© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 4 The Economic Environment

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit The Global Economy

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Population –Population figures can be classified to show specific characteristics of their respective markets. – –A household describes all the persons, both related and unrelated, who occupy a housing unit. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit World Economic Pyramid

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Income – –Per capita GDP is often used as a primary indicator for evaluating purchasing power. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Income –Income figures are useful in the initial screening of markets; however, in product-specific cases, income may not play a major role. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Consumption patterns –Engel’s laws - –Product saturation or diffusion provides information on the percentage of households in a market that own a particular product.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Consumption patterns – –Inflation affects the buying ability of both industrial customers and consumers, and also introduces uncertainty into both the marketer’s planning process and consumers’ buying habits.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Market Characteristics Infrastructure – –Communication systems for marketing include telephones, computers, broadcast media, print media, internet, and wireless technology. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Impact of the Economic Environment on Social Development Factors impeding economic growth: – – – – – –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Physical Quality of Life Index (PQLI) – – Impact of the Economic Environment on Social Development

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Emotional well-being may be determined by: – – – – Impact of the Economic Environment on Social Development

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Forms of Economic Integration in Regional Markets

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration Free trade area Common market European integration Other economic alliances

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration Free trade area – –Each country is free to set its own tariff and quota barriers against nonmember countries. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration Customs union – –Establishes a common trade policy with respect to nonmembers, which takes the form of a common external tariff, whereby imports from nonmembers are subject to the same tariff when sold to any member country.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration Common market area –Covers the exchange of goods and services, prohibits duties in exports and imports between members, and adopts a common external tariff with respect to nonmembers. – –Abolishes restrictions on immigration and cross-border investment. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration Economic union – –Harmonizes taxation, government spending, and monetary policies. –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration European integration –Results in economic growth; sources of growth being: –Operations from one country can be freely expanded to other countries. –There is a “________ ______” fear.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Proposed Company Responses to European Integration

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration North American integration – – –The ratification of the North American Free Trade Agreement (NAFTA) created the world’s largest free market, with 450 million consumers and a total output of $15.7 trillion.

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Levels of Economic Integration North American integration – –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Regional Economic Integration Other economic alliances – – –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Major Regional Trade Agreements

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Exhibit Major Regional Trade Agreements

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Regional Economic Integration Economic integration and the international marketer –Regional economic integration creates opportunities and potential problems for the international marketer. –Decisions regarding integrating markets must be assessed from four different perspectives:

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Emerging Markets Emerging markets - Strategies adopted by marketers to thrive in emerging markets: – – – –

© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Developing Markets Five elements of success required for an international marketer to take advantage of and thrive in developing markets. – – – – –