Comment on the following statement: " A low per capita income will render the market useless"?

Question

int'l marketing college course

Answer 1

This statement is true only for luxuries that people with low income can't afford to buy.

But even the poorest countries have a thriving market for the basic necessities of life.

Answer 2

I presume they mean useless  as a group of consumers that can be convinced to buy a discretionary products because poor people  use their entire income to buy the necessities  of life. That is they are useless to you as a customer base.

Answer 3

A low per capita income means lower purchasing power or ;ower consumer spending. This limits the size of the market for each product and the market is generally for low priced, low value addition goods. Such a low size market with limited product absorption capacity and low size market potential is generally unattractive to international producers for locating plants in low per capita income countries for selling their products there. They can however sell their products  manufactured elsewhere on a mass scale elsewhere and part of the products can be sold on marginal cost pricing basis to low per capita income countries.

So for international; companies, low per capita income markets are genwerally unattractive and currently close to useless. But they would still explore these markets and enter them if they find that the growth rate of income in some low per capita income countries are likely to be steadily rising. International producers may start entering such markets early in a small way to gather foothold and be ready to benefit from faster growth in such markets.

Answer 4

A low per capita income will most certainly

not render the black market (for example) useless.

Markets exist and operate regardless.

In fact, the job market may improve when companies

(local and international) realize that it is affordable in

such areas to hire and retain employees.