GLOBAL

MARKET
 • identify the factors that influence consumers’ abilities to buy and
explain how these affect various national markets and describe
Maslow’s hierarchy-of-needs model and apply it to consumers in
different cultures. Explain why business-to-business markets vary in
buyer needs and behavior from one country to another.
• Familiarized with the special qualities of national and multinational
global buyers.
• Identify the factors that influence consumers’ abilities to buy and
explain how these affect various national markets and describe
LEARNING Maslow’s hierarchy-of-needs model and apply it to consumers in
different cultures.
OBJECTIVES: • Give examples of how consumer behavior is similar across cultures
and examples of how it may differ from one culture to another.
• Describe segmentation options for consumer markets abroad.
• Explain why business-to-business markets vary in buyer needs and
behavior from one country to another.
• List the special qualities of national and multinational global buyers.
• Explain the role of bribery in international contracts
 Consumer Markets
• The consumer market pertains to buyers who
purchase goods and services for consumption rather
than resale. However, not all consumers are alike in
their tastes, preferences, and buying habits due to
different characteristics that can distinguish certain
consumers from others. These particular consumer
characteristics include various demographic,
psychographic, behavioristic, and geographic traits.
Marketers usually define these consumer
characteristics through market segmentation, the
process of separating and identifying key customer
groups.
Are consumption patterns
converging such as:
• The French drink more beer
• The Germans drink more wine
• The Japanese eat more beef
• The Swiss prefer French cheese
National Differences

• Global marketers must consider national

differences in:
– Ability to buy
• Per capita income - is a measure of the
amount of money earned per person in a
nation or geographic region. Per capita
income can be used to determine the
average per-person income for an area
and to evaluate the standard of living
and quality of life of the population. Per
capita income for a nation is calculated
by dividing the country's national income
by its population.
National
Differences
•Purchasing power
parity - the value of a currency
expressed in terms of the amount
of goods or services that one unit
of money can buy. Purchasing
power is important because, all
else being equal, inflation
decreases the amount of goods
or services you would be able to
purchase.
(https://www.investopedia.com/)
–Consumer needs
–Consumer behavior
In 2020, Peru's percentage of informal employment stood at 68 percent of the total employed
population. This means that over two-thirds of Peruvian workers were considered informally used.
https://www.statista.com/statistics/1039975/informal-employment-share-peru/
 •Globalization
–Loss of employment in formal sector
• Uncompetitive firms fold following liberalization
Reasons for • Uncompetitive firms fold during currency crises and
other global economic shocks
Growth of –Cost pressures of increased
Informal competition
Sector • Core of wage employees and
periphery of informal workers
–Information and communications technology
•Makes global coordination of informal firms possible
 –Institutions
•Lack of enforcement institutions and laws against
•Corruption
Reasons for •Tax evasion
•Labor and health violations
Growth of •Red tape of bureaucratic institutions
•Role of human nature orientation
Informal •Tax-related institutions
Sector •Complex, unfair tax codes
•Lack of effective tax auditing
•Lack of political will to change institutions
Consumers Needs

• Is Maslow’s hierarchy of needs

applicable cross-culturally?
• Self-actualization
• Friendship, Love
• Safety, Food, Shelter
• Physiological Needs
Consumer Behavior
• Cultural differences revisited
• Insurance in Muslim countries
• Who makes the purchase decision?
• More joint husband-wife decisions in
the U.S. than in Venezuela
Global Colors
•The world’s favorite color?
–Blue
Blue is described as a favorite color by many
people and is the color most preferred by men. Blue
calls to mind feelings of calmness or serenity. It is often
described as peaceful, tranquil, secure, and orderly.
Blue is often seen as a sign of stability and reliability.
•But many colors elicit different responses
–Purple = Expensive (in Japan, China,
South Korea)
–Purple = Cheap in USA
Segmentation
• is the process of dividing a
market of potential customers
into groups, or segments, based
on different characteristics.
 • A market segment is a group of people who share one or
more similar characteristics.
• Corporations and marketing teams use various criteria to
develop target markets for their products and services.
• The criteria for a market segment include homogeneity
KEY among the segment's main needs, uniqueness, and a
common reaction to marketing tactics.
TAKEAWAYS • The reaction from market segments to marketing plans
or strategies is typically very predictable.
• Common market segment traits include interests,
lifestyle, age, and gender.

