Transcript Global Marketing - Wright State University

MKT421: International Marketing, Spring 2010
Slides for the First Exam (Ch. 1–5 + 8)
Please note: These are selected slides and
are not sufficient by themselves to prepare
for the exam. Please read the book and
class notes in addition to these slides to
be adequately prepared for the exam.
I. Khera
Chapter 1
The Global Marketing Imperative
The World – 1.
• About 220 countries in all; out of which:
• About 30 countries are classified as Developed Countries –
Also called OECD (Organization for Economic Cooperation and
Development) countries. Include U.S., Canada, Mexico, most of
Europe, Japan, Australia, New Zealand, Singapore, Turkey, etc.
• Another 30 are Upper Middle/Middle Income Countries:
Korea, Taiwan, Malaysia, Mexico, South Africa, Brazil, Israel,
Chile, several Eastern/Southern European countries, Mexico,
Turkey, Russia, etc.
• Another 15 or so are Major Oil Exporters : 11 OPEC members
like Saudi Arabia, Kuwait, Iran, Iraq, Indonesia, Nigeria,
Venezuela, etc. Plus non-members like Mexico, Russia, U.K., and
Norway.
•
K
The World – 2.
• Developing Countries: Most Asian and African
countries (A majority of the world’s countries belong
here).
• Rapidly Developing Very Large Countries:
China, India, Brazil, Russia (BRICs)
• Poor Countries: Countries stagnant at very low
levels of development, e.g., Burma, Bangladesh,
Afghanistan, Haiti, Nepal, most sub-Saharan
African countries.
IK
The World – 3.
• Big Emerging Markets (BEMs): In the next 10-20
years, BEMs such as the Chinese Economic Area
(CEA: China + HK+ Taiwan), India, South Korea,
Mexico, Brazil, Argentina, South Africa, Poland,
Turkey, Russia, and the Association of Southeast
Asian Nations (ASEAN: including Indonesia, Brunei,
Malaysia, Thailand, the Philippines, and Vietnam) will
provide major/dominant opportunities in global
business.
World’s Largest Countries
(by population)
World
1. China
2. India
3. U.S.
4. Indonesia
5. Brazil
6. Pakistan
7. Bangladesh
8. Nigeria
9. Russia
10. Japan
6.72 billion people
1.3billion
1.1b
305million
232m
188m
164m
159m
148m
142m
128
What is International Marketing?
• Activity, institutions, and processes across
national borders that create, communicate,
deliver, and exchange offerings that have
value for stakeholders and society.
Global Marketing Imperative
• Saturation of domestic markets: especially, First
World markets.
• Global competition intensifying.
• Need for global cooperation (global competition brings
global cooperation).
• Internet: the Internet and electronic commerce (ecommerce) revolution
• Expanding market opportunities.
Advantages of International Trade for
Consumers.
- More quantity
– Better quality
– Greater variety within product categories
– More customized products/Services
– Lower prices
– Choice of products not available without
international trade
Advantages of International Trade for Firms.
• More trade: World trade in merchandise: from $6.2 trillion in
2000 to over $15.1 trillion in 2008; Services: from $1.5
trillion to $3.3 trillion.
• Access to:
–
–
–
–
–
Bigger markets
Foreign resources
Talent
New management knowledge
New technologies
Experience with selling to diverse markets
Chance to deal with different forms of governments
Chance to work in different competitive environments
Enhanced ability to compete in home market
IK
Arguments Against Free Trade.
• Infant industry argument
• Strategic industry argument
• Protection of world species (CITES: Convention on
International Trade in Endangered Species)
•
•
•
•
IK
Protection of local species, crops, etc.
Domestic environment & culture protection
Domestic politics, jobs etc.
Health & safety of domestic residents
Evolution of Global Marketing.
Five stages in the evolution of global marketing
1.
2.
3.
4.
5.
Domestic Marketing
Export Marketing
International Marketing (markets in many countries;
polycentric orientation).
Multinational Marketing (many markets; consolidation
on regional basis).
Global Marketing (global perspective; global products
with local variations - Standardized efforts, Coordination
across markets, Global integration).
Global Linkages
• World trade → global reorientation of corporate
processes, which opens up entirely new horizons.
