Global Marketing as an instrument of economy diversification in times of crisis
October 30. KAZINFORM. ASTANA
World financial crisis exposed a number of vulnerabilities of Kazakhstan’s economy, particularly its insufficient diversification. In the current situation and with the emphasis made by the President Nazarbayev on the accelerated modernization of the country’s economy we are presented with an opportunity to attain that goal by altering our approach to diversification. We believe that the use of the “best practice” principle – use of analytical sources implemented in business – is the most suitable- tells Sergey Revyakin, NDP “Nur Otan” young leaders’ project member, Bolashak graduate, Moscow State University.
Once a company has made the decision to diversify its business activities and to begin developing its path towards other markets, where does it start?
The concept of diversification is closer connected with business activity. In business conditions when profitability of the niche segment in which a company operates starts diminishing, the company starts exploring opportunities of diversification or differentiation of its activities.
In general, differentiation entails alteration of minor features of the product or service. Diversification on the other hand involves creation of a product (group of products) which will be offered in another segment of the market. In this case we are talking about penetration of new markets and undertaking of activities which before did not fall into the scope of the company’s profile.
Marketing professionals would tell us that in order for a company to choose its appropriate diversification path it is necessary to conduct market research which would determine the intrinsic potential of the company and the external circumstances that would match. Afterwards the company examines the results of this research by taking into consideration its own priorities (goals) and makes the decision regarding diversification. In the event that the company decides to diversify a business plan will be developed which will include estimates of costs, profit expectations, period of capital recoupment, time-periods for realization of diversification stages, controlling indicators as well as other important estimates.
Coming back to our initial task – diversification of the economy, tell us, please, how does it differ from the company’s diversification strategy?
In principle, the only differences are the scale of the analysis (system of markets) and additional capacity of the government to support realization of efficient projects not only in the economic but also in the social sphere.
How do you envision the conduct of the marketing research of a country with the goal of diversifying its economy?
It is understood that in current times of crisis, all undertakings should be subjected to a strict and balanced analysis so that not a “tiyn” (cent) is wasted. It is obvious that without the conduct of a global marketing research we lack the necessary information on the diversification possibilities in economy, which would reflect the overall situation in the country including the consequences of the financial crisis. It is also clear that this research should be conducted by a high-profile firm in the marketing industry. This task cannot be delegated to ministries or other governmental organs for various reasons, including those due to which organizations conduct external audits. The research that is to be conducted should involve a complete systematic analysis of the markets of the economy and outline those which are characterized by unsatisfied demand or the activity in which presents strictly economic interests.
It is possible that the marketing company would be chosen through a tender method. Upon completion of the marketing research results should be presented to the Government of Kazakhstan which will make the decision on the further use of this research.
With the results of the research it might be possible to construct a map outlining the territories of markets experiencing unsatisfied demand for specific types of goods (services) or insufficient business activity. Consequently, taking into consideration the strategic priorities of the government we would be able to analyze those segments and take appropriate decisions on the initiation of further actions with respect to those segments.
How and on what terms?
There are various possibilities ranging from 100% participation of the government to 100% participation of private parties with established stimulatory measures of state support, and including options of mixed state – private party partnership where associations of entrepreneurs would play an important role.
By applying the “best practice” principle and conducting a global marketing research before implementing any kind of modernization measure we will be able to competitively diversify the economy, fill the “gaps” of various market segments, create new employment opportunities, create new objects subject to taxes and contribute to the realization of the import-substitution policy, formation of the middle class, strengthening of small and medium enterprises. A number of other economic, political and social benefits would ensue.
In our opinion, specifically this approach would render the systemic socially-responsible diversification of the economy of Kazakhstan possible, by providing a supporting element for coming out of the crisis and creating new competitive advantages of our new economy, which will play a key role in the future, including during Kazakhstan’s accession to the WTO.