© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted...

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Chapter 4

The EconomicEnvironment


Exhibit 4.1 - The Global Economy


Market Characteristics

• Population– Population figures can be classified to show specific

characteristics of their respective markets.

–

– A household describes all the persons, both related and unrelated, who occupy a housing unit.

–


Exhibit 4.3 - World Economic Pyramid



• Income–

– Per capita GDP is often used as a primary indicator for evaluating purchasing power.

–



• Income– Income figures are useful in the initial screening of

markets; however, in product-specific cases, income may not play a major role.

–



• Consumption patterns– Engel’s laws -

– Product saturation or diffusion provides information on the percentage of households in a market that own a particular product.



• Consumption patterns–

– Inflation affects the buying ability of both industrial customers and consumers, and also introduces uncertainty into both the marketer’s planning process and consumers’ buying habits.



• Infrastructure–

– Communication systems for marketing include telephones, computers, broadcast media, print media, internet, and wireless technology.

–


Impact of the Economic Environment on Social Development

• Factors impeding economic growth:–

–

–

–

–

–


• Physical Quality of Life Index (PQLI)–

–



• Emotional well-being may be determined by:–

–

–

–



Exhibit 4.9 - Forms of Economic Integration in Regional Markets


Levels of Economic Integration

• Free trade area• • Common market• • European integration• • Other economic alliances



• Free trade area–

– Each country is free to set its own tariff and quota barriers against nonmember countries.

–



• Customs union–

– Establishes a common trade policy with respect to nonmembers, which takes the form of a common external tariff, whereby imports from nonmembers are subject to the same tariff when sold to any member country.



• Common market area– Covers the exchange of goods and services, prohibits

duties in exports and imports between members, and adopts a common external tariff with respect to nonmembers.

–

– Abolishes restrictions on immigration and cross-border investment.

–



• Economic union–

– Harmonizes taxation, government spending, and monetary policies.

–



• European integration– Results in economic growth; sources of growth being:

• •

•

– Operations from one country can be freely expanded to other countries.

– There is a “________ ______” fear.


Exhibit 4.10 - Proposed Company Responses to European Integration



• North American integration–

–

– The ratification of the North American Free Trade Agreement (NAFTA) created the world’s largest free market, with 450 million consumers and a total output of $15.7 trillion.



• North American integration–

–


Regional Economic Integration

• Other economic alliances–

–

–


Exhibit 4.11 - Major Regional Trade Agreements


Regional Economic Integration

• Economic integration and the international marketer– Regional economic integration creates opportunities

and potential problems for the international marketer.

– Decisions regarding integrating markets must be assessed from four different perspectives:

• • • •


Emerging Markets

• Emerging markets -

• Strategies adopted by marketers to thrive in emerging markets:– – – –


Developing Markets

• Five elements of success required for an international marketer to take advantage of and thrive in developing markets.–

–

–

–

–

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted...

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