Thrive in the Thrive in the Marketing Marketing

Environment:Environment: The World The World IsIs Flat Flat

Chapter ThreeChapter Three

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Chapter ObjectivesChapter Objectives

Understand the big picture of international Understand the big picture of international marketing and the decisions firms must make marketing and the decisions firms must make when they consider globalizationwhen they consider globalization

Explain how international organizations such as Explain how international organizations such as the World Trade Organization (WTO), economic the World Trade Organization (WTO), economic communities, and individual country regulations communities, and individual country regulations facilitate and limit a firm’s opportunities for facilitate and limit a firm’s opportunities for globalizationglobalization

Understand how factors in a firm’s external Understand how factors in a firm’s external business environment influence marketing business environment influence marketing strategies and outcomes in both domestic and strategies and outcomes in both domestic and global marketsglobal markets

Explain some of the strategies that a firm can Explain some of the strategies that a firm can use to enter global marketsuse to enter global markets

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Real People, Real Choices: Real People, Real Choices: Decision Time at eBayDecision Time at eBay

Which option should eBay undertake? Which option should eBay undertake? • Option 1:Option 1: Customize eBay by adding Customize eBay by adding

additional categories for artisans’ additional categories for artisans’ products, but don’t create a separate products, but don’t create a separate brandbrand

• Option 2:Option 2: Create a completely separate, Create a completely separate, custom-branded experiencecustom-branded experience

• Option 3:Option 3: Create a hybrid model using Create a hybrid model using an independent marketplace and an independent marketplace and licensed brandlicensed brand

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Take a Bow: Take a Bow: Marketing on the Global StageMarketing on the Global Stage

The global marketplaceThe global marketplace World trade:World trade:

The flow of goods and services among The flow of goods and services among different countriesdifferent countries——the value of all the the value of all the exports and imports of the world’s exports and imports of the world’s nationsnations

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Figure 3-1Figure 3-1North American Trade FlowsNorth American Trade Flows

(in Billions of Dollars)(in Billions of Dollars)

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Take a Bow: Take a Bow: Marketing on the Global StageMarketing on the Global Stage

Countertrade: Countertrade: A type of trade in which goods are paid A type of trade in which goods are paid for with other items instead of with for with other items instead of with cashcash• Barter is common form of countertradeBarter is common form of countertrade

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Global Means GrowthGlobal Means Growth

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Figure 3-2Figure 3-2Steps in the Decision Process for Steps in the Decision Process for

Entering GlobalEntering Global

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Deciding to Go GlobalDeciding to Go Global

Must consider Must consider market market conditionsconditions and and competitive advantagecompetitive advantage when making a when making a decisiondecision• Chinese firms such Chinese firms such

as Chery are nowas Chery are nowexporting their brandsexporting their brandsto other countries,to other countries,including the U.S.including the U.S.

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Understand International, Understand International, Regional and Country Regional and Country

RegulationsRegulations Initiatives in international regulation Initiatives in international regulation

and cooperation help tradeand cooperation help trade• General Agreement on Tariffs and Trade General Agreement on Tariffs and Trade

(GATT)(GATT)

• World Trade Organization (WTO)World Trade Organization (WTO) Protectionism restricts tradeProtectionism restricts trade

• Quotas, embargoes, and tariffsQuotas, embargoes, and tariffs Economic communities help Economic communities help

to promote tradeto promote tradeWorld Trade Organization

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It’s DebatableIt’s DebatableClass Discussion QuestionClass Discussion Question

Watch the YouTube video Watch the YouTube video discussing product piracy.discussing product piracy.

Do you think that the WTO can succeed Do you think that the WTO can succeed in reducing, or eliminating product in reducing, or eliminating product piracy? If so, how?piracy? If so, how?