• The level of global investment leads to:
– buildup of international debt by governments.
– Affect on the international value of currencies.
– Provision of foreign capital for firms.
– Influx of major foreign direct-investment activities
Comparative/Absolute Advantage Theory.
Comparative advantage: the ability of a firm, country or region
to produce a particular good or service at a lower opportunity
cost than another party, i.e. produce it most efficiently given all
the other products that could be produced.
Absolute advantage refers to the ability of a party to produce a
particular good at a lower absolute cost than another.
Comparative advantage explains how trade can create value
for both parties even when one can produce all goods with
fewer resources than the other. The net benefits of such an
outcome are called gains from trade. It is the main concept of
the pure theory of international trade.
Comparative Advantage Example
U.S. vs. China
Both have 1,000 labor hour (lh) resources
US: 1lh corn, 5lh microwave
China: 5lh corn, 2lh microwave
Both countries split their resources to produce both items.
Without Trade:
- U.S. – 500 corn + 100 microwave
- China – 100 corn + 250 microwave
Total = 600 corn + 350 microwave
With trade:
- U.S. – 1,000 corn, China – 500 microwave
Total = 1,000 corn + 500 microwave ovens
Sources of Comparative Advantage
(Resource Endowment).
(A) Natural Resources (climate, size, location, topography, flora &
Fauna, minerals, etc.).
(B) Man-made Resources (technology, infrastructure, Education &
Training, etc.)
(C) Human Resources (number, age distribution, health, size, etc.)
(D) Managerial Know-how
(E) Traditions
IK
Product Lifecycle Theory – 2.
Chapter 2
Trade Institutions and
Trade Policy
More Recent History
• The Smoot-Hawley Act (1930) raised import
duties on 20,000 products to reduce the volume
of imports into the United States to help restore
domestic employment → in raising of duties
and imposition of imports barriers by other
nations → worldwide depression and the
collapse of the world financial system.
More Recent History
• Post WW II:
– The Eastern bloc led by the Soviet Union: Emphasis on
centrally planned economies and heavy industry
– Western world led by the United States: Pax Americana
fostered international trade as a key to worldwide
prosperity. Emphasis on market economies and balanced
consumer/industrial goods sectors
Transnational Institutions Affecting
World Trade
GATT (General Agreement on Tariffs and Trade): A set of
rules for non discrimination, transparent procedures and
settlement of disputes in international trade. Adopted by
23 countries in1947:
Purpose: provide an international forum to encourage free
trade among member states
Means: 1. regulation and reduction of tariffs on traded
goods, 2. a common mechanism for resolving trade
disputes
Name changed to World Trade Organization (WTO) on
January 1, 1995 (by Uruguay Round)
Transnational Institutions Affecting
World Trade
WTO currently has 153 member countries.
Functions:
• Administer WTO trade agreements
• Forum for trade negotiations
• Handle trade disputes (empowered to enforce rulings)
• Monitor national trade policies (countries found in violation of
WTO rules are expected to change policies or else face sanctions)
•
•
•
Also responsible for General Agreement on Trade in Services
(GATS), Trade related aspects of intellectual property rights (TRIPS),
and Trade related investment measures (TRIMS).
Its 9th round of negotiations (Doha Round) was launched in 2001 in
Doha, Qatar. It facilitated the way for China and Taiwan to get full
membership in the WTO.
As of now, the Doha Round is completely stalled because of
unresolved subsidy issues
Transnational Institutions Affecting
World Trade
• International Monetary Fund (IMF)
– Established in 1944.
– Designed to provide stability for the international
monetary framework.
– Provided for fixed exchange rates between
countries.
World Banking Group, 1944
Five major components:
- International Bank for Reconstruction and
Development (IBRD)
- International Development Association (IDA)
- International Finance Corporation (IFC)
- Multilateral Investment Guarantee Agency
(MIGA)
- International Center for Settlement of
Investment Disputes (ICSID)
World Bank: Current areas of focus
-
-
Sustainable growth and development.
Clean technologies.
Agricultural assistance for combating inflation in food.
Liberalization of world trade.
Greater participation of rising economic powers and
developing nations in the bank’s governance.
- Reconstruction of war-torn countries.
