Important Economic and Marketing Concepts

Defining elements important to economic & marketing theory.

Important Economic and Marketing Concepts

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World Trade, the role of the WTO, protectionism, import quotas, embargoes, and tariffs.

World trade is a term that represents the movement of products and services between nations and the total value of imports and exports in the world (Solomon & Marshall, 2011). The World Trade Organization was established on January 1, 1995 in the city of Geneva, Switzerland. To this date the WTO has one hundred fifty three (153) members from all over the world. Members of this organization are anywhere from Argentina, Brazil, Mexico, United States, Italy, Spain and Zimbabwe to name a few. According to the World Trade Organization their goal is “to help producers of goods and services, exporters, and importers conduct their business”. The main purpose of the WTO is to try to sort out the trade problems countries face with each other, while ensuring the welfare of its members (World Trade Organization, 2013).

Protectionism is an economic policy or view that attempts to place restraints on industry and trade between nations. The benefits of protectionist policies are believed to be that they raise the price of import goods and thereby make domestic goods more appealing. Quotas, embargoes, and tariffs are all means of limiting import goods. They work by either through only allowing a specific number of goods (quota) or placing a tax on the imports (tariffs). Embargoes are enacted typically when the good does not meet certain standards or there are political motivations that stop trade completely.

Monopoly, Oligopoly, Monopolistic Competition, and Pure Competition

A monopoly refers to a market that is dominated by a single company providing services to a specific industry. In this market, one company is nearly the only source from which a consumer can purchase goods or services. For example, government agencies have a monopoly over many industries, such as water companies or electric companies considered monopolies. These entities can retain exclusive rights for those natural resources.

In contrast to the monopoly, an oligopoly is a market comprised of a several companies who provide similar products and services. Consumers can substitute similar brands for other brands. Competition provides price change in response to consumer needs. For example, large super stores like Wal-Mart or Target can be viewed as purely competitive companies within the clothing, health and beauty aid products, hardware, cookware, and grocery industry for their super centers that offer lower prices than other less popular competing chains.

Pure competition is a market situation where exists many similar products, freedom to enter the market, and many different buyers and sellers. In this market no individual seller or buyer can impact price. Most markets in the US for goods are this way.

Finally, the fourth market structure referred to as a monopolistic competition explains that sellers sell different products. It is almost the same as pure competition; however, it holds the exception that the products slightly altered from one another so consumers will seek the product differences rather than look at a price.

Technological, Sociocultural Environments and the Global Marketplace

The technological environment is part of the external environmental analysis of the company. The concept refers to the technology and its role or impact with the business. Another external factor is sociological environment which refers to the changing tastes and values of the market place that may impact the business.

A firm’s level of commitment related to its level of control in a foreign market: exporting, contractual agreements, strategic alliances, and direct investment.

A firm’s level of commitment is related to its level of control in a foreign market because the more committed the firm is to the foreign market the more control it has over the market. The four levels of involvement for companies are the strategies used which will determine the level of control the firm has in the market:

Exporting- The lowest level of control due to reliance on merchants in a foreign country but is also the safest level of involvement due to little investment in the marketing.

Contractual agreements- Typically used in licensing and contractual agreements, this level of involvement is a strategy used to increase a firm’s presence in a foreign country but places most of the risk on sellers.

Strategic alliances- This strategy is a relationship between a firm trying to expand into a new market where it partners with an existing company in that market. Both companies work towards the same goal.

Direct investment- This strategy is a full involvement where a firm invests and moves its operations into a foreign market. This strategy presents high risk but the greatest control.

Data mining and Marketing

Data mining is a methodical and systematic recovery of knowledge from data contained in data marts or data warehouses. These data sources are normally constructed by virtue of their normal use in business information systems. Marketers’ data mine to discover patterns that are valid and useful correlating to selling and consumers.

The Steps in the Marketing Research Process

Marketing research is comprised of process of defining a marketing problem, the opportunity, systematically collecting and analyzing information, and action. Defining the problem is vital to the marketing process because all other marketing processes hinge on this answer i.e., you cannot collect data on something you do not understand.

Techniques Used to Gather Data in Exploratory Research

Exploratory research is a type of research that uses focus groups telephone interviews, questionnaires, inter-views, small studies to get a “feel” for the problem. Marketers can use exploratory research to study why a particular product is not selling as expected by using groups to and short studies to analyze the products with consumers.

Advantages and Disadvantages of Telephone Interviews, Mail Questionnaires, Face- to- Face Inter-views, and Online

Interviews

Using telephone interviews, mail questionnaires, face- to- face inter-views, and online interviews to conduct research presents many advantages and disadvantages. The advantages of these methods include:

1. Inexpensive
2. They are useful in describing the characteristics of a large population
3. They can be administered from remote locations using mail, email or telephone.
4. Very large samples are feasible, making the results statistically significant.
5. Standardized questions make measurement more precise by enforcing uniform definitions upon the participants.
6. Standardization ensures that similar data can be collected from groups then interpreted comparatively.
7. Usually, high reliability is easy to obtain — by presenting all subjects with a standardized stimulus, observer subjectivity is greatly eliminated.

The disadvantages of surveys include:

1. A methodology relying on standardization forces the researcher to develop questions general enough to be minimally appropriate for all respondents, possibly missing what is most appropriate to many respondents.

2. They are inflexible in that they require the initial study design (the tool and administration of the tool) to remain unchanged throughout the data collection.

3. The researcher must ensure that a large number of the selected sample will reply.

4. It may be hard for participants to recall information or to tell the truth about a controversial question.

5. As opposed to direct observation, survey research (excluding some interview approaches) can seldom deal with “context.”

One of the most significant problems with these methods is in their design. Loaded questions can create a response bias. A loaded question biases the response given by the participant by constructing a question which incites or implies a particular response. For instance asking a question that begins with “Don’t you agree…” is an example of question that implies that the participant should agree.

Cookies and Ethical and Privacy Issues

Cookies are small files that collect data when people visit websites. They help websites and businesses personalize the experience by providing information to the company that allows it to show you what you might be interested in. The problem with cookies is that they collect this data without asking or giving a choice to the consumer. They can also be used for malevolent purposes. Hackers and identity thieves profile consumers using cookies or viruses that collect passwords stored on computers (Reynolds, 2006). These often come in the form of emails or are placed on fake websites or in internet download files.

Important issues to be Considered When Planning Online Data Collection

The important issue with online data is the accuracy of the data. Internet research has a self-selection bias due to the fact that the poor and elderly populations of consumers have limited access to the net. There is also the issue of competitors and hackers stealing or altering information in surveys and studies performed online.

References

World Trade Organization (2009) Retrieved on October 19, 2013 from www.wto.org

Reynolds, G. (2006). Ethics in information technology. (2nd ed.). Independence, KY: Course Technology. Pg. 35–37

Solomon, M.; Marshall, G.; Stuart, E. Marketing: Real People,Real Choices. Textbook. 7th edition. Pearson Prentice Hall. 2011. ISBN 978–0–13–217684–2

~Citation~

Vincent Triola. Sat, Jan 09, 2021. Important Economic and Marketing Concepts Retrieved from https://vincenttriola.com/blogs/ten-years-of-academic-writing/important-economic-and-marketing-concepts

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