THEINTERNATIONALMARKETINGENVIRONMENT 146TheEconomicEnvironment
Anation's economicsituationrepresentsitscurrentandpotentialr:apacitytoproducegoods
andservices.Thekeytounderstandingmarketopportunitiesliesintheevaluationofthe
stageofa nation'seconomicgrowth.
Awayofclassifyingtheeconomicgrowthofcountriesistodividethemintothree
groups:(1)industialized,(2)developing,and(:5)less-developednations.Theindustrial-
izednationsaregenerallyconsideredtobetheUnitedStates,Japan, Canada, Russia,Aus-
traliaandmostofWesternEuropeTheesonomiesofthesenationsarecharacterizedby
privateenterpriseandacow,umerorientaion.Theyhavehighliteracy,modemtechnology,
andhigherpercapitai;1comes,
DevelopingnationsarethosethataremakingthetransitIOnfromeconomiesbased
onagriculturalandrawmaterialsproductionto industrialeconomies,ManyLatinAmeri-
cannations fitintothis category,andtheyexhibitrisinglevelsofeducation,technology,
andpercapitaincomes,
Finally, therearemanylessdevelopednatio!1sintoday'sworid,Thesenationshave
lowstandardsofliving,literacyratesarelow,andtechnologyisverylimited.
Usually,themostsignificantmarketingopportunitiesexistamongtheindustrialized
nations,astheyhavehigh levelsofincome,oneofthe:lecessaryingredientsforthefor-
mationofmarkets. However, mostindustrializednationsalsohavestablepopulationbases,
andmarket saturationformanyprodUCeSalreadyexists.~hedevelopingnations,ontheother
hand,havegrowingpopulationbases,andalthoughtheycurrentlyimportlimitedgoodsand
services,thelong-runpotentialforgrowthinthesenationsexists.Dependentsocietiesseek
productsthatsatisfybasicneeds-food,clothing,housing,medicalcare,andeducation.Mar-
ketersinsuchnationsmustbeeducators,~mphasizinginformationintheirmarketprograms,
Asthedegreeofeconomicdevelopmentincreases,sodoes thesophisticationofthemar-
ketingeffortfocusedonthecountries,
TheCompetitiveEnvironment
Enteringaninternationalmarketissimilartodoingsoina domesticmarket, inthata firm
seekstogaina clifferentialadvantagebyinvestingresourcesinthatmarket.Oftenlocalfirms
willadojJtimitationstrategies,someti.messuccessfully.Whentheyaresuccessful,theirown
nation'secc:lomyreceives a good boost.'Hhentheyarenotsuccessful, themultinational
firmoftenbuysthemout.
Japanesemarketershavedevelopedanapproachtomanagingproductcoststhathas
giventhema competitiveadvantageoverU.S.competitors.AtypicalAmericancompany
willdesigna newproduct,thencalculatethecost.Iftheestimatedcostistoohigh,theprod-
uctwillbetakenbacktothedrawingboard.InJapan,a companytypically startswitha
targetcostbasedonthepricethatit estimatesthemarketismostwillingtoaccept.Prod-
uctdesignen andengineersarethendirectedtomeetthecosttarget.Thisapproachalso
encourage~managerstoworrylessaboutproGuctcostsandmoreabouttheroleit should
playingainingmarketshare,Briefly, atJapanesecompanieslikeNEC,Nissan,Sharp,and
Toyota,a teamchargedwithbringinga productideatomarketestimatesthe priceat which
theproduc t is mostlikelytoappealtothemarket.FromthisfirstimpOltantjudgement,all
elsefollows.AfterdeductingtherequiredprofitmarginfromtheselJingprice,planners
developestimatesofeachelementthatmakeuptheproduct'scost:engineering,manufac-
tsales, andmarketing.U.S.firmstendtobuildproducts, figurehowmuchit coststo
buildtheproduct,andthenaskwhethertheproductcanbesoldata profitableprice.U.S.
companiestendnottoassesswhatthemarKetwillbewillingtopay.