1. BRANCH:-INTERNATIONAL BUSINESS
SUBJECT:- INTERNATIONAL MARKETING
ASSIGNMENT ON
INTERNATIONAL MARKETING
ENVIRONMENT

2. THE INTERNATIONAL MARKETING
ENVIRONMENT
The international marketing environment is a complex constellation of
demands and constraints which the firm faces as it attempts to compete and grow.
Identifying customer values in international markets requires a sophisticated
understanding of differentiated expressions of customer needs, many of which are
influenced by culture. Similarly, the task of communicating the values provide and
their delivery in international markets is complex, requiring a great deal of
understanding of the environment and its influences. International marketing is
characterized by the convergence of the company marketing process, usually in one
country, and the customer’s purchase decision process in another. This international
marketing environment consists of a number of elements most of which lie outside
the control of the firm.

3. The following are the elements of the international marketing environment:-
1. ECONOMIC ENVIRONMENT:-
The economic environment has much to do with the scope of business,
business prospects and the business strategy.
The nature and the level of development of economy, economic resources,
size of economy, economic system and economic policies, economic conditions,
trends in the GNP growth rate and per capita income, nature of and trends in foreign
trade, domestic supply and demand conditions are all the factors relevant to
business. The nations of the world are broadly classified as developing countries and
developed countries.
The developing countries fall into two categories low income countries and
middle income countries. Generally, high income countries are developed countries.
While most of the high income economies are industrial economies some of them act
as exporters.
Low income economies are those with a GNP per capita of $825 or less in
2004. Within the group of low income economies, the United Nations has identified a
special category namely Least Developed countries, most of whom suffer from one
or more of the following constraints: a very low GNP per capita, land locked,
remotely insularity, desertification and exposure to natural disasters.
The middle income economies are those with a GNP per capita between $826
and $10,066 in 2004. The middle income economies are further divided into two
categories; lower middle income between $826 and $3255 and upper middle income
between $3031 and $9360
The High income economies are those with a GNP per capita of $10,066 or
more, in 2004.The developed economies as a group are sometimes referred to as
the North with some exceptions like Australia and New Zealand, since most of them
lie in the Northern hemisphere and the developing economies are referred as the
Southern hemisphere.
The differences in the levels of development and income have implications for
business. In the developing countries, particularly in the low income economies, the
demand for many categories of goods and services is limited because of the low
levels of income. The products that are regarded as essentials in advanced countries
like refrigerator, electric fans, TV, etc. are regarded as luxuries in these countries.
The price and the demand for them may be affected by high taxes on them because
of their categorization as luxurious items. Many developing countries suffer from
severe balance of payments problems and hence their import policies are very

4. restrictive. However, a number of developing countries hold out very good prospects
for business in future because of three reasons:
1. A steady increase in population
2. Increase in income
3. Growing democratization and in dividual freedom
The share of the developing countries in the increase in the world income has been
growing and it would continue in future. The developed economies are characterized
by high levels of income and consumption and business competition. Foreign trade
is more liberal in comparison with that of most of the developing countries. Import
restrictions are confined by and large, to import competing industries. The markets
for many products in these economies are nearing saturation or have already
saturated or are even declining mostly because of the population trends. While the
advanced countries are characterized by high level of competition in the industrial
sector and fast technological changes, most developing countries lag behind in these
respects. Companies in the developed economies even viewed the developing
countries as a market for obsolete technologies and products.
The differences in the income levels may necessitate product and price
modification. The Aero Shoes’ Woodland range of shoes has been introduced in
India for less than one third of the US price although the Indian target is the upper
segment of the market. In countries where the income levels are low cost reduction
may become essential for price reduction. Low cost models of products without the
frills may be appropriate for these markets.
A developing country firm intending to do business in the advanced and
competitive markets must bear in mind the fact that the environment in such markets
may be different from that in the domestic. Product quality, features, styling, and
finish, packaging, etc. are very important for success in these markets. The firm must
make sure that the increased cost due to these factors be more than compensated
by the high price chargeable in foreign markets. The difference in the level of
development may cause a difference in the nature of the demand for a product. Only
the areas that are electrified may the demand for electric consumer durables will be
there. In developing countries most of the household possess a moped, a
refrigerator, a radio, a TV, and a number of other household appliances. The
demand for most of these consumer durables is from the existing customers only.
Creation of primary demand is very important in developed countries even for
products that have become quite common in developed countries.
This difference in the nature of demand has important implications for
marketing. In developed countries the consumers become familiar with the product
and are generally more capable of evaluating the product and are better equipped to
make a choice by not only identifying the common problems in the products but also
rectifying the minor problems.
The economic environment of different countries is thus different indicating
that different business strategies may be required for different markets. The different
regions of a national economy may show great diversity of economical nature. In
such cases, it may not be appropriate to regard it as a single economic unit.
2. POLITICAL ENVIRONMENT:-
The critical concern Political environment has a very important impact on
every business operation no matter what its size, its area of operation. Whether the
company is domestic, national, international, large or small political factors of the
country it is located in will have an impact on it. And the most crucial & unavoidable

