mktg 370 international marketing lars perner, instructor 1 international marketing trade policy...

MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 1

International Marketing

Trade policyCultureConsumer buying powerProduct strategies


Obstacles to Trade: Protectionism

Differing interests of consumers and manufacturersBenefits of trade tend to be more diffused than benefits to specific groups of protectionism


Approaches to Protectionism

TariffsQuotas“Voluntary” export restrictionsSubsidies to domestic producers/exportersNon-tariff barriers

legal obstaclesdifferential treatment


Cultural LessonsDiet Coke is named Light Coke in Japan--dieting was not well regardedRed circle trademark was unpopular in Asia due to its resemblance of Japanese flagPackaging of products is more important in some countries than in U.S.Advertisement featuring man and dog failed in Africa--dogs were not seem as man’s best friend


More Cultural Lessons...

Cologne ad featuring a man “attacked” by women failed in AfricaFood demonstration did well in Chinese stores but not in Korean ones--older women were insulted by being “taught” by younger representativesPauses in negotiationsLevel of formality


The Whole vs. Parts


Definitions

Culture: “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man as a member of society.”

Alternative definition: “Meanings that are shared by most people in a group” [at least to some extent]. (Adapted from Peter andOlson, 1994)


Hofstede’s Cultural Dimensions

Individualism (vs. collectivism)Power distanceMasculine vs. feminineStrong vs. weak uncertainty avoidanceShort vs. long term orientation (Confucianist dynamics)

“The Foolish Old Man Who Moved the Mountain”

Based on interviews withIBM executives throughoutthe World--1980s


Negotiation Content

Non-task soundingTask-related exchange of informationPersuasionConcessions and agreements


Geography--Surprisingly Impactful

U.S. and most Western European areas are highly generally accessibleCompare to areas in the developing World:

ChinaRussiaLatin America (even Mexico), Africa

Communication vs. shipping


Climate and Topography: The Case of Latin America

4,500 by 3,000 miles (at widest)48% forestsWest coast dominated by mountain ranges5% of land arableNatural barriers inhibiting growthLarge proportion of residents in cities; people in rural areas often do not associate themselves with countries


China: Geography

Very rapid progress on Shanghai infrastructureRural villages are difficult to accessStrong regional differences even within the country


Some Issues in Culture

Timemonochronic vs. polychronicmeanings

Personal spacepreferred distanceterritorialityinteraction with/ignoring people in close proximity

Symbolscolorshistorical associations

Friendship and acquaintanceAgreementsEtiquette


Eastern vs. Western Culture

Differences inValuesPerceptions of• Objects• Reality

– Stability vs. change

– Control

Perceived roles

pain mana


Perceived Control Over Reality

World is not generally seen as predictable

Trends are not expected to continue

Individual has little control over the world BUT

Outcome is believed to be tied to effort, not individual skill


More Tendencies

Westeners tend to rate themselvesMore unique than average and what they are“Above average” in ability

Easteners tend to rate themselvesLess unique than they really are“Below average”


Proverbs

Western: “The early bird gets the worm”Eastern:

“The first bird in the flock gets shot”“A nail that stands out will be hammered down.”


ValuesIssue Western Value Eastern ValueDistinctiveness of people

Want to be distinctive Not valued; emphasis on tie to group

Perceived control

Significant; values determine choices

Modest—societal values are already established

Emphasis Success and achievement; relationships may get in the way

Best outcome for relevant group (e.g., family, work group)

Self-esteem Strive to feel good; assurances wanted

Tied to belonging with group

Relationships Equality or superior position

Clearly defined; hierarchical

Rules Same rules apply to all Depend on context and relationship

Source: Richard E. Nisbett, The Geography of Thought: How Asians and Westeners Think Differently … and Why, New York, 2003, The Free Press


Some implications

Thanking people—for things they are clearly supposed to do?Why the need for a choice between 40 different brands of cereal?


Socialization

Western textbook: “See Dick run. See Dick play. See Dick run and play.”Chinese: “Big brother takes care of little brother. Big brother loves little brother. Little brother loves big brother.”


Perception of People

Western: People have characteristics independent of the situation

Fundamental attribution error: People attribute their own behavior to the circumstances but that of others to innate characteristics.

