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Marketing Basics - Kotler Philip

Economic environment

When planning to enter foreign markets, an international marketing activist should study the economics of each country of interest to him. The country's attractiveness as an export market is determined by two characteristics.

The first of these is the structure of the economy. The economic structure of a country determines its needs for goods and services, income and employment levels, etc. There are four types of economic structures.

COUNTRIES WITH ECONOMY TYPE OF NATURAL ECONOMY . In an economy such as subsistence farming, the vast majority of the population is engaged in simple agricultural production. They consume most of what they produce themselves, and the rest are directly exchanged for the catching of goods and services. Under these conditions, the exporter does not have many opportunities. Among countries with a similar economic system, Bangladesh and Ethiopia can be called.

COUNTRIES - EXPORTERS OF RAW MATERIALS . Such countries are rich in one or several types of natural resources, but are deprived in other respects. They receive most of the money from the export of these resources. Examples are Chile (tin and copper), Zaire (rubber) and Saudi Arabia (oil). Such countries are good markets for the sale of mining equipment, tools and auxiliary materials, material handling equipment, and trucks. Depending on the number of foreigners permanently residing in the country and wealthy local rulers and landowners, it can also be a market for Western-style consumer goods and luxury goods.

INDUSTRIALLY DEVELOPING COUNTRIES . Within the framework of an industrially developing economy, the manufacturing industry already provides from 10 to 20% of the country's gross national product. Examples of such countries are Egypt, the Philippines, India and Brazil. As the manufacturing industry develops, such a country relies more and more on imports of textile raw materials, steel and heavy machinery and less and less on imports of finished textiles, paper products and automobiles. Industrialization brings about the emergence of a new class of rich people and a small but constantly growing middle class that require new types of goods, and some of the needs can be met only through imports.

INDUSTRIAL DEVELOPED COUNTRIES . Industrialized countries are the main exporters of manufactured goods. They trade in industrial goods among themselves, and also export these goods to countries with other types of economic structure in exchange for raw materials and semi-finished products. The large scale and variety of production activities make industrialized countries with their impressive middle class rich markets for any goods. Industrialized countries include the United States and Western European countries.

The second economic indicator is the pattern of income distribution in the country . The distribution of income is affected not only by the characteristics of the country's economic structure, but also by the features of its political system. According to the nature of income distribution, an international marketing activist divides countries into five types: 1) countries with a very low level of family income; 2) countries with a predominantly low level of family income; 3) countries with very low and very high levels of family income; 4) countries with low, medium and high levels of family income; 5) countries with predominantly average family incomes. Take, for example, the Lamborghini market - a car worth more than $ 50,000. In the countries of the first and second types, it will be very small. The largest single market for this car is the market of Portugal (type 3 country), the poorest country in Europe, in which, however, there are many wealthy families that are able to buy such a car and take care of their social status and prestige.