5. realities of international business are that both host and home governments are
integral partners. Reflected in its policies and attitudes toward business are a
governments idea of how best to promote the national interest, considering its own
resources and political philosophy. A government control's and restricts a company's
activities by encouraging and offering support or by discouraging and banning or
restricting its activities depending on the government. Here steps in international law.
International law recognizes the right of nations to grant or withhold permission to do
business within its political boundaries and control its citizens when it comes to
conducting business. Thus, political environment of countries is a critical concern for
the international marketer and he should examine the salient features of political
features of global markets they plan to enter.
THE SOVEREIGNITY OF NATIONS: From the international laws point of view a
sovereign state is independent and free from external control; enjoys full legal
equality; governs its own territory; selects its own political, social, economic systems;
and has the power to enter into agreements with other nations. It is extension of
national laws beyond a country's borders that much of the conflict in international
business arises. Nations can and do abridge specific aspects of their sovereign
rights in order to coexist with other countries. Like the European Union, North
American Free Trade Agreement (NAFTA) are examples of nations voluntarily
agreeing to give up some of their sovereign rights in order to participate with member
nations for common, mutually beneficial goals. For example the pajama game
discussed in global perspective is not unusual for multinational corporations. The
pajama caper was a controversy arose over a US embargo forbidding US
businesses to trade with Cuba. Wal-Mart was selling Cuban made pajamas in
Canadian market. When Wal-Mart officials in US came to know about this, they
ordered all offending Cuban pajama's as it was against US law. Canada was
incensed with the obtrusion of US law on Canadian citizens. The Canadian citizen's
felt that they should be able to buy Cuban-made pajama's if they wanted to. Wal-
Mart was caught between a Canada-US foreign policy feud. Wal-Mart Canada was
breaking US law if it continued to sell pajamas, and was subject to a million-dollar
fine and possible imprisonment. However, if it did pull out pajamas from Canadian
market it was subject to 1.2 million dollar fine under Canadian law. The ideal political
climate for a multinational firm is stable, friendly environment. Unfortunately, that is
never really the case, it's not always friendly and stable. Since foreign businesses
are judged by standards as variable as there are nations, the friendliness and
stability of the government in each country must be assessed as an ongoing
business practice.
STABILITY OF GOVERNMENT POLICIES: The most important of the political
conditions that concern an international business is the stability or instability of the
prevailing government policies. Political parties may change or get reelected but the
main concern for MNCs is the continuity of the set rules or code of behavior
regardless of the party in power. A change in the government does not always mean
change in the level of political risks. In Italy the political parties have changed 50
times since the end of World War II but the business continues to go on as usual
inspite of the political turmoil. In comparison is India, where the government has
changed 51 times since 1945 but however much of the government policies remain
hostile to foreign investments. Conversely, radical changes in policies toward foreign
business can occur in the most stable of the governments. Some of the African
countries are among the unstable with seemingly unending civil wars, boundary

