Methodological Approach and Cultural Value

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EXPANDING DIRECT MARKETING IN EMERGING MARKETS:
METHODOLOGICAL APPROACH AND CULTURAL VALUE ANALYSIS
Richard Michon, Ted Rogers School of Management, Ryerson University, Toronto
Atul Tandon, CEO, Tandon Institute, Bellevue, WA
SUMMARY
Nonprofits engaged in direct marketing in high income OECD countries are now looking
for new revenue sources from emerging markets. The popular press is full of horror stories of
firms that were lured by emerging market size, growth and new wealth. Their initial research
was often limited to economic data and failed to identify success factors associated with productmarket specificity. This research examines a methodology to identify direct marketing
fundraising opportunities in overlooked or emerging countries. It studies three major
dimensions: 1) market capacity to give, 2) direct marketing infrastructures, and 3) propensity to
give. The study is based on the experience of a major nonprofit with DM fundraising activities
in some 25 countries on five continents.
Capacity to give: Research on philanthropic market size and capacity to give is a
necessary but insufficient prerequisite. The initial research followed Cavusgil’s (2004)
methodology for developed market potential indicators. Macro-economic data were extracted
from the World Bank Development Indicators at the urban household level. Income deciles and
quintiles are used to estimate potential annual donation thresholds, and remove unviable markets.
Country Infrastructure: Nonprofits must also be able to reach people and engage in
direct marketing activities. Country infrastructure data are available from Michigan State
University's Market Potential Indicators for Emerging Markets and from the World Bank.
Freedom and human right indices are provided by the Heritage Foundation and Freedom House.
Euromoney rates countries on political, social, and financial stability. A multi-criterion model
helped eliminate markets that did not meet minimum values.
Propensity to give: A large gap has been observed in OECD countries between official
development assistance (ODA) and private philanthropy. The Hudson Institute’s Global
Philanthropy Index compares private donations and to ODA. Some countries with strong sociodemocratic traditions rank high on ODA and relatively low on private philanthropy (e.g. Sweden,
Luxembourg, Norway, Netherlands, and Denmark). Nations with liberal economies perform
much better on private philanthropy than on ODA in percentage of their GNI (e.g. the UK, the
U.S., Canada, New Zealand, Australia, Ireland, and Switzerland). Anglo Saxon countries are
more inclined toward private donations while continental European countries favor public
interventions (Salamon et al, 2004).
Brooks (2006) looked at donations and helping behavior in the U.S. and in other countries
participating in the International Social Survey Program that now includes some 40-plus nations.
He observed that “generous” donors are politically to the right (conservative) and have strong
family values. These donors value personal entrepreneurship and are skeptical about
governments’ interventions into economic life and income redistribution. Finally, they are
regular churchgoers, irrelevant of denominations. Values identified by Brooks are available for
most emerging countries in Inglehart’s (2005) World Value Survey. A logistic regression model
was used to score countries on their propensity to give.
Findings: Nonprofits already raise substantial income from Australia, Canada, Germany,
New Zealand, South Korea, Switzerland, Taiwan, the UK, and the US. These countries were
flagged as reference targets. The logistic regression analysis isolated the most significant
predictors for charitable donations, correctly classified all target countries, and identified other
markets with similar profiles.
Countries were ranked according to their capacity to give (potential market), their
propensity for private philanthropy, and plotted on a joint space map. Markets located in the top
quadrant scored well on both counts and should receive priority attention. Countries like China,
South Korea, and Taiwan are found among the top ones. Some nations have smaller potential
markets but display good predispositions for private donations. Lithuania, Croatia, South-Africa,
Estonia, and Hungary are well positioned emerging economies.
Discussion: Findings from the World Value Survey obtain theoretical support from Max
Weber’s Protestant Ethic and the Spirit of Capitalism. First-tier traditional countries for
fundraising are of Protestant tradition. The Protestant ethic gave birth to a renewed form of
capitalistic entrepreneurship and economic growth. Many people in those countries reject the
idea that governments are responsible for income distribution and universal social safety net.
They have a net preference for private charities and a tendency to support religious causes.
Emerging countries opting for capitalistic economies may be sharing some of these
values. Weber noted that economic wealth and utility maximization were the consequences of
ethical habits. Some Asian countries appear as highly promising countries for charitable
fundraising. Fukuyama (1995a) observes that Confucianism advocates the same personal values
that are best adapted to modern capitalist success. “It can be said that Confucianism … has been
functionally equivalent to Protestantism in Western societies (Lew, Choi & Wang, 2011)”
In closing: Direct marketing expansion in emerging markets must be anchored on shared
cross-cultural values. The market mapping methodology helps help managers set development
priorities and allocate resources.
For further information contact:
Richard Michon, PhD
Ted Rogers School of Management, Ryerson University
350 Victoria Street
Toronto, Ontario M5B 2K3
Phone 416 979 5000 ext. 7454
E-Mail: [email protected]
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