https://www.investopedia.com/terms/m/market-segment.asp
Four Characteristics of
a Segment
• Homogeneous characteristics
• Profit potential
• Ability to measure group
• Ability to communicate to group
Companies that understand
market segments can prove
themselves to be effective
marketers while earning a greater
return on their investments.
Three-Step Segmentation Process
DEFINE:
–Take a look at existing customer list; look for common traits.
–Analyze competitors’ customer profiles
PROFILE:
–Full definition of who the segment is, their buyer behavior, attitudes/values, lifestyle etc.
RANK:
–Order of importance for business goals Highest profitability, least competition, most in need of
product/service

Segmentation is important for two reasons:

1. You don’t need everyone in a country to buy your product – you just need a large enough segment to
purchase your product or service
2. How and how much you adapt your marketing mix depends on the segment that you are targeting in
a market
Global segment
• transnational consumer segment based on age, social class, lifestyle
• Convergence of some aspects of buyer behavior
• Cosmopolitans
• But for most products and segmentation schemes, national differences persist
•Just-like-us-segment – segments in international markets that resemble a firm’s domestic buyers
• Easier because does not require marketing mix adaptation
• But may result in few consumers worldwide and limits a firm’s global profit potential
• EXAMPLE – If toy manufacturers only targeted children in China they would miss out on a large segment –
adults buying for themselves!
Business Markets

• The selling of products and services to other businesses to be resold or used to make other items
or services for sale.
• Business to business marketing is needed when one company's output is required for another
company to maintain or improve its operations. Some B2B marketing examples include: An
industrial pump manufacturer is attempting to market and sell their products to an oil and gas
producer.
First Meetings (For
Business Clients)

• Should you present a prospective client

with a gift?
O Yes – China and Japan
O No! – Latin America and the Arab
world
 Factors
Affecting
Organizational
Buyer Choice
https://slideplayer.com/slide/1435021/
Business Buyers’ Needs
• The cost-performance criterion is a key consideration for business buyers

• Business buyers in developed countries choose capital intensive

technologies
• Capital is cheaper/ labor is more expensive

• Business buyers in developing countries usually choose labor intensive

technologies
• Labor is cheaper/ capital is more expensive
Developing Business Relationships

• Cross-cultural negotiations are a particular challenge

• Russian tactics:
–Emotional outbursts, falling asleep, unreasonable
requests
• Americans like to negotiate clear contracts while Chinese
prefer to establish personal trust relationships
 • National global buyers

• –Search the world for products used in

a single market

• Multinational global
Types of Global buyers
• –Search the world for products used
Buyers throughout their global operations

• Global account
management
• –Marketers assign special executive or
teams to address demanding global
buyers
Government Markets
• A government market is one which includes purchases by
governmental units—federal, state, and local—that procure or
rent goods and services in carrying out the main functions of
the government.

• The buying process

– Procurement processes vary by country
– Some contracts go to the lowest bidder
– More sophisticated projects demand more complicated
bidding processes
Bribery and Government
Markets

• Bribery is giving something of value to an

individual in a position of trust to influence
judgment or behavior
• Government employees are trusted to do
what’s best for the public good
• Government corruption is more prevalent in
emerging markets
Transparency International
- Corruption - is operationally defined as the misuse of entrusted
power for private gain.
- Transparency - can be defined as a principle that allows those
affected by administrative decisions, business transactions, or
charitable work to know not only the basic facts and figures but also
the mechanisms and processes. It is the duty of civil servants,
managers, and trustees to act visibly, predictably, and understandably.
https://www.transparency.org/en/cpi/2020/index/nzl
 Which
Countries
are the Least
Corrupt?
 Which
Country Pays
the Least
Amount of
Bribes?
Institutions most
Affected by Corruption

• 29% Political Parties

• 26% Public officials/Civil
Servants
• 16% Parliament/Legislature
• 14% Business/Private Sector
• 9% Judiciary
• 6% Media
U.S. Foreign Corrupt Practices Act
• Under the Foreign Corrupt Practices Act (FCPA), it is
unlawful for a U.S. person or company to offer, pay, or
promise to pay money or anything of value to any
foreign official for the purpose of obtaining or retaining
business.
• Forbids U.S. citizens to bribe foreign government
employees or politicians – or to give money to agents
that are subsequently used to bribe
• Citizens must report bribery in their organization
• Records must be transparent and well kept
• Failure to comply can result in fines and jail time!