Basic Marketing: A Global Managerial Approach

Perreault−McCarthy: Basic
Marketing: A
Global−Managerial
Approach, 14/e

4. Evaluating Opportunities
   in the Changing Marketing
   Environment

Text © The McGraw−Hill

Companies, 2002

Evaluating Opportunities in the Changing Marketing Environment 105

exceeded 400 percent a year in recent years. In contrast, recent U.S. levels— 3

to 20 percent—seem low. Still, inflation must be considered in strategy planning.

When costs are rising rapidly and there are no more cost-cutting measures to

take, a marketing manager may have to increase prices. But the decisions of indi-

vidual marketing managers to raise prices add to macro-level inflation. That can

lead to government policies that reduce income, employment, andconsumer

spending.

In the past, marketing managers often focused their attention on the economy

of their home country. It’s no longer that simple. The economies of the world are

connected—and changes in one economy quickly affect others. One reason for this

is that the amount of international trade is increasing—and it is affected by changes

in and between economies. For example, International Harvester (IH) was very suc-

cessful selling its earth-moving equipment in Asia when construction was booming.

However, when the “Asian flu” hit, many customers could no longer make pay-

ments. IH faced big losses—and the cost of retrieving equipment that was 13,000

miles away!

Changes in the exchange rate—how much one country’s money is worth in

another country’s money—have an important effect on international trade. When

the dollar is strong, it’s worth more in foreign countries. This sounds good—but it

makes U.S. products more expensive overseas and foreign products cheaper in the

United States. Then, firms like Compaq lose foreign customers to producers from

other countries.

A marketing manager isn’t safe from the forces of changing exchange rates just

because his or her firm is not involved in foreign trade. New competition arises in

domestic markets as foreign products gain a competitive edge with lower prices.

Many companies find themselves helpless during such economic change. In fact, a

country’s whole economic system can change as the balance of imports and exports

shifts—affecting jobs, consumer income, and national productivity.

You can see that the marketing manager must watch the economic environment

carefully. In contrast to the cultural and social environment, economic conditions

change continuously. And they can move rapidly—up or down—requiring imme-

diate strategy changes.^15

Managers who compete in

global markets need to be

aware of how changes in the

global economy will impact

their strategies and

opportunities.

The global economy is

connected