Product Piracy

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Environmental Scanning Environmental Scanning Yields OpportunitiesYields Opportunities

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Figure 3-3Figure 3-3Elements of the External Elements of the External

EnvironmentEnvironment

The World Fact book

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The Economic Environment:The Economic Environment: Indicators of Economic HealthIndicators of Economic Health

Key economic indicators:Key economic indicators:

• Gross domestic product (GDP): Gross domestic product (GDP): Total dollar value of goods/services a country Total dollar value of goods/services a country produces within its borders in a yearproduces within its borders in a year

• Gross national product (GNP):Gross national product (GNP):Value of all goods and services produced by a Value of all goods and services produced by a country’s citizens or organizationscountry’s citizens or organizations

• Economic infrastructureEconomic infrastructureQuality of country’s distribution, financial, Quality of country’s distribution, financial, and communications systemsand communications systems

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Table 3-2Table 3-2Selected Comparisons of Economic Selected Comparisons of Economic and Demographic Characteristicsand Demographic Characteristics

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The Economic Environment:The Economic Environment: Level of Economic DevelopmentLevel of Economic Development

Least developed country (LDC)Least developed country (LDC)

• Economic base is often agriculturalEconomic base is often agricultural

Developing countriesDeveloping countries

• Economy shifts emphasis from Economy shifts emphasis from agriculture to industryagriculture to industry

Developed countriesDeveloped countries

• Offer wide range of opportunities for Offer wide range of opportunities for international marketersinternational marketers

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The Economic Environment: The Economic Environment: The Business CycleThe Business Cycle

All economies go through periods of:All economies go through periods of:

• ProsperityProsperity

• RecessionRecession

• RecoveryRecovery

• DepressionDepression

• InflationInflation

Economy.com

Do sales of all goods and services suffer in a recession? If not, name some goods and services that may in fact sell better during a recession than during times of prosperity.

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The Competitive Environment:The Competitive Environment:Analyzing the Market and Analyzing the Market and

CompetitionCompetition Competitive intelligence: Competitive intelligence:

Gathering and analyzing publicly Gathering and analyzing publicly available information about rivals to available information about rivals to develop superior marketing strategiesdevelop superior marketing strategies

• Collected from news media, the Collected from news media, the Internet, and publicly available Internet, and publicly available government documentsgovernment documents

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The Competitive Environment:The Competitive Environment:Competition in the Competition in the MicroenvironmentMicroenvironment

Competition in the microenvironmentCompetition in the microenvironment

• Competition for consumer’s Competition for consumer’s discretionary income discretionary income

• Product competition Product competition

• Brand competitionBrand competition

Name some examples of competition at Name some examples of competition at each level for the iPhone. each level for the iPhone.

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The Competitive Environment:The Competitive Environment:Competition in the Competition in the MacroenvironmentMacroenvironment

Competition in the macroenvironment Competition in the macroenvironment (overall structure of industry)(overall structure of industry)

• MonopolyMonopoly

• OligopolyOligopoly

• Monopolistic competitionMonopolistic competition

• Perfect competitionPerfect competition

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The Technological The Technological EnvironmentEnvironment

Technology:Technology:• Provides firms with important Provides firms with important

competitive advantagescompetitive advantages

• Profoundly affects marketing activitiesProfoundly affects marketing activities

• Can transform industriesCan transform industries Patent: Patent:

• Legal document giving inventors Legal document giving inventors exclusive rights to produce/sell a exclusive rights to produce/sell a particular invention in that countryparticular invention in that country

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The Political and Legal The Political and Legal Environment:Environment: Legal Influences on Legal Influences on

BusinessBusiness Local, state, national, and global laws Local, state, national, and global laws

and regulations affect businessesand regulations affect businesses Purpose of American law:Purpose of American law:

• To make sure businesses compete To make sure businesses compete fairly with each other fairly with each other

• To make sure that businesses don’t To make sure that businesses don’t take advantage of consumerstake advantage of consumers

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Table 3-3Table 3-3Partial List of Significant American Partial List of Significant American Legislation Relevant to MarketersLegislation Relevant to Marketers

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Table 3-4Table 3-4U.S. Regulatory Agencies and U.S. Regulatory Agencies and

ResponsibilitiesResponsibilities

FTC.gov

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The Political and Legal The Political and Legal Environment:Environment:

Political Constraints on BusinessPolitical Constraints on Business

Retaliatory actions against American Retaliatory actions against American businesses sometimes occur as a businesses sometimes occur as a result of political activity or warresult of political activity or war

Political constraints on trade are Political constraints on trade are commonly imposed:commonly imposed:

