Economic development, the process by which a country improves the well-being of its citizens through political or economic means, is influenced by a variety of factors, including marketing. The term is often confused with economic growth, which refers to an increase in the ability of an economy to produce goods or services over time. In fact, economic growth is only one important factor in the economic development of a region.
There are several factors that play a role in enhancing the economic development of a country, region or city, but most of these factors begin at the region’s economic base. This economic base refers to the positive money flow created when a region’s production of goods or services outpaces the local needs of the community in question. To create this surplus, a community could implement a variety of tactics, such as creating new jobs or encouraging new businesses to develop within the region. As a result of these economic improvements, the region as a whole begins to note economic growth, which, in turn, results in increased tax income that can be used to improve infrastructure and other government offerings.
If the community is home to a shoe factory, for example, the majority of the shoes produced in the factory would be exported outside the community as a surplus product. The jobs created by this factory will pay the wages of its workers, who will then use those wages to purchase products and services throughout the community, thereby enhancing the community’s economic base even further.
Marketing serves also as an economic driver in many ways, from job creation to influencing purchases of products and services. The process of marketing, which is the development of goods or services from conception to consumption, includes the coordination of four basic elements: development of a product, determination of a price, selection of a distribution plan and implementation of a promotional strategy. Each of these four steps directly influences the economy.
The process of bringing a new product to market can involve a number of steps, including market research and product design. Understanding customer needs, the nature of the product’s selling environment, product mock-ups and product designs could all result in increased job creation and an influx of spending from the developing company.
The marketing process involves more subtle connections between marketing tactics and a region’s economic development. Marketing uses advertising to inform consumers about their products, persuade buyers to purchase that product or remind customers that the product is available.
To return to the shoe factory example, consider the effects of advertising on the shoe company’s bottom line. A successful advertising campaign has the potential to improve the shoe company’s selling capacity, thus increasing the need for shoes. That means the local shoe factory will need to increase production, resulting in an increase in payable hours for its employees and possibly an increase in jobs at the factory.
Factory workers will gain more disposable income to spend at other businesses in the region. Increased spending will result in increased tax revenue that can be used to improve governmental agencies and other entities that depend on government support, like schools and hospitals.