The World Bank lists 132 countries. Different countries represent varying market potential due to economic, cultural, and political contrasts. These contrasts mean that a global marketer cannot select target customers randomly but must employ workable criteria to choose countries where the company’s product/service has the best opportunity for success.

Major Markets The most basic information needed to identify markets concerns population because people, of course, constitute a market. The population of the world reached an estimated6.0 billion in 1998. According to the latest estimates from the United Nations, this total is expected to increase to6.2 billion by the year 2000 and to almost8.5 billion by 2025. Current world population is growing at about1.7 percent per year. This is a slight decline from the peak rate of1.9 percent, but the absolute number of people being added to the world’s population each year is still increasing. This figure is expected to peak at the turn of the century at about 90 million additional people per year. Population growth rates vary significantly by region. Europe has the lowest rate of population growth at only about 0.3 percent per year. Several European countries, including Austria, Denmark, West Germany, Luxembourg and Sweden, are experiencing declining populations. Growth rates are also below 1 percent per year in North America. The regions with the highest population growth rates are Africa (3 percent per year), Latin America (2 percent per year), and South Asia (1.9 percent per year). China, the world’s most populous country, is growing at only about1.2 percent per year. Even so, it means that China’s population increases by over 12 million people each year. The world’s second most populous country, India, is growing at over1.7 percent per year. India’s population is expected to grow from 970 million today to 1 billion by about 2003. One striking aspect of population growth in developing countries is the rapid rate of urbanization. The urban population is growing at less than 1 percent in Europe and in North America, but it is growing at almost3.5 percent in the developing world. Today 15 of the 20 largest urban agglomerations are in the developing world. By the year 2000, 17 of the 20 will be in the developing world. The only cities in the top 20 located in developed countries will be Tokyo, New York, and Los Angeles.

The world’s largest cities will be Mexico City (27 million) and Sao Paulo (25 million). The above information shows that the total market in Europe and North America will not be increasing; the population of these two continents will not add much to total market size. Of course, these populations are growing older, so certain segments will increase in number. For example, the total population of Europe will increase only2.8 percent from 1990 to 2000, but the over-65 population in Europe will increase by 14 percent during the same period. In the developing world, the increase in numbers does not necessarily mean increased markets for U.S. business. The fastest-growing region in the world, Africa, is also experiencing low or negative rates of economic growth per capita. Many Latin American countries, Brazil in particular, are hampered by huge external debts that force them to try to limit imports while using their resources to generate foreign exchange for debt service. In most of these cases, the problem of foreign debt will need to be solved before the growing populations in the developing world will translate into large markets for U.S. business. Obviously, population figures alone provide little information about market potential because people must have the means in terms of income to become viable customers. Two conclusions are obvious, however: (a) aggregate consuming capacity depends upon total population as well as per capital income; and (b) advanced countries dominate as potential customers. Although population and income variables provide a snapshot of the market opportunity in a given country, a variety of other factors must be considered to identify viable markets. These factors are urbanization, consumption patterns, infrastructure, and overall industrialization. Taking these factors into account, Business International has identified twelve countries as major global markets. Interestingly, three of these twelve countries China, Brazil, and India are developing countries. Although these twelve countries have been identified as the principal global markets by Business International, they may not all be viable markets from the viewpoint of U.S. firms. A variety of environmental factors (political, legal, cultural) affect market opportunity in a nation. For example, Brazil is burdened with debt, which limits the amount of export potential in that country; China’s political control limits freedom of choice; India’s regulations make it difficult for foreign corporations to conduct business there. Thus, many countries may not have large market potential, yet they may constitute important markets for U.S. business. Also shown is the dollar amount of exports to each country in 1997. It should be noted that, globally speaking, although Canada ranks as the 12th largest market in the world it represents the single largest market for the United States, accounting for over one-fifth of its trade.

Emerging Markets

Traditionally, a major proportion of international business activities of U.S. corporations has been limited to developed countries. For example, at the end of 1997, total U.S. direct investment was estimated to be $794 billion, of which almost 70 percent was in developed countries. Slowly, however, new markets are unfolding. Consider the newly industrializing countries. During the decade of the 1980s, South Korea, Singapore, Taiwan, and Hong Kong were the world’s fastestgrowing economies and consequently offered new opportunities for U.S. firms. In recent years, even developing countries, at least the more politically stable ones, have begun to show viable market potential. Anumber of developing countries are achieving higher and higher growth rates every year. Although an individual country may not provide adequate potential for U.S. corporations, developing countries as a group constitute a major market. In 1998, almost 30 percent of U.S. trade was with developing countries. In future years, the flow of U.S. trade with developing countries should increase. An Organization of Economic Cooperation and Development (OECD) study showed that, in 1970, OECD countries, with just 20 percent of the world’s people, had 83 percent of the world’s trade in manufactures; whereas developing countries, with 70 percent of the world’s people, captured just 11 percent of the trade. In the year 2000, however, it is estimated that OECD countries, with 15 percent of the population, will have 63 percent of the world’s trade in manufactures; developing countries, with 78 percent of the population, will account for 28 percent of world trade. Interestingly, although for cultural, political, and economic reasons, Western Europe, Canada, and to a lesser extent Japan have always been predominantly important for business, many developing countries provide a better return on U.S. investment. The relevance of emerging markets for the United States can be illustrated with reference to Pacific basin countries.

