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.

1 . 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.

2 . 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