A comparative analysis of environmental effects on marketing activity in developing countries

Multinational Business Review, Fall 1997 by Ojah, Kalu, Han, Dongchul

Contributions of the Study

While it is important to adapt appropriate marketing designs to environmental factors for optimal operation, it is equally important to keep down the cost of contingency plans for the many possible marketing designs of a multinational marketer. The comparative analysis in this study identifies factors which lump some developing countries together and separate others. More importantly, this apparent grouping of similar markets helps a multinational marketer both to streamline his marketing strategies and to better focus on the environments that are susceptible to change within his clusters of similar foreign markets in order to design appropriate contingency plans. For example, results of this study reveal that (see Tables 2 and 3 below) one marketing strategy might suffice for both Kenya and the Philippines, with modification (contingency plan) for the specific areas in which the two markets differ according to marketing managers' expectations (as indicated in Table 4 below). Access to this kind of knowledge would enhance the effectiveness of the multinational marketer's framework. Such effectiveness would, in turn, reduce the cost of international marketing (e.g., transaction cost would decrease when uncertainty in a target market's environment is minimized).

Furthermore, results from such exploratory studies should provide organizationenvironmental theorists with additional insights that could facilitate effective theory designing and testing (Negandhi and Reimann, 1972; Zeithaml and Zeithaml, 1984; Klein, 1989; Yasai-Ardekani, 1989; and Klein, Frazier and Roth, 1990). For instance, instead of testing appropriateness of an international marketing strategy design on the basis of an organizational structure that matches past business environments, testing could now be based on an organizational structure that matches expected business environments.

HYPOTHESES

There are two main hypotheses implicit in the above discussion of background issues. As is evident in Table 1, developing markets are not always homogenous, but there are economic factors that can be used to segment some of them into groups of similar product markets. Thus, if some African and Asian markets can be grouped together as similar product markets, it is possible to gain knowledge about an unfamiliar market (Africa) through knowledge of a familiar market (Asia). Moreover, if knowledge of an unfamiliar market's future environment can be used to foster sustainable marketing success, there at least, ought to be a link between marketing activities and a market's environments. Hence, we test two hypotheses: (1) The surveyed markets' environments are susceptible to marketing activities. (2) The degree of marketing activities' susceptibility to future environmental changes can be comparable between and among distant but similar product markets. A corollary of these hypotheses is an indication of the extent to which marketing activities in East Asia and Sub-Saharan Africa respond to environmental changes differently.