Transcript Emerging Philanthropy Markets

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
Outline
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Managerial Issues
Literature Review
Research Objectives
Method
 Economic Model
 Cultural Value Model
Discussion
Conclusions, Limitations …
DM in Emerging Markets: Why not?
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Brazil, China, Indonesia, South Korea and Russia
will account for more than half of all global
growth by 2025 (Sommerville, 2011).
New wealth and new middle class
Fund raising: Some countries are in a position to
give back
Few companies are stupid, but many behaved
stupidly in China (The Economist, 1999)
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Lack of marketing infrastructure
Macroeconomic data but not no product/market info.
Imperialist approach
Literature Review
Emerging Market Research:
Economics
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Macro-economic Indicators
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Overall Market Opportunity Index (Cavusgil, 1997)
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Comparing GDPs at PPP (Arnold & Quelch (1998)
• Q = (P+NP) X (DevGDP – AdjGDP)
Emerging Market Research:
Sociology/Culture
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CAGE (Ghemawat & Mallick, 2003): Cultural,
Administrative, Geographic, Economic distances
Value Survey Module (Hofstede, 2001): Cultural
distances: Power, uncertainty avoidance,
individualism/collectivism, masculinity/feminity, time
orientation
GLOBE (House et al., 2004): Global Leadership and
Organizational Behavior Effectiveness
WVS (Inglehart & Welzel, 2005)
Emerging Market Research:
Issues with Cultural Values
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Measuring values or preferences? (Maseland &
van Hoorn, 2009)
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Some abstract constructs difficult to measure
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Values should correlate with practices: negative
correlations between VSM and GLOBE
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WVS: 84 countries (80% of population), 250
variables, constantly updated, data at individual
level, N = 270,000
Emerging Market Research:
Marketing
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Product-market subset
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Business Model Success factors (Arnold, 2003)
Example:
Based on Mary Kay business model, Chinese women
were far more motivated than Japanese to become
« beauty consultants » and pocket extra income.
DM and Fundraising
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“Generosity” index (e.g. CAF)
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ODA & global private philanthropy (Hudson
Institute)
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Cultural clusters (Johns Hopkins’ NPS, 2004)
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European Vs Anglo-Saxon countries
Source: Hudson Institute
Sweden
Netherlands
Luxembourg
Norway
Denmark
Canada
United States
Austria
United Kingdom
Australia
Switzerland
Spain
France
Ireland
Belgium
New Zealand
Germany
Greece
Finland
1
Italy
Portugal
Japan
DM and Fundraising:
OECD Donor Countries
1.2
Remittances
Private Giving
ODA
0.8
0.6
0.4
0.2
0
DM and Fundraising:
Donor Profiles
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Compassionate conservative philanthropy
(Brooks, 2006)
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They are politically to the right;
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They have strong family values;
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They value personal entrepreneurship;
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They are skeptical about governments’ intervention into
economic life (and into income redistribution);
They are regular churchgoers (irrelevant of
denomination).
Research Objectives and Methodology
Research Methodology:
Objectives and Assumptions

