Chapter 6: Consumer, Industrial, and Government Markets Flashcards
Global consumer
An individual or an organizational buyer that exhibits similar needs and tastes worldwide
Emergence of global consumer coincides with two important driving trends:
- Globalization
- Technological developments in information and communications
Globalization
Characterized by a combination of falling trade barriers and the industrialization and modernization of nations worldwide
Technological developments in information and communications
Transportation and global media
Global market segments
Groupings of consumers that exist in multiple countries and display similar characteristics regarding preferences and consumption of specific product or service categories.
Individual global consumers
in some industries (e.g., furniture, home appliances, office supplies, automobiles, consumer electronics, etc.)
But still specialized in some other industries (e.g., food, books, music, clothing styles)
Influences on the global consumer
- Situational Factors
- Economic Status
- Technology Level
- Personal Motives
- Culture
- Social Factors
The ability to purchase goods and services is strongly influenced by…
Income level
Why do emerging markets represent promising market opportunities?
Because emerging markets have rapidly rising incomes
What are income levels related to?
The size of the middle class.
What is the economic status also related to?
To the occupation
Technology
Refers to knowledge and usage of tools, machines, techniques, or methods of an organization applied to solving problems or performing particular functions.
What is the technology level influenced by?
The nature of education systems in individual countries.
The hierarchy of needs (from bottom to tip)
- Psychological needs
- Safety needs
- Love and belonging needs
- Esteem needs
- Self-actualization needs
How is the hierarchy of needs relevant to international marketing?
- Need levels vary worldwide as a function of economic status, technology level, and other factors
Worldwide, people do not consistently follow Maslow’s hierarchy of needs
Culture
Integrated system of learned behavior patterns that distinguish members of a society
Norms
Accepted behaviors within a society or group.
They may be explicit or implicit and define the rules of behavior regarding interactions with others.
How do norms vary substantially from country to country?
E.g., Luxury goods market in China and Japan
E.g., emphasis on sustainability in Europe
What influences consumer behavior?
Family and social groups
- In Asia, family members exert considerable influence on the consumption patterns of individuals
Situational factors
Environmental or locational conditions that affect how consumers behave
What is an example of situational factors?
Physical surroundings
Physical surroundings
Include geographical location and climate.
- E.g., store locations in North America are influenced by the tendency of consumers to drive to shopping destinations, while in Europe and Japan stores are more often located at sites well served by public transportation
Individual-difference psychological factors
- Country of origin
- Consumer ethnocentrism
- World mindedness
- National identity strength
- Animosity
The industrial buyer
- Purchases raw materials, parts, components, and supplies in order to produce other products or run a business.
- Buying is performed by professional purchasing managers who may buy enormous quantities of goods
- Strongly influenced by globalization
Two important concepts of the industrial buyer
- Derived demand
- Cost-performance
Derived demand
Demand for raw materials, parts, and other inputs that depend on demand for some other good
Cost-performance
Expected performance of a product relative to the cost to buy and use it
The government buyer
Governments are important targets for sales of goods and services
Government expenditure
15% of GDP in advanced economies, and 20% of GDP in the developing economies.
The government buyer: Challenges
negotiations, regulations limiting purchases to domestic producers.
COO challenges
- Marketing research
- When COO image is negative, try to conceal the national origin or position the offerings as made in the targeted country.
- Offer products with superior quality.
- Offer products at a relatively low price.
- Have products distributed by well-respected channels.
What is increasingly harder to determine about a product?
Where a product is made
What are the three levels of the global consumer?
- Individual-level characteristics
- Nation level factors
- Supranational factors
Nation level factors
- Technology and infrastructure
- Political and legal environment
- Cultural environment
- Economic environment
Supranational factors
- Trade institutions and policy
- Information and communications technologies
- Globalization
What does the emergence of the global consumer coincide with?
Two important driving trends:
- globalization
- advancing information and communications technologies
Globalization (2)
Refers to the growing interconnectedness of nations, the organization of life on a global scale, and the consolidation of world society.
“World culture”
Is marked by the growing interconnectedness of varied local cultures or the appearance of a relatively homogeneous, global culture
What has played a major role in the emergence of the global consumer?
