Question

1. Explain the importance of shifting spending patterns and quality in the selection of products for exports.

2. What is the importance of political and legal forces in international market assessment?

Answer 1

1. The basic determinants of how much a consumer buys a product is the taste and preference of the person, as well as the product's price relative to the other product's price. The consumer's income is another major influence. If the income of the consumer increases, demand will increase for most goods. However, demand for goods that people consider to be necessities, such as fuel, tobacco, bread, or meat, tends to decline, and exporters of such products are unlikely to benefit greatly from rising consumer incomes elsewhere. Luxury demand, such as new cars or expensive food, is growing faster. Exporters should therefore generally focus more on goods that consumers consider to be "luxuries" due to shifting patterns of expenditure in response to rising incomes.

2. There are laws in some countries that will greatly affect or completely prohibit your ability to do business in them. One such example is Thailand which has specific laws stating that no foreign person or company can own more than 49 percent of Thailand's assets, so you need to be willing to take on a Thai partner to do business there. If part of your product marketing strategy includes manufacturing or distributing your goods in a foreign target market country, you must be aware of laws like this. There is a chance that the only way you can do business in a foreign country is to issue a costly license or license to manufacture and sell your product for you from another business in that country. Governments do these things as a way to ensure a higher percentage of sales income remains at home. Pepsi's license to bottle and distribute Pepsi products in the Netherlands is an example of this.

Taxes are another way for governments to cash in on foreign businesses operating and selling their country's products, so spending on their citizens doesn't allow much money to leave the country. Taxes can and will affect your ability to make a profit by selling goods and services in a foreign country and will therefore shape your international marketing strategy. High tax rates on sold goods, such as those in the United States, can make it difficult for a business to remain on the right side of that fine line between profit and loss.