Section I: Introduction
While the Earth remains a constant size, the world grows larger in many ways. The world’s people cannot be looked at in the same way as years past and neither can world business. As a fashion merchandising major and student in various marketing and apparel classes I have learned the importance of extensive target market research to find the correct target market for any good or service. The worldwide consumer population is huge and this creates many obstacles and opportunities. Research is the most important part of any merchandiser’s job, especially when entering foreign markets. Population growth has changed demographics and consequently changed marketing strategies. In one specific example population growth has forced the need for control and created a homogeneous target market of parents with only one child in China.
Background information on population is important to understanding why marketing has had to change. Section II will give the startling statistics about the growing world population as well as the consequences of it. Section III discusses how the issue of population is affecting the fields of merchandising and marketing. Population growth has changed demographics and how marketers administer their strategies. Market research is the essential first step to understanding shifts in demographics.
Section IV, a case study, will discuss China because it is easy to see how population has affected marketing. Population growth and the threat of overpopulation has forced the Chinese government to create the One Child Policy in order to try to stop the threat. The One Child Policy relates to fashion merchandising and marketing because of the new target market it created. This target market is unique in that it is primarily comprised of parents of only one child. This one child will be pampered and spoiled with the best and newest consumer products. Knowledge about China’s new target market is valuable to upcoming merchandisers and marketers. China seems to be the best market to advertise and promote new baby products. If parents are willing to pay any amount for the best goods, the Chinese may welcome quality goods from other countries. As an American merchandiser, always looking for new opportunities, China could prove to be a very profitable country to research. Section V will discuss the implications of the research. It will also look forward to the future and how population and marketing will continue to effect each other.
Section II: The Global Trend of Population Growth
The issue of population growth and threat of overpopulation has become a huge global concern. The growth of an individual country puts strain on the entire world’s people and the Earth. More people require more food, water, housing, and work (Pimental 1). Population has been estimated and analysts are now predicting for the future. Brian Halweil, a researcher for Worldwatch, puts overpopulation in perspective by saying, "Some people ask: How many people can the Earth sustain? The more pertinent question is what level of human suffering and what level of ecological destruction are we satisfied with?" (Lowy 3).
The world’s population has been studied and numbers reported to prove how fast the world is growing. In 1804 the world reached a population of one billion people. While it took over 1,000 years to reach one billion, in only twelve years the world’s population has gone from five billion to six billion worldwide. With seventy eight million people born each year, it is comparable to adding the city of Philadelphia once a week. The world has twice the world population today than in 1960. Growth is slowing slightly and forecasters predict a world population of 8.9 billion in 2050. They hope the population will stabilize by 2080 (Lowy 1).
The first issue to look at when studying population is fertility. Ninety-eight percent of the future population growth will occur in Third World countries (Lowy 1). Presently Africa, the Middle East, and Southern Asia have the highest fertility rates on the globe. Family planning has not proven to be the worldwide soluntion. The Catholic Church and Islamic Law resist family planning (2). Also there are organizations like STOPP (Stop Planned Parenthood) that believe population has been an issue for one hundred years and somehow technology also grows and makes a growing population less of a threat. However, family planning in developed countries has been helped these nations to achieve the lowest fertility rates; all countries are below the replacement level of 2.06 children per woman. Of the developed countries the United States has the highest fertility rate of 2.03 children per woman (1). In these industrial countries children have become more of a financial burden while developing ones still need children as workers (Kelleher 70). Even with the fertility rates dropping worldwide, the population continues to grow.
One major reason why fertility is not holding the population growth is "demographic momentum". Worldwide this term means one billion people are between the ages of fifteen and twenty-four; two billion children are under the age of fifteen. In the developing countries a third of the population is under fifteen years of age (Lowy 2). All of those children and young adults will be having children of their own in the near future and cause a significant rise in population.
The global issue of rapid population growth is a factor in the cycle of underdevelopment. Research proves a correlation between high population growth and low economic growth rates within a country (Kelleher 69). The trend today is a high birth rate in developing countries, but a low death rate. This equates to a rapid increase in population. The solution for economic growth is an economy that can satisfy the population’s needs as well as make advances in investments (71). Population can grow, but "economists agree the optimum economic growth occurs when a population grows slowly and steadily" (69). Developing countries’ populations grow too quickly to allow the economic growth that is necessary for the developing country to become an industrialized nation.
The urban areas of the world have been classified into different categories. A metro city is defined as having at least one million inhabitants. Currently 326 exist in the world, but in only twenty-five years 650 are expected to thrive (Lowy 1). A megacity has ten million or more people living there. Today half of the world’s people live in the countryside, but by 2030 forecasters believe seventy percent will migrate to urban areas. "The cities are magnets and the attraction is hope" (Gribbin 2). People have this view, but in truth these Third World megacities are not bringing hope; instead they are areas of poverty that breed diseases and lack healthcare, electricity, clean water, and proper sewer systems (Gribbin 2).
