Transcript mgm 4273 international marketing

MGM 4273
INTERNATIONAL MARKETING
PJJ 1ST FACE-TO-FACE
14/9/13
SITI RAHAYU HUSSIN
[email protected]
• First half : chapters 1-10
• Second half : the rests of the book
International Marketing
• Performance of business activities designed to
– Plan
– Price
– Promote, and
– Direct the flow of a company’s goods and services
to consumers or users in more than one
nation for a profit
1-3
The International Marketing Task
Exhibit 1.3
1-4
ANALYSIS & DECISION
• Environmental differences must be taken into
account if firms are to market products and
services at a profit in other countries
– Laws
– Customs
– Cultures
SRC and Ethnocentrism
• Ethnocentrism and the SRC can influence an
evaluation of the appropriateness of a
domestically designed marketing mix for a
foreign market
• The most effective way to control the
influence of ethnocentrism and the SRC is to
recognize their effects on our behavior
1-6
Framework
for Cross-cultural Analysis
1. Define business problem or goal
• Home-country vs. foreign-country cultural traits,
habits, or norms
• Consultation with natives of the target country
2. Make no value judgments
3. Isolate the SRC influence
• Examine it carefully to see how it complicates the
problem
4. Redefine the problem
• Without SRC influence
• Solve for the optimum business goal situation
1-7
Stages of International
Marketing Involvement
•
•
•
•
•
1-8
No direct foreign marketing
Infrequent foreign marketing
Regular foreign marketing
International marketing
Global marketing
No Direct Foreign Marketing
• Products reach foreign markets indirectly
– Trading companies
– Foreign customers who contact firm
– Wholesalers
– Distributors
– Web sites
• Foreign orders pique a company’s interest to
seek additional international sales
1-9
Strategic Orientation
• Domestic market extension orientation
• Multidomestic market orientation
• Global market orientation
1-10
Global Perspective
Trade Barriers – An International Marketer’s Minefield
• Countries take advantage of U.S. open
markets while putting barriers in the way of
U.S. exports
• Tariff and nontariff barriers to trade are major
issues confronting international marketers
• To realize the benefits of the social, political,
and economic changes, free trade must
prevail throughout the global marketplace
– WTO (World Trade Organization)
2-11
World Trade
and U.S. Multinationals
• New global marketing opportunities
• 1950s – U.S. companies began to export and
make significant investments in overseas
marketing and production facilities
• 1960s – U.S. multinational corporations
(MNCs) faced major challenges on two fronts
– Resistance to direct investment
– Increasing competition in export markets
2-12
World Trade
and U.S. Multinationals
• American MNCs confronted by a resurgence of
competition from all over the world
– NIC (Newly Industrialized Countries)
– SOE (State-Owned Enterprises)
• The balance of merchandise trade
– U.S. trade deficit
• U.S. dilemma of how to encourage trading partners to
reciprocate with open access to their markets without
provoking increased protectionism
–
–
–
–
2-13
WTO (World Trade Organization)
NAFTA
AFTA (American Free Trade Area)
APEC (Asia-Pacific Economic Cooperation Conference)
Beyond the First Decade
of the 21st Century
• U.S. economy has slowed dramatically
• World growth (except China) also slowed
– The Organization for Economic Cooperation and
Development (OECD) estimates 3% average annual
growth for next 25 years
• Developing countries will grow faster
– From an annual rate of 4% in the past quarter to a
rate of 6% for the next 25 years
– Share of world output will range from one-sixth to
one-third
2-14
Beyond the First Decade
of the 21st Century
• Level of intensity of competition will change
as companies focus on gaining entry or
maintaining their position
– Emerging markets
– Regional trade areas
– Established markets in Europe, Japan, and the U.S.
