The two most important economic factors that affect international marketing are:
1. The industrial structure of a country
2. The income distribution of a country.
The product and service needs of a country are shaped by the country’s industrial structure. There are 4 main types of industrial structures. They are as follows:
1. Subsistence economies: People consume what they grow and such an economy offers very few market opportunities.
2. Raw material exporting economies: Economies wealthy in one or more than one natural resources but poor otherwise. Such countries are excellent markets for large equipment etc and for luxury goods if a wealthy upper class is present.
3. Industrializing economies: Manufacturing accounts for 10-20% of the country’s economy. These countries are a good market for raw textile materials, heavy machinery, steel etc. A new affluent class and a small middle class are usually created by the on going industrialization, both of which require new types of imported foreign goods.
4. Industrial economies: Services and manufactured goods are the chief exports of industrial economies.. A large middle class usually exists making industrial economies an ideal market for all sorts of goods....
Low, medium and high income households may exist in industrialized economies whereas a subsistence economy may exist of mostly very low income households. However, developing or even poor economies may be attractive markets for all kinds of goods. The best example in this case is China. Even though China has only 0.2 millionaires per 1000 residents it trails only the US, Germany and the UK in the total number of millionaires because of its large population. (Kotler, 2008) The cultural elements that affect international marketing include: The different ways in which potential customers in different countries use and think about certain goods e.g. an average Frenchman uses twice as many grooming aids and cosmetics as his wife (Kotler, 2008). Cultural norms and regulations of each country e.g. Nike inadvertently offended Arabs and Muslims when it released shoes with a stylized “Air” logo which resembled Allah in Arabic script (National Geographic, 1999). Business norms and behaviors also play a very important role in international trade. Question 3: The political risks in international marketing involve: 1. Negative attitude of host government towards foreign firms. For e.g. Currency restrictions, import quotas etc might be imposed on the foreign to make life difficult for them. 2. Monetary regulations. Buyer’s government might impose restrictions on removal of a currency from the country leaving the seller no option but to receive payment in the blocked currency and getting their profits stuck. 3. Political instability is another risk associated with international trade. A major example of this phenomenon is the Dell Brazil case. Dell chose the Brazilian state of Rio Grande Do Sul as the site for its