Exam (elaborations) MKT824 CONSUMER BEHAVIOUR

At the end of the course, Individuals will examine the principles of Global Marketing an apply them within the companies need critically reflect Marketing behavior within companies and their impact on the development of this course. 10. GLOBAL MARKETING IN THE 21ST CENTURY 10.1 Introduction of the Global Marketing 10.2 Relationships and Networks 10.3 The Marketing Concept 10.4 Marketer Responses and Adjustments 10.1 Introduction of the Global Marketing The nations of the world are linked by a multidimensional network of economic, social, cultural, and political ties. As these connections become more important and complex, countries will find themselves richer but more vulnerable to foreign disturbances, and this vulnerability increasingly will move the issues surrounding international trade and finance into the political arena. The Global Economy – World trade has grown sixteenfold since 1950, far outstripping the growth in GDP. GATT and WTO have helped to reduce tariffs from 40 percent in 1947 to an estimated 4 percent in 2000. As the WTO replaced GATT in 1996, the major challenge was to assure compliance and to assert the authority of the WTO over powerful regional trade agreements like the European Union (EU), the North American Free Trade Agreement (NAFTA), the Common Market of the South (MERCOSUR), and the Asian-Pacific Economic Cooperation (APEC). There are over eighty regional agreements between countries granting preferential access to each other’s markets. Thus understanding the economics of trade is critical to understanding that the need for free trade flows from country to country. The basis for trade involves two advantages: Absolute Advantage and Comparative Advantage. As provided by Adam Smith, the theory of selling what you are best at is known as Absolute Advantage. David Richardo pointed out that it is still possible to produce profitably what one is best at even if someone else is better, and this theory is well known as Comparative Advantage. Comparative Advantage measures a product’s cost of production, not in monetary terms but in terms of forgone opportunity to produce something else. In essence, the theory of comparative advantage says it pays for countries to engage in international trade exporting in which they are efficient and to import goods that they are relatively inefficient at producing. Global MARKETING IN THE 21st century MM – 102 Global Marketing in the 21st Century | 2 In global economy, balance of payments is considered to be very important by many businesspeople, government officials and economists. It is an accounting record of the transactions between the residents of one country and the residents of the rest of the world over a given period of time. There are three important balance of payments measures: the balance on merchandise trade, the balance on goods and services, and the balance on current account. The last measure is considered to be a reflection of a nation’s financial claims on other countries. A global industry is one in which the strategic positions of competitors in major geographic or national markets are fundamentally affected by their overall global positions. Global firms—both large and small—plan, operate, and coordinate their activities and exchanges on a worldwide basis. Today we can distinguish between a marketplace and a marketspace. The marketplace is physical, as when one goes shopping in a store; marketspace is digital, as when one goes shopping on the Internet. E-commerce—business transactions conducted on-line—has many advantages for both consumers and businesses, including convenience, savings, selection, personalization, and information. For example, on-line shopping is so convenient that 30 percent of the orders generated by the Web site of REI, a recreational equipment retailer, is logged from 10 P.M. to 7 A.M., sparing REI the expense of keeping its stores open late or hiring customer service representatives. However, the e-commerce marketspace is also bringing pressure from consumers for lower prices and is threatening intermediaries such as travel agents, stockbrokers, insurance agents, and traditional retailers. To succeed in the on-line marketspace, marketers will need to reorganize and redefine themselves. The metamarket, a concept proposed by Mohan Sawhney, describes a cluster of complementary products and services that are closely related in the minds of consumers but are spread across a diverse set of industries. The automobile metamarket consists of automobile manufacturers, new and used car dealers, financing companies, insurance companies, mechanics, spare parts dealers, service shops, auto magazines, classified auto ads in newspapers, and auto sites on the Internet. Car buyers can get involved in many parts of this metamarket. This has created an opportunity for metamediaries to assist buyers to move seamlessly through these groups. One example is Edmund’s (), a Web site where buyers can find prices for different cars and click to other sites to search for dealers, financing, and accessories. Metamediaries can serve various metamarkets, such as the home