lecture 5 - global economic environment Flashcards
(45 cards)
standardiation in international marketing
definition
in marketing means using uniform marketing practices, strategies and marketing mix across different countires or regions without any modifications
standardiation in international marketing
key points
- counter approach to adaptation
- where companies modify their practices to fit the local markets
standardiation in international marketing
benefits
- economies of scale; reduced costs in product design, manufacturing and marketing
- uniform global brand image
- simplified decision making and faster time to market
standardiation in international marketing
some challenges
- Local resistance ; standard products might not meet specific local preferences or cultural nuances
- Regulatory issues; different countries can have varyingregulations that a standardized productmight not meet
- Lack of flexibility; a one size fits all approach might make it challenging to address market specefic crisis or opps
Potential backlash; perceived neglect of local traditions or needs can result in backlash against the brand
localization in international marketing
definition
customizing products and marketing strategies to fit local market conditions and consumer preferences
localization in international marketing
key elements
- Product; adjustments features, design and functions to local needs and tastes
- Price; considering local purchasing power, competitors and market demand
- Place; local distribution strategies, retail envrionemnts and supply chain
Promotion; tailored advertising and sales promotions that resonate with local culture
Localizations in international marketing
benefits
- enhanced customer appeal and satisfaction
- competitive advantage in local markets
- reduced risks of cultural insensitivity
Localizations in international marketing
challenges
- increased costs and complexities in design and production
- need for extensive market research
- balancing global brand consistency with local relevance
global economic environment
- level of economic development of the target market (host country)
- industrial structure - possibility to do business in the target country
- level of income - possibility tto get consumers in the target country
- international economic structure
level of economic development of the target market
industrial structure
economic development results from 1 of 3 types of economic activity;
1. primary - agricutlutfe and extractive processes eg fishing, mining
2. secondary - manfacturing activities - starts with processing tthe output of primary activties
3. tertiary - services - tourism, insurance, healthcare
- based on this countires are classified into; less developed, newly industrilised, advanced industrilised and post industrialised/ knowledge economies
level of economic development of the target market
level of income - market potential
market potential (current and future demand) is defined through answers to questions about population;
- how big is it and what rate is it growing
- where is it located and how dense is it
- what is its average age and distribution
- what is its diposable income and distribution
the answers influences companys marketing strategy
many attempts made to classfiy economies based on level of economic development; Hollensen, world bank, IMF
level of economic development
- criteri; GDP, GNP per capita, level of industrialisation
- the broadcast measure of economic development is gross national productGNP
- GNP = GDP + incomes generated by export
- GNI (gross national income) can be regarded as same as GNP
- a countures GNP per capita simply itts GNP divided by its population - a nationa imcome per person
- gdp also cal per capita
GNP
income generated by domestic production + the countrys international acttivites during one year period
GDP
gross domestic product
value of all goods and services produced by the domestic economy over one year period
classification based on eco devolp (hollensen); less devl, newly and advanced industrilized
- less developed countires LDCs main features
-low GDP per capita less than 3.000 USD
- relaince on agric
- limited amount of manufac activity
- single - product dependence eg cuba sugar and often single trading partner
- fluctuating commondity prices increases volatiliy and vulnerability
- forign invesottrs are reluctant - depend on world aid programmes
- poor and fragmented infrastructure ( transport, communication,education,healthcare)
- slow moving and bureaucratic public sector
classification based on eco devolp (hollensen); less devl, newly and advanced industrilized
- newly industrialised countires NICS
- eg south east asian tigers; singpore, south korea; south american NICs; brazil, mexico
- emerging industrial base, capable for exporting
- considerable development of infrastructure but should continue to respond to domestic/ foreign demand
classification based on eco devolp (hollensen); less devl, newly and advanced industrilized
- advanced industr countries - emergent and post industrial
- eg north and west eu, usa
- considerable GDP per cap
- wide industrial base + development of services sector
- substantial invesments in infrasture
- N.B some of them have well developed agric industry
world bank classification GNI per capita
refers to tot income of coutry divided by population. key indicator of coutrys eco well being
- world bank updates these incomes thresholds annuallu to accountt for inflation and changes in global eco
- essential to note GNI per cap doesnt capture income distribution within a country and dispartities can exist in high income nations
- low income (dependent) economies
- afghan, etthipia, uganda
- high birth rate +2.1%per ann
- high infant mortality
- low life expentancy men 57
- low literacy men 64%
- limited industrialisation - emphasies agric and subsistence farming
- investments in extractive processes; mining, logging
- poor infastructuree; road, rail, air, shipping
- state the main purchaser; public utilities with emphasis on power generation
- no market economy; consumers have no discrntionary income after having met lifes necessities - food,water,shelter
lower - middle (seekers) economies
- some very large populations (mean growth1.2%); india, egypt, nigeria
- educated and well mottivated human resources; a competitive adv in producing mature, standarised manufactured products; tools, toys, textiles, electronics
- possess few internationally- known domestic brands
- infastructture a high priority; electricty, railways, paved, roads, airports
- consumer markets; cars, electronic, food and drink expanding rapidbly in income subgroups; usually high PDI; economic elite enjoying high per cap incomes
- upper-middle (industrailsing) economies
- high income acheived through rapid industrialisation; china, brazil, malaysia, turkey etc
- relatively low population growth 0.9%
- high adult literacy 93% and strong educational systems
- % engaged in agric falls sharply as people move to city hoping for better standard of living
- wages are rising but still signigicanlty loweer than in advanced economies
- beginnigns of mass market for consumer products
- innovative strong local companies eg Lenovo computers in china, proton cars in malaysia
- high income (developed) countries
- sustained growth through many decades
- low population growth 0.7%
- economic restructuring - manufacturing moves tto developing countries
- service sectors becomes dominant esp finance
- high discretionary income, high acess to credit, mature consumer markett whoch highly segmented and very competitive. insensive networks of marketing channels
- decline of high street with move to out of town retailing
world economic outlook
- classification proposed by international monetary fund IMF
- the most recently published data
- incompete anaylysis GDP NOT GNP
implications of world economic outlook for marketing
how does eco dev level of the target country influence glob markof company
- what markets to focus on
dynamic nature of economic development;
- eco dev dynamic its changes over time
- countries in same income categories can differ signif in other aspects
- recommendation; focus on growth, not just current levels
- insteas of soley considering current income levels, look at the growth of gdp or gnp
- a forward looking approach takes into account nations potential not just current status
IMF lastest annual GDP growth data;
- consider newest data from IMF on annual GDP growth
- recentt trends; due to impact covid and lockdown most countries experinced economies downtturns
- positive shift; the situation is improving sign of recovery in maj of countires
