Marketing to the poor: an institutional model of exchange in emerging markets

In this paper we argue that formal exchanges with poor consumers in emerging markets are hard to create and maintain, resulting in widespread market failure. More specifically, in emerging markets the institutions required for exchange either function poorly or are entirely absent, making it difficu...

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Bibliographic Details
Published in:AMS review 2017-12, Vol.7 (3-4), p.101-122
Main Authors: Prabhu, Jaideep, Tracey, Paul, Hassan, Magda
Format: Article
Language:English
Subjects:
Business and Management
Business models
Emerging markets
Entrepreneurship
Knowledge
Marketing
Organization theory
Organizational change
Social Sciences
Theory/Conceptual
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Summary:In this paper we argue that formal exchanges with poor consumers in emerging markets are hard to create and maintain, resulting in widespread market failure. More specifically, in emerging markets the institutions required for exchange either function poorly or are entirely absent, making it difficult for sellers to deliver affordable and accessible offerings to poor buyers in a financially sustainable manner. The marketing challenge thus becomes (1) developing a viable business model to facilitate market-based exchanges and (2) shaping the institutions needed to implement this business model. Drawing on institutional theory and extending it with insights from the marketing and business model innovation literatures, we develop a model of exchange in emerging markets. At the heart of our model is the idea that sellers often need to act as institutional entrepreneurs in order to create and deliver value when marketing to the poor in emerging markets. We discuss the implications of our model for future research on marketing, exchange and emerging economies, as well as the implications for managers seeking to market to the poor in emerging economies.
ISSN:1869-814X
1869-8182
DOI:10.1007/s13162-017-0100-0