• Smaller companies also seeking new markets
– Novel approaches
– Technological expertise
2-15
Protectionism
• Tariffs, quotas, and nontariff barriers are
designed to protect markets from intrusions
by foreign countries
• Nations utilize barriers to restrain entry of
unwanted goods
– Legal
– Exchange
– Psychological
– Private market
2-16
Protection Logic and Illogic
• Arguments concerning protectionism on trade
–
–
–
–
–
–
–
–
–
–
–
2-17
Protection of infant industry
Protection of the home market
Need to keep money at home
Encouragement of capital accumulation
Maintenance of the standard of living and real wages
Conservation of natural resources
Industrialization of a low-wage nation
Maintenance of employment and reduction of unemployment
National defense
Increase of business size
Retaliation and bargaining
Trade Barriers
•
•
•
•
•
Tariffs
Quotas
Voluntary Export Restraints (VER)
Boycotts and embargoes
Monetary barriers
– Blocked currency
– Differential exchange
– Government approval
• Standards
• Antidumping penalties
2-18
Types of Nontariff Barriers
Exhibit 2.6
2-19
GEOGRAPHY, HISTORY &
INTERNATIONAL MARKETING
• A prospective international marketer should be
reasonably familiar with the world, its climate, and
topographic differences
• Geographic hurdles must be recognized as having a
direct effect on marketing and the related activities
of communications and distribution
3-20
History Perspective
in Global Business
• History helps define a nation’s mission
– How it perceives its neighbors
– How it perceives itself
– Its place in the world
• Insights into history are important for
understanding current attitudes
• It is necessary to study culture as it is now as
well as to understand culture as it was
– A country’s history
3-21
History and Contemporary Behavior
• Japanese history
–
–
–
–
–
–
–
Seven centuries under the shogun feudal system
The isolation before the coming of Admiral Perry in 1853
Threat of domination by colonial powers
Rise of new social classes
Western influences
Humiliation of World War II
Involvement in the international community
• Historically, loyalty and service, a sense of responsibility, and
respect for discipline, training, and artistry were stressed to
maintain stability and order
• A historical perspective gives the foreigner a basis on which to
begin developing cultural sensitivity and a better understanding of
contemporary Japanese behavior
3-22
Geography and Global Markets
• Geography – an element of the uncontrollable
environment that confronts every marketer
– Affects a society’s culture and economy
– Physical makeup limits a nation’s ability to supply
its people’s needs
3-23
Geography, Nature
and Economic Growth
• As countries prosper, natural barriers are
overcome
• Environmental issues
– Disruption of ecosystems
– Relocation of people
– Inadequate hazardous waste management
– Industrial pollution
3-24
Resources
• The availability of minerals and the ability to
generate energy are the foundations of modern
technology
• The principal supplements to human energy
–
–
–
–
–
–
–
3-25
Animals
Wood
Fossil fuel
Nuclear power
Ocean tides
Geothermal power
The sun
Resources
• United States in perspective
–
–
–
–
1942 – nearly self-sufficient
1950 – major importer
1973-2000 – increased dependency from 36% to 66%
Mid-2000’s – predicted to be importing more than
70% of needs
• The location, quality, and availability of resources
will affect the pattern of world economic
development and trade well into the 21st century
3-26
Dynamics of Population Trends
• Global population trends determine today’s
demand for goods
– Rural/urban population shifts
– Rates of growth
– Age levels
– Population control
• Changes in population will profoundly affect
future demand
• The most important deterrent to population
control is cultural attitudes about the
importance of large families
3-27
World Population by Region – 2005-2050
Life Expectancy at Birth – 2005-2010 (millions)
Exhibit 3.4
3-28
Worker Shortage and Immigration
• The free flow of immigration will help to
ameliorate the dual problems of explosive
