Income Distrubtion

What are the different income-distribution patterns? How does income distribution in the economies affect the marketing decision of the firms?

 The income-distribution patterns measures the degree of inequality in income. The term “income distribution” is a statistical concept. The income distribution arises from people’s decisions about work, saving, and investment as they interact through markets and are affected by the tax system of the country.

There are four types of industrial structures:

·         Subsistence economies.

·         Raw material exporting economies.

·         Industrializing economies.

·         Industrial economies.

The different income-distribution patterns are:

v  Very low income: The income of people are very low and they cannot afford expensive product such that the market will be very very low at that place.

v  Mostly low income: The income of most of the people are low and launching new things will create low market.

v  Very low, very high income: The GDP of the country is very low but most of the people afford expensive product.

v  Low, medium, very high income: The market of the particular product in country or society which include all the low, medium, and very high income people are not very high. The lower income people consume inexpensive product and high income people use expensive product. The medium class of people will enter on both market.

v  Mostly medium income. They start to buy new things and market will grow on this area

     In a global economy, marketers need to pay attention to the shifting income distribution in countries around the world, particularly in countries where affluence levels are rising. The greater the inequality between income of consumer it will affect the market more this is because due to the elasticity of demand. The lower income family only afford the cheaper product and in this area the firm should produce those cheaper thing that is affordable by those family to increase their market. The firm decision making process is highly effected by the income distribution of population of particular market. If we want to launch any new services or product we have to first analyze the income of people to decide whether these things are affordable by people or not. For example if a company want to launch the product that worth says 3 lakh then the company should target those area where the income of people are very high. They cannot launch it on low income area. Such that the market of any product is highly influence by income of people. Before making any decision the company will start survey to determine the income distribution of area then after if they found people will afford their services or product then they start to market their product. As we know if the income of people increase then the market will increase. People are able to buy expensive things and like to use brand product. In the very low incomes society launching expensive thing has only a small market as compare to the high income society. So I concluded that income distribution in the economies affect the marketing decision of the firms.