Legal, Social, Cultural and Demographic Features of International Market – SS3 Marketing Lesson Note (First Term)

International marketing is the marketing of goods and services to customers in countries other than the firm’s home country.

• Main influences: social, cultural, demographic, economic, competitive and legal factors in the country where the firm sells.
• What they shape: the value system, customers’ needs and wants, the economic environment, competitors’ strategies and the rules a firm must follow.
• Rule for firms: study these factors before deciding the international marketing mix.

Behavioural objectives

By the end of the lesson, students should be able to:

1. List and explain the features of the international market.
2. List the factors that affect international marketing.
3. Explain how social, cultural and demographic factors influence the international marketing mix.
4. Explain how economic, competitive and legal factors influence the international marketing mix.

Instructional techniques and materials

Instructional techniques

• Identification
• Explanation
• Questions and answers
• Demonstration
• Videos from source

Instructional materials

• Videos
• Loud speaker
• Textbook
• Pictures

What is the international market?

The international market is the set of buyers and sellers who trade goods and services across national borders.

What are the features of the international market?

• Different customers: buyers in each country have their own needs, tastes and buying habits.
• Different languages: a firm must communicate in the languages of its buyers.
• Different currencies: payment involves foreign exchange and changing exchange rates.
• Different laws: each country has its own rules on trade, tax, prices and product standards.
• Different cultures: beliefs, customs and values differ from one country to another.
• Greater distance: goods travel further, so transport, insurance and documentation matter more.
• Higher risk: changes in government policy, exchange rates or demand can affect the firm.
• More competition: the firm meets local firms and firms from other countries.

What factors affect international marketing?

There are six main factors that affect international marketing: social, cultural, demographic, economic, competitive and legal.

How do social factors affect international marketing?

The social factors of a nation determine the value system of its society, which in turn affects the international marketing mix.

• Culture: the way of life of the people.
• Caste or social class: the group a person belongs to, which can affect what he or she buys.
• Customs: accepted ways of behaving, such as how people greet and trade.
• Languages: they affect labels, advertisements and brand names.
• Lifestyle: how people live, dress, eat and spend their money.
• Standard of living: it decides what people can afford to buy.
• Climate: it affects the demand for clothes, building materials, fans, heaters and food storage.
• Marketing infrastructure: roads, ports, storage, banks and media that a firm needs to sell its goods.

The demand for goods and services is affected by all these factors.

Changing lifestyle and buying habits

• The quality of people’s lifestyle is changing a lot.
• People are willing to buy consumer durables such as TVs, fridges and computers even when they cannot pay for them outright.
• This became possible because of hire purchase and instalment payment.

How do cultural factors affect international marketing?

Cultural factors are the beliefs, values, customs and habits that people learn from the society in which they grow up.

• They influence every aspect of international marketing.
• International marketing decisions are based on recognition of the needs and wants of customers.
• They help marketers understand the behaviour patterns and lifestyle of the culture in which an individual has grown up.
• An individual’s perception is therefore shaped and influenced by cultural factors.

Elements of culture that a marketer must study

• Language: a wrongly translated brand name or slogan can confuse or offend buyers.
• Religion: it can forbid some foods, drinks or dress, so such products will not sell.
• Values and beliefs: they decide what people accept as good, proper or fashionable.
• Customs: they affect gift giving, festivals and when people buy most.
• Food habits and dress: they decide which food products and clothes suit a market.
• Colours and symbols: the same colour can carry different meanings in different cultures.

How do demographic factors affect international marketing?

Demographic factors are the features of a country’s population, such as its size, age, income and location.

• Population size: a large population means a large possible market.
• Population growth: a fast-growing population means rising demand for food, housing and schools.
• Age structure: a young population buys more toys, school items and fashion. An older one buys more health products.
• Sex: the share of males and females affects demand for items such as clothing and cosmetics.
• Income level and distribution: they decide how many people can afford the product and at what price.
• Urban and rural location: city dwellers are easier to reach with advertising and shops.
• Family size: it affects the pack size and quantity people buy.
• Education level: it affects how people read labels and respond to advertisements.
• Occupation: it affects what people need and when they have money to spend.

How do economic factors affect international marketing?

Economic factors are the conditions of a country’s economy that decide whether a firm can trade and make profit there.

• They are the most significant determinants of international marketing.
• They also affect the survival and success of a business organisation.
• They determine the economic environment of a country.
• Before going into export business, or before deciding the international marketing mix, a firm must examine them.

Economic factors to study

• Exim policy of the country: the government’s rules on exports and imports.
• Commercial policy: the government’s trade rules, such as import duties and quotas.
• Financial system: the banks and other institutions that supply credit and handle payments.
• Monetary system: the country’s money, interest rates and exchange rate.
• Currency restrictions: limits on changing the local currency into foreign money or sending it out of the country.
• Inflation: a general rise in prices, which reduces what customers can buy.
• Deflation: a general fall in prices, which can reduce sellers’ profit.

How does competition affect international marketing?

Competition is the rivalry between firms selling similar goods to the same customers, and it is an important determinant of the international marketing mix.

• A business firm faces competition in its home market as well as in the international market.
• The firm decides its marketing mix by considering competitors’ strategies for product, price, place and promotion.
• Product: what quality, design and features rivals offer.
• Price: what rivals charge and whether they offer discounts.
• Place: how and where rivals distribute their goods.
• Promotion: how rivals advertise and which media they use.

How does the legal environment affect international marketing?

The legal environment is the set of laws and regulations that a firm must obey in a country where it does business.

• It influences international marketing decisions on competition, price setting, taxation and other legal matters.
• A firm should study the legal system of a country well before doing business with that country.

Common legal matters

• Competition rules: laws that stop unfair practices such as price fixing.
• Price setting: rules that may limit how high or low a price can be.
• Taxation: import duties, sales tax and company tax that raise the cost of selling.
• Product standards: rules on quality, safety, labelling and packaging.
• Advertising rules: limits on what an advertisement may say or show.
• Contracts and disputes: the law that governs agreements and settles disagreements.

How do these factors influence the international marketing mix?

Each factor influences one or more of the four Ps of the marketing mix: product, price, place and promotion.

Evaluation

1. List and explain the factors that affect international marketing.
2. State four features of the international market.
3. Explain three demographic factors a firm should study before entering a foreign market.
4. Give two examples of cultural factors that can affect the sale of a product abroad.
5. List four economic factors that a firm must examine before exporting.

Assignment

A Nigerian firm plans to sell packaged food in another country. Write short notes on how the legal, social, cultural and demographic features of that country could affect its marketing mix.