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CHAPTER 6
CONSUMER, INDUCTRIAL, AND GOVERNMENT MARKETS
Chapter Outline
A. Drivers of the Global Consumer
B. The Global Consumer
C. Influences on the Global Consumer
1. Economic Status
D. Country-of-Origin Effects
E. The Industrial Buyer
F. Influences on the Global Industrial Buyer
1. Culture
This chapter begins with a discussion on the drivers of the global consumer. It then helps us
understand the characteristics of the global consumer. Next, it helps us recognize the
Suggestions for Teaching
• The instructor could ask the students to discuss how their economic status influences their
buying decision.
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• The instructor could ask the students to discuss the situational factors that influence them
while buying a product.
• The students could be asked to identify the countries that have a positive and the countries
Chapter Summary
Exhibit 6.1 displays three levels of factors that shape the world of consumers today. At the
outermost level are supranational factors, which transcend national borders and affect the global
consumer at a macro, international level. Trade institutions and policy refer to global entities such
A. Drivers of the Global Consumer
The emergence of the global consumer coincides with two important driving trends:
• Globalization
• Advancing information and communications technologies
Globalization refers to the growing interconnectedness of nations, the organization of life
on a global scale, and the consolidation of world society. It is characterized by a
combination of falling trade barriers and the industrialization and modernization of nations
The second major trend refers to technological developments in information and
communications. A century ago, nations were largely cut off from one another due to trade
barriers, geographic distance, and lack of efficient transportation technologies that could
convey goods quickly from one corner of the world to another. This geographic distance,
however, has been dramatically reduced thanks to developments in transportation.
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B. The Global Consumer
The past few decades have seen the emergence of the global consumer. Global consumers
are individuals or organizational buyers that exhibit similar needs and tastes worldwide.
Industrial markets in virtually every economic sector have acquired global characteristics.
The rise of multinational corporations has stimulated widespread competitive pressures on
In each country, the existence of a consumer culture is characterized by:
• Emphasis on marketing-based exchange relationships
In the United States, consumerism is practiced with much conviction, and Americans tend
to judge their friends and neighbors based on the products they own. Based on its “winner
takes all” and “growth at all costs” approach, the marketing discipline has on occasion led
individuals and society astray.
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Among the most important factors spurring increased consumption are:
• Rising income levels
• Participation in global free trade
Internationally, market researchers can observe much similarity in the consumption
C. Influences on the Global Consumer
In international marketing, certain factors are known to influence the preferences and
buying behavior of consumers. These factors are summarized in Exhibit 6.2.
1. Economic Status
The ability to purchase goods and services is strongly influenced by income level.
Comparisons can be based on the level of each nation’s per-capita gross domestic
product (GDP).
Growing convergence of income levels has coincided with the emergence of
consumers with similar tastes around the world. As consumers attain higher levels of
affluence, they want to buy more, and they increasingly aspire for the same types of
products and services. Mass media expose consumers in less developed economies to
2. Technology Level
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Technology refers to knowledge and usage of tools, machines, techniques, or methods
3. Personal Motives
A motive is an internal force that orients a person’s activities toward satisfying a need
or achieving a goal. Perhaps the most recognized explanation on the formation of
motives is that of the psychologist Abraham Maslow. Maslow’s “hierarchy of needs”
suggests that people are motivated to fulfill basic needs before moving on to other
needs, all of which motivate ultimate behavior.
• Physiological needs describe the needs vital to survival, such as the need for food,
4. Culture
Culture is the integrated system of learned behavior patterns that distinguish the
members of a given society. It represents basic beliefs, values, and behavioral
tendencies that are learned from family and other important institutions. It strongly
influences consumption in each country. It is characterized by norms, which are
accepted behaviors within a society or group. They may be explicit or implicit and
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5. Social Factors
Family and social groups strongly influence consumer behavior. In many countries,
the family is the center of social life.
6. Situational Factors
Situational factors are environmental or locational conditions that affect how
consumers behave. Physical surroundings include geographical location and climate.
The buying experience differs between two countries due to differences in geography,
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consumer behavior.
D. Country-of-Origin Effects
Buyer behavior is affected by the national origin of products and services. Country–of–
origin (COO) refers to the nation where a product is produced or branded. Origin is usually
indicated by means of a product label. When consumers are aware of a product’s COO,
they may react positively or negatively. Firms may need to use substantial resources to
convince foreign consumers to buy their goods and services or to change their perceptions.
Buyer reactions to COO are influenced by various factors:
• COO stereotypes vary depending on the origin of the judge and on the category of the
Consumer ethnocentrism is the tendency to view domestically produced goods as superior
to those produced in other countries. Some people believe it inappropriate, and possibly
even immoral, to buy products from other countries.
Also known as organizational buyers or businesses, industrial buyers differ substantially
from retail consumers. Industrial buyers purchase raw materials, parts, components, and
supplies in order to produce other products or run a business. Some industrial buyers
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Industrial buying is associated with two important concepts:
• Derived demand: It refers to demand for raw materials, parts, and other inputs that
depend on demand for some other good. For example, demand for antennas used in
1. Culture
Cultural influences occur at the level of the nation, the industry, and the firm. Most
companies have a distinctive set of norms, values, and modes of behavior. Marketing
goods to such buyers necessitates skills in dealing with organizational and national
cultural factors. Industrial buyers work closely with their suppliers. In business–to–
The industrial buying process typically tends to be systematic and stepwise as
purchasing professionals identify, evaluate, and choose among alternative brands and
suppliers. Initially, the process is guided by the organization’s goals and constraints.