population expansion in less-developed
countries and worker shortage in industrialized
regions
• Europe will need 1.4 billion immigrants over the
next 50 years
• Japan and the U.S. will need 600 million
immigrants between now and 2050
3-29
World Trade Routes
• Progression of trade routes
–
–
–
–
Overland
Sea routes
Air routes
The Internet
• Trade routes bind world together, minimizing:
–
–
–
–
Distance
Natural barriers
Lack of resources
Fundamental differences between and economies
• Trade routes represent attempts to overcome influence
of geography
– Causing economic and social imbalances
3-30
Communication Links
•
•
•
•
•
•
3-31
Telegraph
Telephone
Television
Satellites
Computer
Internet
Cultural Dynamics in Assessing
Global Markets
Chapter 4
• A complete and thorough appreciation of the
origins and elements of culture may well be the
single most important gain to a foreign marketer
in the preparation of marketing plans and
strategies
• Marketers can control the product offered to a
market – its promotion, price, and eventual
distribution methods – but they have only limited
control over the cultural environment within
which these plans must be implemented
4-33
• When a company is operating internationally
each new environment that is influenced by
elements unfamiliar and sometimes
unrecognizable to the marketer complicates
the task
• Special effort and study are needed to absorb
enough understanding of the foreign culture
to cope with the uncontrollable features
4-34
Global Perspective
• Culture deals with a group’s design for living
• The successful marketer clearly must be a
student of culture
• Markets are the result of the three-way
interaction of a marketer’s
– Economic conditions
– Efforts
– All other elements of culture
• The use of something new is the beginning of
cultural change
– The marketer becomes a change agent
4-35
Culture’s Pervasive Impact
• Culture affects every part of our lives, every day, from
birth to death, and everything in between
• As countries move from agricultural to industrial to
services economies’ birthrates decline
• Consequences of consumption
– Tobacco
• Culture not only affects consumption, it also affects
production
– Stomach cancer in Japan
4-36
Definitions and Origins of Culture
• Traditional definition of culture
– Culture is the sum of the values, rituals, symbols, beliefs,
and thought processes that are learned, shared by a group
of people, and transmitted from generation to generation
• Humans make adaptations to changing environments
through innovation
• Individuals learn culture from social institutions
– Socialization (growing up)
– Acculturation (adjusting to a new culture)
– Application (decisions about consumption and production)
4-37
We All Love Flowers – Why?
•
•
•
•
•
•
4-38
Geography
History
Technology and economics
Social institutions
Cultural values
Aesthetics as symbols
Social Institutions
• Family
– Nepotism
– Role of extended family
– Favoritism of boys in some cultures
• Religion
– First institution infants are exposed to outside the home
– Impact of values systems
– Misunderstanding of beliefs
• School
– Affects all aspects of the culture, from economic development to consumer
behavior
– No country has been successful economically with less than 50% literacy
4-39
Social Institutions
• The media
– Media time has replaced family time
• TV
• Internet
• Government
– Influences the thinking and behaviors of adult citizens
• Propaganda
• Passage, promulgation, promotion, and enforce of laws
• Corporations
– Most innovations are introduced to societies by companies
– Spread through media
– Change agents
4-40
Elements of Culture
• Cultural values
–
–
–
–
4-41
Individualism/Collectivism Index
Power Distance Index
Uncertainty Avoidance Index
Cultural Values and Consumer Behavior
Hofstede’s Indexes
Language, and Linguistic Distance
Exhibit 4.5
4-42
Cultural Sensitivity and Tolerance
• Being attuned to the nuances of culture so
that a new culture can be viewed objectively,
evaluated and appreciated
– Cultures are not right or wrong, better or worse,
they are simply different
