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The Benefits of Marketplace Literacy in Low-Income Communities

The Benefits of Marketplace Literacy in Low-Income Communities

Madhubalan Viswanathan, Nita Umashankar, Arun Sreekumar and Ashley Goreczny

Success for marketers looking to emerging markets for growth is inextricably linked to the wellbeing of the hundreds of millions of subsistence consumers and microentrepreneurs who face poor infrastructure, material resource constraints, and low literacy. Such markets are some of the fastest growing in the world, with nearly $5 trillion of consumption spending annually. As a result, many multinational companies (e.g., Proctor & Gamble, Nokia, Unilever) market products to subsistence consumers.

Unique to subsistence marketplaces is that micro-entrepreneurship serves as a primary source of livelihood, and consumers’ purchasing power depends on their microenterprise success. A primary disconnect between marketers’ engagement in such markets and subsistence consumers’ demand for their products, however, is the latter’s inability to participate in marketplaces effectively and beneficially. A new Journal of Marketing study demonstrates that effective participation requires knowledge and skills that relate to what, how, and why to participate in marketplace exchanges both as consumers and as entrepreneurs.

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Beneficial marketplace participation involves consumers making optimal decisions and generating income by creating value for others through micro-entrepreneurship. With low marketplace participation and suboptimal decision making, firms may sell substandard products rather than high-quality and valuable products. Moreover, firms might not partner with local entrepreneurs, which is an important strategy for market entry in emerging markets.

Our research team demonstrates that subsistence consumers’ effective and beneficial marketplace participation requires not only material resources (e.g., access to capital), but also marketplace literacy, which we define as the knowledge and skills that enable marketplace participation both as a consumer and as an entrepreneur. In particular, we demonstrate that marketplace literacy causes an increase in psychological wellbeing and consumer outcomes related to wellbeing (e.g., consumer confidence and decision-making ability), especially for subsistence consumers with lower marketplace access. In addition, it causes an increase in entrepreneurial outcomes related to wellbeing (e.g., starting a microenterprise) for those with higher marketplace access.

We discuss implications for public policy makers, development efforts, and companies’ corporate social responsibility initiatives. First, we advocate that subsistence consumers play a significant role in mainstream marketing research since they represent a sizable proportion of consumers globally and function in extreme conditions that challenge the theories developed for resource-rich consumers and markets. Second, we demonstrate that marketplace literacy offers a pathway to a better world for subsistence consumers. This pathway is fundamentally about literacy in a marketing domain, which encompasses buyers, sellers, and their interactions. Third, we introduce marketplace access as an important contextual factor that should be considered when exploring marketing phenomena across income levels. Fourth, we identify marketplace literacy as a critical form of literacy, in addition to consumer and financial literacy, that should be cultivated. Fifth, we recommend that marketplace literacy interventions be implemented to help subsistence consumers overcome their lack of marketplace access and allow them to engage in entrepreneurship.

Even brief programs (4 to 12 hours) with rudimentary methods can aid the development of marketplace literacy and generate substantive outcomes. Such programs can be customized for different audiences (e.g., women vs. men) and occupations (farmers vs. artists) and can have their causal impact assessed. Lessons can be reinforced through short clips on web-based smartphone applications (e.g., WhatsApp, which has widespread adoption, even in rural areas of developing economies) or through text messages.

Further, given that multinational firms engage in corporate social responsibility initiatives to build stakeholder engagement, policymakers should hold marketers accountable for playing a central role in engendering marketplace literacy. This can be achieved through consumer and entrepreneur protection agencies, subsidies, and metrics that reward firms adhering to such standards. In terms of broader implications, we recommend that the United Nations include marketplace literacy explicitly in its sustainable development goals to build consumer and entrepreneurial knowledge and skills. 

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From: Madhu Viswanathan, Nita Umashankar, Arun Sreekumar, and Ashley Goreczny, “Marketplace Literacy as a Pathway to a Better World: Evidence from Field Experiments in Low-Access Subsistence Marketplaces,” Journal of Marketing.

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Madhubalan Viswanathan is Professor, Department of Marketing, Loyola Marymount University, USA.

Nita Umashankar is Assistant Professor of Marketing, San Diego State University, USA.

Arun Sreekumar is Assistant Professor of Marketing, Indian Institute of Management, India.

Ashley Goreczny is Assistant Professor of Marketing, Iowa State University, USA.