Identify new or neglected potential markets for
DM fundraising programs
1.
2.
3.
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Capacity to give (Economic Analysis)
DM Infrastructure to give (Documentary Analysis)
Propensity to give (Predictive Modeling)
Research proposition:
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Individuals ready to support private philanthropy share
some common values
Research Methodology:
Setting
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Empirical research:
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Christian NGO raising funds in 25 countries
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Exploring some 130 new markets for DM expansion
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Successful DM Fundraising Markets: Australia, Canada,
Germany, New Zealand, South Korea, Switzerland,
Taiwan, the UK, the U.S.
Capacity to Give
Capacity to Give
Estimate urban
households
Estimate hhold
income
Estimate hhlds
by income
Estimate potential
market
Population
estimate
GDP
per capita
% income
distribution per
decile/quintile
Hhld penetration
assumptions
over 5 years
% of urban
population
GDP
per household
Average income
per decile/quintile
Estimate number
of potential donors
Average
household size
Hhld spending as
% of GDP
Define hhld
income threshold
Estimate potential
income
Number of urban
households
Household income
Sources:
World Bank Development Indicators
CIA World Factbook
Capacity to Give:
Hhlds with Income Threshold > $20K
Rank
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Country
World Bank Classification
S. Korea
Brazil
Sweden
Argentina
Russia
India
Poland
Indonesia
Greece
Colombia
Venezuela
Peru
Malaysia
Iran
Thailand
Hungary
Iraq
Lebanon
Czech Rep.
Romania
Guatemala
N. Korea
Ecuador
El Salvador
Slovenia
High income
Latin America
High income
Latin America
Europe & C. Asia
South Asia
Europe & C. Asia
E. Asia & Pacific
High income
Latin America
Latin America
Latin America
E. Asia & Pacific
M. East & N. Africa
E. Asia & Pacific
Europe & C. Asia
M. East & N. Africa
M. East & N. Africa
Europe & C. Asia
Europe & C. Asia
Latin America
E. Asia & Pacific
Latin America
Latin America
High income
Potential Hhlds (000)
7,194
6,236
2,994
1,996
1,863
1,798
1,493
1,442
1,304
1,049
1,029
952
694
671
490
488
348
330
316
277
263
260
240
205
198
Annual Potential Mkt
Growth Rate
4%
3%
3%
10%
6%
10%
3%
7%
4%
7%
11%
8%
7%
8%
5%
4%
-%
1%
6%
4%
6%
2%
6%
5%
4%
DM Infrastructure
DM Infrastructure
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Infrastructure
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Economic Freedom:
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Telephone mainlines per 1000 habitants
Cellular mobile subscribers per 1000
Number of PC's per 1000
Internet servers per million
Percentage of households with TV sets
Daily newspapers per 1000 (Source: World Bank, Development Indicators)
Economic Freedom Index (Source: Heritage Foundation)
Political Freedom Index (Source: Freedom House)
Country Risk:

