Podcast
Questions and Answers
Why is it important for a business considering international expansion to assess the disposable income levels of the target country's consumers?
Why is it important for a business considering international expansion to assess the disposable income levels of the target country's consumers?
Because if an enterprise wants to sell to a customer, the customer must have the money with which to buy that good or service. They need money to buy the goods being sold.
Describe two potential consequences of a falling level of disposable income in a country.
Describe two potential consequences of a falling level of disposable income in a country.
- People with low incomes may struggle to afford basic necessities. 2. Those with higher incomes may reduce spending on non-essential items.
Explain how a consistent rise in disposable income might influence a business's decision to enter a new international market.
Explain how a consistent rise in disposable income might influence a business's decision to enter a new international market.
Steady or rising disposable income indicates that consumers are likely to have the financial capacity to buy products both now and in the future, making the market an attractive and sustainable expansion opportunity.
How might cultural factors combine with disposable income to influence consumer behavior in international markets, using India's luxury goods market as an example?
How might cultural factors combine with disposable income to influence consumer behavior in international markets, using India's luxury goods market as an example?
What are main destinations where you can find data regarding disposable income across different countries?
What are main destinations where you can find data regarding disposable income across different countries?
Flashcards
Disposable Income
Disposable Income
Income remaining after taxes and deductions, available for spending or saving.
OECD, Euromonitor, World Bank, UN
OECD, Euromonitor, World Bank, UN
Organizations that provide data on disposable income levels in different countries.
Impact of Falling Disposable Income
Impact of Falling Disposable Income
Reduced consumer spending, declining market expenditure, and decreased savings.
Attractive Market Conditions
Attractive Market Conditions
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India's Luxury Goods Market Increase
India's Luxury Goods Market Increase
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Study Notes
- Businesses consider disposable income when selling goods/services internationally.
- Customers need sufficient disposable income to purchase those goods/services.
Disposable Income
- Disposable income is the money left after taxes and deductions.
- Remaining disposable income can be used for consumption or saving.
Understanding Disposable Income in International Trade
- It's important to understand the average level of household disposable income compared to other countries.
- Online research can help businesses find data on disposable income in specific countries.
- Sources for data include the OECD, Euromonitor, the World Bank, and the UN.
Impact of Falling Disposable Income
- Falling disposable income can cause those with low incomes to struggle to pay for a minimum standard of living.
- Those with higher incomes may reduce expenditure on luxuries.
- Overall consumption decreases, total expenditure in markets falls, and savings are likely to be reduced.
- As an example, Greek consumers experienced significant falls in average monthly income between 2013 and 2018 due to Greece's financial situation.
Importance of Steady or Rising Disposable Income
- Businesses want to ensure consumers have sufficient disposable income to purchase goods/services.
- Businesses want to ensure that the country's level of disposable income is at least steady and hopefully growing over time.
- Steady or rising disposable income indicates consumers' ability to buy products now and in the future, which makes expansion attractive.
- India's luxury goods market has been increasing due to the rising disposable incomes of the growing young professional class.
- Items like jewelry and watches are purchased as investments.
- Euromonitor predicts a significant increase in Indian households with a disposable income of between $10,000 and $25,000 up to 2030, making India a growth market.
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