The International Political Economy -Chapter 4

The first part of chapter four talks about the importance of demographics when marketing a product internationally. The book says that there are three things that we have to take into consideration to find out if the international market is right for a product. The first thing is to find out is if the country is right for the product, it would be very difficult to try to open a The North Face store in St. Maarten for example. The second step is to make sure that the potential customers are able to pay for the product. And the last step is to make sure that the Market is large enough.

There are three categories used to describe a country, developed countries, like USA for example, are countries that have a strong economy and high standard of living. Newly Industrialized countries have a high level of industrialization but sometimes they might not have a high income or the road and rail network that a develop country has. And the developing countries, also known as third world countries, which have a low personal income.

Chapter four also talks about the importance of education and how it influences a countries economy. The book estates that most developed countries require citizens to have a high level of education. A high-developed country requires 12 to 13 years of education (I didn't know that), while a less-developed country requires only from 6 to 9... that's half!! This is an important thing for a marketer to have in mind because one, the more educated a country is the easier it is for a company to develop. And two, the more educated a customer is, the more identified he/she is going to feel with the product.

Population is also a very important fact to have in mind when marketing a product internationally. Developed countries are strong in very aspects but when it comes to population, developing countries beat them. Why? Developing countries have a much larger population of younger people, innovators who are always looking for the next new thing and can actually afford it because they have a higher disposable income. Developed countries on the other hand, are declining. The average age is increasing, the tax burden is rising, lessening the ability to buy a product.

Social class is another important piece of information that we as marketers should have in mind because it varies in every country. Here, in USA for example, if you work hard and have a good credit ( or credit cards) you can buy anything you want, a big house in Great Falls, a BMW or a First Class ticket to travel around the world. No matter what social class you are part of you are allowed to have this type of life if you can afford it. In Colombia that is not possible, individuals from lower, middle class would never be able to drive a BMW or buy a house in a city like Great Falls, because they don’t have the social status to do it.
As a marketer, if you want to target a product in a different country this is something you have to have in mind all the time because people from a higher class for example think different and are used to a different life, full of expensive things and never concerned about how much money they are going to spend. Lower social classes, on the other hand, do take this into consideration; they are more conservative when it comes to money and normally live on a budget.

The second part of the chapter talks about the Economic Environment and the effect this has in a country.
The economic system is what controls the production, distribution and usage of the goods and services of a product. There are 4 types of economic systems marketers have to have in mind when marketing a product. The sales strategies used, should be based on the type of economic system the country has. Market economy is when a free market determines which products are produced, marketed and priced. Mixed economy merges a market economy characteristic with different levels of government control. Planned economy, is very straightforward, they plan the products manufactured and decides where they can be sold and how much to charge. And the last one is Traditional economy, conventional economic systems; traditions, religions beliefs and historical events determine how questions should be answered.

The last part of the chapter talks about the Political and Legal Environments. There are a few types of political systems around the world, the book talks about four. Democracy, allows direct elections by a country’s citizen. Republic, citizens’ chose a representative who is in charge of voting on laws. One party state, agrees to have only one political party. Theocracy, religion or faith plays a leading role.
The legal environment creates, interprets and enforces the laws of a country. There are to main types of legal systems Statutory law –sets every legal issue possible into a law and Case law –allows statutes to specify situations.