Country risk rating (Source: Euromoney)
DM Infrastructure:
Ranking of Latin/S. American Markets
Infrastructure
Economic Freedom
Country Risk
All Countries Region
All Countries Region
All Countries Region
LATIN & SOUTH AMERICA
Chile
Mexico
Costa Rica
Brazil
El Salvador
Colombia
Peru
Guatemala
Venezuela
Bolivia
Honduras
Dominican Republic
Argentina
Ecuador
Nicaragua
Haiti
48
50
49
51
74
61
85
80
65
77
81
64
52
55
92
97
1
3
2
4
10
7
14
12
9
11
13
8
5
6
15
16
8
20
28
44
36
59
15
51
2
71
45
40
51
58
20
69
2
4
6
9
7
14
3
11
1
16
10
8
11
13
4
15
39
42
53
54
56
58
59
67
80
84
85
87
89
95
107
117
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Propensity to Give
Propensity to Give:
Target Markets
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Australia
Canada
Germany
New Zealand
South Korea
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Switzerland
Taiwan
United Kingdom
United States
Propensity to Give:
Selected Indicators
Familism:
Religiosity:
Government:
Entrepreneurship
Conservatism
Family is very important in life
Importance of child obedience
Child needs a home with father and mother
Divorce is never justifiable
Religion is very important in life
Belong to a religious organization
Spend time at church, mosque or synagogue weekly
Consider myself as a religious person
People should take more responsibility
Government doing enough or too much against poverty
Government doing enough or too much for less developed
countries
Owners should be able to run their business
We need larger income differences as incentive
Private ownership of business should be increased
Wealth can grow so there’s enough for everyone
Self positioning on the political scale
People are poor because of laziness and lack of will power
Source: Brooks (2006)
Propensity to Give:
Logistic Regression and Odds Values
FAMILISM
Family is very important in life
Importance of child obedience
Child needs a home with father
and mother
Divorce is never justifiable
CAPITALISM
1.117
.929
.871
1.114
RELIGIOSITY
Religion is very important in life
.867
Spend time at church, mosque
or synagogue weekly
1.026
Consider myself as religious
person
.955
Owners should be able to run their
business
We need larger income differences
as incentive
Private ownership of business
should be increased
Wealth can grow so there’s enough
for everyone
1.084
.950
1.117
1.161
CONSERVATISM
Conservative: Self positioning on
the political scale
People are poor because of laziness
and lack of will power
.933
1.057
Propensity to Give:
Top 25 Markets
Canada
New Zealand
Denmark
China
Austria
Switzerland
Australia
Ireland
United States
United Kingdom
Taiwan
Czech Republic
S Korea
Germany
Finland
Belgium
Japan
Israel
Malta
Portugal
Norway
Netherlands
Croatia
Estonia
Sweden
Ranking
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
Market Map:
Ranking on countries propensity for private donations
Capacity and Propensity to Give
1
New Zealand
Switzerland
Austria
Denmark
II
11
Ireland
Czech Republic
Malta
Latvia Croatia
21
Slovenia
Estonia
Slovakia
Serbia and
Montenegro
31
Lithuania
41
Norway China
Belgium
Italy
United Kingdom
Portugal
Finland
Sweden
South Africa
Hungary
Netherlands
Poland
Greece
Venezuela
Peru
Singapore
Taiwan Canada
Australia
United States
S Korea
I
France
Germany
Japan
Argentina
Spain
India
Mexico Brazil
Russia
Romania Chile
Dominican Republic
Indonesia
Philippines
Colombia
Turkey
Jordan
III
Iran
IV
El Salvador Iraq
51
61
61
51
41
31
21
Ranking on countries economic market potential
11
1
Discussion:
Multi-criteria Decision Analysis
Country
Top 5%
Income
5%
Propensity Infrato Give
structure
35%
15%
Freedom
Risk
Weights
Capacity
to Give
30%
5%
10%
Weighted
Score
100%
S. America
Mexico
Chile
Argentina
Venezuela
Colombia
Peru
Dominican R.
El Salvador
Costa Rica
Ecuador
Guatemala
Bolivia
Honduras
Nicaragua
5
3
4
4
4
3
2
2
2
2
2
1
1
1
4
3
3
3
3
3
2
3
3
2
3
2
1
1
3
3
3
3
2
3
3
2
1
1
1
1
1
1
3
3
2
2
2
1
2
1
3
2
1
1
1
1
2
5
2
1
2
2
2
3
3
1
1
1
2
2
3
3
1
1
2
2
1
2
2
1
2
1
1
1
72
62
58
57
53
51
45
39
38
30
30
21
21
21
Asia
China
India
Indonesia
Philippines
Malaysia
Thailand
5
4
4
3
3
3
1
1
1
1
2
1
5
3
3
3
1
1
2
1
1
2
3
3
1
2
2
2
1
1
3
2
2
2
3
2
79
55
55
52
43
40
Discussion:
Fund Raising Markets
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Weberian Capitalism
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(Weber, 1904)
Protestant Ethic and the Spirit of Capitalism (Weber,
1904)
Private philanthropy
PE  SC  MWC  IR
(Lesnoff, 1981)
Secularization of PE
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(Carroll, 2009)
Asian Drama: An Inquiry into the Poverty of Nations
(Myrdal, 1968): Hindu fatalism, Confucian hierarchy,
Buddhist indifference material gains
Confucian capitalism (Fukuyama, 1995; Lew, Choy &
Wang, 2011)
Conclusions, Limitations and Future
Research

Contribution to methodology
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Importance of cultural values and predictive validity
Multi-attribute and structured approach as decision
support models
Caveat:

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Western business model
Modeling and human judgment
Nonprofits’ core values and compromises