All of the population places a strain on the Earth’s natural resources like water. It is a fact that the oceans are expanding and glaciers are melting, but people can use only one percent of the Earth’s water. The water supply is decreasing while the demand is increasing due to the needs of industry and energy. In only twenty-five years forecasters predict there will not be enough "water to drink, wash, irrigate cropland, generate electricity, or supply industry" (Capdevila 1). The World Commission and World Water Vision know that developed countries will spend money to get clean water from anywhere. Unfortunately, developing countries do not have the funds to do this and they have water shortages and the water they do have is often polluted. In these developing nations three millions children annually get water diseases and die (2). The population pollutes the water that evaporates to add to environmental problems like acid rain.
Another natural resource affected by population is land. More people on the Earth require more housing. The housing takes over the land used for farming. With less farmland to grow crops on, less food can be produced. In fact, food per capita has been on the decline since 1984 (Pimental 1). Natural disasters and storms also hurt the land by causing problems like erosion. Due to all the pollution from megacities the ozone is depleting and adding to global warming. All the environmental problems affect climate and crop growing conditions (Gribbin 2). The World Health Organization reports that three billion (half of the six billion world population) is malnourished. Malnutrition leads to disease, inability to work, and a poor lifestyle (Pimental 1).
The issue of overpopulation is a global issue affecting even developed countries that have access to resources or finances to acquire the necessary resources. The environment is the same worldwide which explains why one city’s population that pollutes it will affect the land, water, air and climate around the world. Diseases can also spread around country to country because carriers such as people, animals and insects are constantly migrating. As demands for food, water, heath care, services, and land grow higher the world will need to work together to supply them. No country can be exempt from dealing with this issue of population growth.
Section III: Population’s Impact on the Merchandising and Marketing Profession
As the population grows and migrates, the consumer demands change. This growth in population changes the professions of merchandising and marketing by requiring the marketing strategies to be constantly reevaluated. Worldwide demographics prove that the consumer market is very heterogeneous, and even very diverse within each country. With the constant change, marketing strategies that were successful last year may not be successful this year. The key to understanding the population from a marketer or merchandiser’s point of view is market research. Due to the population growth and daily change in demographics, market research and market segmentation has become crucial to the success of businesses.
Marketers should realize how population is growing and be able to specifically pinpoint who is the target market of their product. "The marketing research function is the primary source of information needed to make effective marketing decisions" (Boone 199). Many companies today are not doing research and research is the most important step in determining the target market and appropriate products to market (Slywotzky 1). Marketing research needs to be the first and most important process for marketers today because it is necessary to create intelligent strategic, or long-term, decisions. Marketing research can be done in many ways, using many sources. Marketers use primary and secondary sources of information. Primary data is collected by the researcher while secondary data was collected by a creditable source, but posted for others to use (like government research) (Burnett 93). More research needs to be done when entering a new market or foreign one.
By looking at population growth, marketers can understand how and where consumer markets are changing. Population growth in developed countries is 0.4 percent on the current population of 1.3 billion people. This contrasts the market size in developing nations where a population of 4.7 billion people is growing at a rate of two percent. In Africa and countries like India women continue to have many children. This explains why many developing countries have such a high population growth. In developed countries, like in Europe where only 1.5 children are born to each woman, the population is still growing due to longer life expectancy. Marketers need to know that the demographics, specifically the distribution of ages, differ country to country. With fewer births and higher life expectancy in Europe the larger target markets tend to be toward the older ages while in developing areas the trend is more toward the younger generations (Boone 121).
Marketers should know about the shift of the population from rural to urban areas. With fifty percent of the population living in urban areas marketers need to research the different types of urban areas. Not all urban foreign markets can offer the same potential or be looked at in the same way. The level of development in the urban area will determine what products can be marketed appropriately (Boone 121). For example, in a subsistence economy that is supported by agriculture, the people have a low income so foreign trade may not be profitable (122). This low level of development means few products are appropriate for the areas. In a new industrialized economy consumers are creating a demand for goods. The increase in the level of development means more products are appropriate because the economy and consumers want them. Industrialized economies with a high level of development export and trade goods. The level of the economy can help a marketer understand the population in its target market.
As countries move from subsistence to new industrial, the consumers have more disposable income. Consequently, these consumers begin to demand new products. With a growth in the middle class population in Asian countries such as Thailand, South Korea, India, and China marketers have seen an increased demand for Western products (Boone 122-123). A survey in South China reported on the public opinion that Western products were in demand because they were perceived as better in quality, value, and lasted longer. The United States exports two times the amount of goods to Asia than to Europe. In 1997 exports to Asia were up thirty seven percent from the prior year (117). The growth in the middle class population has created a market opportunity for consumer products.