6. disputes and oppressive military regimes. Like one of the region with the greatest
number of questions concerning long-term stability is Hong Kong as since China has
gained control, the official message is that nothing will change and thus everything is
seemingly going smoothly but the political analysts say that it is too early to say how
will the business climate change, if it will. If there is potential for profit and if given
permission to operate within a country, MNCs can function under any type of
government as long as there is some long-term predictability and stability.
POLITICAL PARTIES: Particularly important to the marketer is the knowledge of all
philosophies of all major political parties within a country, since anyone might
become dominant and alter prevailing attitudes. In those countries where there are
two strong political parties where usually one succeeds the other, it is important to
know the direction each of the parties is likely to take. Changes in direction a country
may take toward trade and related issues are caused not only by political parties but
also by politically strong interest groups and factions within different political parties,
which cooperate to affect trade policies.
NATIONALISM: Economic nationalism that exists to some degree in all countries is
another factor that affects international environment. Nationalism is intense feelings
of national pride and unity, an awakening of nation's people to take pride in their own
country. This pride can take an anti-foreign business bias. One of the central aims of
economic nationalism is the preservation of national economic anatomy where
national interest and security are more important than international considerations.
POLITICAL RISKS OF GLOBAL BUSINESS CONFISCATION, EXPROPRIATION
AND DOMESTICATION The most severe political risk is confiscation, which is
seizing of company's assets without payment. Less severe is however,
expropriation, which requires reimbursement, for the government seized investment.
A third type of risk is domestication, which occurs when host country takes steps to
transfer foreign investments to national control and ownership through series of
government decrees. A change in the government's attitudes, policies, economic
plans and philosophies toward the role of foreign investment is the reason behind the
decision to confiscate, expropriate or domesticate existing foreign assets.
ECONOMIC RISKS International companies are often faced with many economic
risks most of which arise without any prior warning. Economic risks are an important
and a recurring part of political environment that a few companies can avoid. ·
Exchange controls stems from shortage of foreign exchange held by the country.
When this happens, controls may be placed upon all movements of capital or
selectively against most politically vulnerable companies. Exchange controls are
extended to cover products by applying a system of multiple exchange rates to
regulate trade. · Local-content laws- companies often require a portion of any
product sold in a country to have a local content. · Import restrictions- selective
restrictions on import of certain raw materials, machines and spare parts are
common strategies used to force foreign companies to purchase more materials
within host country creating markets for local products. · Tax controls- taxes are a
classified risk when used as a means of controlling' foreign investments. They are
often raised without warning and in violation of formal agreements. · Price controls-
essential products that command considerable public interest are often subject to
price controls. ASSESSING POLITICAL VULNERABILITY: Some products are more
politically vulnerable than others, in that they receive more government attention.
This special attention may result in positive or negative actions towards the

7. company. Unfortunately there are no absolute guidelines for marketer's to follow
whether the product will receive government attention or not.
POLITICALLY SENSITIVE PRODUCTS: There are some generalizations that help to
identify the tendency for products to be politically sensitive. Products that have an
effect upon the environment exchange rates, national and economic security, and
the welfare of the people are more apt to be politically sensitive. For products judged
non essential the risk would be greater, but for those thought to be making an
important contribution, encouragement and special considerations could be
available.
FORECASTING POLITICAL RISKS: A number of firms are employing systematic
methods of measuring political risk. Political risk assessment can: · Help managers
decide if risk insurance is needed · Devise and intelligence network and an early
warning system · Help managers develop a contingency plan · Build a database of
past political events for use by corporate management · Interpret the data gathered
and getting forewarnings about political and economic situations REDUCING
POLITICAL VULNERABILTY: Even though the company cannot directly control or
alter the political environment, there are measures with which it can lessen the
susceptibility of a specific business venture. GOOD CORPORATE CITIZENSHIP A
company can reduce its political vulnerability by being a corporate citizen and
remembering: - 1. It is a guest in the country and should act accordingly 2. The
profits are not it's solely, the local employees and the economy of the nation should
also benefit. 3. It is not wise to try and win over new customers by totally
Americanizing them. 4. A fluency in the local language helps making sales and
cementing good public relationships. 5. It should train its executives to act
appropriately in the foreign environment.
STRATEGIES TO LESSEN POLITICAL RISKS: MNCs can use other strategies to
minimize political risks and vulnerability. They are: - · Joint ventures · Expanding the
investment base · Marketing and distribution · Licensing · Planned domestication ·
Political payoffs GOVERNMENT ENCOURAGEMENT OF GLOBAL BUSINESS
FOREIGN GOVERNMENT ENCOURAGEMENT Governments also encourage
foreign investment. The most important reason to encourage investment is to
accelerate the development of an economy. An increasing number of countries are
encouraging investments with specific guidelines toward economic goals. MNCs may
be expected to create local employment, transfer technology, generate export sales,
stimulate growth and development of the local industry.
US GOVENRMENT ENCOURAEMENT: The US government is motivated for
economic as well as political reasons to encourage American firms to seek
opportunities in the countries worldwide. It seeks to create a favorable climate for
overseas business by providing the assistance by providing the assistance that helps
minimize some of the troublesome politically motivated financial risks of doing
business abroad.
3. LEGAL ENVIRONMENT:-
Organizations must deal with laws at the international, federal, state, and local
levels. US laws directly affecting marketing typically fall into two categories: those
promoting competition among firms and those protecting consumers and society.