- Assists fledging economies to participate in modern
economic trade.
- Resolving debt problems of developing nations.
Trade Positions
• International trade positions have changed substantially
when measured in terms of world market share.
• The U. S share of total world export has declined
precipitously since 1950s.
• Another important development is the rise of China, India
and Brazil’s trade positions.
• The impact of international trade and marketing on
individuals is highlighted when trade is scrutinized from a
per-capita perspective.
Trade Positions (contd.)
• Factors behind the decline in U.S. international
competitiveness:
– Attitude of the US policy makers - Ignoring domestic firms
in an attempt to boost the development of foreign
economies (OK during Marshall Plan but disastrous when facing
strong foreign competitors)
– Perception amongst US manufacturers about
international marketing being risky and complicated.
– Lack of global interest (Technological arrogance, NIH syndrome,
etc).
– Unfamiliarity with international market conditions.
– Complicated trade regulations.
The Impact of Trade and Investment
• The effect of international investment
– Almost one in seven U.S. manufacturing employees works for
a foreign affiliate.
– To some extent, foreign direct investments substitute for trade
activities.
– Even though theory suggests open investment policy, some
uneasiness exists about the rapid growth of such investment.
• Restrictions on investment may
– Permit more domestic control over industries.
– Deny access to foreign capital and often innovation.
– Tightening up credit markets → higher interest rates, and a
decrease in willingness to adapt to changing world market
conditions
Import-related Policy Responses
• Mainly ad hoc political reactions (over time) → (change to)
protectionism (protectionism OK as a bargaining tool but
not when passed into laws).
• Voluntary import restrictions - aid domestic industries to
reorganize, restructure, and recapture their trade
prominence of years past.
• Export restrictions – to keep scarce or critical resources
from overseer competitors or to encourage inward FDI, e.g.
rare earths in China
• Non-tariff barriers - Providing preferential treatment to
domestic bidders, using national standards, placing
emphasis on design rather than performance, and
preventing the market entry of foreign products.
Chapter 3
The Cultural Environment
Culture Defined
• Culture - An integrated system of learned behavior
patterns that are distinguishing characteristics of the
members of any given society.
• It encompasses a wide variety of elements, from
materialistic to the spiritual.
• Enculturation – Absorbing one’s own culture
Acculturation - Adjusting and adapting to a specific
culture other than one’s own.
• Adjusting to cultures is one of the keys to success in
international operations.
Elements of Culture
•
•
•
•
•
•
•
•
•
•
Language
Religion
Values & Attitudes
Manners & Customs
Aesthetics
Education
Social Institutions
Material Elements
Etc.
Cultural universals - Manifestations of the total way of life that are
common to all cultures (elements such as body adornments,
courtship, etiquette, family, gestures, humor, mealtimes, music,
personal names, status differentiation, trade etc.)
Elements of Culture
Language
•
•
•
•
•
•
•
Written/Spoken/Body Language
Formal/Informal
Forms of Address
Direct/Contextual (high vs. low context)
Hierarchy
Diversity
Etc.
Elements of Culture
• Religion provides the basis for transcultural
similarities under shared beliefs and behavior.
• The major religions include:
– Christianity - Lays stress on frugality and
accumulation of wealth from hard work; consists
of two significant groups Catholicism and
Protestantism.
– Islam - Plays a pervasive role in the life of its
followers; it supports entrepreneurship and
discourages exploitation.
Elements of Culture
• The major religions
– Hinduism - Family is an important element in Hindu
society; the extended family structure has an impact
on the purchasing power and consumption of Hindu
families.
– Buddhism - Views life as an existence of suffering;
emphasizes on spiritual achievement rather than
worldly goods.
– Confucianism - Characterized by a code of conduct;
stresses on loyalty and relationships.
– Shinto – Nature-centric, polytheistic religion of Japan
(tradition & family, love of nature, cleanliness)
Elements of Culture
• Values and attitudes
– Values: shared beliefs or group norms that have
been internalized by individuals.
– Attitudes: evaluations of alternatives based on
values (attitudes towards change is positive in
industrialized countries, but change is viewed
with suspicion in tradition bound societies).
Values represent powerful market opportunities.