Even with the rise in middle class and demand for products, marketers and companies have not taken full advantage of this trend. Comparing the American market with ones in developing nations proves the differences. In the American consumer product market a plethora of choices in every product category exist while in developing countries there hardly are enough basic products. The differences can be seen by going to an American drug store and finding seventeen different Colgate brands compared to going to a developing nation without even two choices. The population growth is slowing in developed countries and yet the product choices are growing. Ironically in developing ones the opposite is occurring; the population is growing and product categories are not (Slywotzky 2). All of this information should lead marketers toward a market opportunity.
Because the population is very diverse, it is important to connect the right people to the right market strategy. Assessing five points will help to create the perfect marketing campaign. First, assess demand. In today’s market place it is better to research what the consumers are demanding and then create a product (Boone 123). Even though marketers work with products, the focus needs to be on the consumer (Slywotzky 1). Second, what is the competition doing? Next, it is imperative to understand the economic environment at the time. Fourth, the social-cultural environment needs to be evaluated, especially when marketing abroad. Marketers need an understanding of culture, tastes, religion, and the language. Even within one country this needs to be done. For example, in Malaysia there is a need for different market campaigns to reach the different groups of Malaysians, Muslims, Chinese, and Indians living in the country (Burnett 299). Finally, marketers must be aware of the political and legal environment (Boone 123).
The most important step in the marketing process that needs to be constantly addressed is market research. Marketers and merchandisers must know about all areas, not just about the product they are trying to market. Understanding all the environments and larger global issues will influence the marketer to incorporate the learning in the strategic plans. Market research needs to be ongoing due to the constant changes in the global marketplace.
Section IV: China Case Study
Chinese history tells about population struggles. Early in the history the population was kept small due to tragedies like war and epidemic. Finally in the 1950’s population grew and this seemed positive. "Of all things in the world, people are the most precious," said by Mao Zedong (Choi 2). However, these feelings changed by 1970 when the government realized the population was straining China in many ways. The Chinese, who thought people could help its economic growth, now believed its rapid population growth could hinder its development.
To regulate population growth the Chinese created the One Child Policy in 1979 and it remains in effect today (Choi 1). In order to promote economic development the population goal was a one percent growth rate by 1980 and a desirable zero percent growth rate by 2000 (2). The policy was explained in local communities to parents with the hope of getting parents to understand the need to slow China’s population growth. The officials strived to gain support by pressuring parents with information about costs of school, health care, and the burden of many children on the community. For the sake of China’s future one child was all that was necessary. Many parents also received financial incentive for cooperation and conversely financial burden with each additional child (2). Urban areas were easier to convince, but the policy needed full country support to be successful.
With a land mass just less than the United States, the country supports an estimated 1,261,832,482 or one-fifth of the world’s population (July 2000 estimate) ("China" 3). The growth rate is 0.9 percent while 1.82 children are born to every Chinese woman. The One Child Policy may have eliminated 250 million people from the world’s population, but it created a unique homogenous target market of parents with only one child (Choi 4). In the global marketplace where the population is very heterogeneous, China has a huge target market with something very important in common- only children.
Twenty million Chinese babies are born each year and bring much happiness to their parents and a huge marketing opportunity to baby product companies around the world. The term "little emperor" comes from the popular belief states that the most spoiled babies in the world are Chinese (Saywell 1). Peggy Yu, a mother of a five-month-old son, said, "He’s the most worthwhile cause for me to spend my money on." (Chen 1). Parents around the world cherish their children, but in China, by law, parents are permitted to have only one. Because of the restriction Chinese parents value their only child differently than parents anywhere else in the world. These parents are willing to spend any amount of money to get the best for their cherished "little emperor".
A large percentage of a baby’s parents’ income is spent on buying the best baby products offered. Even if the parents do not purchase brand name products for themselves, they want their baby to have brand name clothing and toys. All of these goods are becoming more and more available throughout China. Parents also want the best health care and education for their only child (Choi 4). It is estimated that parents spend anywhere from a third to half of their disposable income on their child. They are demanding the best and often the best is not a Chinese product. Parents feel the best products are Western and even though they are expensive, parents will splurge (Chen 1). In a survey of parents in urban areas, twenty six percent of the respondents answered they wanted foreign food products and twenty one percent also wanted foreign toys (Saywell 2).
Many Western companies have discovered the open Chinese market. Disney has been selling products in China since 1993 and the high priced apparel goods are selling (Chen 2). Kooshies Baby Products, a Canadian manufacturer, realizes how open the market is for baby products in China. Currently, Kooshies designs reusable cotton diapers and sources the manufacturing locally in China to keep costs down (Saywell 1). In the first year in business in China the company had sales of five million dollars and expects this to only grow. Ray Perez, the general manager, does not think the arrival of disposable diapers to the market will hurt Kooshies business of reusable ones. He knows Chinese prefer cloth diapers and the idea of more expensive disposable diapers may take a little longer to catch on. Ray Perez is currently assessing other areas of the baby product market. Because parents want their child to do his/her best in school, they are now demanding learning and educational toys (2).