8. Exhibit 3.8 presents examples of each type. Laws promoting competition focus on
outlawing practices that give a few firms unfair competitive advantages over others.
The specific impact of these laws depends on court rulings that may change over
time or differ at the state and national levels. An interesting example is in the area of
pricing. A federal court ruled that American Airlines was not guilty of trying to drive
weaker competitors out of business when it slashed fares in 1992. In contrast, a
state court in Arkansas found Wal-Mart guilty of predatory pricing by selling
pharmacy products below cost to drive out competitors. These examples illustrate
the complexity of the political/legal environment.
Consumer protection laws generally indicate what firms must do to give
consumers the information they need to make sound purchasing decisions or to
ensure that the products they buy are safe. For example, the Fair Packaging and
Labeling Act requires packages to be labeled honestly; the Child Protection Act
regulates the amount of advertising that can appear on children’s television
programs.
Laws typically affect marketing activities by indicating what can or cannot be
done. Until recently, Germany had a law that forced most retail stores to close at
6:30 PM on weekdays and 2 PM on Saturdays, and it did not allow commercial
baking on Sunday. This restricted the operations of retailers. A new law expanded
allowable shopping hours to 8 PM on weekdays and 4 PM on Saturdays; it also
allowed bakeries to sell fresh bread on Sunday mornings. Other stores must
remain closed on Sunday.
Some laws are directed at providing marketing opportunities. Syria, for
example in trying to open its economy to the private sector and foreign investment,
passed a law that exempts investors in approved projects from taxes for five to
nine years, waives customs duties on certain imports, and removes regulations that
made it difficult to do business in Syria. Known as No. 10, it has contributed to a
7 to 8 percent growth in the Syrian economy.
REGULATION AND REGULATORY AGENCIES:
Most legislation in the US is enforced through regulations developed by a
variety of agencies, and marketers must often work with regulatory authorities at the
federal, state, and local levels.
Key US laws affecting marketing
A. Promoting competition
Act Purpose
v Sherman Act (1890) Prohibits monopolistic practices
v Clayton Act (1914) Prohibits anticompetitive activities
v Federal Trade Commission Act (1914) Establishes regulatory agency to enforce
laws against unfair competition
v Robinson–Patman Act (1936) Prohibits price discrimination
v Lanham Trademark Act (1946) Protects trademarks & brand names
v Magnusson–Moss Act (1975) Regulates warranties
v US–Canada Trade Act (1988) Allows free trade between US & Canada
B. Protecting consumers & society
Act Purpose
v Food, Drug, and Cosmetics Act (1938) Regulates food, drug & cosmetic industries
v Fair Packaging and Labeling Act (1966) Regulates packaging & labeling
v Child Protection and Toy Safety Act (1969) Prevents marketing of dangerous
products to children

