International Economic Environment in Marketing
Clarke Ricks
School of Business, Liberty University
BUSI 690: Policy and Strategy in Global Competition
Dr. Hicks
April 6, 2021
International Economic Environment in Marketing
The international economic environment can be described as the global factors that
are outside of the control of individual organizations but that can affect the way that
businesses operate. These factors include unemployment rates, inflation rates, and labor
costs. External factors found in the macroeconomic environment can also affect
organizations' decision-making and performance activities. They include cultural and social
influences, legal issues, demographics, and political considerations, as well as changes in the
natural environment and technology.
The Business Cycle
To gain a good understanding of the international economic climate and how or why
particular factors can affect it, it's important to have an understanding of the business cycle.
The business cycle represents the four stages of economic growth followed by economic
decline. The four stages consist of:
Peak/boom
Contraction/slump
Recession
Expansion
As the business cycle repeats itself on a continuous basis, the expansion stage would be
followed by another peak. The following diagram is a pictorial representation of the
business cycle.
Factors Affecting this Environment
There are various factors that can affect the global economy, and thus the economic
cycle. These factors include, but are not limited to, currency exchange, interest and inflation
rates, trade, and unemployment statistics. Let's examine a few of these factors, beginning
with the unemployment rate.
Unemployment Rate
According to the United States Bureau of Labor Statistics, the national unemployment
rate as of August 2022 stood at 3.7%. The lower the national unemployment rate, the more
money is generated into the economy, as consumers have more income and more money to
spend.
Many of the world's major nations also experienced low unemployment rates, per
Trading Economics in the summer of 2022, as the world emerged from COVID-19 shutdowns
and supply shortages. For example, many European countries reported low rates of
joblessness in Germany (5.5%), France (7.4%), Italy (7.9%), and the U.K. (3.6%). Nor was this
trend limited to the Western hemisphere - in Asia, rates were 2.6% in Japan and 3.5% in
Australia.
The report showed that areas of high unemployment were common in Africa and the
Middle East. Ethiopia (19.1%), Botswana (24.5%), and South Africa (33.9%) experienced high
levels along with Jordan (22.6%).Marketers use cognitive dissonance in their advertising to
influence consumers into buying their products. Learn the definition of cognitive dissonance
and see how it is used in marketing through some examples. Updated: 09/13/2021
Introduction to Cognitive Dissonance
Ever walked down the street and had someone come up to you with a clipboard and
inquire, 'Do have a minute to help the homeless?', or possibly some other cause like saving
the rainforest? You might be frustrated that you have to take a minute to interact with this
stranger who wants your attention, but that is far better than walking on and ignoring the
person. After all, by doing so you would be admitting openly that you do not have a minute
to help the homeless.
Or, at least, that is the implication of the question that the clipboard crusader asked
you. It's very clever, because he or she is using cognitive dissonance to get your time and
attention.
Definition of Cognitive Dissonance
Cognitive dissonance is when your words, thoughts, and/or deeds contradict your
beliefs. Because each person has a self-image that's complete, consistent, and non-
contradictory, there's a very strong drive to reduce cognitive dissonance. The primary ways
of reducing cognitive dissonance are to change words, thoughts, and/or deeds; change
beliefs; engage in denial of one or more of the aforementioned; or reframe one of the
aforementioned. No matter how we reduce cognitive dissonance, it must be done in some
way or another.
Cognitive Dissonance in Marketing
The example from before highlights the use of cognitive dissonance in trying to get
people to give their time, attention, and resources to whatever the marketer is promoting.
In the case of the clipboard crusader, it's a donation or a signature on a petition, and the
individual tries to induce cognitive dissonance by framing the option of walking away as
being inconsistent with your beliefs. 'Surely you, who have so much, can afford to give one
measly minute for the sake of the poor and underprivileged homeless!' Yet, there are many
other ways that marketers can use cognitive dissonance.
Examples of Its Use
'Why settle for a cheap, F-Brand product, when you could have a state-of-the-art A-
Brand product, all for a low price of (far more than the F-Brand product)?'