Elements of Culture
• Manners and customs
– Concept of Time:
•
•
•
•
Linear vs. cyclical
Times of activities during the day
Appointments, meetings
Industrial discipline
– Negotiating Styles: (Potential problem areas): insufficient…
• understanding of different ways of thinking.
• attention to the necessity of saving face.
• recognition of the differences in decision-making
process and the role of personal relations.
• allocation of time for negotiations.
Elements of Culture
Aesthetics: a culture’s concept of good taste,
as expressed in the arts and in the particular
symbolism of colors, form, music, etc.
Color is often used as a mechanism for brand
identification, feature reinforcement, and
differentiation.
Elements of Culture
Education:
• Levels of Participation
• Literacy
• Vocational
• Administrative
• Technical, Professional
• etc.
Elements of Culture
• Social institutions
– Social organization - determines the way people relate to
one another including the roles of managers and
subordinates.
– Kinship or blood relationships - family relations and
family obligations.
– Tribal identity
– Reference groups - Provide the values and attitudes that
become influential in shaping behavior; can be primary or
secondary.
• Social stratification – Differences in the division of a
particular population into classes (higher strata control most
of the buying power and decision-making positions).
Elements of Culture
• Material culture results from technology and is manifested in
the availability and adequacy of these basic infrastructures:
– Economic - transportation, energy, irrigation, and
communications systems.
– Social - housing, health, and educational systems.
– Financial and marketing - facilitating agencies for the
international firm’s operation in a given market; e.g.,
banks and research firms.
– Technological – advancement brings about cultural
convergence.
Cultural Analysis
• Hofstede’s dimensions of culture:
– Individualism
– Power distance
– Uncertainty avoidance
– Masculinity/Famininity
– Long-term versus short-term orientation
Exhibit 3.8
– Culture-Based Segmentation
Cultural Analysis
• Self-reference criterion – The unconscious reference to
one’s own cultural values.
• Influence of one’s own cultural values can be reduced by:
– Define the problem in terms of domestic and foreign
cultural traits, habits, or norms.
– Pinpoint the complicating influence of the self-reference
criterion.
– Redefine the problem without the self-reference criterion.
• Ethnocentricism - Belief that one’s own culture is superior to
others.
– Can be mitigated only by acknowledging it and properly
adjusting to its possible effects in decision making.
The Training Challenge
The aim is to foster preparedness, sensitivity, patience, and
flexibility in managers and other personnel.
• Area studies - Provide factual preparation for a manager to
operate in, or work with people from, a particular country.
• Cultural assimilator - Trainees must respond to scenarios of
specific situations in a particular country.
• Sensitivity training - Focuses on enhancing a manager’s
flexibility in situations that are quite different from those at
home.
• Field experience – Exposes managers to different cultural
environments for a limited amount of time.
Making Culture Work for Marketing
Success
•
•
•
•
•
Embrace local culture (acculturation).
Build relationships.
Employ locals to gain cultural knowledge.
Help employees understand you.
Adapt products and processes to local
markets.
• Coordinate by region.
Chapter 4
The Economic Environment
Exhibit 4.1
- The Global Economy
Market Characteristics
• Population
– Figures should be classified to show specific
characteristics of their respective markets.
– Age distribution and life expectancy correlate heavily
with the level of development of the market.
– A household includes all the persons, both related
and unrelated, who occupy a housing unit.
– The degree of urbanization dictates the nature of the
marketing task in terms of distribution, market
potential, and buying habits.
Market Characteristics
• Income
– Income-distribution: from very low to very high family
incomes with varying within-country distributions.
– Per capita GDP - often used as a primary indicator for
purchasing power.
– Income figures are useful in the initial screening of
markets; but in product-specific cases, income may not
play a major role.
– The lack of income in a market may preclude the
marketing of a standardized product but may provide an
opportunity for an adjusted product.
Purchasing Power Parity
Purchasing Power Parity (PPP) of GDP for various countries (2003). The US is
used as a reference (100). Bermuda has the highest index value, 154, i.e., goods
sold in Bermuda are 54% more expensive than in the United States.
Market Characteristics
• Consumption patterns
– Engel’s law - As a family’s income increases, the
percentage spent on food will decrease, the
percentage spent on housing and household
operations will be roughly constant, and the amount
saved or spent on other purchases will increase.