9. v Consumer Credit Protection Act (1968) Requires full disclosure of financial charges
for loans
v Fair Credit Report Act (1970) Regulates reporting & use of credit information
v Fair Debt Collections Practice Act (1970) Regulates methods for collecting debts
v Child Protection Act (1990) Regulates advertising on children’s television programs
v Americans with Disabilities Act (1990) Prohibits discrimination against consumers
with disabilities.
Often, regulations are not the same at different depends on court rulings that
may change over time or differ at the state and national levels. An interesting
example is in the area of pricing. A federal court ruled that American Airlines was not
guilty of trying to drive weaker competitors out of business when it slashed fares in
1992. In contrast, a state court in Arkansas found Wal-Mart guilty of predatory pricing
by selling pharmacy products below cost to drive out competitors. These examples
illustrate the complexity of the political/legal environment.
The governmental levels: For example, the Federal Trade Commission (FTC)
enforces guidelines for how firms promote the environmental advantages of their
products, but these guidelines do not supersede
state laws or regulations. Now, 12 states regulate environmental claims in some
way, with more states likely to follow in the future. Sorting through different
regulations is a complex task for marketers. Several of the most important federal
agencies are described in
Some of these regulatory agencies cut across industries (FTC, CPSC, EPA);
others focus on specific industries (FDA, ICC, FCC). The impact of these regulatory
agencies is especially evident in the pharmaceutical industry. The FDA must
approve a new drug before it is marketed and can place limitations on its use. For
example, the FDA approved Warner-Lambert’s anticonvulsant, Neurontin, but only
as an add-on therapy for patients taking other epilepsy medications. This stipulation
limits Warner-Lambert’s marketing efforts for Neurontin. FDA actions can also
produce
marketing opportunities. The approval of smoking-cessation nicotine drugs as over-
the-counter products opened up a large market to marketers of nicotine gum and
patches. As more firms participate in the global marketplace, the need for
international regulations is emerging. One example is the International Standards
Organization’s 25-page set of quality standards called ISO 9000. These standards
apply to 20 different functions within a company, such as product design, process
control, purchasing, customer service, inspection and testing, and training, and are
being incorporated into laws of the European Union (EU) to regulate trade in Europe.
A company must go through a long and expensive process to become ISO 9000–
certified, which would indicate it meets world standards in many areas. Companies
not ISO 9000– certified may not do business in Europe or many other countries.
Even individual companies, like General Motors and Siemens, require their suppliers
to be ISO 9000–certified.Regulations in different countries also change and present
market opportunities or threats. For example, the EU is deregulating European skies.
Beginning April 1, 1997, any EU carrier can fly anywhere in the EU. This
deregulation provides opportunities for EU airlines to open new markets, but the
increased competition is likely to reduce prices to consumers. Lower prices will exert
tremendous pressure on profits. Many of the smaller, start-up airlines may not be
able to survive. The larger airlines, such as Lufthansa, are already implementing cost
cutting measures to prepare for the more competitive environment. Sometimes

10. regulations are slow to develop for new markets. This is the case in Japan shows of
how entrepreneurs are taking advantage of this situation.
4.SOCIAL ENVIRONMENT:-
The social environment includes all factors and trends related to groups of
people,including their number, characteristics, behavior, and growth projections.
Since consumer markets have specific needs and problems, changes in the Identify
relevant environmental factors & trends Does trend create a marketing opportunity?
Does trend pose a marketing threat? Decide how to minimize threat Assess impact
of trends on markets & marketing activities Decide how to take advantage
of opportunity.
Social environment can affect markets differently. Trends in the social
environment might increase the size of some markets, decrease the size of others,
or
even help to create new markets. We discuss two important components of the
social environment: the demographic environment and the cultural environment.
Speaking from Experience Based in Hong Kong, Samuel Chi-Hung
Lee’s company has established extensive business networks in southeast Asian
countries, such as Indonesia, Malaysia, Singapore, Burma, Vietnam, and southern
China. Samuel has been a senior sales and marketing management executive for
several North American corporations with operations in Hong Kong and has an MBA.
He describes some of the business opportunities made possible by the rapidly
changing marketing environment in China and Hong Kong.
‘‘Tremendous changes have taken place in Hong Kong since China
implemented
its open-door policy to the outside world. Hong Kong has changed from a
manufacturing center to an international financial and professional services
center. Because land and labor costs are high, many businesses in Hong Kong
are knowledge-based and driven by information technology. My company
utilizes
knowledge and information to help other companies pursue opportunities in
different Asian countries. For example, we are working with a joint venture to
build a chemical plant in Ho Chi Minh City, Vietnam.’’
Demographic Environment
The demographic environment refers to the size, distribution and growth
rate of groups of people with different characteristics. The demographic
characteristics
of interest to marketers relate in some way to purchasing behavior, because people
from different countries, cultures, age groups, or household arrangement often
exhibit different purchasing behaviors. A global perspective requires that marketers
be familiar with important demographic trends around the world as well as within the
United States.
GLOBAL POPULATION SIZE AND GROWTH
Population size and growth rates provide one indication of potential market
opportunities. The world population is now more than 5.3 billion, and almost 100
million people will be added each year during the 1990s. Thus, the world population