– The more exotic the situation, the more sensitive,
tolerant, and flexible one needs to be
4-43
Cultural Change
• Dynamic in nature – it is a living process
• Paradoxical because culture is conservative
and resists change
– Changes caused by war or natural disasters
– Society seeking ways to solve problems created by
changes in environment
– Culture is the means used in adjusting to the
environmental and historical components of
human existence
4-44
Cultural Borrowing
• Effort to learn from others’ cultural ways in
the quest for better solutions to a society’s
particular problems
– Imitating diversity of other makes cultures unique
– Contact can make cultures grow closer or further
apart
• Habits, foods, and customs are adapted to fit
each society’s needs
4-45
Similarities – An Illusion
• A common language does not guarantee a
similar interpretation of word or phrases
– May cause lack of understanding because of
apparent and assumed similarities
• Just because something sells in one country
doesn’t mean it will sell in another
– Cultural differences among member of European
Union a product of centuries of history
4-46
Chapter 5
Culture, Management Style,
and
Business Systems
Summary
• Some cultures appear to emphasize the importance of
information and competition while others focus more on
relationships and transaction cost reductions
• Businesspersons working in another country must be sensitive
to the business environment and must be willing to adapt
when necessary
• Understanding the culture you are entering is the only sound
basis for planning
• Business behavior is derived in large part from the basic
cultural environment in which the business operates and, as
such, is subject to the extreme diversity encountered among
various cultures and subcultures
5-48
Summary
• Environmental considerations significantly affect the
attitudes, behavior, and outlook of foreign businesspeople
• Varying motivational patterns inevitably affect methods of
doing business in different countries
• The international trader must be constantly alert and
prepared to adapt when necessary
• No matter how long in a country, the outsider is not a local –
in many countries that person may always be treated as an
outsider
• Assuming that knowledge of one culture will provide
acceptability in another is a critical mistake
5-49
Required Adaptation
• Adaptation is a key concept in international
marketing
• Ten basic criteria for adaptation
1) open tolerance
2) flexibility
3) humility
4) justice/fairness
5) ability to adjust to varying tempos
6) curiosity/interest
7) knowledge of the country
8) liking for others
9) ability to command respect
10) ability to integrate oneself into the environment
5-50
The Impact of American Culture
on Management Style
• “Master of destiny” viewpoint
• Independent enterprise as the instrument of
social action
• Personnel selection and reward based on merit
• Decisions based on objective analysis
• Wide sharing in decision making
• Never-ending quest for improvement
• Competition producing efficiency
5-51
Authority and Decision Making
• Influencers of the authority structure of business:
– High PDI Countries
• Mexico, Malaysia
– Low PDI Countries
• Denmark, Israel
• Three typical authority patterns:
– Top-level management decisions
– Decentralized decisions
– Committee or group decisions
5-52
Communication Styles
• Face-to-face communication
– Managers often fail to develop even a basic understanding of just one other
language
– Much business communication depends on implicit messages that are not
verbalized
• Internet communications
– Nothing about the Web will change the extent to which people identify with
their own language and cultures
• 78% of today’s Web site content is written in English
• An English e-mail message cannot be understood by 35% of all Internet users
– Country-specific Web sites
– Web site should be examined for any symbols, icons, and other nonverbal
impressions that could convey and unwanted message
5-53
Marketing Orientation
• A company’s marketing orientation has been
positively related to profits (U.S.)