– Product saturation or diffusion provides information
on the percentage of households in a market that own
a particular product.
Market Characteristics
• Infrastructure
– Transportation networks by land, rail, waterway, or air
are essential for distribution.
– Communication systems for marketing include
telephones, computers, broadcast media, print media,
internet, and wireless technology.
– The more extensive the firm’s international
involvement, the more it can rely on its already
existing support network of banks, advertising
agencies, and distributors to assess new markets.
Economic Integration of Markets
Removal of
Internal
Level of Integration Tariffs
Free Trade Area
Customs Union
Common Market
Monetary Union
Economic Union
Political Union
Common
External
Tariffs
Free Flow
Of Capital
and Labor
Single
Currency
Harmonize
Economic
Policies
Coordinate
Political
Syatems
Implications of Economic Integration for
Marketing.
1. Increased growth for the region
2. Growth in income within the region → increased exports for
both member and nonmember countries
3. Trade creation and trade diversion
4. Opportunity for direct investments
5. Increased competition within the region
6. New standards of fair competition
7. Support for local industries
8. Greater market segmentation
EU Membership History.
1952: Belgium, Netherlands Luxemburg, Germany,
France & Italy
1973: Denmark, Ireland, UK
1981: Greece
1986: Portugal, Spain
1995: Austria, Finland, Sweden
2004: Cyprus, the Czech Republic, Estonia, Hungary,
Latvia, Lithuania, Malta, Poland, the Slovak
Republic and Slovenia
2007: Romania, Bulgaria (27 countries)
EU’s Governing Bodies.
Council of European Union - Main decision-making body. One
minister from each member country.
European Parliament (Legislative body)
European Commission (Bureaucracy)
Court of Justice - Ensures that Community laws are uniformly
interpreted and applied
Court of Auditors - Checks EU’s receipts and expenses and
manages the budget.
IK
Other Agreements.
North America: NAFTA: 1994. Includes two side agreements to correct
perceived abuses in labor and the environment in Mexico. Introduction
of maquiladoras.
Europe: EFTA (European Free Trade Association): Iceland, Norway,
Switzerland and Liechtenstein.
Africa: Several agreements. ECOWAS (Economic Community of West
African States), SACU (South African Customs Union): Botswana,
Lesotho, Namibia, South Africa, Swaziland.
Latin America: MERCOSUR (Southern Common Market – founded in
1991): Argentina, Brazil, Paraguay, Uruguay + 5 Associate members,
Mexico is an observer. LAIA (Latin American Integration Association);
CENCOM (Central American Common Market); ANCOM (Andean
Common Market); CARICOM (Caribbean Community and Common
Market)
Asia: ASEAN (Association of South East Asian Nations); SAARC (South
Asian Association for Regional Cooperation)
Strategies for Regional Markets
Europe: Fill gaps in product/market portfolios; Create
alliances with strong European firms; Rationalize
European organization, production, distribution; Hire
senior-level European talent; Establish region-wide
government relations …
Emerging markets: Adjust entry strategy; Manage
affordability; Invest in distribution; Build strong
brands …
Developing Markets: Research customers; Create
buying power; Tailor local solutions; Improve
access; Shape aspirations …
Chapter 5
The Political and Legal
Environment
International Political Issues.
• Nationalism, sovereignty, imperialism,
power, ideologies, national interests,
political risk...
IK
Political/Legal Concerns of
International Marketers
 Home country political and legal circumstances
 Host country political and legal circumstances.
 Bilateral and multilateral agreements, treaties, and laws
governing the relations between host and home countries.
• Influence of home country government policies and the legal
systems on a firm’s opportunities abroad, e.g.,
– Minimum wage legislation affects the international competitiveness
of a firm using highly labor intensive production processes.
– Cost of domestic environment safety regulations may significantly
affect the firm’s international pricing policies.
Consequences Of Political Actions.
• Indigenization/Domestication
• Nationalization (Acceptable according to international law if it
satisfies public purpose & includes compensation)
• Expropriation/Confiscation (no compensation)
• Local content laws
• Local hiring laws
• Discriminatory taxes
• Discriminatory pricing of resources
• Joint-venture pressure
• Import/Export controls, embargos, sanctions, etc.
