Navigating the Global Economy: Trends, Strategies, and Marketing

Posted on Jan 1, 2025 in Economy

The world economy has undergone significant changes in recent years, transforming large geographical areas into a small and interconnected world. This transformation is driven by technological development, advances in communications and computing, and increased trade and mobility. This reduction in distance has allowed many companies to expand their geographic markets and sources of supply. They can now buy and sell in distant places. Many products sold in a country are hybrids, with processes, materials, and assembly originating from several countries. Companies selling their products abroad have made alliances with suppliers, distributors, and technology partners. It is also crucial to consider competition abroad and develop strategies to compete under these new conditions.

The key question of this millennium is: “What should I offer so that what I produce is sold?” This requires efficient and effective organizational management, encompassing business management and sales, which is essentially marketing. Marketing is the social and administrative process by which groups and individuals obtain what they need and want by generating, providing, and exchanging products of value with others. It deals with the phenomenon of exchange and turning desire into need.

The uncontrollable variables are provided by the environment, while those controlled by the company are: Product, Price, Place, and Promotion (Publicity).

Key Marketing Concepts

Needs, Desires, and Demands:
- Need: A state of deprivation, the difference between what one has and what one wants (e.g., food).
- Desires: The desire for goods or products, shaped by social forces.
- Demands: The desire for specific products, backed by the capacity (purchasing power) and willingness to buy.
Products and/or Services:
- Products: Everything that can be offered to satisfy a need or desire.
- Service: Provided through people, places, activities, or organizations (e.g., the desire for fun through a theater performance (people) or a trip (place)). Marketing often sells not just physical products or services, but the means of satisfying needs and desires.
Value: The consumer’s estimation of a product’s ability to meet their needs. The better a product satisfies a desire, the more valuable it is to the consumer.
Cost: The amount of a commodity a consumer gives up to acquire another while maintaining the same level of satisfaction.
Exchange: The act of obtaining a desired product by offering something in return. It is a process.
Trade: When an exchange occurs, it becomes a trade. Trade involves the exchange of values between two parties. It is called money when product A is given to B in return for money. For a transaction to exist, there must be two objects of value, agreed-upon terms, price, time, and space. It differs from a transfer, where there is no payment (e.g., a gift).
Market: Potential clients who share a specific need or desire. It may or may not be a physical place where buyers and sellers meet (e.g., mail order or internet purchases). In all cases, sellers offer their products on the market to satisfy needs and desires in exchange for money.

Objectives of Sales and Commercial Management (Marketing)

The objectives are to plan, implement the plan, set prices, market, and distribute products and services to meet the needs of people and organizations through exchanges. To achieve these, business management must implement processes for the overall management of organizations, specifically in marketing and sales. The objectives are:

Identify consumer needs that the company can meet with its products and services (the market). This puts the company in touch with its context and is accomplished through market research, segment identification, setting goals, etc.
Guide specific areas to produce those goods or provide those services. This involves coordination between marketing and production. Marketing defines what product/service is required, and production designs the product/service within the company’s cost constraints.
Determine the price. This is a priority of the commercial area.
Establish distribution channels.
Define communication and promotion. These two objectives are part of the marketing function and can be developed internally or by hiring specialized companies. This mode of operation reduces costs because the company does not need to maintain these areas internally (outsourcing).

Market Segmentation

Market: A place (physical or otherwise) where buyers and sellers interact, each aiming to meet their needs. The company needs to identify market segments it can best serve. Marketing also needs to establish goals and positioning, research the market, and understand consumer behavior. Identifying the target market means defining the market to which a company will direct its product offerings. This involves grouping potential buyers based on common characteristics. Demand can be grouped by income levels, age, sex, etc. The criterion depends on the product offered and the characteristics of the segment it targets.

Types of Segmentation Methods

Geographic Segmentation: Divides the market into units such as countries, regions, provinces, municipalities, etc.
Demographic Segmentation: Divides the market into groups based on demographic variables like age, family size, income, and religion (most commonly used variables).
Psychographic Segmentation: Divides the market based on variables like social class and lifestyle.
Behavioral Segmentation: Divides the market into groups based on their behavior or attitude toward a product.

Setting Targets

Once market segments are defined, marketing management must evaluate the different segments and decide which and how many to target with its products, as well as the goals for each segment. The following criteria are considered:

Segment Size and Expected Growth: The company must know the growth potential and size of the segment. A larger segment offers better opportunities but attracts more competitors.
Structural Attractiveness of the Segment: Each segment has a structure arising from customers and competitors. Marketing management must analyze the risk of larger competitors, new substitute products, or input suppliers increasing their prices.
Objectives and Resources of the Company: Marketing management must analyze the company’s objectives regarding the selected segment and the resources available to address them.

Commercial Management May Decide To

Act in a single segment: This is simple but risky if new substitute products emerge.
Specialize selectively: The company selects multiple segments, diversifying risks.
Specialize in a niche: The company focuses on a specific group of potential customers.
Select all segments: This is full coverage, typically only feasible for large companies.

Setting goals involves determining:

Segment size
Segment structural attractiveness
Alignment with objectives and resources

Positioning

One of the most important functions of business management is devising ways to differentiate a product offering from its competitors. In this stage, marketing aims to develop maximum competitive advantage and optimize the company. Differences in the product can be found in specifications, quality of materials, production process, and packaging.

Factors Determining Competitive Advantage

Differences in the product, personnel training, and the projected value of the brand. Differentiation is based on concepts such as better, newer, faster, and cheaper. Once financial management identifies all product differences, it must establish the product image and brand. Advertising plays a crucial role here. The image is how the public perceives the company.

Identity: Names, logos, symbols, events. Brand image is enhanced when reinforced by identity. The message must be unique, consistent, and communicate key product features. Usually, the brand image is represented by a symbol, which should be included in audiovisual and written communications.

Marketing management will then generate market competition strategies through a process called market research.

Market Research

There are six steps:

Defining the Problem: Researchers must know the objectives of their investigation.
Developing a Research Plan: The researcher must organize information sources, which can be primary or secondary. Primary sources provide general information, while secondary sources use existing information for research.
Selecting the Method for Collecting Information: The researcher must decide whether to collect information by observing buyers, bringing them together in groups, or using questionnaires.
Collecting Information: Many use telephone questionnaires, while others use self-service terminals where buyers read questions and input responses.
Analyzing Information: The researcher tabulates responses and calculates averages and dispersion measures.
Presenting the Results: The researcher must present relevant data useful for decision-making.

Different Types of Consumers

Marketing management must understand the consumer. The main factors influencing consumer behavior are:

Cultural: Culture, subculture, social class.
Social: Reference groups, family, role, and status.
Personal: Age, occupation, income, lifestyle.

Product Life Cycle

The product life cycle reflects the different stages of an asset’s sales. Each stage presents various alternatives and marketing challenges.

Stages

Introduction: The product is introduced to the market, characterized by investment to ensure its dissemination. This stage has lower income and higher expenses.
Growth: The product is accepted in the market, with continuous investments leading to sales growth. This stage involves a lot of promotion, with higher revenue and expenses.
Maturity: Sales volume stabilizes, investments do not increase, and profits peak. Sales are stagnant and can only grow by taking market share from competitors. Revenue is higher, and expenses are lower. Repositioning (finding new uses for the product) may be an option.
Decline: Sales decrease. Decisions include discontinuing the product or continuing with it as is. This stage has lower revenue and lower expenses.

Commercial management should explore the product’s history, sales trends, and the expected duration of each stage.

Process of New Product Development: Idea generation, research, development of the product concept (what the client should understand), sketch, and recent economic and financial analysis.