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global marketing sem 1 > lecture 5 - global economic environment > Flashcards

lecture 5 - global economic environment Flashcards

1
Q

standardiation in international marketing
definition

A

in marketing means using uniform marketing practices, strategies and marketing mix across different countires or regions without any modifications

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2
Q

standardiation in international marketing
key points

A
  • counter approach to adaptation
  • where companies modify their practices to fit the local markets
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3
Q

standardiation in international marketing
benefits

A
  • economies of scale; reduced costs in product design, manufacturing and marketing
  • uniform global brand image
  • simplified decision making and faster time to market
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4
Q

standardiation in international marketing
some challenges

A
  • 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
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5
Q

localization in international marketing
definition

A

customizing products and marketing strategies to fit local market conditions and consumer preferences

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6
Q

localization in international marketing
key elements

A
  • 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
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7
Q

Localizations in international marketing
benefits

A
  • enhanced customer appeal and satisfaction
  • competitive advantage in local markets
  • reduced risks of cultural insensitivity
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8
Q

Localizations in international marketing
challenges

A
  • increased costs and complexities in design and production
  • need for extensive market research
  • balancing global brand consistency with local relevance
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9
Q

global economic environment

A
  1. level of economic development of the target market (host country)
  2. industrial structure - possibility to do business in the target country
  3. level of income - possibility tto get consumers in the target country
  4. international economic structure
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10
Q

level of economic development of the target market
industrial structure

A

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
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11
Q

level of economic development of the target market
level of income - market potential

A

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

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12
Q

level of economic development

A
  • 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
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13
Q

GNP

A

income generated by domestic production + the countrys international acttivites during one year period

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14
Q

GDP

A

gross domestic product
value of all goods and services produced by the domestic economy over one year period

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15
Q

classification based on eco devolp (hollensen); less devl, newly and advanced industrilized

  1. less developed countires LDCs main features
A

-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

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16
Q

classification based on eco devolp (hollensen); less devl, newly and advanced industrilized

  1. newly industrialised countires NICS
A
  • 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
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17
Q

classification based on eco devolp (hollensen); less devl, newly and advanced industrilized

  1. advanced industr countries - emergent and post industrial
A
  • 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
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18
Q

world bank classification GNI per capita

A

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

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19
Q
  1. low income (dependent) economies
A
  • 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
20
Q

lower - middle (seekers) economies

A
  • 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
21
Q
  1. upper-middle (industrailsing) economies
A
  • 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
22
Q
  1. high income (developed) countries
A
  • 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
23
Q

world economic outlook

A
  • classification proposed by international monetary fund IMF
  • the most recently published data
  • incompete anaylysis GDP NOT GNP
24
Q

implications of world economic outlook for marketing
how does eco dev level of the target country influence glob markof company

  1. what markets to focus on
A

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

25
Q

conclusion on what markets to focus on

A
  • selecting target markets requires a nuanced approach
  • focus on both economic development and growth potential
  • stay updated with lastest data and treends esp in dynamic global landscape
  • its not just about most econ developed
  • eco develop dyniamic changes over time and countires within same income categories differ
  • look at GDP/GNP growtth not just current levels
  • IMFs lastest data most countirs faced eco downturn due to covid but recovery
  • choose markets wisely consider both current status and growth potential
26
Q

BRICS; the new growth markets of the world
similarities

A

og BRIC (goldman sachs2001) emerging markets brazil, russia, india,china

similarities
- big countries 42% global pop
- increasing wealth 17% global GNI, 9.7% annual growth 2006-10
- new rich as the economic power - rising no of billionaires

27
Q

BRICS
differences

A
  • china and india focus on manufacture
  • russia and brazil export natural resources argi commondities, oil reserves
  • china invests alot in infasturature projects
  • russia has ageing pop other coutires - demographic boom
28
Q

BRICS
implications

A
  • further growth might decrease poverty further
  • the emerging middle class should have an emormous influence - eg on energy consumption and demand for consumer goods
  • increasing influence pf these cpuntriees on global decision making - relate this to global distribution of power - an effect of political globalisation
29
Q

