Why subsistence consumers need marketplace literacy

Researchers from Loyola Marymount University, San Diego State University, Indian Institute of Management, and Iowa State University published a new paper in the Journal of Marketing that examines how effective marketplace participation by subsistence consumers requires knowledge and skills that relate to what, how, and why to participate.

The study, forthcoming in the

Journal of Marketing

, is titled “Marketplace Literacy as a Pathway to a Better World: Evidence from Field Experiments in Low-Access Subsistence Marketplaces” and is authored by Madhu 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.

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.

Viswanathan explains that “Our research demonstrates that subsistence consumers’ effective and beneficial marketplace participation requires not only material resources, such as access to capital, but also marketplace literacy–the knowledge and skills that enable marketplace participation both as a consumer and as an entrepreneur.” Umashankar adds that “Marketplace literacy causes an increase in psychological wellbeing and consumer outcomes related to wellbeing like consumer confidence and decision-making ability, especially for subsistence consumers with lower marketplace access. It also causes an increase in entrepreneurial outcomes related to wellbeing, such as starting a microenterprise, for those with higher marketplace access.”

The research provides insights for public policy makers, development efforts, and companies’ corporate social responsibility initiatives. First, 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, 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, marketplace access is an important contextual factor that should be considered when exploring marketing phenomena across income levels. Fourth, marketplace literacy is a critical form of literacy, in addition to consumer and financial literacy, that should be cultivated. Fifth, marketplace literacy interventions should 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.

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. Sreekumar says that “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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Full article and author contact information available at:

https:/

0022242921998385

About the

Journal of Marketing

The

Journal of Marketing

develops and disseminates knowledge about real-world marketing questions useful to scholars, educators, managers, policy makers, consumers, and other societal stakeholders around the world. Published by the American Marketing Association since its founding in 1936,

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