• Other countries have more traditional approach
– Production orientation (consumers will prefer
products that are widely available)
– Product orientation (consumers will favor products
that offer the most quality performance, or innovative
features)
– Selling orientation (consumers and businesses alike
will not buy enough without prodding)
• Encouraging a marketing orientation across
global business units can be difficult
5-54
Gender Bias
in International Business
• Women represent only 18% of the employees who are chosen
for international assignments
• In many cultures women not typically found in upper levels of
management, and are treated very differently from men
– Asia, Middle East, Latin America
• Prejudices toward women in foreign countries
• Cross-mentoring system
– Lufthansa
• Executives who have had international experience
– More likely to get promoted,
– Have higher rewards, and have
– Greater occupational tenure
5-55
Ethical and Socially
Responsible Decisions
•
Difficulties arise in making decisions, establishing policies, and engaging
in business operations in five broad areas
–
–
–
–
–
•
•
Laws are the markers of past behavior that society has deemed
unethical or socially irresponsible
Ethical principles to help the marketer distinguish between right and
wrong, determine what ought to be done, and justify actions
–
–
–
5-56
Employment practices and policies
Consumer protection
Environmental protection
Political payments and involvement in political affairs of the country
Basic human rights and fundamental freedoms
Utilitarian Ethics
Rights of the Parties
Justice or Fairness
Culture’s Influence
on Strategic Thinking
• British-American
– Individualistic
• Japan & Germany
– Communitarian
• In the less individualistic cultures labor and management
cooperate
• A competitive, individualistic approach works well in the
context of an economic boom
• Fourth kind of capitalism –
– Common in Chinese cultures
– Predicted by culture
5-57
Dimensions of Culture, A Synthesis
Exhibit 5.7
5-58
International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham
The Political
Environment:
a Critical Concern
Chapter 6
McGraw-Hill/Irwin
International Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
Summary
• The foreign firm
– Must strive to make its activities politically acceptable or it may be subjected
to a variety of politically condoned harassment
• The foreign marketer frequently faces the problem
of uncertainty of continuity in government policy
• Marketing firms accepted under one administration
might find its activities undesirable under another
– As governments change political philosophies
• Unfamiliar or hostile political environment does not
necessarily preclude success for foreign marketers
– If the company becomes a local economic asset and responds creatively to the
issues raised by political and social activities
– If a company is considered vital to achieving national economic goals, the host
country often provides an umbrella of protection
6-60
Global Perspective
•
A crucial reality of international business
– Both host and home governments are integral partners
•
A government controls and restricts a company’s
activities
– By encouraging and offering support
– By discouraging and banning or restricting its activities
•
International law recognizes the sovereign right of a
nation
– To grant or withhold permission to do business within its
political boundaries
– To control where its citizens conduct business
6-61
Stability of Government Policies
• Issues that can affect the stability of a government
– Radical shifts in government philosophy when an opposing political party
ascends to power
– Pressure from nationalist and self-interest groups
– Weakened economic conditions
– Bias against foreign investment
– Conflicts between governments
• Five main political causes of international market
instability
– Some forms of government seem to be inherently unstable
– Changes in political parties during elections can have major effects on trade
conditions
– Nationalism
– Animosity targeted toward specific countries
– Trade disputes themselves
6-62
Targeted Fear and/or Animosity
• Marketers should not confuse nationalism with
a widespread fear or animosity directed at a
particular country
– Toyota in the U.S. (1980s)
– Animosity toward the United States in France
– The unhappiness of citizens and politicians in many other countries
concerning the war in Iraq
• No nation-state, however secure, will tolerate
penetration by a foreign company into its market and
economy
– If it perceives a social, cultural, economic, or political threat to its well-being
• Trade disputes
6-63
Political Risks of Global Business
• Confiscation – the seizing of a company’s assets without
payment
• Expropriation – where the government seizes an
investment but makes some reimbursement for the
assets
• Domestication – when host countries gradually cause the
transfer of foreign investments to national control and
ownership through a series of government decrees
– Mandating local ownership
– Greater national involvement in a company’s
management
6-64
Economic Risks
• Exchange controls
– Stem from shortages of foreign exchange held by a
country
• Local-content laws
– Countries often require a portion of any product sold
within the country to have local content
• Import restrictions
– Selective restrictions on the import of raw materials
to force foreign industry to purchase more supplies
within the host country and thereby create markets
for local industry
6-65
Economic Risks
• Tax controls
– A political risk when used as a means of controlling foreign
investments
• Price controls
– Essential products that command considerable public
interest
• Pharmaceuticals
• Food
• Gasoline
• Labor problems
– Labor unions have strong government support that they
use effectively in obtaining special concessions from
business
6-66
Political Sanctions
• One or a group of nations may boycott
another nation
– Stopping all trade between the countries
– Issuing sanctions against trade of specific products
• U.S. boycotts of trade with Cuba/Iran
• History indicates that sanctions are often
unsuccessful in reaching desired goals
– Particularly when ignored by other major nations’ traders
6-67
Cyberterrorism and Cybercrime
• Each wave of viruses
– Gets more damaging
– Spreads so rapidly that considerable harm is done
before it can be stopped
• Tools for cyberterrorism
– Can be developed to do considerable damage
• To a company,
• An entire industry
• A country’s infrastructure
• Mounting concern over the rash of attacks
– Business leaders and government officials addressed a
Group
of Eight conference
6-68
Politically Sensitive
Products and Issues
• Politically sensitive products
– Perceived to have an effect on the environment,
exchange rates, national and economic security, and
the welfare of people
– Are publicly visible or subject to public debate
• Health is often the subject of public debate, and
products that affect or are affected by health
issues can be sensitive to political concern
• The European Union has banned hormonetreated beef for more than a decade
6-69
International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham
The International
Legal Environment:
Playing by the Rules
Chapter 7
McGraw-Hill/Irwin
International Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Should You Learn?
