It is important to take a region’s economic development into account. Advanced economies have buyers who are in a better position to buy and demand more sophisticated products and product versions. Keeping the economic realities in mind helps determine the potential for selling certain types of products and services. Products that are affordable will be more accessible. Swedish apparel manufacturer H&M proved this when it successfully entered the U.S. market in 2000 with trendy women’s clothing priced low enough for the typical teenager’s budget.
Developing markets sometimes require backward innovation to meet the region’s lower income level by providing a simplified version of a product. In emerging economies, products often need to be simple and easily operated in harsh environments. India’s TVS Electronics recognized this when designing its all-in-one business machine for retailers in developing markets. Part cash register and part computer, it tolerates heat, dust, and power outages, making it an appealing and practical product. Buying power in developing economies also has an impact on packaging – companies often sell products such as cigarettes and razor blades individually so that those with limited incomes can afford them. On the other hand, companies also sell food mixes in larger packages that contain more servings per container in these regions because it is economical and suits family needs.
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