Academy of Marketing Science
Published in: Journal of the Academy of Marketing Science 5/2020

27-04-2019 | Original Empirical Research

New product introductions for low-income consumers in emerging markets

Authors: S. Arunachalam, S. Cem Bahadir, Sundar G. Bharadwaj, Rodrigo Guesalaga

Published in: Journal of the Academy of Marketing Science | Issue 5/2020

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Abstract

Facing growth pressures, firms attempt to target the large low-income consumer segment present in emerging markets. This multi-method study develops research insights regarding consumer-, retailer-, firm-, category- and country-level factors that enhance the acceptability, awareness, availability, and affordability of products that facilitate the low-income consumer adoption of and firms’ introduction of new products for low-income consumers. Study 1 uses a qualitative grounded-theory approach by interviewing company managers and low-income consumers in India and Chile. Study 2, empirically tests an integrated multi-level model of several category factors identified in Study 1, combined with country-level factors drawn from the literature, using a unique 12-year longitudinal panel dataset of new product introductions in 27 emerging market countries from Africa, Asia, Eastern Europe, and South America. The research identifies consumer aspirations, region-based versioning, visible packaging and the product demonstrations as critical motivating factors for adoption of products by low income consumers. Consumers’ knowledge of the product category, the concentration of branded products, availability of global brands, and the presence of traditional retail stores motivate firms to launch products for low income consumers in emerging markets.
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Appendix
Available only for authorised users
Footnotes
1
Special session at the 2018 AMA Summer Academic Conference, a forthcoming Journal of Marketing special issue.
 
2
“Understanding India’s economic geography,” retrieved on March 26, 2018 from https://​www.​mckinsey.​com/​featured-insights/​asia-pacific/​understanding-indias-economic-geography.
 
3
Randomly selected transcripts with the coding were given to two independent judges. Their categorization was similar, and the inter-judge reliability was around 80%.
 
4
As of March 18, 2019, the currency exchange rate for Indian Rupees and the US Dollars is such that 1 Indian Rupee equals $0.015 USD.
 
5
From annual reports of top CPG companies such as P&G, HUL, Emami, Dabur.
 
6
“Beyond the Wall,” The Economic Times, March 18, 2015 (https://​economictimes.​indiatimes.​com).
 
7
There are low-income consumers who live in urban areas with transportation networks more developed than rural areas. The proxy for the distribution infrastructure is based on the density of the road networks in relation to the geographic size of countries.
 
9
While the remittance flows increase the purchasing power of the low-income consumers in emerging markets, these flows tend to significantly fluctuate. For example, Bahadir et al. (2018) report that in Philippines, standard deviation of remittance flows is 10.82 times as large as the standard deviation of GDP for the 1993-Quarter 1 to 2011-Quarter 3. Due to the significant fluctuations in remittance flows, most of the low-income households receiving international remittances cannot be categorized as middle-income households.
 
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Metadata
Title
New product introductions for low-income consumers in emerging markets
Authors
S. Arunachalam
S. Cem Bahadir
Sundar G. Bharadwaj
Rodrigo Guesalaga
Publication date
27-04-2019
Publisher
Springer US
Published in
Journal of the Academy of Marketing Science / Issue 5/2020
Print ISSN: 0092-0703
Electronic ISSN: 1552-7824
DOI
https://doi.org/10.1007/s11747-019-00648-8

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