International mass media (primarily television, movies, and the Internet)
Various product categories have become signs of global cosmopolitanism and modernity, such as…
Air conditioners, automobiles, consumer electronics, and hamburgers.
How do many firms cut costs?
By minimizing the variety of parts, components, and other inputs used to produce finished products and services.
What does using standardized parts for a product result in?
Economies of scale and the ability to minimize variety in factory inventories.
What do global customers seek to do in business-to-business markets?
Centralize and standardize their purchasing of raw materials, parts, components, and finished goods.
In each country, the existence of a consumer culture is characterized by:
1) emphasis on marketing-based exchange relationships
2) a large proportion of the population achieving an improved standard of living
3) a perception of consumption as an acceptable, and even desirable, activity
4) level and quality of consumption as an important criterion for judging others.
In international marketing, demand for certain product categories remains…
relatively specialized, requiring adaptation to nation-level needs and tastes.
Goods and services that depend on language tend to…
remain relatively local
What are some standardized items?
- Automobiles
- Consumer electronics
- Furniture
- Home appliance
- Office supplies and furnishing
- Industrial and scientific equipment
- Most types of products and services purchased by firms and governments.
How does the emergence of global consumers facilitate companies?
Facilitates companies’ ability to target buyers worldwide with very similar products and services.
Economic status
The ability to purchase goods and services is strongly influenced by income level.
Comparisons can be based on the level of each nation’s per-capita gross domestic product (GDP).
How much do people earn per year in the highest, middle, and lowest income categories?
- Highest income category: $34,000
- Middle income category: $13,000
- Lowest income category: $5,000
Why do firms normally devise novel business strategies in developing markets?
infrastructure is often very poor in developing markets. Consequently, firms usually must devise novel business strategies, which usually include offering low-cost products via innovative marketing communications and distribution approaches.
What does high income at the individual and corporate level imply?
A superior ability to purchase products and services.
What does the size of the middle class reflect?
Reflects how wealth is distributed.
Growing convergence of income levels has coincided with…
the emergence of consumers with similar tastes around the world.
As consumers attain higher levels of affluence, they want to buy more, and they increasingly aspire for the same types of products and services. Mass media expose consumers in less developed economies to the lifestyles of people in Europe, North America, and other advanced economies. Such exposure triggers growing desire for many of the same types of goods and promote the emergence of a consumer class with similar needs and tastes.
Advanced technologies are characteristic of…
economically developed nations.
What happens in the absence of advanced technologies?
A nation’s productivity level and living standards are relatively limited. People in poor countries usually have little access to advanced technologies or knowledge of how to use such tools. Many are employed in subsistence farming or other
low-value-adding activities. Their ability to work in most industrial fields, and resultant prospects for earning a good living, is limited.
Motive
An internal force that orients a person’s activities toward satisfying a need or achieving a goal.
What does Maslow’s hierarchy of needs suggest?
That people are motivated to fulfill basic needs before moving on to other needs, all of which motivate ultimate behavior.
Who came up with the hierarchy of needs?
Abraham Maslow
Physiological needs
describe the needs vital to survival, such as the need for food, water, and sleep. All subsequent needs are secondary until physiological needs are met.
Safety needs
refer to people’s need for safety and security. They include the desire for steady employment, health care, safe neighborhoods, and shelter from the environment.
Love and belonging needs
are basic to everyone and represent the desire for friendships, romantic attachments, and families, fulfilling a need for acceptance and companionship.
Esteem needs
are sought once the first three needs have been met. Esteem needs describe the desire for objects and activities that enhance self-esteem, personal worth, social recognition, and accomplishment.
Self-actualization needs
represent the highest level in the hierarchy of needs and refer to the desire for personal growth and the ability to achieve one’s full potential. Most people worldwide tend to neglect self-actualization because they are so occupied with achieving the four prior needs.
Two points about the hierarchy of needs are especially relevant to international marketing.
First, need levels vary worldwide as a function of economic status, technology level, and other factors. Most countries are characterized by substantial poverty, in which the focus is on satisfying physiological and safety needs.
Second, worldwide, people do not consistently follow Maslow’s hierarchy of needs. In developing economies, for example, people may forgo meeting some physiological needs (such as eating three meals a day) or safety needs (such as living in a safe neighborhood) in order to purchase higher-level products such as cell phones and automobiles.
