Chapter 6 Consumer, Industrial, and Government Markets

The Exhibit above displays three levels of factors, ____________________________________,

________________________________, and _________________________________________
that shape the world of consumers today.

Emergence of global consumer coincides with 2 important driving trends:

(1) _________________________: refers to the growing interconnectedness of nations, the
organization of life on a global scale, and the consolidation of world society.
(2) ______________________________________________________________________
The developments in transportation reduced the geographic distance.
International mass media plays a major role in emergence of global consumer.

I. The Global Consumer

1. Definition of global consumers and global market segments

The global consumers are ____________________________________________________
_________________________________________________________________________

Global market segments are __________________________________________________

_________________________________________________________________________

Various product categories have become signs of global cosmopolitanism and modernity,
such as air conditioner, automobiles, consumer electronics, and hamburgers. Industrial
markets in every economic sector have acquired global characteristics. The rise of
multinational corporations has stimulated widespread competitive pressures on firms.
Many firms cut costs by minimizing the variety of parts, components, and other inputs used
to produce finished products and services.

In each country, the existence of a consumer culture is characterized by

(1)

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 (2)
(3)
(4)

2. Influences on the global consumer

In international marketing, certain factors are known to influence the preferences and
buying behavior of consumers. These factors are:

• Economic status
The ability to purchase goods and services is strongly influenced by _______________
and is related to __________________________________ and __________________.
Comparisons can be based on the level of each nation’s _________________________
______________________________________________________________________

• Technology level
Technology refers to _____________________________________________________
______________________________________________________________________
Technology level is strongly influenced by the ________________________________
in individual countries. The education systems affect literacy rates, the ability of
citizens to deal with advanced technologies, and ultimately earnings potential.

• Personal motives
A motive is ____________________________________________________________
______________________________________________________________________
Maslow’s hierarchy of needs suggests that people are motivated to fulfill basic needs
before moving on to other needs, all of which motivate ultimate behavior.
a. __________________________ describe the needs vital to survival, such as the
need for food, water, and sleep. All subsequent needs are secondary until
physiological needs are met.

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 b. __________________________ refer to people’s need for safety and security.
They include the desire for steady employment, health care, safe
neighborhoods, and shelter from the environment.
c. _______________________________ are basic to everyone and represent the
desire for friendships, romantic attachments, and families, fulfilling a need for
acceptance and companionship.
d. __________________________ describe the desire for objects and activities
that enhance self-esteem, personal worth, social recognition, and
accomplishment.
e. _______________________________ refer to the desire for personal growth
and the ability to achieve one’s full potential. Most people worldwide tend to
neglect self-actualization because they are so occupied with achieving the four
prior needs.

Two points about the hierarchy of needs are especially relevant to international
marketing.
a.

b.

• Culture
Culture is the integrated system of learned behavior patterns that distinguish the
members of a given society. It represents basic beliefs, values, and behavioral
tendencies that are learned from family and other important institutions. Culture is
characterized by ____________, which are accepted behaviors within a society or
group. They may be explicit or implicit and define the rules of behavior regarding
interactions with others.

Countries are also characterized by subculture, groups of people with shared value
systems based on common life experiences and situations. Subcultures may be
distinguished by differences in nationality, religion racial group, or geographic region.
Many subcultures constitute important market segments.

• Social factors
_____________ and ______________________________________ strongly influence
consumer behavior.

• Situational factors
Situational factors are environmental or locational conditions that affect how
consumers behave.

_____________________________include geographical location and climate. Physical

surroundings also vary at individual stores and include _________________________,
__________________________, and ________________________________________

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 _____________________________ refers to the public organizations and constraints
that societies create to give structure to human interactions. Institutions include
government and legal systems. Laws, regulations, and other formal institutions
determine the structure and efficiency of marketing systems.

3. Country-of-origin effect

Country of origin (COO) refers to the __________________________________________

Buyer reactions to COO are influenced by various factors: (1) COO stereotypes vary
depending on the origin of the judge and on the category of product being judged. (2)
Opinion varies depending on the national origin of the firm and the location where its
product is made. (3) As the capacity of countries to perform well in industries improves,
COO phenomenon varies over time. (4) Tendency of consumers to discriminate against
foreign products varies by demographic factors.

____________________________ is the tendency to view domestically produced goods as

superior to those produced in other countries.

_____________________________ refers to a consumer’s interest in, and openness to,

acquiring goods from other countries.

II. The Industrial Buyer

Industrial buyers are also known as organizational buyers. Industrial buyers purchase raw
materials, parts, components, and supplies in order to produce other products or run a business.

Industrial buyers may have substantial face-to-face contact with vendors, with whom they
often develop long-term relations. Purchases are usually based on specifications and technical
data, with buyers applying relatively scientific and rational approaches to the buying process.
Buying is performed by _________________________________ who may buy enormous
quantities of goods. Industrial buyers often employ competitive bidding and negotiations
during the buying process.

Industrial buying is associated with two important concepts:

(1) ____________________________: demand for raw materials, parts, and other inputs
that depends on demand for some other good
(2) ____________________________: the expected performance of a product relative to
the cost to buy and use it

1. Culture influences on the global industrial buyer

Cultural influences occur at the level of the nation, industry, and the firm. Most companies
have a distinctive set of norms, values, and modes of behavior. Marketing goods to such
buyers necessitates skills in dealing with organizational and national cultural factors.

