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Chapter 21 North America NAFTA: North American Free Trade Agreement • Abolishes within 10 years tariffs on 99 percent of the goods traded between Mexico, Canada, and the United States • Removes most barriers on the cross-border flow of services, allowing financial institutions • Protect intellectual property • Removes restrictions on foreign direct investments between the three member countries, although special treatment protection • Allows each country to apply its own environmental standards, provided such standards have scientific basis United States of America Country Characteristics • Population: 267,954,764 (July 1997 est) • Land Area: 9,158,960 sq. km • Languages: English, Spanish • Literacy Rate: 97% • Religion: Protestants (56%), Roman Catholic (28%), Jewish (6%), other (4%), none (10%) • GDP: Purchasing power parity: $7.61 trillion (1996 est.) • GDP per capita: Purchasing power parity: $28,600 (1996) • GDP real growth rate: 2.4% (1996 est.) • Inflation rate: Consumer Price Index: 3 % (1996 est.) • The US has less than 5 percent of the world’s population and less than one-fourth of its gross domestic product • The world’s fastest growing markets are overseas - in Asia and Latin America • Foreign competitors of the U.S. companies are not only marketing in the U.S., but in third-party countries worldwide. • Many US companies-indeed, entire industries-face a saturated, highly competitive U.S. market. Culture • Many U.S. entrepreneurs are highly individualistic, timeconscious, goal-oriented people. • The use of colors, numbers, and shapes can symbolize different things in different cultures. • Example: In the U.S. red, white and blue are patriotic colors, but in China, blue and white are funeral colors, and red ink suggests bad luck in South Korea • The English spoken in the United States is different from that spoken in the united Kingdom and Australia. Mexico Country Characteristics • Population: 97,563,374 (July 1997 est) • Land Area: 1,923,040 sq. km • Languages: Spanish, various Mayan dialects • Literacy Rate: 89.6% • Religion: Roman Catholic (89%), Protestants (6%) • GDP: Purchasing power parity: $777.3 billion (1996 est.) • GDP per capita: Purchasing power parity: $8,100 (1996) • GDP real growth rate: 5.1% (1996 est.) • Inflation rate: Consumer Price Index: 28 % (1996 est.) About Mexican Culture • • • • • • • • Literacy has increased to 84%, urbanization has boosted to 65% Mexicans are warm and hospitable people To a Mexican, the uniqueness of the individual should be recognized Family plays a chief role in an average Mexican’s life and emphasis is placed on knowing one’s family ties. Most Mexican’s speak in a circumculatory manner and often avoid any direct references or conversations Mexicans tend to be fatalistic and attribute emphasis on the “right time” When approaching the organizational structure, it is important to note the hierarchy within the company Machismo- the concept of masculinity that infiltrates into business dealings as well Conducting Market Research in Mexico • Gifts and not money to be used as incentives, paying money is not very appealing • Improvement in telecommunications means that it should not be a problem for a researcher to contact potential respondents over the phone or fax, but reliability of the connections cannot be guaranteed • Postal system not very effective, hence mail surveys may not be very effective • Information regarding the 32 states and close to 2,403 municipalities are available, so collecting secondary information is not difficult Canada Country Characteristics • Population: 30,337,334 (July 1997 est) • Land Area: 9,221,970 sq. km • Languages: English,French • Literacy Rate: 97% • Religion: Roman Catholic (45%), United Church (12%) Anglican (8%), other (35%) • GDP: Purchasing power parity: $721 billion (1996 est.) • GDP per capita: Purchasing power parity: $25,000 (1996) • GDP real growth rate: 1.4% (1996 est.) • Inflation rate: Consumer Price Index: 1.4 % (1996 est.) Business Characteristics • When conducting business with Canadians it would be advisable not to make any comparisons with the US • It is important to not the difference between English speaking Canada and the French regions like Quebec. Eg: While English Canadians adopt a more cooperative strategy in complying with the foreign party, The French Canadians compete in order to obtain the best possible strategy • The business culture thrives of establishing ties with the rest of the industry. • The culture in Canada is markedly influenced by European norms. It becomes imperative for the marketer to address the regions separately. Conducting Marketing Research in Canada • It is easy to conduct research in Canada because of the longstanding ties between the U.S. and Canada • Telecommunications infrastructure in Canada is considered to be extremely advanced and conducting surveys over telephone, fax or the Internet is relatively expedient and accurate • One of the main problems that several companies face is that consumer groups complain regarding the invasion of privacy • Conducting focus groups as well as personal interviews is feasible if a compensation is offered to the respondent • Most often, qualitative interviews help the researcher to arrive at a more specific niche in such a variegated market, to target at. • Country characteristics • Business characteristics • Conducting marketing research in Canada