As a consequence, reality today is more complex as international trade becomes more and more part of daily life. Marginal incomes vary significantly across cultures and within cultures. Prices are not solely driven by market forces and elasticity of price - demand does not follow simple marginal analysis theory. Tastes and preferences are not only different in different cultures, but change rapidly as fads come and go. In many ways consumers are more discerning (complaining more frequently about poor service and their "rights") but are also "illogical," borrowing heavily on their credit cards although much less expensive sources of finance are available.
Since any country's imports are another country's exports, eventually they must be balanced and governments often intervene to achieve this by tariffs and barriers - or are required to do so by international monetary systems. Whilst balance-of-payments accounts may be balanced at settlement time, inequalities across the world are increasing. For example, in some countries a drought means that cars can't be washed, whereas in other places people may die and crops fail.
So now the British and Dutch drink French wine, Americans drive Japanese cars, and Russians eat American burgers and wheat. Nevertheless, we should recall that the basis for international trade is exchange. Uni-directional selling is not sustainable. Cultural and other international differences, such as the availability of labor and materials, lead to differences in costs and prices. Through international marketing effort and then trade, countries supply the world with commodities they can offer cheaply in exchange for other goods which are available cheaply elsewhere. Traditionally goods made by labor-intensive methods were likely to cost more relative to goods produced by capital-intensive methods in the west. However world trade has grown faster than world income, and many less-developed countries complain that industrialized countries are exploiting them by buying raw materials at low cost, then sending them back as finished goods at a much higher cost. Many industrialized countries are now exporting jobs to lower labor cost areas, as can be seen with the devlopoment of telephone call centers in India.
Customer loyalty can no longer be taken for granted in cultures where it has previously existed. In contrast it may be expressed in different ways in new destination markets, in a different culture, because of the different meaning that relationships play in the buyer-seller interface. But commercial success has to depend more on finding a new understanding of market dynamics than short-term, fleeting success through lucky accidents of matching or hitting a fashion trend.
Fed by the growing accessibility of information, money, and goods across borders, all of these changes present a constant series of challenges to marketers as well as governments. For most societies in the free world, the livelihoods, pensions, and future security of their citizens depends on the renewal, transformation, and survival of organizations, institutions, and relationships to prevent a "melt-down into collective confusion, insecurity and chaos" (Crainer, 1998). Leadership of these new organizations will require support to progress individual and social as well as corporate transformation. Future corporate success will only result from successful marketing identifying, creating, and satisfying customer needs so that the organization can deliver service and value to customers in this new environment.
CHANGING DEMOGRAPHICS
Marketers have always been concerned with changing demographics in order to profile customers and subgroups of customers. They are discovering how rapidly they need to rethink and reassess such groupings. We have to be concerned with:
structural changes (in population, age distributions, fecundity/birth rates of different cultures),
migrations - net of immigration and emigration (aculturalization, ethnicity, diversity, and the development of multicultural societies), and
changes in beliefs and values held by different people (shifts, divergences, and convergence of cultural norms and values).
The total potential market is growing as the world population expands at an increasing rate although it should be noted that this growth is not uniform, and in some areas - including Europe - the population is actually declining (see Table 1.1).
Table 1.1: Population data
Country or area
Population (000s)
2003
2025
2050
World
6,301,463
7,851,455
8,918,724
Africa
850,558
1,292,085
1,803,298
Asia
3,823,390
4,742,232
5,222,058
Europe
726,338
696,036
631,938
Latin America and the Caribbean
543,246
686,857
767,685
Northern America
325,698
394,312
447,931
Oceania
32,234
39,933
45,815
Source: United Nations Population Statistics and Forecasts, July 2003.
The main growth continues to occur in the Far East, especially China and Korea, and in South America. Of course population growth does not imply a direct growth in market opportunity, especially because those countries with larger growth rates also tend to be those with lower GNP per capita. More importantly, population growth in these regions results in a larger low-cost labor force, which is why many US and European organizations operate in these countries.
However, even more dramatic are the changes in the structure of the population due to birth rates and life expectancy. These result because of differences in fecundity (fertility, health of mothers, and survival rates) and other changes in society (women in more developed societies restricting pregnancies and/or choosing to delay the onset of childbearing) combined with longer life expectancy. In some countries, such as Bangladesh, Pakistan, and India, life expectancy will double over the course of less than a century (see Figure 1.1).
Figure 1.1: Changes in life expectancy. Source- United Nations Population Statistics and Forecasts, July 2003.
These changes have important consequences for marketers. In the west, age-generation profiling has become even more a part of the marketers' toolkit - witnessed by the growth in targeted services and goods to WOOPs ("well off older people"), DINKYs ("double income, no kids yet") and SWLAs ("single women living alone") replacing the older A1, A2, B, and C social class groupings.
Whilst migration has very little effect on overall population levels, it does contribute to changes in population structure. Immigrants usually come from different cultural backgrounds and offer and create different opportunities for marketers. Entirely new markets have been identified and satisfied (like one for black adhesive plasters) for these immigrants as new customers. In addition immigrants often become a new source of suppliers as they offer new, culturally-led products and services to the host community - such as ethnic food shops and restaurants.
Smoking
As smoking declines in the west, tobacco companies have found an even larger and expanding group of new smokers in China. More cigarettes are smoked in China than anywhere else, with 1,643 billion consumed in 1998. Given that global consumption in 2000 was 5,500 billion, then one in every three cigarettes smoked is smoked in China.