ECONOMIC FACTORS

Economic factors: Classification systems, Income and Urbanization
In order to judge the economic situation of a market, you can use different classification systems, that are commonly referred to. In general, there are

1. subsistence economies (agriculture as main sector),

2. raw-material exporting economies (mainly exporting goods),

3. industrializing economies (manufacturing ≈ 10 - 20%, emerging rich and a middle class),

4. industrial economies (major exporters of manufactured goods, large middle-class).

Although industrial economies have been the most lucrative markets in the past, because of their large middle class, the demographic change is likely to change that. In fact, poorer countries are already huge markets for some companies. Speaking of rich and poor, it is helpful to know another classification, that deals with different incomes:

1. Very low family incomes (mostly in subsistence economies),

2. Mostly low family incomes (mostly in industrializing economies),

3. Very low, very high family incomes (majority just above subsistence level, rich minority),

4. Low, medium, high family incomes (middle class (industrialization) but social barriers),

5. Mostly medium family income (advanced industrial economies, large middle class).

The degree of urbanization is also a major economic factor. In general, the more urbanized a market is, the more attractive it is to international marketers, as the market tends to consume more consumer goods.