Managers have long understood the rationale for investing in new products. Now, however, they face an even more compelling need: to invest in targeting new markets, specifically those in less developed countries (LDCs). The argument presented in this article, for initiating or increasing marketing efforts in these nations, makes two related points. First, a healthy world economy requires consumers in developing nations-particularly China-to spend more, because trade imbalances between the United States and LDCs cannot be sustained. Second, in order to foster consumption in LDCs and to profit from it, marketing expertise in the developed world must refocus. Success will require devising, promoting, and distributing products that will overcome economic constraints in some markets, and in others will overcome an understandable reluctance to spend rather than save. We suggest that lessons may be gleaned from examples regarding recent efforts targeting LDCs by a pharmaceutical company (Pfizer) and a food supplement marketer (Procter & Gamble), as well as efforts pioneered in less developed countries themselves (including low-cost private schools and $2,500 automobiles).

This is an MIT Sloan Management Review article. While most managers would think long and hard before bringing to market a product that lacked patent protection and could be easily imitated, many invest in sales promotions--sweepstakes, coupons, time-limited price discounts, free gifts or samples, special events, displays, membership rewards, consumer-directed promotions, and so on--that are easier to imitate than the simplest new product. Others sign off on plans so generic that they seem unrelated to the brand or company offering them, despite the fact that sales promotions may absorb a significant portion of a company's promotional dollars--currently a reported 31% of marketing budgets. By contrast, a strategic focus--considering how customers and competitors will react to any promotional effort, as well as the message delivered and the stature in the marketplace of the brand delivering it--leads to promotions that defy or delay imitation and yield disproportionate benefit for companies that have already developed a strong competitive position. Suggests that when all these strategic factors are aligned, the result is a successful promotion, and illustrates that with successful promotions conducted by General Motors, Home Depot, and Procter & Gamble, among others. However, such promotional strategies require inventiveness, originality, and swift action--qualities neither present nor encouraged in many corporate cultures in which familiarity and predictability are prized. Managers in such organizations not only must successfully tailor a promotion to its intended market, but also skillfully shepherd it through internal barriers. Knowing why, how, and for whom sales promotions will most likely be profitable surely will help in that regard.