Components of International Marketing Environment & importance:
The various components of the international marketing environment are the major determinants of marketing opportunities. As such, it is the responsibility of an international firm to have clear grasp of international marketing environment to formulate effective marketing decisions regarding Marketing Mix variables.
The International Marketing Environment consists of following elements:
- Economic Environment
- Financial Environment
- Cultural Environment
- Social Environment
- Political Environment
- Legal Environment
- Competition Environment
- Technological Environment
1. Economic Environment
The economic environment is comprised of the following economic variables at least:
a) National Income.
b) Gross Domestic Product (GDP).
c) Industrial Structure.
d) Currency floating (Open/fixed) issue.
e) Demand patterns.
f) Balance of Payment (BOP) status
g) Economy base (Import/Export).
h) Rate of Economic Growth.
i) Occupational Pattern.
j) State of Inflation.
k) Consumer Mobility.
The international marketer tries to understand economic environmental variables of the global markets for identifying the right marketing opportunities for the enterprise.
2. Financial Environment
Financial environment refers to the financial system study of a country in which the international marketer intends to operate. A financial system of a country refers to the following two variables such as: a) Money Market. b) Capital Market.
3. Cultural Environment
Culture is everything that people have, think and do as members of the society. It is the sum total of knowledge, beliefs, arts, morals, laws, customs and any other capabilities and habits acquired by humans as members of the society. The environment which is comprised of norms, taboos, religious sentiments, habits that determines the lifestyle, attitude towards different goods and buying decisions is regarded as cultural environment.Since consumer behavior is highly influenced by cultural environment, a firm pursuing international marketing must know the cultural differences in which international efforts are made.
4. Social Environment
Human beings live in a society. A contemporary society is comprised of various social classes depicting a wide range of values, attitudes and behavior. Each class is shown in terms of social status, relative wealth and prestige. Individuals belonging to a particular class are found to lead their lives as per the norms and values of the concerned class. Thus social environment refers to social stratification of a society and its behavioral implications. The international marketer intends to provide an insight into the social environment to know the constituents of a foreign society and to understand how social classes differ in their buying habits, brand choice and living patterns.
Research on social environment has come out with the following social classification and their buying/consumption pattern which are helping international marketer to decide about their strategy:
a)Upper Class: Consumers belonging to Upper Class serve as a reference group for others to the extent that their consumption decisions trickle down and are imitated by other social classes. They constitute a good market for jewellery, antiques, homes and vacations.
b)Lower Upper Class: This class tends to show patterns of conspicuous consumption to impress those belonging to less than their social position. They seek to buy the symbols of status for themselves and their children, such as, expensive homes, schools, automobiles etc.
c)Upper Middle Class: This class is a quality market for good homes, clothes, furnitures and appliance. They seek to run gracious home, entertaining friends and clients.
d)Middle Class: This class constitutes a major market for do it yourself products. This group is involved in religious activities and tries to avoid highly styled clothings.
e)Working Class: This class basically aims at meeting salient human needs. They also strive for security and interested in items that enhanced their leisure.
f)Upper lower Class: The upper lowers are found to be sports fan, heavy smokers. In view of their financial conditions, they tend to show interest in the low priced consumer goods.
g)Lower-lower Class: Individuals belonging to this class usually have broken down homes, dirty clothes and raggedy possessions.
5. Political Environment
Political environment refers to the variables like below:
a) Stability of Government Policies.
b) Philosophies of the political parties.
c) State of Nationalism.
d) Kinds of Political risks
e) State of bureaucracy.
f) Economic Risks.
g) Attitude toward foreign investment.