Muhammad Waqas Global Markets Lecture 9

Muhammad Waqas Recap International and global legal forces Forecasting and managing regulatory change Managing political risk Risk reduction strategies

Muhammad Waqas Chapter Outline Understanding buyers The consumer market Business market Government market

Muhammad Waqas Learning Objectives List the factors that influence consumers’ abilities to buy and explain how these affect various national markets. Describe Maslow’s hierarchy-of-needs model and apply it to consumers in different cultures. 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.

Muhammad Waqas Learning Objectives List the special qualities of national and multinational global buyers. Describe the five “screens” a foreign firm must pass through to win a government contract. Explain the role of bribery in international contracts.

Muhammad Waqas The Consumer’s Ability to Buy To purchase a product, a consumer must have the ability to buy. The ability to buy a product is affected by the amount of wealth a country possesses.

Muhammad Waqas Income Distribution Government tax policies Wealth concentration – Belgium Top 10% = 20% income – Colombia Top 10% = 46% income

Muhammad Waqas The Hidden Economy Informal sector = Income not reported to authorities Peru’s informal sector = – 42% construction – 45% transportation – 16% manufacturing

Muhammad Waqas Consumer Needs Is Maslow’s hierarchy of needs applicable cross- culturally? Self-actualization Friendship, Love Safety, Food, Shelter Physiological Needs

Muhammad Waqas 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

Muhammad Waqas Global Colors The world’s favorite color? – Blue But many colors elicit different responses – Purple = Expensive (in Japan, China, South Korea) – Purple = Cheap in USA

Muhammad Waqas 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

Muhammad Waqas Developing Business Relationships B2B sales involve usually ongoing relationships. Building such relationship involves a social exchange process. Cross-cultural negotiations are a particular challenge to global marketers.

Muhammad Waqas The Business Buyer’s Needs Cost-performance criterion Large suppliers are preferred Account management Service quality Economic situation (labor cost)

Muhammad Waqas Developing Business Relationships Business relationships are based on mutual understanding, past experiences, and expectations for the future. Building business relationship involves social exchange process. Cross-cultural negotiations are a particular challenge to global marketers.

Muhammad Waqas Summary Understanding buyers The consumer market

Muhammad Waqas References Gillespie, K., Jeannet, J.P. and Hennessey, H.D. (2004), Global Marketing: An Interactive Approach, Houghton Mifflin, Boston, NY.