Download Lesson 5.2 - Townview Education and Social Services

Lesson 5.2: Marketing in a Global Environment
Lesson Purpose:
Marketing is more than just advertising. Marketing is the creation and maintenance of
satisfying relationship. In other words, it’s a specialized form of communication in which
companies work together to provide both necessary and convenient products and services.
Marketing begins with the planning of a product or service and continues through the production,
distribution, promotion, and sale.
Lesson Objectives:
Research international consumer activity and prepare a feature and benefit analysis
for a variety of consumer products and services
Select international, consumer product, transportation, service and presentation
options
Select procurement procedures to accommodate the manufacturing and distribution
plan, for example: maquiladoras (twin plant operation)
Outline an effective foreign advertising campaign
Document the return on international marketing activities by providing a cost-benefit
analysis
Identify the issues affecting marketing in international trade
Identify advertising media used in foreign markets, for example: newspaper, radio,
television, Internet and magazine
Lesson Content:
(1)Marketing is more than just advertising. Marketing is the creation and maintenance
of satisfying relationship. In other words, it’s a specialized form of communication in which
companies work together to provide both necessary and convenient products and services.
Marketing begins with planning a product or service and continues through the production,
distribution, sale, and feedback. When marketing in an international environment, procedures
and methods might change but the marketing principles stay the same.
(2)What is marketing? According to Marketing by Burrow, marketing can be grouped
into seven functions: Product/Service Management, Distribution, Selling, MarketingInformation Management, Financing, Pricing, and Promotion.
(3)Product/service management is assisting in the design and development of precuts
and services that meet the needs of prospective customers. Sony used this function to create the
Video Walkman. Distribution is determining the best methods and procedures to use so
prospective customers can locate, obtain, and use the organization’s products and services. Hertz
is known for its unique distribution in the car rental service: It parks a car at the exit of an
airport terminal with the engine running, heated in the winter and cooled in the summer, with all
the paperwork ready for a customer’s signature inside. This greatly expedites the customer’s
departure from the airport in their rental vehicle.
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(4)The third function of marketing is selling, which is the direct, personal
communications with prospective customers to assess needs and satisfy those needs with
appropriate precuts and services. Many professional services firms like law and accounting
firms recognize the benefits of training its employees on personal selling in hopes of developing
new client bases. Following selling, marketing-information management is obtaining,
managing, and using market information to improve decision making and the performance of
marketing activities. Electronic scanners used at checkouts at many retail and grocery
establishments provide information on purchases so managers can instantly determine what is
purchased in order to keep the best assortment of products available for customers.
(5)The next marketing function is financing, which is budgeting for marketing activities,
obtaining the necessary funding, and providing financial assistance to customers to assist them
with purchasing the organization’s products and services. An example of financing in action is
the automobile industry, in which manufacturers like General Motors maintain their own
financing organization (GMAC) to make loans to consumers available at automobile dealerships.
Pricing is establishing and communicating the value of products and services to prospective
customers. For example, a bakery manager notices that customers aren’t purchasing certain
pastries; as part of the pricing function, she lowers the prices of these pastries and places a sign
in the front window advertising them.
(6)The final function of marketing is promotion. Promotion is communicating
information to prospective customers through advertising and other promotional methods to
encourage them to purchase the organization’s products and services. Businesses that sell
expensive products like oceanfront condominiums prepare high-quality videotapes that provide
information and promote products using audio and video messages. To promote efficiently, the
videotapes are sent to carefully selected customers to interest them in purchasing a condominium
through a unique type of promotion. Television, radio, billboards, and the Internet can all be
effective in promoting different products and services.
(7)So how does marketing fit in the global economy? Businesses go into international
trade for several reasons. Some do it out of necessity, because competition in their current
markets is very intense and sales and profits are decreasing. Others enter the international
market because they see foreign firms marketing within their domestic market. The last common
reason for global marketing is the increasing demand for products on a worldwide scale.
(8)As discussed in earlier lessons, companies can become involved in global marketing in
many different ways. From indirect exporting to direct exporting to direct foreign investment to
wholly owned subsidiaries, there are many ways to become involved in global trade. But there
are several kinds of market information a company must get before jumping into the competitive
waters of trade, including, Economic Environment, Consumer Characteristics, Culture and
Customs, Technology, and Political and Legal Structures.
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(9) An economic system is loosely defined as country’s plan for its services, goods
produced, and the exact way in which its economic plan is carried out. In general, there are three
major types of economic systems prevailing around the world. There are 4 types of economic
systems: Market economy, Command economy, Traditional economy, and Mixed economy.
(10) A market economy (free enterprise, capitalism) is an economic system in which
individuals own and operate the factors of production. The unfettered interaction of individuals
and companies in the marketplace determines how resources are allocated and goods are
distributed. Individuals choose how to invest their personal resources—what training to pursue,
what jobs to take, what goods or services to produce. And individuals decide what to consume.
