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introduction of Challenges

related to Middle-class definition

in the context

of emerging markets through

the examination of existing

concepts and empirical

observations (i.e dicretionary

consumption , disposable income

,NMUM theoretical

framework etc.)

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Conceptualization of middle classness Based on NMTM* theoretical framework

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Conceptualization of middle classness Based on NMTM* theoretical framework

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Proposed conceptual modeling combined NMTM three main aspects (income , consumption behaviour & values) with migration in multilayered segmentation to cover a multi-aspects definition of middle classness.

Middle class is then defined as a group of individuals sharing similar market response patterns and seeking for:

1-virtual membership to a group

2-need for self distinction

3-balance between belongings and spendings

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The article made use of NMTM three aspects combined with migration to analyze individuals response patterns. It has proposed 3 sets of conjectures about the model using the following methodologies:

1-Income effect/asset ownership /consumption drive

Methodology:

-Focus on long term migration trends out-looking short term volatility in the process

-Comparison between rising income (and resultant assets ownership ) and spending levels and effect on upward/downward migration process.

-Comparison between traditional MC and new MC behaviors and correlation with economic crisis and booms

2-formative aspects of middle classness

Methodology:

address psychological and behavioral patterns of consumption related issues by examining 1)quantitative aspects of marketing and spending responses 2)qualitative characteristics of consumption

3-Value aspects of Middle ClassnessMethodology:analysis of MC world view and predispositions

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1. There needs to be a digital approach as this allows the individuality of needs to be framed and the segmentation can be reshaped vertically. This more top down approach results in a higher ROI.

2. The companies need to create value and favorable perceptions of their products. Though this make a take a long time it’s vital as many middle-class individuals are living in such varied conditions.

3. There is also the opportunity for consumers to pay on credit as so many middle-class consumers are willing to do.

4. This group much be broken down into micro-segments to customize their market efforts.

5. Companies can now chase the consumer in a way that was never available before. If they see that a consumer is looking at a product online, they can now offer directly to that consumer. This type of marketing does not require any previous demographic knowledge.

6. They need to be aware that there are variances within different cultures and how they market to them will vary.

7. There is a need to target urban areas as this where a lot of the middle class have migrated to. Adverts here will provide a lot more bang for the company’s buck.

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Starbucks has a goal of opening 10 locations in Bolivia by the year 2020, as of now they have 5 locations in the city Santa Cruz de la Sierra, and have plans to open one more in this city, along with 2 additional locations in the city La Paz by the end of 2018. Bolivia’s middle class population is growing significantly in recent years as poverty levels decrease, especially within the city of Santa Cruz de la Sierra, which was recognized in 2015 as the 14th fastest growing metropolis in the world (Forbes, 2015). The population living within the city even feels very positive about the direction of their economy, specifically the 40% of the city which is middle-class (Forbes, 2015). This is a city filled with US style malls, private universities, high end homes, and luxury cars, which is a great population for Starbucks to now target. In addition, there is “no shortage of basic goods, inflation runs below 4% a year” (Toro, 2017) which all combined makes Bolivia, specifically Santa Cruz de la Sierra, an ideal candidate for a target market for a western company, as outlined in the article.

Starbucks has targeted the middle class population of Santa Cruz de la Sierra with something as simple as designing a Starbucks mug for Bolivia that features the country of the city, dark green, rather than the colors of the national flag, as this region of the country has strong views against the national government, and as the article states, this new middle class is diverse and has strong political tendencies.

To go above their marketing strategies, they should find additional ways to connect with region, this microsegment, as it varies a lot from the next target location, La Paz. To distinguish marketing in the two cities, a main strategy should involve speaking the language of the people in their adverts and menu items. The inhabitants of La Paz, speak a different dialect than those of Santa Cruz de la Sierra and the adverts in each region should reflect this. In addition, the population of Santa Cruz already has higher coffee consumption than La Paz, so they simply needed to market their brand to this population, but in La Paz, Starbucks will need to market the product, coffee and pastry items, along with their brand itself.

The colors and dialects portrayed on adverts for each region should reflect the values and lifestyles of each city.

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Theory – Theory of Normative Model of Target Markets (NMTM) – Tollefson and Lessig 1978

Model – NMTM model creates market segmentation through the aggregation on individual consumers into groups rather than dissecting consumer groups into segments.

Purpose - “divide a market into distinct groups of buyers” (Armstrong and Kotler, 2005 p54). This facilitates group homogeneity.

Use – Defining target markets through three set criteria

Demand Elasticity

Marginal Response

Response function coefficients

Benefits

Minimizes in group differences (Mahajan and Jain 1978) reducing the margin of the study error

Makes it easier to develop a homogenous research segment by identifying the individual consumer across different borderlines.

Limitations

Allocation of marketing resources and activities to form a uniform segmentation across countries specifically those where digital data is difficult to retrieve

Time consuming to identify and develop a homogenous group across countries for the research purposes

Isolate larger potential markets or groups

Implication for marketers

Approach can aid organisations in focusing on improving their efficiency and making a bigger impact on the consumer through the firms marketing programme to middle class consumer (Mahajan and Jain 1978)