Over the last quarter century, streams of food, fuels, textiles, cameras, cars, and videocassette recorders flowing from countries all across Asia exerted heavy pressure on Western economies. This outpouring of exports has increased the Asian/Pacific share of world trade from less than 10 percent in the 1970s to over 25 percent in 1997 and has pushed one Asian economy after another out of the Dark Ages and into the global marketplace. For U.S. marketers, rising Pacific power holds both a threat and a promise. The threat is dramatically increased competition for sales and market share, both at home and abroad. In 1997 alone, Asian/Pacific countries supplied 40 percent of all U.S. merchandise imports and contributed some $68 billion to the U.S. trade deficit, 70 percent of the total. As for the promise, there is the emergence of a market of more than two billion potential consumers. In the last 25 years, as the Pacific region began its time-bending leap into the twentieth century, millions of Asians began an equally rapid transition from rural to urban, from agrarian to industrial, and from feudal to contemporary society. With more of the Pacific region’s rural population traveling to cities to shop every day, the demand for goods and services from the most basic household commodities to sophisticated technical devices is soaring. Despite the recent currency problems, in the coming years, as rising incomes continue to bolster the spending power of Asia’s new consumer population, the opportunities for shrewd marketers will be unparalleled. Barriers to conducting business in the region are beginning to fall, too. Increasingly, throughout the region English is the language of commerce, and an allegiance to free market economics is widespread. And, as companies such as McDonald’s, General Foods, Unilever, and Coca-Cola have already discovered, from Penang to Taipei, this is a region where well-made and well-marketed products and services are witnessing increasing acceptance. As modern influences exert greater pressure on traditional Asian cultures, two trends with important implications for marketers are starting to take shape:

• Although each Asian nation is culturally distinct, consumers throughout the Pacific region are gradually sharing more of the same wants and needs. As Asian homogenization progresses, sophisticated strategies and considerable economies of scale in regional and global marketing and advertising will become increasingly relevant.

• Many Western marketers misinterpret the nature of current changes in the Pacific region. Despite the Big Macs, the Levi’s, the Nikes, and all the other familiar trappings, Asia is not Westernizing it’s modernizing. Asian consumers are buying Western goods and services, not Western values and cultures. Elsewhere in the East, India and China are two large markets that should provide unprecedented opportunities for U.S. corporations as we enter the next century, and as their economies become fully market oriented. A growing number of U.S. consumer-goods companies have begun to make inroads in China. In November 1987, Kentucky Fried Chicken Corp. opened the first Western fastfood restaurant in China. Coca-Cola and PepsiCo are aggressively expanding distribution. Kodak and other foreign film suppliers have attained a 70 percent share of the color film market. Nescafé and Maxwell House are waging coffee combat in a land of tea. A number of U.S. companies PepsiCo, Timex, General Foods, Kellogg have entered India to serve its emerging middle class. Thus, the developing countries provide new opportunities for U.S. corporations to expand business overseas: as their wealth grows, U.S. marketing possibilities expand. It has been observed that early in the next century Latin American countries, too, will emerge as modern, Northern-styled marketplaces with improved transportation systems, subsidized credit to native businesses, and marketing education programs. All of these changes should result in more efficient channels of distribution, more local marketing support services, and fewer bottlenecks that hamper exchanges.

