1. 7.2: Consumer & Business Markets
International Marketing

2. WarmUp What is a consumer market? What is a business market?
The selling of goods & services to the individual buyer
What is a business market?
The selling of goods & services to other companies who in turn:
Resell them
Use them to create products
Use them to support their services

3. Consumer Markets Consumer needs & wants vary greatly across cultures
Therefore, consumer products companies more likely to use adaptation strategies
Local companies often have advantage over global brands because they understand local consumer market better
Consumer market promotion is moving heavily toward the internet
Web sites for global companies often have the same design across countries, even when using a different language

4. Consumer Market Promotion in Mexico & India

5. Website in America

6. Promotion: Use of Celebrities: Television Commercials: http://www

7. Pricing in foreign markets
Price represents what is given up in exchange for receiving a product.
Sometimes bartering is used instead of money
Bartering: Exchange of one product (good or service) for another product (good or service)
Prices in wealthy countries tend to be higher than in poor countries.
Average income in China is less than Switzerland
Prices in China are cheaper than prices in Switzerland

8. Pricing
Purchasing power parity (PPP) Global pricing depends on the ability of each market to pay.
Purchasing power parity (PPP) measures how much of a product a certain country’s currency can purchase.
Products are priced differently based on where they are sold
Lower prices reflect lower expenses to create product in that country
Higher prices reflect a higher standard of living in that country
Companies have two methods of setting prices in global markets:
Standard global price
Difficult to establish because of added distribution costs and taxes, which are different in every market
Local market price

9. Big Mac Exercise Use the Big Mac to determine Purchasing Power Parity
Big Macs are sold at over 25,000 McDonalds restaurants in 116 countries
Widely popular
Allows economist to compare exchange rates & relative prices in multiple countries
Purchasing Power Parity
Describes why over time, the dollar price of a good in one country should equal the dollar price in all other countries
Should a product sell for the same price in all countries

10. Cross Currency Rates See "Cross Currency Rates" at

11. Determine PPPP
2,835 Japanese Yen (JPY) is equal to  United States Dollar (USD)
2,835 Japanese Yen (JPY) is equal to  British Pound (GBP)

12. Big Mac Activity in Edmodo.

13. Luxury Markets
Luxury market would most likely use standard global pricing since individuals with high incomes are more likely to have similar needs and wants and an equal ability to pay
Otherwise, products could be purchased in cheaper markets and returned to the local market as a grey market product
Students provide examples
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