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Marketing Basics - Kotler Philip

Economic environment

Besides the people themselves, their purchasing power is also important for the markets. The general level of purchasing power depends on the level of current income, prices, savings and the availability of credit. Purchasing power is affected by economic downturns, high unemployment, and the rising cost of obtaining loans.

Many Americans have responded to today's economic environment with a more cautious approach to shopping. To save money, they began to buy more “store brand” goods and fewer “nationwide brand” goods. Many companies began to produce “economical” options for their products, and in advertising calls to emphasize the attractiveness of prices. Some consumers have postponed the purchase of durable goods, others? on the contrary, they accelerated them because of fears that next year prices will rise by 10%. Many families felt that they could not afford a big house, two cars, traveling abroad and getting higher education in private educational institutions. At the same time, as can be seen from the table. 4, there was a redistribution of the percentage of costs for a number of product categories, for example, the cost of food and clothing.

Table 4

Distribution of expenses on consumption,%

Cost Objective

1960 year

1970 year

1980 year

Food, drinks, tobacco

27.1

23.8

21.9

Housing

14.8

15,2

16.3

Housing Operations

14.2

14.2

13.7

Transport

13.1

12.5

14.5

Medical service

7.2

8.1

9.9

Clothing, accessories, jewelry

8.9

9.0

7.4

Recreation and entertainment

5.5

6.6

6.4

Personal expenses

4.3

5.1

5.3

Personal hygiene costs

1,6

1.8

1.4

Other needs

3.3

3,7

3.2

Market players should pay attention to the nature of income distribution. And the distribution of income in the United States is still highly uneven. Top-class consumers are the leaders whose costs have not been affected in any way by recent economic events and which remain the main market for luxury goods (such as Rolls-Royce cars worth $ 100,000 or more) and expensive services (such as round-the-world sea voyages worth from 10 thousand dollars and above).

Then come the middle-class consumers, somewhat limiting themselves in costs, but still feeling quite comfortable and able to purchase expensive clothes, antique items, a second boat or a second house. The working class should practically not go beyond the acquisition of the most necessary of food, clothing and shelter, and must by all means try to save something. And finally, representatives of the lower layers of society (people living on social security benefits), as well as many pensioners, are forced to consider every cent when making even the most necessary purchases.

Market players should also take into account geographical differences in the structure of income distribution. (Let's say the city of Houston is growing rapidly, while Detroit is growing weak.) They should focus on areas that offer the most promising opportunities.