Download GLOBAL AND DOMESTIC ECONOMY (MKTG 101)

GLOBAL AND DOMESTIC ECONOMY (MKTG 101)
ECONOMIC SYSTEMS AND MARKETING

The underlying foundation for modern life and efficient marketing which an
area must possess in order not to be considered underdeveloped is known by
the term infrastructure.

An economic system in which government planners determine production
levels is known as a planned economic system.

In a market-directed economic system consumers decide what is to be
produced and by whom through their dollar votes. Survival, profit,
survival, and growth are not guaranteed for producers; prices change
according to supply and demand, and consumers have freedom of choice.

The role of price in a market-directed economy is to: 1) allocate resources
and distribute income according to consumer preferences; 2) serve as a
rough measure of the social importance of consumer goods and
services; and coordinate the economic activity of many people and
institutions.

Government’s role in a market-directed economic system is to set rules to
protect individual rights and freedom, supervise the economic system, and
provide things such as mass transportation and highways, national defense,
police and fire protection, and public health services. It is not government’s
role to determine prices and thereby allocate resources and distribute
income.

An effective MACRO-marketing system is necessary for economic
development. It is not the result of greater economic development or the
only cause of economic development.

Marketing could NOT take place without two or more parties who each
have something they want to exchange for something else.

A "market" is a group of buyers who are willing to exchange something
of value with sellers offering various goods and services.

Exchanges between buyers and sellers are simplified by the use of money
as a medium of exchange, use of middlemen, and use of a central
market as a trading location.
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
On a more MICRO basis, marketing helps create economic utility: 1)
possession utility gives a customer the right to use a product; time utility
means having the product available when the customer wants it; form utility is
provided by making something out of something else; and place utility means
making the product conveniently available to the buyer—NOT wherever it
can be done most efficiently.
GLOBAL MARKETPLACE

In a pure subsistence economy, the family units in a country make all the
products they consume.

In advanced economies mass production is a necessary--but not the only
condition--for satisfying consumer needs. Creating time, place, and
possession utilities is more complex, exchange is facilitated by consistencies
in quantity and assortment, and both supply and demand tend not to be
homogeneous.

The countries of Western Europe may be classified as having developed
economically to the stage of industrial nations. They have passed being
barter economies, subsistence economies, or even newly-industrialized
states.

The U.S. is an attractive market for foreign marketers because of its large
population, relative political stability, and high level of discretionary
income. The downside is that it is not experiencing rapid population and
economic growth.

Some countries create barriers to international trade by instituting exchange
controls which requires firms exchanging currencies do so through the
central bank at its discretion.

When a group of nations agree to the free trade of goods among themselves
by abolishing tariffs and other trade restrictions, the nations have created a
free trade area.

To enter some foreign markets, companies may use foreign licensing. This
is a contractual agreement by which a domestic firm grants foreign marketers
the right to distribute a firm's merchandise or use its trademark, patent, or
process in a specified geographic area.
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
To enter foreign markets, a firm could use a global marketing strategy or a
multi-domestic marketing strategy. A standard marketing strategy that is
modified only minimally for use in each of the firm's foreign markets is a
global marketing strategy.

Use of a multi-domestic marketing strategy means that a firm customizes its
marketing decisions to effectively reach individual marketplaces.

Customizing marketing strategies for different international markets means
that the company pays attention to local preferences, produces products
tailored to target market needs, and uses promotions that appeal to
local tastes. This may mean that it cannot achieve lower production costs
per unit of product through economies of scale.
Assessment lecture notes 09-11-08.doc
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