consumer goods, perhaps the most important factor influencing
the per capita (or 'per head') demand for a product in a
given country is the real disposable income per capita. 'Real
income' means the monetary value of income adjusted for inflation.
'Disposable income' nets out tax liabilities from the gross
income of individuals. Presumably, the higher the per capita
income in a particular market, the greater the demand for
(and the higher the price that can be charged for) goods
and services in that region. It is interesting to note how
eating habits change in response to rising incomes. The basic
trend in a country with rising incomes is towards increasing
consumption of packaged, convenience foods which save time
for the housewife and add variety to menus.
While the existing level of per capita income
gives an indication of the current size of a potential
market, the potential growth prospects for that market
should also be interesting (see Step 3). After all,
it will take some time to formulate and implement plans
to enter a market. Furthermore, given the often substantial
costs of commencing international operations of the company's
involvement in international business should be considered
a long-term commitment.
A variety of publications provide estimates
of current income levels in different countries and regions,
e.g. the United Nations' Statistical Yearbook, and The
Economist. There is, however, a growing tendency for published
income statistics to understate true per capita income
levels. This is due to the widespread phenomenon of unreported
economic transactions - even in industrialised countries.
In many cases, the existence of this so-called 'underground
economy' is motivated by the incentive to avoid paying
taxes, while in developing countries, an efficient mechanism
for the collection and processing of national income statistics
often does not exist.