• Selective boycotts
• Price controls
• Terrorism, etc.
IK
Export Controls
– Designed to deny or delay the acquisition of
strategically important goods by the adversaries.
– The legal bases for export controls vary across
nations.
– Export of dual use items (military and civilian) is
controlled by the US and the European Union.
• Help avoid the proliferation of weapons of mass
destruction.
• Reduce flows of technological knowledge to control the
sophistication of armaments used by insurgent groups.
• Impose financial controls which inhibit funding for
terrorist training.
Exhibit 5.3 - The U.S. Export Control System
Import Controls
• Problems faced while administering import controls:
– They exact a huge price from domestic consumers.
– The social cost of these controls may be damaging to
the economy.
– They bring about downstream change in import
composition.
– They often do not to work.
– Supply may respond to artificial stimulation and grow
far beyond demand.
POLITICAL-RISK INDICATORS.
ECONOMIC
- GDP, Inflation, Capital flight
- Foreign debt, Food output
- Commodity dependence...
POLITICAL
- Wars or involvement in foreign conflicts...
- Relations with neighbors
- Degree of authoritarianism (use of coercion to retain power)
- Legitimacy of government/Mechanisms for transfer of power
- Military or political control
- Politically motivated violence
SOCIETAL
- Urbanization,,
- Corruption, nepotism…
- Social Unrest (ethnic, language, religious… fundamentalism)
- Xenophobia, Extreme nationalism
IK
Other Political “Risks”
–
–
–
–
Shortage of foreign currency.
Difficulty dealing with exchange controls.
Prolonged negotiations with government officials.
Increase in tax rates or stricter applications of the host
country’s tax codes.
– Government control on the prices of imported products
or services.
– Other government controls (e.g., censorship)
Legal Environment
•
•
•
•
Home country laws
Host country laws
International law
Two major legal systems popular worldwide are:
– Common law - Based on tradition and depends less on
written statutes and codes than on precedent and
custom.
– Code law - Based on a comprehensive set of written
statutes that spell out legal rules explicitly; based on
Roman law. (Islamic Law: Based on Sharia, direct impact
on dietary and financial aspects)
Host Country Legal Environment
• Antidumping laws – Prohibit below-cost
sales of products.
• Laws may be designed to protect domestic
industries and reduce imports.
• The enforcement of laws may have a
different effect on national and foreign
marketers.
International law
– No enforceable body of international law exists;
– Treaties and agreements respected by a
number of countries influence international
business operations.
– Firms are restricted by both home and host
country laws.
International Conflict Resolution
• Conflicts with foreign commercial and
government entities may be resolved by
mediation, arbitration or litigation.
• Procedures should always be included in the
original contract.
• Mediation should be the first/preferred alternative
• Arbitration is typically more formal than mediation.
• Litigation is the most expensive and timeconsuming alternative.
International Terrorism
―Terrorism is the systematic use (or threat) of
violence aimed at attaining a political goal and
conveying a political message.
– Terrorists direct their strikes at business more
than any other target.
– Terrorism creates new opportunities for firms
in a few industries like construction, security,
and information technology.
International Terrorism
– Direct effects: the immediate cost levied on individual
firms. Physical damage to infrastructure and
disruption of public services and supply of inputs,
resources and services.
– Indirect effects: decline in per capita income,
purchasing activity, and stock market values.
Deterioration of international relations. Onerous
counter terrorism regulations.
– Chill effect: Uncertainty about the state of a nation’s
economy can sharply reduce domestic business
activity as well as FDI. Curtailment of travel by foreign
executives, etc.
Ethical Issues
• The ethical obligations faced by
multinational enterprises include:
– Corporate governance and responsibility
– Intellectual property rights
– Bribery and corruption
Striking a balance
Intellectual Property Rights:
• Many countries propose a balance between IP
protection and availability of essential information
in various areas of public policy such as
–
–
–
–
Health (access to affordable medicines)
Biotechnology (use of genetic research tools)
Education (access to scientific materials)
Food & agriculture (food security & preservation of
biodiversity)
Bribery and corruption
– The Foreign Corrupt Practices Act (FCPA): 1977:
prohibits U.S. firms to bribe foreign officials for
business purposes. Similar laws in Europe and other
countries.
