From the dawn of civilization until the lSOOs, world population grew to about 1 billion people. It almost doubled by 1900, and today over 6 billion people inhabit the planet. According to Census Bureau projections, world population will increase to nearly 8 billion in the next 25 years. Ninety-six percent of the increase in world population occurs in less-developed regions such as Africa, Asia, and Latin America. Population growth rates in affluent countries, however, have slowed to 0.4 percent annually—one fifth the annual growth of less-developed countries. What this all means is that, over the next quarter-century, firms will have to adapt their goods and services to meet the needs and wants of consumers in developing countries.
One-fifth of the world’s population—l.2 billion people—lives in China, for example, but less than one in 20 resides in the United States. Africa is growing fastest at 2.8 percent a year, followed by Latin America at 1.9 percent and Asia at 1.7 percent. Average birth rates are dropping around the world due to family planning efforts, but death rates are declining even more rapidly. However, in Africa the birth rates are still high (6 children per woman), and Indian women average 3.4 children. European birth rates have fallen considerably, and couples average only 1.5 children. This could present economic challenges as the age distribution shifts due to the low birth rate.’4
The world marketplace is increasingly an urban marketplace. Today, almost 50 percent of its people live in large cities. As a result, city populations are swelling: 39 cities currently have a population of 5 million or more. Mexico City, whose population of 18 million ranks it as the world’s largest city; is expected to grow to 31 million by 2010. Increased urbanization will expand the need for transportation, housing, machinery, and services.
The growing size and urbanization of the international marketplace does not necessarily mean all foreign markets offer the same potential. Another important influence on market potential is a nation’s economic development stage. A subsistence economy offers a different environment than that of a newly industrialized country or an industrial nation. In a subsistence economy, most people engage in agriculture and earn low per-capita incomes, supporting few opportunities for international trade. In a newly industrialized counny, such as Brazil or South Korea, growth in manufacturing creates demand for consumer products and industrial goods such as high-tech equipment, The industrial nations, including the United States, Japan, and western Europe, trade manufactured goods and services among themselves and export to less-developed countries. Although these wealthy countries account for just a small percentage of the world’s population, they produce over half of its output.
As a nation develops, an increasingly affluent, educated, and cosmopolitan middle class emerges. India’s middle class includes nearly 300 million people, a number larger than the entire population of the United States. India’s processed food producers and marketers are now facing global competition as a result of economic reforms and market liberalization. The greatest concerns for foreign companies seeking new markets in India is overcoming inadequate and restricted marketing channels. However, significant opportunities can be found through joint ventures and strategic alliances. International marketers see similar growth in middle-income households occurring in the booming East Asian economies like China, Thailand, Singapore, South Korea, and Hong Kong, as well as in Mexico, South America, and sub-Saharan Africa. These new middle-class consumers have both the desire for consumer goods, including luxury and leisure goods and services, and money to pay for them.