Page 309 - Introduction to Business

CHAPTER 8 Marketing Basics 283

even more significant purchasers. The governments of Denmark and Sweden
account for about 45 percent of all purchases nationwide; and it is even higher,
almost 60 percent, in Belgium and the Netherlands.
Governments buy a wide variety of products and services, including office sup-
plies and equipment, automobiles, food, clothing, specialized military hardware,
and research services. In order to successfully sell to governments, it is necessary to
understand how governments buy. When standard items are being purchased by
governments, marketers are normally required to submit bids that give prices for
the products with the service specifications and performance requirements as stip-
ulated by the government. In general, the lowest-priced bid will be accepted. For
items like planes and warships, the government will negotiate with one or two
selected suppliers, putting a great deal of emphasis on their reputation and past
evidence of their being able to do the job. Because small businesses are important
determinants of growth, the U.S. government sets aside funds specifically ear-
marked for bids submitted by them.
Government buying is open to public scrutiny and control. Thus, it is rela-
tively easy to be aware of and understand what products and services the govern-
ment needs. On the other hand, many small firms are reluctant to do business
with the government because of the bureaucracy encountered and the paperwork
required.
reality Scan your local newspaper for three or four days. Are there any
CH ECK examples of the types of products and services your local government
purchases?

International Markets

With 95 percent of the world’s population living outside the United States and 80
percent of its income there, it is not surprising that many companies are finding
that international markets offer attractive opportunities for U.S. products and international markets Markets for
services. products and services that exist in
foreign countries

Case in Point

Sony Decides to Enter the China Market

In 2002, Sony was making plans to about $1 each, pirated software retails in China at a
market its PlayStation in China. much lower price than elsewhere. PlayStation is one
Previously, Sony had been reluctant of Sony’s most profitable items, with a profit margin
to enter the Chinese market due to piracy problems. of 8.4 percent. It is the leader in market share over
Besides PlayStation, China has also been accused such competitors as Sega, Nintendo, and Microsoft’s
of being a source of pirated video games, DVDs, Xbox. None of these had been introduced into China
and music CDs. As part of its marketing strategy, by the beginning of 2003.
Sony will get local talent to develop the software
programs. They will also be given a stake in the
business, which Sony executives believe will reduce Questions
the piracy problem. 1. What are the advantages and disadvantages of
Most PlayStation consoles are imported from Sony’s China strategy? What areas of marketing
Hong Kong. They retail in Shanghai for around $340, covered in this chapter are mentioned in this arti-
much higher than what is quoted on Amazon.com cle? Should Sony introduce PlayStation into
($249.99, plus shipping and handling). However, at China? Why or why not?

Copyright 2010 Cengage Learning, Inc. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part.