• The four heritages of today’s legal systems
• The important factors in jurisdiction of legal
disputes
• Issues associated with jurisdiction of legal
disputes and the various methods of dispute
resolution
• The unique problems of protecting intellectual
property rights internationally
7-71
What Should You Learn?
• How to protect against piracy and
counterfeiting
• The legal differences between countries and
how the differences can affect international
marketing plans
• The different ways U.S. laws can be applied to
U.S. companies operating outside the United
States
• The many issues of evolving cyberlaw
7-72
Summary
• Businesses face a multitude of problems in their efforts
to develop successful marketing programs
– Varying legal systems of the world and their effect on business transactions
• Political climate, cultural differences, local geography,
different business customs, and the stage of economic
development must be taken into account
• Legal questions must also be considered
–
–
–
–
7-73
Jurisdictional and legal recourse in disputes
Protection of intellectual property rights
Extended U.S. law enforcement
Enforcement of antitrust legislation by U.S. and foreign governments
Summary
• The Internet creates a new set of legal
entanglements
• The freedom that now exists on the World Wide
Web will only be a faint memory before long
• Prudent path to follow at all stages of foreign
marketing operations is one leading to
competent counsel, well versed in the
intricacies of the international legal
environment
7-74
International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham
Developing a Global
Vision Through
Marketing Research
Chapter 8
McGraw-Hill/Irwin
International Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Should You Learn?
• The importance of problem definition in
international research
• The problems of availability and use of
secondary data
• Quantitative and qualitative research methods
• Multicultural sampling and its problems in less
developed countries
• Sources of secondary data
• How to analyze and use research information
8-76
Global Perspective
Japan – Test Market for the World
• Enterprises with international scope of
operations
– Need for current, accurate information magnified
• Marketing research
– The systematic gathering, recording, and analyzing of
data to provide information useful in marketing
decision making
• International marketing research involves two
complications
– Information must be communicated across cultural
boundaries
– The environments within which the research tools are
applied are often different in foreign markets
8-77
Summary
• The basis objective of the market research
function is providing management with
information for more accurate decision making
• Customer attitudes about providing information
to a researcher are culturally conditioned
• Foreign market information surveys must be
carefully designed to elicit the desired data and at
the same time not offend the respondent’s sense
of privacy
8-78
Summary
• Many foreign markets have inadequate or
unreliable bases of secondary information
• Three keys to successful international
marketing research
– The inclusion of natives of the foreign culture on
research teams
– The use of multiple methods and triangulation
– The inclusion of decision makers, even top
executives, who must on occasion talk directly to
or directly observe customers in foreign markets
8-79
I n t e r n a t i o n a l M a r k 1e4 t ht Ei dni t i ogn
P h i l i p R. C a t e o r a
M a r y C. G i l l y
J o h n L. G r a h a m
Emerging
Markets
Chapter 9
McGraw-Hill/Irwin
International Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Should You Learn?