BRICS expansions

A
  1. BRICS expansion; 6 new members invited - argentia, eygpt, ethiopia, iran, saudi, UAE
  2. objective; strengthen the voice of deveeloping nations, esp in south
  3. interest and applications; over 40 coutries expressed inteerest, 23 applied
  4. geopolitical impact; middle east centric additions may reshape policies and alliances
  5. energy - centric focus; consideration for enrgy pricing and reducing oil reelated risks
  6. currency diversification; trade in local currencies to reduce reliance on the US dollar
  7. global governance; potential for BRICS tto influence global governance reform
  8. future poltical role; BRICS could play more active poltical role in the future
  9. changing dynamics; reflects shifting global poltics and econmics
  10. BRICS evolution; ongoing changes may reshape global trade and influnce
30
Q
  1. what aboutt low incomes countries? do they have market potential
A

should companies also strive to extend to poorer countires and treat them as attractice export markets

  • poverty as widespread reality of the world- bottomof the pyramid BOP markets;
  • 4 regions rural and urban; africa 12.3% asia 72% eastern eu 6.4% latin am and carib 9.1%
  • catering to BOP markets, companies create market opps of substantial value and this should be reegular part of core business
  • basic assumption; poor consumers are aware of value but lack of income represents and obstacle for purchasing products
31
Q

why companies should cooperate with govt, NGOs, communties and finanical institutions

A
  1. create buying power
  2. shape aspirations through customer education
  3. improve access through better distribution and communication system
  4. tailor local solutions
32
Q

how to reach customers in poor markets

A
  1. deep cost management - focus on the core value
  2. deep benefit management - focus on specific consumer needs
33
Q
  1. international economic structure
A
  • influence of exchange rates on internationsl business actitvies
  • international dependence of nations
  • influence of regional economic integrations
34
Q
  1. influencee exchange rate on internation business activites
    def
A

exchange rate how much of one curreency for certain amount of other

35
Q
  1. influencee exchange rate on internation business activites

the law of onee pric

A

identical product must have identical price (in common - denominator currency ) in all countries

36
Q
  1. influencee exchange rate on internation business activites

the economists bigmac index

A

theory of purchasing poweer parity
- in the loong run exchange rates should adjust to equal the price of basket of goods and services in different countires
- the index compares pric eof bigmac in diff countires
- the assumption is that the same product should cost roughly same when converted into common currency
- if its doesntt suggest the local currency is overvlaued or under
- if bigmac more expensive in one coutry than US local currency overvlued

37
Q

impact on a strong currency on businesses

A

reefers to situation where a countrys currency has a high exchange rate valuee compared to other currerncies, takes more units of foreign currency to purchase one unit of the strong curreency
- import cheaper; business benefitt from lower cost import due to strong currency
- export pricier; strong currency exports costiler, impact businesses rlancee on oversea sales
- tourism costt; expensive for tourists affect sector
- acquisition opps; favourable for companies to acquiree assets in coutires weaker currencies
- cost competitivdness; businesses in strong currency countires struggle with cost competitiveness
- interest rates and capital flows; ceentral bank actions linked to currency strength influence investment and capital flows

(make more flashcards)

38
Q
  1. international dependence of nations
A

world trade increased over 20 fold since 1950 fuelled by the continued opening of markets around th world

39
Q

why has world trade increases

A

increasingly complex division of labour associated with growth of totla outtput and trade, rise of capitalsim and of the complexity of industrialised processes

40
Q

the growth of world trade

A
  • the principle of free trade has led to tthee building of market interdependence eg manufacturing has moved to developing nations with lower unit costts to be replaced by higher value addedd services
  • services eg banking make up over 50%of national income in developed countires
  • forign dirct investment another indication of global integration have increased
  • invisible exports have become signifcant too serivces like higher educaion transfers from workers abroad and income earned on overseas investment
41
Q

influence of regional economic integrations

A
  • economic integration= trade unification between countries by thee partial or full abolishing of barriers; lower prices for consumers - increasing trade
  • in early 20th c economic intergration was 10% today 50%
  • main aim; access and moree efficient use of resources access to new consumers
42
Q
  1. free trade area
A

eg USMCA, EU
- the least restrictiv and loosest form of economic integration
- all barriers within - removed, but members keep own barriers for non-members

43
Q
  1. cusoms union
A

eg benelux
- common external trade policy - barriers to nonmembers

44
Q
  1. common market
A

eg central american nations
- in addition factors of production are mobile among members (labour, capital, technology) - single european act 1987

45
Q
  1. economic union
A

eg EU
common economic policies
- maastricht treaty 1993

global marketing sem 1 (6 decks)

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