Multinational Firms and Middle Class

Why do multinational firms need to think about the middle class now more than in the past?

What should the multinational companies do to capture this emerging middle class?

In the article, "Capturing the world's emerging middle class," middle-class consumers are estimated to include almost two billion people, spending a total of $6.9 trillion annually. The authors estimate the figure will rise to $20 trillion during the next decade. (Court, 2010) With figures such as these, it is imperative for multinational firms to think about the middle class and targeting these premium consumers.

In order to capture the interest of the emerging middle class, multinational companies must identify the product attributes that the middle-class consumers in the specific markets value and also recognize the ones that these consumers do not value. These preferences may also vary from country to country.

"Competing for the Global Middle Class" is an article that was featured in the Autumn 2011 issue of Strategy and Business. The article identifies and explains several myths of competing globally and the realities behind those myths. One of these myths includes the assumption that a multinational company cannot make money in the middle class markets. The reality, however, as set forth in the article is that although most products are set at a lower price in these markets, the sales volumes tend to be "two to three times greater" than those in mature markets. (Edward Tse, 2011) Aside from lower prices, it is said that a "change in the conventional business mindset" is necessary to successfully enter into the middle class market.

References

Court, D. a. (2010). Capturing the world's emerging middle class. McKinsey Quarterly , 12-17.

Edward Tse, B. R. (2011, 21 August). Competing for the Global Middle Class. Retrieved April 26, 2012, from Strategy & Business: http://www.slideshare.net/wrusso1011/competing-for-the-global-middle-class