All of these indications point toward a variety of emerging opportunities for U.S. corporations in Latin America. For example, a few years ago, the Gillette Co., discovered that only eight percent of Mexican men who shave used shaving cream. Sensing an opportunity, Gillette introduced plastic tubes of shaving cream in Guadalajara, Mexico, that sold for half the price of its aerosol. In a year’s time, 13 percent of Guadalajaran men began to use shaving cream. Gillette has been selling its new product, Prestobarba (Spanish for “quick shave”), in the rest of Mexico, in Colombia, and in Brazil. These emerging markets in less-developed countries can help many U.S. corporations to counter the results of demographic changes in Western nations examined above. As mentioned above, in most advanced nations of the world, birthrates are declining while population in the developing countries is growing. This increasing population holds the future growth potential for U.S. business. With the fall of the Berlin Wall and the lifting of the Iron Curtain, new opportunities await Western managers in Eastern Europe, previously a forbidden region. In many ways, the opening of Eastern Europe could prove even more important than the drive for a single market in Western Europe. Take, for example, Poland, Hungary, and Czechoslovakia. Their combined GNP is larger than that of China. These three countries also have relatively well-trained and reliable workers who work for less than a quarter of what Western Europeans are paid. Giving them access to their developed neighbors’ markets and hefty injections of Western capital, they could become the tigers of Europe. As their economies grow, they should develop into viable markets for a variety of goods and services. Developments in Eastern Europe will benefit American companies in two ways. First, as Eastern Europe’s backward economies finally integrate into the global economy and take off, new market opportunities should emerge. Second, sales to Western Europe by U.S. firms, made even more dynamic by its expanding Eastern frontier, will increase. Just as markets in the 1980s were developed by Reaganomics and Thatcherism, markets in the next century will be developed by the shifting of the ideological plates that have separated the world’s geopolitical land masses. Companies that aim for global market and remain competitive will be the winners.

The Triad Market From a global perspective, the United States, Canada, Japan, and Western Europe, often referred to as triad countries, constitute the major market. Although elsewhere opportunities are emerging, in the foreseeable future these countries continue to be the leading markets. They account for approximately 14 percent of the world’s population, but they represent over 70 percent of world gross product. As such, these countries absorb a major proportion of capital and consumer products and, thus, are the most advanced consuming societies in the world. Not only do most product innovations take place in these countries, but they also serve as the opinion leaders and mold the purchasing and consumption behavior of the remaining 86 percent of the world’s population. For example, over 90 percent of the world’s computers are used by triad countries. In the case of numerically controlled machine tools, almost 100 percent are distributed in the triad market. The same pattern follows in consumer products. The triad accounts for 90 percent of the demand for electronic consumer goods. What these statistics point to is that a company that ignores the market potential of the triad does so at its own peril. An interesting characteristic of the triad market is the universalization of needs. For example, not too long ago manufacturers of capital equipment produced machinery that reflected strong cultural distinctions. West German machines reflected that nation’s penchant for craftsmanship; American equipment was often extravagant in its use of raw materials. But these distinctions have disappeared. The best-selling factory machines have lost the “art” element that once distinguished them and have become both in appearance and in the level of skill that they require much more similar. The current revolution in production engineering has brought about ever-increasing global standards of performance. In an era when productivity improvements can quickly determine life or death on a global scale, companies cannot afford to indulge in a metallic piece of art that will last 30 years. At the same time, consumer markets have become fairly homogeneous. Ohmae notes that Triad consumption patterns, which is both a cause and an effect of cultural patterns, has its roots to a large extent in the educational system.

As educational systems enable more people to use technology, they tend to become more similar to each other. It follows, therefore, that education leading to higher levels of technological achievement also tends to eradicate differences in lifestyles. Penetration of television, which enables everyone possessing a television set to share sophisticated behavioral information instantaneously throughout the world, has also accelerated this trend. There are, for example, 750 million consumers in all three parts of the Triad (Japan, the United States and Canada, the nations of Western Europe) with strikingly similar needs and preferences. . . . A new generation worships the universal “now” gods ABBA, Levi’s and Arpege. . . . Youngsters in Denmark, West Germany, Japan, and California are all growing up with ketchup, jeans, and guitars. Their lifestyles, aspirations, and desires are so similar that you might call them “OECDites” or Triadians, rather than by names denoting their national identity. There are many reasons for the similarities and commonalities in the triad’s consumer demand and lifestyle patterns. First, the purchasing power of triad residents, as expressed in discretionary income per individual, is more than 10 times greater than that of residents of developing countries. For example, television penetration in triad countries is greater than 94 percent, whereas in newly industrialized countries it is 25 percent; for the developing countries, it is less than 10 percent. Second, their technological infrastructure is more advanced. For example, over 70 percent of triadian households have a telephone. This makes it feasible to use such products as facsimile, teletext, and digital data transmission/ processing equipment. Third, the educational level is much higher in triad nations than in other parts of the world. Fourth, the number of physicians per 10,000 in triad countries, which creates demand for pharmaceuticals and medical electronics, exceeds 30. Fifth, better infrastructure in the triad leads to opportunities not feasible in less-developed markets. For example, paved roads have made rapid penetration of radial tires and sports cars possible.