GLOBAL MARKET ENVIRONMENT.
The principal components of the international marketing environment include cultural, political, legal, commercial, and economic forces. Each of these forces represents informational input that must enter into the strategy formulation process.
CULTURE
Refers to learned behavior over time, passed on from generation to generation. This behavior manifests itself in the form of social structure, habits, faith, customs, rituals and religion, each of which tends to affect individual lifestyles, which in turn shape consumption patterns in the marketplace. They buy largely culturally determined.
POLITICS
Although the degree of intervention varies across countries, developments in developing contries perhaps represent situations where government policies are most extreme.
Positive answers to the following questions signal political troubles for a foreign marketer:
- Is the supply of the product ever subjet to important political debates? (sugar, salt, gasoline, public utilities, medicines, foodstuff).
- Do othe industries depend upon the production of the product? (cement, power, machine tools, construction machinery, steel).
- Is the product considered socially or economically essencial? (key drogs, laboratory equipment, medicines).
- Is the product essential to agricultural industries? (farm tools and machinery, crops, fertilizers, seed).
- Does the product affect national defense capabilities? (transportation industry, communications).
- Does the product require important components that would be available from local sources and that otherwise would not be used as effectivelly? (labor, skill, materials).
- Is there competition or is it likely from local manufacturers in the near future? (small, law-investment manufacturing).
- Does the product relate to channels of mass communication media? (newsprint, radio equipment).
- Is the product primarily a service?
- Does the use of the product, or its design, rest upon some legal requirements?
- Is the product potentially dangerous to the user ? ( explosives, drugs).
- Does the product induce a net drain on scarce foreign exchange?.
LEGAL ASPECTS.
Despite the best intentions, differences may rasonably arise between parties doing business. What recourse exist for the resolution of differences and whose laws will apply are of vital concern to global marketers. Although there is no simple solution to such a complex problem, it is important that marketers anticipate areas where disputes are likely to arise and establish beforehand agreement on the means to use and which country will have jurisdiction in the resolution of differences. Legal difficulties in marketing are most prevalent regarding the following issues:
- Rules of competition about:
- collusion
- discrimination against certain buyers
- promotional methods
- variable pricing
- exclusive territory agreement
- Retail price maintenance laws.
- Cancellation of distributor or wholesaler agreements.
- Product quality laws and controls.
- Packaging lwas.
- Warranty and after-sales exposure.
- Price controls and limitations on markups or markdowns.
- Patents, trademarks and copyright laws and practices.
Needless to say, the marketer in conjunction with legal counsel should probe these areas and establish with the buyer varios contingencies prior to the making of commitments.
COMERCIAL PRACTICES:
An International marketer must be thoroughly familiar with the business customs and practices in effect in overseas markets. Although some evidence suggests that business traditions in a country may undergo a change as a result of dealing with foreing corporations, such transformations are long-term processes. Thus, Local customs and practices must be researched and adhered ti in order to gain the confidence and support of local buyers, channel intermediaries, and other business operatives. The specific customs and practices of a country may be studied with reference to the following factors:
Business Structure
Size
Ownership
Various business publics
Sources and level of autority
Top management decision making
Decentralized decision making
Committee decison making
Management Attitudes and Behavior
Personal backgroud.
Business status
Objectives and aspirations
Security and mobility
Personal Life
Social acceptance
Advancement
Power
Patterns of Competition
Mode of Doing Business
Level of Contact
Communications emphasis
Formality and Tempo
Business ethics
Negotiation emphasis
ECONOMIC CLIMATE.
Only a small percentage of people in the world approach the standard of living experienced in the United States and in other advanced industrialized countries. The level of economic development in various countries can be explained and described through a number of measures. One common measure used to rank nations economically is per capita GNP.
According to Rostow, the countries of the world can be grouped into the following stages of economic development:
- The traditional
- The precondition for take-off
- The take-off
- The drive to maturity
- Mass Consumption.
Most African, Asian and Latin American Countries would be categorized as underdeveloped, having lower living standards and limited discretionary income. The amount of work required to earn enough to purchase a product varies greatly among different countries. For example, to buy one kilogram of sugar, a person in the United States needs to work a little over five minutes; in Greece it takes 53 minutes of labor to earn an equivalent amount. In many African and Asian Countries the effort needed to buy a kilogram of sugar and for that matter, other similar products is even higher.
Claudia Tatiana Palacio Vasco
Business administrator.
International Marketing Specialist
TP - 07362 Ministry of Economic Development
Freelance Consultant Adviser