The buying task is determined by the structure and size of the firm, structure of the
2. Stage of Economic Development
Countries pass through various stages of economic development. The level of
development determines, to a large extent, the nature and quantity of demand for
industrial products. The typical developmental stages are as follows:
• Traditional society: At the most basic level, many countries are characterized by
subsistence activity in which output is consumed by producers rather than traded.
3. National Situational Factors
Numerous situational factors influence industrial buying. Initially, countries have
differing levels of technological development. The technology acceptance model
describes how individuals and firms accept and use given technologies. A firm may be
reluctant to embrace an innovation or advanced technological product if the offering
G. The Government Buyer
Governments are important targets for sales of goods and services. Governments at both
federal and local levels purchase nearly every kind of good.
Most governments have a system, often required by international agreements or treaties,
for opening government purchases that exceed a certain dollar value to international bids.
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1. Targeting Global Customers
In many ways the task of the international marketer today is less complex than in the
past. In earlier times, when countries differed sharply in terms of culture, income,
legal systems, and other factors, marketers found themselves devising a wide range of
marketing programs to suit diverse needs and tastes around the world. Today, thanks
Many firms organize dealings with key global industrial buyers through global
account management (GAM). Companies worldwide have long used national account
management to handle their most important accounts. Recently, globalization has
created the need for coordinating top accounts at multinational firms on a global scale.
GAM benefits customers in various ways:
• By sourcing the same products and services for its worldwide operations, the
2. Country-of-Origin Challenges
Multinational firms employ various strategies to overcome consumer ethnocentrism
and the COO phenomenon. When contemplating a new marketing venture in a given
foreign country, management should conduct market research to learn about the
presence and nature of any COO effects. Research also should aim to ascertain the
3. Global Customer Relationship Management
The customer is the ultimate focus of marketing. Historically, transactional marketing
focused on increasing the number of individual sales. Today, experienced marketers
know it is more effective to maintain long-term relationships with good customers
than to constantly search for and find new customers. In many ways, the historic
4. Selling to Governments
One of the most lucrative market opportunities when selling to foreign governments is
infrastructure development. Nations need basic infrastructure in order to function well
and develop dynamic economies.
Broadly, government procurement, or public tendering, is the purchasing of products
and services on behalf of a government agency or other public entity. Governments
usually designate a central office to serve as a point of contact for publicizing
procurement opportunities and receiving bids. Tendering involves several steps:
• Initially, a government desires to purchase a given product or service.
Several factors are of paramount importance to ensuring success in selling to foreign
governments:
• It is essential to know one’s strengths and weaknesses.
Key Terms
Global consumers: These are individuals or organizational buyers who exhibit similar needs and
tastes worldwide.
Norms: These are accepted behaviors within a society or group.
Country–of-origin (COO): It refers to the nation where a product is produced or branded.
Consumer ethnocentrism: It is the tendency to view domestically produced goods as superior to
those produced in other countries.
World mindedness: It refers to a consumer’s interest in, and openness to, acquiring goods from
other countries.
Questions for Discussion
1. Describe the main characteristics of the global consumer.
Global consumers are individuals or organizational buyers that exhibit similar needs and
2. Explain the three levels of global consumer.
Student answers should be based on Exhibit 6.1.
At the outermost level are supranational factors, which transcend national borders and affect
the global consumer at a macro, international level. The influence of globalization and
3. Explain the drivers of the contemporary global buyer marketplace.
The emergence of the global consumer coincides with two important driving trends:
• Globalization: It refers to the growing interconnectedness of nations, the organization of
life on a global scale, and the consolidation of world society. Growing integration of
world markets enables individuals, companies, and nations to reach around the world
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4. What are the main influences on the global consumer?
The main influences on the global consumer are:
• Economic status
5. What are country–of-origin effects? Define consumer ethnocentrism and world mindedness.
Buyer behavior is affected by the national origin of products and services. Many consumers
are relatively indifferent to where a product is made. Other consumers favor goods produced
in their home country. Country of origin (COO) refers to the nation where a product is
6. Describe the main characteristics of the industrial buyer.
Also known as organizational buyers or businesses, industrial buyers differ substantially
from retail consumers. Industrial buyers purchase raw materials, parts, components, and
7. What factors influence the global industrial buyer?
The factors that influence the global industrial buyer are:
8. Explain the typical stages of national economic development.
The typical stages of national economic development are:
• Traditional society: At the most basic level, many countries are characterized by
subsistence activity in which output is consumed by producers rather than traded. This
9. What are the main characteristics of the government buyer?
Governments are important targets for sales of goods and services. Governments at both
federal and local levels purchase nearly every kind of good, from aircraft to thumbtacks,
10. Explain what firms do to succeed at targeting global consumers.
A global market segment is a group of customers who share common characteristics across
numerous national markets. Marketers target these buyers with relatively standardized
marketing programs.
Many international firms aim for a global positioning strategy, that is, one in which the
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11. What is global customer relationship management?
The customer is the ultimate focus of marketing. Historically, transactional marketing
focused on increasing the number of individual sales. Today, experienced marketers know it
is more effective to maintain long-term relationships with good customers than to constantly
12. Explain the major steps in selling to governments.
Broadly, government procurement, or public tendering, is the purchasing of products and
services on behalf of a government agency or other public entity. Governments usually
designate a central office to serve as a point of contact for publicizing procurement
1. The European Union is home to more than 500 million (mostly well-heeled) consumers,
making it one of the largest and most attractive markets worldwide. As firms contemplate
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2. Governments are important consumers of products and services. Suppose you work for a
firm seeking to market its offerings to the governments of Mexico and Norway. You can