11. is expected to grow by 1 billion during the decade of the 1990s. Approximately 95
percent of that growth will take place in developing countries in Asia, Africa, and
Latin America.2 Population in the developed countries will grow at a much slower
rate. For example, the US population grew by approximately 1 percent per year
during the 1980s, a low rate expected to persist throughout the 1990s. There is a
tremendous disparity in population size and growth rates across countries, China
currently has the largest population, followed by India, with the US a distant third.
The rapid growth of the Indian population is expected to make it the world’s most
populous nation by the year 2100. Other countries with large and growing
populations are the developing nations of Indonesia, Brazil, Pakistan, Bangladesh,
and Nigeria. The world population situation can be summarized as follows. About
every two seconds, nine babies are born and three people die, for a net increase of
three people each second. This leads to a growth rate of 10,600 people per hour,
254,000 per day, 1.8 million per week, 7.7 million per month, and 93 million per year.
Of this annual increase, developing countries will have 87 million new people, and
developed countries, 6 million. Annual growth will increase to 94
million by the year 2000; by 2020 it will be 98 million, with 98 percent occurring in
developing countries. These world population statistics make it clear that marketers
cannot rely on population growth in developed countries alone for general increases
in market size. The largest growth markets, measured by population size, are in the
developing countries. Yet, lower income levels in developing countries may limit the
actual market size for many products. Thus, marketers will have to look hard to find
attractive growth markets in developed and developing countries.
GLOBAL DEMOGRAPHIC CHARACTERISTICS AND TRENDS
Overall world and country population statistics are important, but most
marketers target subgroups within these large populations. Trends in population
subgroups are therefore typically the most useful to marketers. An important trend in
many countries is growth of the urban population. Current and projected populations
for the world’s largest cities are presented in In general, the largest cities and the
highest city growth rates are in developing countries such as Mexico, Brazil, and
India; however, growth in urban population is evident in many developed countries.
For example, in 1900 the US population was 39.6 percent urban and 60.4 percent
rural; in 1990 the figures were 75.2 percent urban and 24.8 percent rural.4 This
means the largest and fastest-growing markets for many products are located in the
urban areas of most countries. However, there has also been some growth in the
rural population in the US since 1990. US rural areas have seen a 5.1 percent
population increase in the past five years, the fastest rural growth rate in more than
two decades. Much of this growth is from retirees, those seeking specific types of
recreation, and those wanting a more peaceful life. Some families are moving to rural
areas; but in many of these households, at least one parent commutes to work in a
big city or telecommutes. Retailers, such as Wal-Mart and Kmart are responding to
this growth by opening stores in these rural areas. Another interesting trend is the
aging of the population in many countries. Current and projected median ages for
selected countries The aging of the population is especially evident in Italy, Japan,
Britain, and the US. Notice, however, the relatively young populations in the
developing countries, such as Nigeria, Mexico, Brazil, and China. Age distribution
trends in the US are presented in more detail in The largest percentage of growth is
occurring in the 45–64 and 65+ age brackets, with slight to moderate decreases in
all younger age categories. These trends have important implications for marketers;
older consumers have different needs and purchasing habits than younger

12. consumers. Marketers are responding to different age markets in a number of ways.
For instance,
• Financial institutions have increased marketing efforts to attract mature
Americans. Mutual fund giants, T. Rowe Price and Vanguard, offer software
programs to help older consumers plan for retirement. Merrill Lynch hired a
gerontologist to understand mature consumers better and to develop products to suit
their goals. ESPN developed the Alternative Sports Olympics to appeal to
consumers aged 18 to 29. Also called The Extreme Games, the program featured
sports that would attract the so-called Generation X (bungee jumping, street luging,
sky surfing, and barefoot water ski jumping) and was sponsored by companies trying
to target those young consumers (Taco Bell, Mountain Dew, Nike, AT&T, and
Pontiac). More than 130,00 spectators saw the games live and 11.1 million watched
on television. ESPN has made this an annual sports competition.
• Sega of America spends a great amount of time trying to understand teens.
The company’s advertising agency visits the homes of 150 teens and goes shopping
with them at the malls. This information helps Sega introduce new video games
successfully. Yet another relevant demographic trend is the declining number of
household units consisting of the ‘‘typical’’ family: married couples with children living
at home. Only 26 percent of US households fall in this category, down from 31
percent in 1980. People living with nonrelatives is the fastest-growing household
type, up 46 percent during the 1980s.9 In addition, 23 million Americans live by
themselves. This is an increase of 91 percent for women and 156 percent for men
during the 1980s.10 The needs and purchasing behaviors of different household
arrangements represent important trends affecting marketers.
The world’s largest cities
City
1991
(in thousands)
2000 (est.)
(in thousands)
1. Tokyo—Yokohama, Japan 27,245 29,971
2. Mexico City, Mexico 20,899 27,872
3. Sa˜ o Paulo, Brazil 18,701 25,354
4. Seoul, South Korea 16,792 21,976
5. New York, USA 14,625 14,648
6. Osaka—Kobe—Kyoto, Japan 13,872 14,287
7. Bombay, India 12,109 15,357
8. Calcutta, India 11,898 14,088
9. Rio de Janeiro, Brazil 11,688 14,169
10. Buenos Aires, Argentina 11,657 12,911
Cultural Environment
The cultural environment refers to factors and trends related to how people
live and behave. Cultural factors, including the values, ideas, attitudes, beliefs, and
activities of specific population subgroups, greatly affect consumers’ purchasing
behavior. Thus, marketers must understand important cultural characteristics and
trends in different markets.
CULTURAL DIVERSITY Cultural differences are important in both international
and domestic markets. A cultural group’s characteristics affect the types of products
it desires and how it purchases and uses those products. Different cultural groups in