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 Industrial buyers vary based on their ___________________________, which differs
cross-nationally.
• __________________________ countries are risk averse and favor rules, regulations,
and control mechanisms to minimize risk taking.
• __________________________ cultures are innovative and open to new approaches.

The industrial buying process typically tends to be systematic and stepwise as purchasing
professionals identify, evaluate, and choose among alternative brands and suppliers.
Initially, the process is guided by the organization’s goals and constraints. The buying task
is determined by the structure and size of the firm, and technology available and relevant to
purchasing. When management recognizes a need, it undertakes a process of specifying the
features of the desired good. The firm will search for suppliers and solicit proposals from
suitable vendors. Purchasing will select the most appropriate supplier, place an order, and
review the performance of supplier and its goods or service. The nature of these steps
varies from country to country.

2. The influence of stage of economic development on the global industrial buyer

Countries pass through various stages of economic development. The level of development
determines the nature and quantity of demand for industrial products. The typical
developmental stages are as follows.

(1) _____________________________: The stage is most associated with subsistence

farming, the most common economic activity in the world’s poorest countries.
(2) _____________________________: Countries evolve beyond dependence on
agriculture and begin to engage in simple manufacturing of value-added goods. The
stage coincides with development of infrastructure in transportation, communications,
and other areas. Entrepreneurs emerge who launch small firms that require basic inputs
and trade in natural resources and other primary products.
(3) ________________: Here workers progress from agriculture to manufacturing.
Producers specialize and begin to mass produce goods that can be exchanged with
trading partners worldwide. Most emerging market countries have attained this stage.
(4) _____________________________: In this stage, countries emphasize the production
of high-technology products and development of a strong services sector. Some late-
stage emerging markets are in this stage.
(5) _____________________________: This stage is characterized by a thriving consumer
and industrial economy with a substantial services sector. Numerous advanced
economies are in this category.

The firm must investigate each nation’s specific circumstances to determine what types of
products and services are in most demand.

3. The influence of national situational factors

Numerous situational factors influence industrial buying.

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 • __________________________________
Technology acceptance model describes how individuals and firms accept and use
given technologies.

• __________________________________ affect the attractiveness of foreign goods

making them costly or inexpensive.

• __________________ causes prices to rise.

III. The Government Buyer

Governments are important targets for sales of goods and services. Most governments have a
system, often required by international agreements or treaties, for opening government
purchases that exceed a certain dollar value to international bids. The aim of ______________
_________________ is to ensure the government pays a competitive price, receives quality
goods, and avoids the corruption that may accompany choosing suppliers based on personal
relationships.

• ____________________________________________ of the World Trade

Organization ─ main goal is to open government procurement to international
competition. It is also aims to ensure procurement laws, regulations, and procedures are
transparent and do not protect domestic products or suppliers nor discriminate against
foreign products or suppliers.

IV. Marketing to Global Consumers

1. Targeting global customers

Global market segment is a group of customers who share common characteristics across
national markets. Many international firms aim for a ______________________________,
that is, one in which the offering is positioned similarly in the minds of buyers across an
entire region or worldwide. The strategy reduces international marketing costs by
minimizing the need to adapt elements of the marketing program for individual markets.

Many firms organize dealings with key global industrial buyers through _______________
_________________________________________________________________________
Global account management (GAM) benefits customers in various ways. First, by sourcing
the same products and services for its worldwide operations, the customer gains economies
of scale and scope that translate into lower costs and more efficiencies. Second, GAM
ensures the supplier speaks to the customer with one voice, reducing the possibility for
miscommunication or mishap. Third, the customer needs to deal only with a single contact

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 point, a global account executive or team focused on its specific needs, who provides
consistent support.

2. Country-of-origin challenges

Multinational firms employ various strategies to overcome consumer ethnocentrism and the
COO phenomenon.

• When contemplating a new marketing venture, management should conduct

___________________ to learn the nature of COO effects.

• In the event the COO image is negative, the firm may attempt to conceal the national
origin or position the offering as made in the targeted country. The best way to
overcome negative stereotypes is to
a.
b.
c. Distribute the product through a well-respected intermediary in the target
market.

3. Global customer relationship management

The customer is the ultimate focus of marketing. Today, experienced marketers know it is
more effective to maintain long-term relationships with good customers than to constantly
search for and find new customers. Firms that emphasize ___________________________
seeks to build long-term relationships with key customers. This is achieved by emphasizing
activities that ensure consistent _____________________________. It applies to acquiring
quality relations with supply-chain partners and collaborative venture partners. It has
relevance to international marketing and is especially important in industrial sales.

_______________________________________ refers to collecting, storing, and analyzing

customer data to develop and maintain two-way relations between the firm and key
customers. Goal of CRM is to __________________________ to the firm's most important
customers. CRM is also related to providing superior customer service. Customer service
includes activities such as training, repair of damaged products, financing to assist
customers in purchasing products, and complaint resolution.

4. Selling to governments

Infrastructure development is one of the lucrative market opportunities. Nations need

infrastructure and communication systems to function well and develop economies.
___________________________, or public tendering, is the purchasing of products and
services on behalf of government agency. Tendering involves several steps. Initially, a
government desire to purchase a given product. Companies bid on the right to provide the
product for a determined price, and then the government chooses the lowest bidder.

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 Several factors are of paramount importance to ensuring success in selling to foreign
governments.
•
•
•
•

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