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Introduction
Economic growth and global trade has extended well into the 21st century Three multinational markets are crucial: The Americas, Europe, and Asia Within each of these markets are fully industrialized dust a ed nations, at o s, rapidly ap d y industrializing dust a g nations, and less developed nations , miles, , and cultural distances can be Time zones, a major concern and many U.S. companies have organized their international operations according di to these h concerns
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Overview
The importance of marketing and economic development Stages of economic development, economic growth factors, objectives of developing countries, infrastructure and development, and marketings contributions Marketing in developing countries g Emerging g g Markets ( (BEMs) ) and the Americas Big
NAFTA, DR-CAFTA, MERCOSUR, LAEC, FTAA, SAFTA
According to the Encyclopedia Britannica Physiological desnychronization desnychronization is caused by Physiological transmeridian (east-west) travel between different time zones Most people find it difficult to travel eastward, adapting a shorter day as opposed to a longer one For international travelling executives executives, jet lag can be a major concern Jet lag g can cause extreme fatigue, g , sleep p J disturbances, loss of concentration, disorientation, malaise, sluggishness, gastrointestinal upset, and loss of appetite
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The United Nations groups countries into three categories MDCs (more-developed countries Canada, g France, Germany, y Japan, p and the United England, States) LDCs (less-developed countries Asia and Latin America) LLDCs (least-developed countries Central Africa and Asia) ) NICs (Newly Industrialized Countries Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan)
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C Countries t i th that t are experiencing i i rapid id economic i expansion i and industrialization Do not exactly fit as LDCs or MDCs Have moved away from restrictive trade practices Instituted significant free market reforms Brazil B il is i a good d example l of f an NIC NIC, exporting ti everything thi from alcohol-based fuels to carbon steel. Brazilian orange juice, poultry, soybeans, and weapons compete with U.S. products d t for f foreign f i markets. k t The Th B Brazilian ili aircraft i ft manufacturer, Embraer provides a substantial portion of the commuter aircraft used in the U.S. and elsewhere
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Political stability in policies affecting their development Economic and legal reforms Entrepreneurship Planning Outward orientation Factors of production Industries targeted for growth Incentives to force a high domestic rate of savings and to direct capital to update the infrastructure, transportation, housing, education, and training Privatization of state-owned enterprises p ( (SOEs) ) that p placed a drain on national budgets
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Privatization is the norm and currently a major economic phenomenon in industrialized as well as in developing countries
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Infrastructure represents those types of capital goods that serve the activities of many industries such as paved roads, railroads, seaports, communication networks, etc. The quality of an infrastructure directly affects a countrys economic growth potential and the ability of an enterprise to engage effectively in business The less developed a country is the less adequate the infrastructure is for conducting business Countries begin to lose economic development ground when their infrastructure cannot support an expanding population and economy
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Marketings Contributions
Marketing (or distribution) is not always considered id d meaningful i f l to those h responsible ibl f for planning Marketing M k ti i is an economys arbitrator bit t b between t productive capacity and consumer demand The marketing process is the critical element in effectively utilizing production resulting from economic growth Marketing is instrumental in laying the groundwork for effective distribution g
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In evaluating the potential in a developing country, y the marketer must look at two areas:
Level of market development Demand in developing countries
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North American Free Trade Agreement (NAFTA) United States Central American Free Trade Agreement-Dominican Republic Free Trade Agreement (DR-CAFTA) (DR CAFTA) Southern Cone Free Trade Area (MERCOSUR) Latin American Progress Latin American Economic Cooperation FTAA or SAFTA?
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The U.S. Department of Commerce estimates that over 75% of the expected growth in world trade over the next two decades will come from the more than 130 developing and newly industrialized countries Big emerging markets share important traits
Are all geographically large Have significant populations Represent sizable markets for a wide range of products Have strong rates of growth or the potential for significant growth Have undertaken significant programs of economic reform A of Are f major j political liti l i importance t within ithi th their i regions i Are regional economic drivers Will engender further expansions in neighboring markets as the grow
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A single market of 360 million people with a $6 trillion GNP Ratified and became effective in 1994 994 Requires the removal of all tariffs and barriers to trade over 15 years All tariff barriers dropped in 2008 Improves all aspects of doing business within North America Creates one of the largest and richest markets in the world Job losses have not been as drastic as once feared, in part because companies have established maquiladora plants in anticipation of the benefits from NAFTA
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Most of the countries in Latin America have moved from military dictatorships to democratically elected governments in the last three decades Protectionism has g given way y to p privatization and other economic, monetary, and trade policy reforms Because of its size (population of 600 million is nearly twice that of the United States and 100 million more than the European Community) and resource base, the Latin American market has always been considered to have great economic and market possibilities
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A vast population of the emerging market are viable customers with expanding income As a country develops Incomes change
Population concentrations shift Expectations p for a better life adjust j to higher g standards New infrastructures evolve Social capital investments made
When incomes rise, new demand is generated at all income levels for everything from soap to cars
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The $10,000 Club is group of consumers with h homogenous d demands d who h share h a common knowledge of products and brands If a company fails to appreciate the strategic implications of the $10,000 Club, it will miss the opportunity to participate in the worlds fastestgrowing global consumer segment Markets are changing rapidly, and identifiable market k t segments t with ith similar i il consumption ti patterns tt are found across many countries
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Summary (1 of 2)
Foreign marketers must be able to
Rapidly react to market changes Anticipate new trends within constantly evolving market segments that may not have existed as recently as last year
As nations develop their productive capacity, all segments of their economies will feel pressure to improve The impact of these political, political social and economic trends will continue to be felt throughout the world IT will speed p up p the economic g growth in every y country
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Summary (2 of 2)
Marketers must focus on devising plans d i designed d to respond df fully ll to each hl level l of f economic development Big Bi emerging i markets k t may present t special i l problems however, they are promising markets for a broad range of products now and in the future Emerging markets create new marketing opportunities for MNCs as new market segments evolve
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