13. international markets often require marketers to develop strategies specifically for
them. Campbell’s Soup has had some successes and some failures in doing this.
The successes include hearty vegetable and fat-free soups in Australia, duck-gizzard
soup in Hong Kong, and the Godiva Chocolatier line in Japan. But the company has
had some failures due to lack of understanding cultural differences in some markets.
German consumers did not like Campbell’s canned condensed soup. They prefer dry
soups in envelopes. Polish consumers did not like Campbell’s prepared soups, since
they would rather cook soup at home. Much of the population growth in the US is
and will be accounted for by different cultural groups. The majority US population is
expected to grow by about 3 percent between 1990 and 2000. Compare this to the
14 to 52 percent growth rates of different ethnic groups. A large portion of this
population growth is accounted for by African-Americans, Asian-Americans, and
Hispanic-Americans. However, significant growth is also expected from other cultural
groups: Arabs, Russians, Eastern Europeans, and Caribbeans. These different
cultural groups retain many of their habits, attitudes, interests, and behaviors even
though they are proud to be Americans. The US is not a melting pot; it’s a mosaic of
unique people with a variety of cultures. Successful marketers understand the
delicate balance between important cultural differences and similarities that unite
different cultures. For example, the Arab-American sector consists of a diverse group
of people from 22 different countries, with the largest subgroups being Egyptians,
Syrians, Lebanese, Palestinians, and Iraqis. Although these subgroups differ in
various ways, there is also cohesiveness among them due to their common Arab
heritage. This cultural complexity provides marketers with a continual challenge.
Take the cosmetics industry as an example. Maybelline introduced its Shades of You
cosmetics line to appeal women of color in 1991 and captured 41 percent of the
$55 million ethnic cosmetics market by 1992. In 1993, Revlon and Cover Girl
entered the ethnic market. These companies found out, however, that a large portion
of their sales were to white women, even though marketing efforts were targeted to
specific cultural groups. The companies now offer a wide variety of cosmetic shades,
but present them together in stores and advertise in generalmarket women’s
magazines.
Contrast that with the situation of Susan Yee. She and her five sisters were
constantly frustrated by the lack of cosmetic products that would highlight the yellow
undertones of their complexions. Susan decided to remedy the situation by
establishing Zhen, a line of cosmetics targeted to Asian women. Zhen, pronounced
‘‘jen,’’ means genuine in Chinese. Zhen products are sold through a 12-page catalog
and at some Nordstrom branches. Her typical customer is a working Asian-American
woman between the ages of 20 and 40.17 These examples in the cosmetics industry
illustrate the importance of understanding the diversity among and within different
cultural markets. There are typically opportunities to market products across some
cultural groups and to also target specific cultural groups. Sometimes, products from
one culture can appeal to consumers in another culture. Princess Asie Acansey of
Ghana capitalized on such an opportunity when she formed Advanced Business
Connections (ABC). She was disturbed about the imagery of Africa as typically
presented in the US and decided to do something about it. ABC infuses African
culture into the American teddy bear. The teddy bears represent African royalty and
follow African royal customs. The first teddy bear was the king’s protocol officer,
Kwesi-Bear, then King Tutu Bear, followed by Queen Abena. Most of ABC’s
marketing has been on the QVC home shopping network. The products have been