– Bribery: the process driven by “individual greed,” the
amount depends on the individual official and is for
the official’s own personal use.
– Functional lubrication/Enabling payments: the
amount is small, it is standardized, and is passed on
to others involved in the processing of documents.
Chapter 8
Chapter 8
Research
Research
Purpose of Marketing Research
• Marketing Research is used to:
– Identify marketing opportunities and problems.
– Generate, refine and evaluate marketing
actions.
– Monitor marketing performance and improve
understanding of marketing as a process.
Types of Marketing Studies
Required for Doing Business Abroad
Market: Select, enter, expand, contract, leave
Product: Add, delete, change…
Price: Price-demand relationships, profitability
analysis, discounts, competitors’ prices…
Promotion: Media availability, media selection,
copy design, promotional mix…
Distribution: Channels, location, policies, trade
discounts…
International vs. Domestic Research
• International research involves:
– New parameters like information availability,
respondent access, laws governing information
gathering, survey familiarity, communication
infrastructures, research suppliers, etc.
– New environment: cultures, demographics,
political systems, stability, different societal
structures, language, etc.
Determining Research Objectives
• Exporting - Foreign market opportunity analysis
– Broad-brush approach to narrow down international
marketing activities; the two goals being country
ranking and clustering.
– Cursory analysis of general market variables such as
total and per capita GNP, population statistics, etc.
– Information on individual market data to identify
fastest-growing markets, largest markets for a
particular product, market trends, and restrictions.
– governmental restrictions.
– competitive assessment.
Determining Research Objectives
• Importing
• Reliability of a foreign supplier.
• Consistency of its product or service quality.
• Length of delivery time.
• Government rules in the exporting (source)
country.
• Domestic restrictions and legislation.
• Risks of disruption and terrorism.
• Market expansion
– Detailed information for penetrating a market.
– Monitoring the political climate of a country.
Sources of Secondary Information
•
Firm’s Internal Records
•
The Internet/Electronic Databases (e.g., CIA World Fact book)
•
International Agencies (e.g., UN)
•
Regional Agencies (e.g., EU, OECD)
•
National Governments
•
Consulting Firms/Universities
•
Foreign Embassies/Trade Offices
•
Trade Publications/Trade Associations
•
Syndicated Services
•
Multinational Banks
•
etc.
IK
Secondary Information Caveats
– Consider the quality of the data source, with
primary focus on the purpose and method of
original data collection.
– Assess the quality of actual data in terms of
accuracy, reliability, and recency.
– Assess the comparability and compatibility of the
data.
Research Techniques
• Qualitative
– Interviews (gender issues)
– focus groups
• Quantitative
– Surveys: Questionnaire design issues such as
willingness to respond, societal constraints,
ambiguous words and questions, language or
data equivalence, translation/retranslation, etc.
• Observational
International Sampling
• Can be difficult due to a lack of organized or current sources or
lists etc.
– Local survey organizations in some countries have devised
reasonably reliable sampling techniques
– In the Web 1.0 online research model, surveys can be
administered either through e-mail or via a website.
– Another trend in the Web 1.0 world is the use of social
networks to access particular consumer groups.
– In the Web 2.0 model, users generate the content of the
data collected.
– The limitations of Web 2.0 market research efforts are
reliability, sampling, and the methodology.
The International Information System
• Serves as a mechanism to coordinate the flow of
information to corporate managers for decision-making
purposes.
• The system should have the following attributes:
– Relevant
– Timely
– Flexible
– Accurate
– Exhaustive
– Convenient
Environmental scanning
• Information on:
• Political, social, and economic affairs internationally;
• Changes of attitudes held by public institutions and
private citizens;
• Possible upcoming alterations in international
markets.
• Performed by
• Obtaining factual input regarding relevant variables.
• Content analysis of communication in a society and
monitoring social, economic, cultural, and
technological environment, pinpoint upcoming
changes and new opportunities.
• Conducted within and/or outside the corporation.
Chapter 9
Chapter 9
Market Entry
and Expansion
Market Entry and
Expansion