• The political and economic changes affecting global
marketing
• The connection between the economic level of a country
and the marketing task
• Marketing’s contribution to the growth and development of
a country’s economy
• The growth of developing markets and their importance to
regional trade
• The political and economic factors that affect stability of
regional market groups
• The NIC growth factors and their role in economic
development
9-81
Stages of Economic Development
• The United Nations groups countries into three categories
– MDCs (more-developed countries)
– LDCs (less-developed countries)
– LLDCs (least-developed countries)
• Newly Industrialized Countries (NICs)
– Countries that are experiencing rapid economic expansion and
industrialization
– Do not exactly fit as LDCs or MDCs
– Have moved away from restrictive trade practices
– Instituted significant free market reforms
9-82
Information Technology, the Internet, and
Economic Development
• New, innovative electronic technologies are key to a
sustainable future for developed and developing nations
• The Internet accelerates the process of economic growth by
speeding up the diffusion of new technologies to emerging
economics
• Wireless technologies greatly reduce the need to lay down a
costly telecom infrastructure to bring telephone service to
areas not now served
• Substantial investments in the infrastructure to create easy
access to the Internet and other aspects of IT are being made
by governments and entrepreneurs
9-83
Infrastructure of Selected Countries
Exhibit 9.2
9-84
Marketing’s Contributions
• Marketing (or distribution) is not always
considered meaningful to those responsible for
planning
• Marketing is an economy’s arbitrator between
productive capacity and consumer demand
• The marketing process is the critical element in
effectively utilizing production resulting from
economic growth
• Instrumental in laying the groundwork for
effective distribution
9-85
Marketing in a Developing Country
• Marketing efforts
– Must be keyed to each situation
– Custom tailored to each set of circumstances
• Must provide for optimum utility
• Marketer must evaluate existing level of market
development and receptiveness
– The more developed an economy, the greater the variety of marketing
functions demanded, and the more sophisticated and specialized the
institutions become to perform marketing functions
• Demand in a developing country
– Three distinct kinds of markets in each country
• Traditional rural/agricultural sector
• Modern urban/high-income sector
• Transitional sector usually represented by low-income urban slums
9-86
Evolution of the Marketing Process
Exhibit 9.3
9-87
Marketing in a Developing Country
• Demand in a developing country (continued)
– Tomorrow’s markets will include expansion in industrialized
countries and the development of the transitional and
traditional sectors of less-developed nations
– New markets also means that the marketer has to help educate
the consumer
– The companies that will benefit are the ones that invest when it
is difficult and initially unprofitable
• Bottom-of-the-pyramid markets
– Bottom-of-the-pyramid markets (BOPMs) – consisting of the 4
billion people with incomes of less than $1,200 across the globe
– Most often concentrated in the LDCs and LLDCs
9-88
Developing Countries
and Emerging Markets
• The U.S. Department of Commerce estimates
– Over 75% of the expected growth in world trade over the next two decades
will come from the more than 130 developing and newly industrialized
countries
• Big emerging markets share important traits
–
–
–
–
–
–
–
Are all physically large
Have a significant populations
Represent considerable markets for a wide range of products
Have strong rates of growth or the potential for significant growth
Are of major political importance within their regions
Are regional economic drivers
Will engender further expansions in neighboring markets as the grow
• Because many lack modern infrastructure, much
of the expected growth will be in industrial sectors
9-89
Big Emerging Markets
Exhibit 9.6
9-90
Asia
• Asia has been the fastest-growing area in the world for the
past three decades
• Asian-Pacific Rim
– Four Tigers (Hong Kong, South Korea, Singapore,
Taiwan)
– First countries in Asia to move from a status of
developing countries to newly industrialized countries
• China
– After U.S., most important single market is China
– Two major events that occurred in 2000 are having a
profound effect on China’s economy
• Admission to the WTO
• U.S. granting China normal trade relations on a permanent
basis
9-91
Asia
• China (continued)
– China has two important steps to take if the road to
