The economic theory of advertising as information emphasizes the role of advertising in reducing the time consumers expend on search and hence their total (purchase price plus search) acquisition cost." (Silk, Klein and Berndt, 2002)
Market forecasting is not an accurate science; and, the best models used are based on variables that the individual designing the model deems necessary. Marketing needs get more complicated as the number of markets and the variance within each market increase. The sensitivity to various factors can also help the marketing manager determine the soundness of the models proposed. Budget and finance cost can then be provided to department heads of various teams and groups in the organization at different locations to help them set a target for achieving the goals of the organization.
Larger amounts of R & D. spending, shorter product life cycles, the race to market of new products, differences in cultures and social needs, discrepancies in wages and salaries of workers and the increasing stakeholder demands for higher profits and returns have made most industries very competitive and volatile. Initial aggressive marketing, and research and development costs are some of the major reasons for poor performance on profits for organizations that are still growing. For a new entrant into the market, identifying the critical niches of competitors is the singular factor that will ensure success or failure of the organization.
While many researchers in the field state that higher levels of advertisement and marketing allow for higher levels of retail sales, this fact is often difficult to substantiate with empirical data. (Duffy, 2001) in many cases, perceived demand of the product in the mind of the customer might be more important that any external creation of need. Though it may be true that advertisement campaigns affect sales of the product, linking advertisement budgets to sales performance might negatively impact the performance of the product. Companies that are able to get their product to market first are often able to charge higher prices especially if there is a need for that product in the marketplace. If the company realizes however, that it face a new threat as a result of potential competitors in the market, it generally increase the "informative (goodwill) advertisement" at an earlier stage to gain an advantage.
In the name of "free trade," many economic injustices are carried out -- exploitation of the resources and labor of poorer countries to benefit corporations and wealthy nations are but a few. (Schifferes, 2003) the developed nations try very hard to hold on to their technology and advanced information and research ideas and only provide the poorer and underdeveloped countries with the final, low value addition to the production in terms of the cheap labor, questionable working conditions and not as perfect legal and political infrastructure. Many of the issues that constantly worry poorer states and developing countries is global market access without the help of multinational companies, technology transfer and the loss of traditional knowledge and trade in domestically produced goods.
National, state and local governments of countries play an important role in the stability of trade and commerce with foreign and multinational cooperation's. Stephen Cohen is of the opinion that "governments still matter to the outcomes of international competition" and that their role is more significant and critical in this period of time than at any other time in the history of trade and commerce. (Cohen and Zysman, 1987; Carnoy, 1993) Countries have to create the necessary climate for change to occur -- many try to change the local environment by liberalizing their trade, privatizing state owned enterprises and reforming their tax system in the hope of attracting and keeping foreign investment. Many a time, doing so helps in the short-term but may be detrimental to the country if not adequately regulated or tweaked.
Deregulation of critical markets is often not as advantageous as imagined with the result that some unfair and dubious deals may be carried out all in the name of fair market practice. The stability of a country's currency and the borrowing capacity of the country are also important if trade balance is required. Governments should have clear and well-defined policies and should be able to implement these polices in a just manner in the business communities operating in their territories. Global financial and economic institutions such as the International Monetary Funds (IMF), World Trade Organization (WTO) and the World Bank have not always managed to help balance the global economy. (TradingPlaces-PeterRobinson, 2002) Although the smaller and less flexible state markets may not be able to absorb the shock from a global recession and take care of the social problems arising from people's expectations being unsatisfied, they have to deal with the problem, nevertheless.
Countries around the world have achieved and sustained remarkable growth through opening their market to foreigners, thus encouraging their internal business to become more competitive. The primary goal of having a trade policy is to open markets internationally, raise living and working standards and increase trade between nations. Free trade attempts to encourage every nation of the world to share similar values and assume responsibilities for the betterment of the global community. Free trade encourages competition. It forces companies to evaluate their processes and technology. Constant improvement and changes have to be undertaken as barriers to entry are becoming smaller and positioning in the market no longer guarantees market share. Free trade helps provide economic liberty, freedom of choice, transparency and opportunity.
Government can however, influence the direction and the type of growth that it thinks the country should pursue. In this world, the government and big corporations are involved in a complex game of accumulation of wealth and riches and this wealth trickles down to the citizens of the country and the employees of the organization in forms of higher purchasing capacity, higher standards of living and customer choice options.
Marketing however faces limitations. In the current environment, organizations are greatly dependent on financial service companies to provide capital for growth and development. Often, financial companies also market the fact that they have been able to back organizations that have helped create jobs and opportunities for the people in the region that the company operates. For example, Bank of America regularly advertises the fact that its small business loans have helped entrepreneurs setup operations and their convenient hours, interest rates and programs have kept their customers loyal to the bank for a long time. The stability of the insurance industry and stock market in any region also plays an important role in the stability of the organization. The concepts of insurance were first developed in London and most organizations in London seek out some form of insurance for their risk management. Marketing often highlights the insurance carriers who support their respective industries in the hope that the surety and reliability of the insurance backers will instill confidence in the consumer.
Countries around the world do not have the same labor laws and environmental policies that govern business in the U.S. In addition, cheap labor, very lenient (or in some cases) non-existent legal policies and poor labor conditions have seriously impacted the manufacturing and production industries in the UK and in many developed countries around the world. Corporations, financial institutes and governments have to work together to ensure that the product or services being marketed is well received in the market. This requires collaborative efforts to inform customers of the problems and benefits of the products. Consumer watch groups and government agencies dedicated to investigating the marketing, advertisement and sales tactics used by companies are also spending resources to investigate the marketing and sales tactics used.
Marketing and sales is an important aspect of strategic management for any organization. The ability of any organization to use marketing and sales to improve its financial standing and stability over the long run can help establish the company as an important player in any industry it operates in.
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