Eastern: Person is connected; behavior is the result of specific roles played at the time


Contrasting Advertising Perspectives (Aithison 2002)

Western“Atomistic”—broken down to smallest component parts“Unique selling propositions”“How to”PositioningMay be “dull and boring”“Copy focused”

AsianHolistic“Everything relates to everything else”How things “fit together” and “relate”Visual and oral

Jim Aitchison, How Asia Advertises, New York: Wiley, 2002.


Advertising Content Comparisons

American:Individual benefit and pleasure (e.g., “Make your way through the crowd)

KoreanCollective values (e.g., “We have a way of bringing people together)


Debate and Conflict

“The first person to raise his voice has lost the argument.” (Chinese proverb)Use of indirection and projectionFace-to-face vs. anonymous commentsWestern adversarial “rule of law” based on consistent universal ideals vs. solution for the case at hand in context


Relationships, Education, and Work

Western Standing out; being “better”Self perceived favorablySelf-esteem buildingWork longer on successful job

EasternHarmonyMust “weed out” personal characteristics that might annoy othersTaught self-criticismNot recognized in profession until after many years of practiceWork longer on unsuccessful job


Physical Product vs. Communication Adaptations

Communication adaptations not needed (extension)

Communication adaptations needed

Product adaptations not needed (extension)

Some industrial equipment; some electrical equipment

Bicycle; fast food; chewing gum

Product adaptations needed

Gasoline; laundry detergent

Greeting cards

Domestic equivalent does not exist (product invention)

Compass-equipped prayer rug; hand powered washing machine


CONSUMER INCOMES AND BUYING POWER

Measuring country wealthgross domestic product“purchase parity” vs. nominal

Government role in the economyTax burdenServices provided by the Government—e.g., health care, education


Country of Origin Effects

Perception of productquality (e.g., Japan, Germany)elegance and style (e.g., France, Italy)

Historical associationsPositioning strategies

Emphasis on origin (e.g., French wine)De-emphasis/obfuscation of of country of origin (e.g., French beer, American products with French language labels)


Nominal vs. Purchase Parity Adjusted GNPs—Examples (2003)

Country Nominal GNP PPA United States 37,610 37,610

Japan 34,510 28,640

Argentina 3,650 10,920

Czech Republic 6,740 15,650

Mexico 6,230 8,950

Russia 2,610 8,920

Source: World Bank (http://www.worldbank.org/data/databytopic/GNIPC.pdf)

http://www.worldbank.org/data/databytopic/GNIPC.pdf


The Hamburger Standard (from the Economist)Country Local Price in

US$Buying power relative to U.S.

U.S. $2.71 1.00

Britain 3.14 .75

Egypt 1.35 2.00

Mexico 2.18 1.24

China 1.20 2.26

Switzerland 4.59 0.59


Market Entry StrategiesExporting

Low investmentLow control of promotion

LicensingLow investmentLow control of promotion, positioning, and qualityAble to benefit from existing distribution and market knowledge

Joint ventureConsiderable investmentMore controlAble to benefit from partner’s experienceMust work with partner

Direct investmentLarge investmentRiskyGreater controlMay lack knowledge of market


Market Positioning Strategies Across Countries

Häagen-Dazs—U.S. vs. JapanCorona Beer—Mexico vs. U.S.Mercedes-Benz—Europe vs. U.S.McDonald’s

U.S.EuropeDeveloping countries—e.g., China

http://www.haagendazs.com/hdshds.do


U.S. Laws of Interest to firms with U.S. InvolvementAnti-trust

Foreign Corrupt InfluencesAnti-boycott lawsTrading With the Enemy


The International Life Cycle

Market for older technology tends to exist in less developed countries

Manufacturing of older generation technology--e.g., Pentium I computersResale of capital equipment—e.g., DC 8 aircraft, old three part canning machines

Some countries tend to be more receptive to innovation than others

“Leap frogging”Going directly from old technology to the very newest, skipping intermediate step (e.g., wireless rather than wired technology)

Shortening of product life cycles

mktg 370 international marketing lars perner, instructor 1 international marketing trade policy...

Documents

shipping slide

parts slide

best friend slide

power product strategies

case of latin america

cultural lessons diet

china russia latin america

foolish old man