14. well received beyond the African-American market in the US, illustrating the potential
from mixing different cultures.
CHANGING ROLES As more women enter the workforce and household
compositions change, typical household roles are altered. No longer are financially
supporting the household and developing a career solely the responsibility of men.
No longer are household chores, child care, or grocery shopping solely the
responsibility of women. In many households, roles have shifted and distinctions
have become blurred. More men spend time on household and shopping chores,
and many women are involved in career development and provide much or most of
the financial resources for a household. Tremendous market opportunities exist for
firms that can develop effective strategies for appealing to these changing roles.
Take golf as an example. Women now account for 21 percent of the 25 million
golfers in the US. And this percentage is growing. Some of this growth is due to
more women playing golf as part of their business or professional life. Others play
the sport entirely for pleasure. In any case, women spend about $3 billion annually
on golf equipment, clothing, travel, green fees, and other related products. One study
found that women are more likely to take golf lessons, are less price sensitive, and
are more concerned
about wearing fashionable clothing than men golfers. This growing, upscale market
of female golfers is attractive to marketers of golf products as well as other products.
EMPHASIS ON HEALTH AND FITNESS Another cultural trend is an increased
emphasis on health and fitness. The pursuit of a healthier lifestyle includes eating
more nutritious foods, exercising regularly, participating in various sports activities,
and focusing on wellness. This translates into potential market opportunities for firms
that provide products and services geared toward improving health and fitness.
The organic food and beverage industry is illustrative. Sales have increased by more
than 20 percent for each of the past four years and are in excess of $3 billion
annually. The number of new organic food and beverage products has increased
from 512 in 1991 to 1,015 in 1995. These products include everything from chicken
potpies to pinot noir wine. Every indication is that this growth will continue in the
future.20 The emphasis on health and fitness has contributed to the longer life
expectancies in the US and other countries. Longer life spans increase the
importance of customer loyalty as discussed in ‘‘Earning Customer Loyalty: Longer
Lifetimes, More Lifetime Value.’’
DESIRE FOR CONVENIENCE Changes in household composition, increases in
the number of working women, and a general shortage of time underlie an increased
desire for convenience. Two-paycheck households often have more money than
time. And they are willing to spend this money to avoid spending time doing
undesirable chores, such as cooking, cleaning, or auto maintenance. Thus, many
consumers buy products and services to minimize time devoted to such chores,
opening new market opportunities for companies able to meet these needs. Firms
specializing in home shopping are taking advantage of this need by making it easy
for consumers to purchase products whenever it is convenient. QVC and Home
Shopping Network dominate the $2.5 billion televised home shopping business. In
Japan, consumers are purchasing US products through World Shopping Network
(WSN). WSN is available 24 hours a day as an online computer service.
CONSUMERISM Consumerism is the movement to establish and protect the rights
of buyers. Some say the consumerism movement will intensify as we move through
the 1990s. Consumers are more educated, knowledgeable, and organized. They will

15. demand better consumer information, quality, service, and dependability, and fair
prices.22 The consumerism movement is one reason marketers need to adopt an
ethics perspective. Giving consumers products that work, charging fair prices, being
honest, and practicing social responsibility are the best ways to respond to
consumerism.one increasingly important consumer issue is environmentalism.
As consumers worldwide become concerned with environmental issues, their
purchasing behavior will change. Successful marketers can respond by developing
environmentally safe products and communicating their environmental contributions.
Ogallala Down Co. is taking advantage of this trend. The company’s philosophy is,
‘‘Healthy products for people and the environment.’’ It markets down comforters and
pillows that are hypoallergenic, warm, lightweight, breathable, and guaranteed for 10
years. Established in 1989, the company has enjoyed rapid sales growth in an
industry long dominated by large firms. The American Marketing Association
recognized the environmental achievements of Ogallala Down by presenting it with
an Edison Environmental Award.
POPULAR CULTURE The final cultural trend we note is the popularization of
the US culture throughout much of the world. Movies, television shows, and
commercials typically express a culture’s values and attitudes, and US food, fashion,
and entertainment trends are becoming increasingly popular worldwide.
Technological advances and globalization of the media allow the export of this
popular culture, resulting in a variety of market opportunities. One firm taking
advantage of these opportunities is MTV, which beams music videos into 210 million
households in 71 countries. Revenues are increasing at the rate of 20 percent per
year as MTV establishes or expands operations in Europe, Australia, Latin America,
Russia, China, Korea, and Taiwan.

16. THANK YOU
SUBMITTED BY:-
ASHWIN VIJAY DIDOLKAR
SEMESTER: III