• Economic sanctionsEconomic sanctions

• NationalizationNationalization

• ExpropriationExpropriation

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The Political and Legal The Political and Legal Environment:Environment: Regulatory Constraints Regulatory Constraints

on Businesson Business

Regulatory constraints on Regulatory constraints on trade often restrict the trade often restrict the marketing of goodsmarketing of goods

• Local content rules Local content rules

Human rights issues may Human rights issues may limit foreign countries’ limit foreign countries’ business opportunitiesbusiness opportunities

• U.S. Generalized System U.S. Generalized System of Preferences (GSP)of Preferences (GSP)

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The Sociocultural The Sociocultural EnvironmentEnvironment

Key sociocultural considerations:Key sociocultural considerations:

• DemographicsDemographics

• Cultural valuesCultural valuesIndividualismIndividualismCollectivismCollectivism

• Social norms Social norms and customsand customs

• LanguageLanguage

• EthnocentrismEthnocentrism

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It’s DebatableIt’s DebatableClass Discussion QuestionClass Discussion Question

America has been rocked in recent America has been rocked in recent years by numerous business scandals.years by numerous business scandals.

Do you think that the individualistic Do you think that the individualistic cultural orientation found in the U.S. it cultural orientation found in the U.S. it to blame? to blame?

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When is a Bribe Not a Bribe?When is a Bribe Not a Bribe?Ethical Issues in Global BusinessEthical Issues in Global Business

What is considered to be ethical What is considered to be ethical business behavior varies by countrybusiness behavior varies by country

Bribery:Bribery:When someone voluntarily offers When someone voluntarily offers payment to get an illegal advantagepayment to get an illegal advantage

Extortion:Extortion:When someone in authority extracts When someone in authority extracts payment under duresspayment under duress

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Table 3-5Table 3-5Transparency Bribepayers IndexTransparency Bribepayers Index

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Table 3.6Table 3.6Market Entry StrategiesMarket Entry Strategies

countryrisk.com

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How “Global” Should a Global How “Global” Should a Global Marketing Strategy Be?Marketing Strategy Be?

Product-level decisions: the marketing-Product-level decisions: the marketing-mix strategy:mix strategy:

• Standardization vs. localizationStandardization vs. localizationStandardization: Standardization:

Offer the same products in all marketsOffer the same products in all marketsLocalization: Localization:

Offer a customized marketing mix for Offer a customized marketing mix for each countryeach country

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How “Global” Should a Global How “Global” Should a Global Marketing Strategy Be?Marketing Strategy Be?

Tweaking the marketing mixTweaking the marketing mix

• Product decisions:Product decisions:Straight extension strategyStraight extension strategyProduct adaptation strategyProduct adaptation strategyProduct invention strategyProduct invention strategyBackward inventionBackward invention

• Promotion decisions: Promotion decisions: Whether or not to modifyWhether or not to modify

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How “Global” Should a Global How “Global” Should a Global Marketing Strategy Be?Marketing Strategy Be?

Tweaking the marketing mixTweaking the marketing mix• Price decisions:Price decisions:

Products are often more expensive to Products are often more expensive to produce for foreign markets produce for foreign markets

– Free trade zonesFree trade zones– Gray market goods Gray market goods – DumpingDumping

• Distribution decisions:Distribution decisions:Getting the product to remote Getting the product to remote

locations is often difficultlocations is often difficult

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Real People, Real Choices: Real People, Real Choices: Decision Made at eBayDecision Made at eBay

Robert chose option 3Robert chose option 3

• Why do you think that Robert chose to Why do you think that Robert chose to license the brand “license the brand “WorldofGood.comWorldofGood.com” ” and launch the marketplace on a and launch the marketplace on a platform independent from eBay?platform independent from eBay?

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Keeping It Real: Fast-Forward Keeping It Real: Fast-Forward toto Decision Time at Plan-It Decision Time at Plan-It

MarketingMarketing Meet Ryan Garton, director of Meet Ryan Garton, director of

Consumer Insights at Discover Consumer Insights at Discover Financial ServicesFinancial Services

Ryan lacks an integrated approach to Ryan lacks an integrated approach to evaluating how new product ideas fit evaluating how new product ideas fit with consumers’ desireswith consumers’ desires

The decision to be made: The decision to be made: Should the process used to screen new Should the process used to screen new product ideas be changed?product ideas be changed?

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