Market economies aim to reduce or eliminate entirely subsidies for a particular industry, the predetermination of prices for different commodities, and the amount of regulation controlling
different industrial sectors. The absence of central planning is one of the major features of this
economic system. Market decisions are mainly dominated by supply and demand. The role of the
government in a market economy is to simply make sure that the market is stable enough to carry
out its economic activities properly.
(11) A command economy (socialism, communism) is an economic system in which the
government owns and operates the factors of production. The state decides how to use and
distribute resources. The government regulates prices and wages; it may even determine what
sorts of work individuals do. Socialism is a type of command economic system. Historically, the
government has assumed varying degrees of control over the economy in socialist countries. In
some, only major industries have been subjected to government management; in others, the
government has exercised far more extensive control over the economy.
(12) A traditional economy (Non-Industrialized, Agrarian societies) is an economic
system based upon customs and traditions. Economy is based upon agriculture and hunting.
Example of countries that practice this kind of economy are Chad, Haiti, and Rwanda.
(13) A mixed economy is an economic system that has features of both market and
command economies. Many economic decisions are made in the market by individuals. But the
government also plays a role in the allocation and distribution of resources. This system prevails
in many countries where neither the government nor the business entities control the economic
activities of that country - both sectors play an important role in the economic decision-making
of the country. In a mixed economy there is flexibility in some areas and government control in
others. Mixed economies include both capitalist and socialist economic policies and often arise
in societies that seek to balance a wide range of political and economic views.
(14)There are three stages of economic development: preindustrial, industrial, and
postindustrial. A preindustrial economy is based on agriculture and raw material development
through activities like mining, oil production and cutting timber. The standard of living of its
citizens is low, and manufacturing, distribution, and retail systems are in their beginning stage.
Leaders in a country at the preindustrial stage must recognize the importance of moving to the
next stage.
(15)At the next stage, the industrial economy, the primary business activity is
manufacturing products. The standard of living of its citizens is higher than in a preindustrial
economy, but unlike the preindustrial stage, raw materials remain within the country itself and
are converted into products; sometimes more raw materials are imported to keep up with
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expanding manufacturing plants. Sometimes the finished products are sold within the country
itself, other times they are returned to their original country’s market. An example of this is
maquiladoras, which are assembly plants in Mexico set up by foreign companies. At Ford
Motor Company’s maquiladoras, many of the raw materials not already found in Mexico are
imported into the plants, where Mexican workers convert the materials into automobile parts and
then assemble parts together to produce a finished product. These finished products,
automobiles, are then shipped back to the United States for retail sales.
(16)The last type of economy is the postindustrial economy, which is based on a mix of
industrial and consumer products and services produced and marketed using high-tech
equipment and methods and purchased and sold in the global economy. Most countries with this
type of economy have a high standard of living and have many international business
opportunities. Its citizens are very aware of products and services available from other countries,
and expect businesses in their own country to produce similar goods and services of comparable
quality at competitive prices. If domestic businesses cannot satisfy those needs and wants,
customers purchase them from companies in other countries. This is best illustrated in the
automobile and electronics industries, where consumers force companies to truly compete in a
global market.
(17)After locating a country with an economy appropriate for its needs, a company must
then gather market information. Included in this information gathering are consumer
characteristics, like demographic information. Demographic information includes age, income,
employment, and education. Businesses need to know where potential customers are located,
where they buy products, etc. to best market their products to those customers. After the get this
demographic information they take culture and customs into account. This is where
communication is crucial, because certain words have very different meanings in some cultures.
Another example is punctuality; in some countries being on time for an appointment is a sign of
respect; in other countries, being on time is unimportant.
(18)The final two market information needs are technology and political and legal
structure. Businesses cannot assume that the technology used in their home country is available
or used in other countries. Even basic technologies that have existed for many years might be
utilized differently in other countries. The best example is the metric system. Because it is used
throughout the world, the United States tried to convert to the metric system years ago. Though
the conversion was unsuccessful, more people in the U.S. now use the metric system, which
plays a significant part in measurement of parts, packages, containers, etc. traded on a global
scale.
(19)Perhaps the most significant factor effecting the success of international marketing is
the political and legal structure in a country. In the recent past, one of the major political
structures, communism, was rejected in many central European countries that were formerly part
of the Soviet Union. Those countries chose to reorganize their political structures into systems
employing more market driven principles. Political stability is important to businesses, because
without it ownership and operating procedures can be threatened. There are numerous examples
throughout the world of governments being overthrown and businesses owned by foreign
companies being destroyed or taken over by the new government. Countries develop laws to
regulate businesses, and many of these laws effect international businesses. As discussed in
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previous lessons, some of these laws protect domestic businesses from foreign competition with
tariffs and import quotas. Some countries provide subsidies, which are monies the government
give businesses to assist in the development and sale of its products.
(20)To develop the right marketing mix when expanding into international markets,
businesses need to consider the seven main functions of marketing: product/service
management, distribution, selling, marketing-information management, financing, pricing, and
promotion. When used in conjunction with the four major marketing information needs, these
functions can change significantly from country to country. However, to be successful
marketing products and services in a global economy, a company must properly research and
correctly implement all these things.
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