Environmental Factors

1
Environmental Factors

• International Advertising

2
Housekeeping

• No class on Friday (01/17)
• Read Chap 3 of your packet The International
  Marketing
• Today
• Explanation of two assignments
• First individual assignment
• Group project interest form
• Finish lecture on environmental factors
• Packet is ready in Target Copies

3
Questions for Made in China.

• List the environmental factors mentioned in the
  article
• What are the main obstacles of companies that do
  business in China?
• Why companies want to penetrate the Chinese
  market?
• Explain the reasons why some companies are making
  a profit in China, while others are losing (or
  lost) large amounts of money.

4
Assessing The Intl Advertising Environment

• Economic Factors
• Demographic Factors
• Geographic Factors
• Educational Factors
• Political Factors
• Legal/Regulatory Factors
• Cultural Factors

5
All factors are important.

• When evaluating market potential.
• When designing and implementing the marketing
  mix.
• Product
• Price
• Place/distribution
• Promotion

6
How much control over the environment?

• Very little.
• The TASK is to assess ALL FACTORS to identify
  potential barriers to success.
• Affluent markets have extensive secondary data to
  assist in assessment.
• Developing markets often pose a challenge.

7
Assessing Demographics

• How would we assess the US market?
• Market Size - How are over 6 billion or so
  consumers distributed around the globe?
• Population Distribution - Over half of the
  worlds pop. live in only 10 countries.
• Population Growth development stage is
  reflected by pop. growth and impacts sales.

8
Population Growth Rules of Thumb

• Wealthier countries have more stable population
  growth.
• Developing nations have higher rates of pop.
  growth.
• High population growth rates may indicate the
  formation of new households.
• () Increased demand for consumer goods.
• (-) Low per capita income translates to low
  purchasing power.

9
Population Distribution

• Density
• Number of consumers per square mile?
• Age
• Life expectancy (low young pop.)
• Differing needs
• Different purchasing power
• Household Size
• Relationship of occupants in a housing unit.
• Different definition of household by markets.

10
Education

• Usually info is limited to national enrollment
  figures.
• Close relationship between economy and education
  attainment.
• More developed the nation, usually the greater
  the years of education.
• Implications for marketers?

11
Economic Factors

• The attractiveness of a market.
• The willingness and ability to buy goods and
  services.
• We need to closely examine three factors.
• TYPE OF ECONOMY
• PER CAPITA INCOME
• LEVEL OF URBANIZATION

12
Type 1 Subsistence Economies

• Most citizens engaged in agriculture.
• Consume most of what they produce.
• Barter any excess production.
• Market opportunities very limited.

13
Type 2 Raw-material-exporting Economies

• Usually rich in one or more natural resources.
• Considered poor in other ways.
• Revenues come from exporting.
• Market opportunities for heavy machinery.

14
Type 3 Industrializing Economies

• Countries where manufacturing accounts for 10-20
  of national economy.
• Requires imports and heavy machinery.
• Industrialization often creates a new rich class
  and a growing middle class who demand consumer
  goods.

15
Type 4 Industrial Economies

• Countries are major exporters of manufactured
  goods.
• Investment funds.
• Usually trade among themselves.
• Export to industrializing and raw-material
  exporting countries.
• Large middle class ideal for most goods.

16
Per-capita Income

• Is an indicator of level of development
  potential purchasing power.
• ! Use caution Per capita income IS AN AVERAGE !
• Gross national product nations total income.

17
Level of Urbanization

• Rural versus Metropolitan areas.
• Geography
• Different areas have different speeds of
  urbanization.
• Geography via climates affects every marketing
  p.

18
Political Environment

• Trade Sanctions (home country).
• Import and Export Controls (home country).
• Political Risks (host country).
• Expropriation take over of a foreign investment
  by host government.
• Confiscation ownership transfer to government.

19
Tax-political barriers

• Tariff tax imposed by a government on goods
  entering their country.
• Non-tariff barriers
• Quotas a number or dollar limit applied to
  specific categories of goods.
• Exchange controls used by host countries that
  face a shortage of foreign currency.
• Nationalism level determines ease of doing
  business.

20
International Law
21
International Monetary Fund

• Created from WW II.
• Promotes international monetary cooperation.
• Works to diminish nationalistic actions as
  nations.
• Lends money to member nations facing deficits in
  debt payments.
• At least 150 countries belong.

22
World Bank

• Open to all members of IMF.
• Bank owned and controlled by 129 governments.
• US is the banks largest shareholder.
• Purpose to provide financial and technical
  assistance to developing nations.
• Loans for projects agriculture, pop. Planning,
  telecomm., electrical power, water,
  transportation.

23
General Agreement on Tariffs and Trade (GATT)

• Established after WW II.
• Works against discriminatory trade practices.
• GATT rules govern trade relations with other
  nations.
• Goal is to reduce trade barriers.
• Liberalization of world trade.

24
World Trade Organization

• Permanent institution that began in 1995
• Relationship with GATT
• Oversees the functioning of multilateral trade
  agreements
• Statutory powers
• Trade disputes