Transcript Ch 3 - International Business courses

Thrive in the Marketing
Environment:
The World Is Flat
Chapter Three
© 2012 Pearson Education, Inc. publishing as Prentice-Hall
Chapter Objectives
 Understand the big picture of international
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marketing and the decisions firms must make
when they consider globalization
Explain how international organizations such as
the World Trade Organization (WTO), economic
communities, and individual country regulations
facilitate and limit a firm’s opportunities for
globalization
Understand how factors in a firm’s external
business environment influence marketing
strategies and outcomes in both domestic and
global markets
Explain some of the strategies that a firm can
use to enter global markets
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Real People, Real Choices:
Decision Time at eBay
 Which option should eBay undertake?
• Option 1: Customize eBay by adding
additional categories for artisans’
products, but don’t create a separate
brand
• Option 2: Create a completely separate,
custom-branded experience
• Option 3: Create a hybrid model using
an independent marketplace and a
licensed brand
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Take a Bow:
Marketing on the Global Stage
 World trade:
The flow of goods and services among
different countries—the value of all the
exports and imports of the world’s
nations
 Countertrade:
A type of trade in which goods are paid
for with other items instead of with
cash
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Deciding to Go Global
 Step 1: “Go” or “no go” - should focus
remain on home market or go global?
 Step 2: IF “go”, which markets are most
attractive?
 Step 3: What market-entry strategy is
best?
 Step 4: How should marketing mix
strategies for foreign markets be
developed?
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Deciding to Go Global
 “Go” or “no go”
•
Is it in the best interest of the firm to
remain in the home market or to go
where foreign business opportunities
exist?
 Must consider domestic and global
market conditions and competitive
advantage when making a decision
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Understand International,
Regional and Country Regulations
 Initiatives in international regulation
and cooperation help trade:
• General Agreement on Tariffs and Trade
(GATT)
• World Trade Organization (WTO)
 Protectionism restricts trade:
• Quotas, embargoes, and tariffs
 Economic communities help
to promote trade
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Analyzing the Global Marketing
Environment
 A company going global must
understand local conditions in the
targeted country, including:
• Economic environment
• Competitive environment
• Technological environment
• Political and legal environment
• Sociocultural environment
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The Economic Environment:
Indicators of Economic Health
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Key economic indicators:
• Gross domestic product (GDP):
•
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Total dollar value of goods and services a
country produces within its borders in a year
Gross national product (GNP):
Value of all goods and services produced by a
country’s citizens or organizations
Economic infrastructure:
Quality of country’s distribution, financial,
and communications systems
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The Economic Environment:
Level of Economic Development
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Least developed country (LDC)
• Economic base is often agricultural
Developing countries
• Economy shifts emphasis from agriculture
to industry
Developed countries
• Offer wide range of opportunities for
international marketers
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The Economic Environment:
The Business Cycle
 All economies go through periods of:
• Prosperity
• Recession
• Recovery
• Depression
• Inflation
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The Competitive Environment:
Analyzing the Market and Competition
 Competitive intelligence:
Gathering and analyzing publicly
available information about rivals to
develop superior marketing strategies
• Collected from news media, the
internet, and government documents
available to the public
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The Competitive Environment:
Competition in the Microenvironment
 Competition in the microenvironment:
• Competition for consumer’s
discretionary income
• Competition among products to satisfy
the same consumer’s needs and wants
• Competition among brands offering
similar goods and services on the basis
of brand reputation or perceived
benefits
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The Competitive Environment:
Competition in the Macroenvironment
 Competition in the macroenvironment
(overall structure of industry):
• Monopoly
• Oligopoly
• Monopolistic competition
• Perfect competition
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The Technological Environment
 Technology:
• Provides firms with important
competitive advantages
• Profoundly affects marketing activities
• Can transform industries
 Patent
• Legal document giving inventors
exclusive rights to produce and sell a
particular invention in that country
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The Political and Legal Environment:
Legal Influences on Business
 Local, state, national, and global laws
and regulations affect businesses
 Purpose of American law:
• To make sure businesses compete
fairly with each other
• To make sure that businesses do not
take advantage of consumers
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The Political and Legal Environment:
Political Constraints on Business
 Retaliatory actions against American
businesses sometimes occur as a
result of political activity or war
 Political constraints on trade are
commonly imposed:
• Economic sanctions
• Nationalization
• Expropriation
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The Political and Legal Environment:
Regulatory Constraints on Business
 Regulatory constraints on trade often
restrict the marketing of goods
• Local content rules
 Human rights issues may limit the
business opportunities in a foreign
country
• U.S. Generalized System of Preferences
(GSP)
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The Sociocultural Environment
 Key sociocultural considerations:
• Demographics
• Cultural values
Collectivist
vs. individualistic cultures
• Social norms and customs
• Language
• Ethnocentrism:
The tendency to prefer products
from one’s own culture
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When is a Bribe Not a Bribe?
Ethical Issues in Global Business
 What is considered to be ethical
business behavior varies by country
 Bribery
When someone voluntarily offers
payment to get an illegal advantage
 Extortion
When someone in authority extracts
payment under duress
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How “Global” Should a Global
Marketing Strategy Be?
 Company-level decisions - the market
entry strategy:
• Exporting
• Contractual agreements:
Licensing
Franchising
• Strategic alliances
Joint
venture
• Direct investment
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How “Global” Should a Global
Marketing Strategy Be?
 Product-level decisions: the marketingmix strategy:
• Standardization vs. localization
Standardization:
Offer the same products in all markets
Localization:
Offer a customized marketing mix for
each country
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How “Global” Should a Global
Marketing Strategy Be?
 Tweaking the marketing mix
• Product decisions:
Straight
extension strategy
Product adaptation strategy:
– Product invention
– Backward invention
Product
invention strategy
Whether
or not to modify
• Promotion decisions:
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How “Global” Should a Global
Marketing Strategy Be?
 Tweaking the marketing mix
• Price decisions:
Products
are often more expensive to
produce for foreign markets
– Free trade zones
– Gray market goods
– Dumping
• Distribution decisions:
Getting
the product to remote
locations is often difficult
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Real People, Real Choices:
Decision Made at eBay
 Robert chose option 3
• Why do you think that Robert chose to
license the brand “WorldofGood.com”
and launch the marketplace on a
platform independent from eBay?
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Keeping It Real: Fast-Forward to
Decision Time at Plan-It Marketing
 Meet Ryan Garton, director of
Consumer Insights at Discover
Financial Services
 Ryan lacks an integrated approach to
evaluating how new product ideas fit
with consumers’ desires
 The decision to be made:
Should the process used to screen new
product ideas be changed?
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photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America
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