Companies of products other than baby care ones are even recognizing the market opportunity. Marmon Group Incorporated, a Chicago based heavy industrial equipment manufacturer, is an example. Even though the company was in a different product market, they saw the opportunity for American style baby food in China. Baby food is different in China because it is usually homemade. Statistics prove that Chinese babies do not receive enough nutrients and vitamins from the mushy baby food. Marmon Group Incorporated created Huiliduo with a local company in China. They produce baby food in jars that has all the nutrition a baby needs. Working parents are spending the extra money to buy this product because it saves them time by not having to prepare the baby food themselves (Chen 2).
Many companies, however, are finding it difficult to simply market Western products in China. Kooshies found out Chinese parents did not need receiving blankets like Western parents (Saywell 2). Chinese parents are not familiar with many Western products and do not show a need until they are taught about the product. Companies are sending representatives and experts, such as doctors, to help create a demand for Western products (Chen 3). Disposable diapers are not common in China, but may become commonplace thanks to Western marketers. Sales of disposable diapers increased thirty percent from 1997 to 1998. To Chinese parents, they are very expensive and parents are used to using cloth diapers. Marketers are optimistic that as incomes continue to rise and education about the conveniences of them spreads, sales will increase (2).
The target market actually includes more target purchasers than just the baby’s parents. Each child has two parents as well as four grandparents. "When you have parents and four grandparents spending on one child, it’s a no-brainer to know that this is the right market," commented Roberta Lipson of the United States-China Industrial Exchange Incorporated (Chen 3). Baby product companies can go global and market to any country, but many are choosing China because the market is huge. Even though the number of births is decreasing each year the product categories and choices are going up (1). Ray Perez discussed some simple statistics to prove how large the baby market is and how easy it is to make a profit in China. He takes the estimate of twenty million babies being born each year and guesses only one percent will use his company’s diaper. This one percent, or 200,000 babies, will consume one million diapers a year (Saywell 3).
As a merchandiser preparing for the workplace, I know that I cannot ignore global opportunities. I learned it is important to fully research and ask questions about the target market first. The opportunity for marketing to parents in China is an interesting one to explore because the target market is homogeneous. The One Child Policy has been in effect since 1979, which means another generation is about to be born of the first generation of only children of the late seventies. The original generation of "little emperors" has grown up and now will be making purchasing decisions. It will be interesting to follow the purchasing trends of these older "little emperors".
Section V: Implications
The world’s population continues to quickly multiply. Countries are trying to help control growth as well as its effects on the environment. The composition of the population changes daily as demographics shift. Specifically the number of people in each age cohort is shifting. In developing countries more people are in the younger age cohort while more older people exist in developed nations. Levels of development in the fields of technology, health care, and sanitation also affect the population. As development improves, people live longer. Adding together new births and longer life expectancy results in global population growth.
These population shifts consequently change marketing. Marketers and merchandisers today must conduct effective research. They must research to gain an awareness, knowledge, and understanding of the target market. The research needs to be even more in-depth when entering foreign markets. As seen in the China case study, marketers have taken advantage of the opportunity in the baby product market, but also made mistakes. In today’s marketplace, no one wants to fall behind the competition. Marketers should use every resource available to be up-to-date and competitive.
In the future, the population shifts in the global market present an opportunity to the marketing and merchandising professions. The world has been brought closer together due to the global market place. Nothing anymore is truly "American" or "Italian". For example an "American" car has parts from Mexico, paint from Europe, and upholstery from South Asia. Foreign cars are now manufactured domestically. In the future the world will no longer be able to buy national products; all products will be international in many ways. Products will not be defined by the country where they are made because it could be any combination of nations. With all of the international business, the future will also bring a need for new marketing ethics, standards, and regulations. Because marketing and manufacturing will be changing day to day the regulations that are set should be written to allow room for change. Currently, there are standards within countries, but marketers will need to soon set standards for global marketing.
All business students today should have an international focus. Business today means international business because it is hard to strictly stay within the boundaries of one country. Marketers are crossing these boundaries to help satisfy demands. Marketers know that Chinese parents are demanding the best baby care products. China is only one example of a global opportunity. Without the enthusiasm and willingness to enter the global market, marketers can fall behind the competition. There are many more "little emperors" around the world waiting for the global market to bring them what they want.
Works Cited
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Chen, Kathy. "Chinese Babies are Coveted Consumers." Wall Street Journal. 15 May 1998:
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