Chapter 6

Consumer, Industrial, and Government Markets

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Exhibit 6.1 Three Levels of the

Global Consumer

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Drivers of the Global Consumer

Emergence of global consumer coincides
with two important driving trends:
Globalization:
Growing interconnectedness of nations
Organization of life on a global scale
Consolidation of world society

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Drivers of the Global Consumer

Technological developments in information
and communication
Geographic distance leads to developments in
transportation
International mass media plays a major role in
emergence of global consumer

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The Global Consumer

Is an individual or an organizational buyer
that exhibits similar needs and tastes
worldwide
Global market segments are groupings of
consumers that exist in multiple countries
and display similar characteristics
Signs of global cosmopolitanism and
modernity:
Air conditioners
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The Global Consumer

Automobiles
Consumer electronics
Hamburgers

Firms cut costs by minimizing:

The variety of parts
Components
Other inputs used to produce finished
products and services

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The Global Consumer

In business-to-business markets, global
customers seek to centralize and
standardize purchasing:

Raw materials
Parts
Components
Finished goods

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The Global Consumer

The existence of consumer culture is
characterized by:
Emphasis on marketing-based exchange
relationships
Large proportion of the population achieving
improved standard of living
Perception of consumption
Level and quality of consumption

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The Global Consumer

Emergence of global consumers facilitates
companies' ability to target buyers
worldwide with very similar products and
services

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Exhibit 6.2 - Influences on the

Global Consumer

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Influences on the Global

Consumer
Economic status - Ability to purchase
goods and services is influenced by
income level
Is related to occupation

Technology level - Knowledge and usage

of:
Tools
Machines
Techniques
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Influences on the Global

Consumer
Strongly influenced by the nature of education
systems in individual countries

Personal motive - An internal force that

orients a person's activities toward
satisfying a need or achieving a goal
Basic needs:
Physiological needs
Safety needs
Love and belonging needs

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Influences on the Global

Consumer
Esteem needs
Self-actualization needs

The hierarchy of needs is relevant to

international marketing
Need levels vary worldwide as a function of
economic status, technology level, and other
factors
Worldwide, people do not consistently follow
Maslows hierarchy of needs

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Influences on the Global

Consumer
Culture - Integrated system of learned
behavior patterns that distinguish
members of a society
Norms: Accepted behaviors within a society
or group

Social factors - Family and social groups

influence consumer behavior

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Influences on the Global

Consumer
Situational factors Environmental or
locational conditions that affect how
consumers behave
Physical surroundings include geographical
location and climate
Institutional environment Public
organizations and constraints that societies
create to give structure to human interactions

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Country-of-Origin (COO) Effects

COO: Nation where a product is produced
or branded
Buyer reactions to COO are influenced by
various factors:
COO stereotypes vary depending on the origin
of the judge and on the category of product
being judged
Opinion varies depending on the national
origin of the firm and the location where its
product is actually made
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Country-of-Origin Effects
As the capacity of countries to perform well in
industries improves, COO phenomenon varies
over time
Tendency of consumers to discriminate
against foreign products varies by
demographic factors

Consumer ethnocentrism: Tendency to

view domestically produced goods as
superior to those produced in other
countries
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Country-of-Origin Effects
World mindedness: Consumer's
interest in, and openness to, acquiring
goods from other countries
Cosmopolitan is someone who:
Maintains a network of links and personal
contacts with those outside the immediate
community
Is willing to venture into other cultures

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The Industrial Buyer

Purchases raw materials, parts,
components, and supplies in order to
produce other products
Buying is performed by professional
purchasing managers who may buy
enormous quantities of goods

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The Industrial Buyer

Derived demand - Demand for raw
materials, parts, and other inputs that
depend on demand for some other good
Cost-performance - Expected
performance of a product relative to the
cost to buy and use it

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Influences on the Global Industrial

Buyer
Culture
Influences occur at the level of the nation,
industry, and the firm
Industrial buyers vary based on their attitude
toward risk, which differs cross-nationally
High uncertainty-avoidance countries are risk
averse
Favor rules, regulations, and control mechanisms to
minimize risk taking

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Influences on the Global Industrial

Buyer
Low uncertainty avoidance cultures are
innovative and open to new approaches
Industrial buying process is systematic as:
Purchasing professionals identify, evaluate, and
choose among brands and suppliers

Purchasing will:
Select the most appropriate supplier
Place an order
Review the performance of supplier and its goods

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Influences on the Global Industrial

Buyer
Stages of economic development

Traditional society
Transitional stage
Take-off
Drive to maturity
Mass consumption

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Influences on the Global Industrial

Buyer
National situational factors
Technology acceptance model describes how
individuals and firms accept and use given
technologies
Fluctuating exchange rates affect the
attractiveness of foreign goods making them
costly or inexpensive
Inflation causes prices to rise

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The Government Buyer

Governments are important targets for
sales of goods and services
Aim of competitive bidding:
Ensures the government pays a competitive
price
Receives quality goods
Avoids corruption

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The Government Buyer

Selling to governments can be
bureaucratic
Agreement on Government Procurement
(GPA)- Main goal is to open government
procurement to international competition

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Marketing to Global Consumers

Targeting global customers
Global market segment: Is a group of
customers who share common characteristics
across national markets
International firms aim for a global positioning
strategy:
One in which the offering is positioned similarly in
the minds of buyers

Firms organize dealings with key global

account management (GAM)
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Marketing to Global Consumers

GAM benefits customers:
Sources the same products and services for its
worldwide operations
Ensures the supplier speaks to the customer with
one voice, reducing miscommunication
Customer needs deal only with a single contact
point, global account executive, who provides
consistent support

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Marketing to Global Consumers

Country-of-origin challenges
When contemplating a new marketing
venture:
Management should conduct market research to
learn the nature of COO effects

To overcome negative stereotypes is to:

Offer superior quality products
Offer the product at a low price
Distribute the product through a well-respected
intermediary in the target market

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Global Customer Relationship

Management
The focus of marketing is the customer
Relationship marketing: Seeks to build
long-term relationships with key
customers
Achieved by emphasizing activities that
ensure consistent customer satisfaction
It applies to acquiring quality relations with
supply chain partners and collaborative
venture partners
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Global Customer Relationship

Management
It has relevance to international marketing
Important in industrial sales

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Global Customer Relationship

Management
Customer relationship management
(CRM): Collecting, storing, and analyzing
customer data to develop and maintain
two-way relations between the firm and
key customers
Goal of CRM is to maximize value to the firm's
most important customers

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Global Customer Relationship

Management
Customer service includes activities such as:
Training
Repair of damaged products
Financing to assist customers in purchasing
products
Complaint resolution

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Selling to Governments
Infrastructure development is one of the
lucrative market opportunities
Nations need infrastructure and
communication systems to:
Function well and develop economies

Government procurement is the

purchasing of products and services on
behalf of government agency
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Selling to Governments
Tendering involves:
Government desires to purchase a given
product
Companies bid on the right to provide the
product for a determined price
Government chooses the lowest bidder

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Selling to Governments
Factors to ensure success in selling to
foreign governments:

Know one's strengths and weaknesses

Develop the right resources
Develop the appropriate relationships
Engage in planning

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