economic growth is to be smooth
• Improving human rights
• Reforming the legal system
– The American embassy in China has seen a big jump in
complaints from disgruntled U.S. companies
– Two Chinas
• One a maddening bureaucratic, bottomless money pit
• The other an enormous emerging market
9-92
Asia
• Hong Kong
– Hong Kong reverted to China in 1997 when it became a special
administrative region (SAR) of the People’s Republic of China
– The Hong Kong government negotiates bilateral agreements and
makes major economic decisions on its own
– The keys to Hong Kong’s economic success
•
•
•
•
•
•
•
9-93
Free market philosophy
Entrepreneurial drive
Absence of trade barriers
Well-established rule of law
Low and predictable taxes
Transparent regulations
Complete freedom of capital movement
Asia
• Taiwan
– Mainland-Taiwan economic ties are approaching a
crossroads as both countries enter the World Trade
Organization
– “Three direct links” must be faced because each country
has joined the WTO and the rules insist that members
should communicate over trade disputes and other issues
• India
– Five-point agenda
•
•
•
•
•
9-94
Improving the investment climate
Developing a comprehensive WTO strategy
Reforming agriculture, food processing and small scale industry
Eliminating red-tape
Instituting better corporate government
Newest Emerging Markets
• The U.S. decision to lift the embargo against Vietnam
– If Vietnam follows the same pattern of development as other Southeast Asian
countries, it could become another Asian Tiger
• The United Nations’ lifting of the embargo against South
Africa
– South Africa has an industrial base that will help propel it into rapid economic
growth
– The South African market also has a developed infrastructure
• Vietnam and South Africa’s future development
– Will depend on government action and external investment by other
governments and multinational firms
9-95
Strategic Implications for Marketing
• As a country develops
– Incomes change
– Population concentrations shift
– Expectations for a better life adjust to higher
standards
– New infrastructures evolve
– Social capital investments made
• When incomes rise, new demand is generated at all income
levels for everything from soap to cars
• If a company fails to appreciate the strategic implications of
the $10,000 Club, it will miss the opportunity to participate in
the world’s fastest-growing global consumer segment
9-96
Summary
• Foreign marketers must be able to
– Rapidly react to market changes
– Anticipate new trends within constantly evolving
market segments that may not have existed as recently
as last year
• As nations develop their productive capacity, all
segments of their economies will feel pressure to
improve
• The impact of these political, social and economic
trends will continue to be felt throughout the
world
• IT will speed up the economic growth in every
country
9-97
Summary
• Marketers must focus on devising plans
designed to respond fully to each level of
economic development
• Big emerging markets may present special
problems
– But they are promising markets for a broad range
of products now and in the future
• Emerging markets create new marketing
opportunities for MNCs as new market
segments evolve
9-98
International Marketing
14th Edition
P h i l i p R. C a t e o r a
M a r y C. G i l l y
John L. Graham
Multinational
Market Regions
and Market Groups
Chapter 10
McGraw-Hill/Irwin
International Marketing 14/e
Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.
What Should You Learn?
•
•
•
•
•
The reason for economic union
Patterns of international cooperation
The evolution of the European Union
Strategic implications for marketing in Europe
Evolving patterns of trade as eastern Europe and the
former Soviet states embrace the free-market system
• The trade linkage of NAFTA and South America and its
regional effects
• The development of trade within the Asia-Pacific Rim
10-100
Strategic Implications
for Marketing in Europe
• Multinational groups spell opportunity
– Through access to greatly enlarged markets with reduced or abolished
country-by-country tariff barriers and restrictions
• World competition will intensify
– As businesses become stronger and more experienced in dealing
with large market groups
• Opportunities
– Economic integration creates large mass markets for the marketer
• Market barriers
– Initial aim of a multinational market is to protect businesses
that operate within its borders
• Reciprocity
– If a country does not open its market to an EU firm, it cannot expect to have
access to the EU market
10-101
Marketing Mix Implications
• In the past, companies often charged different prices in
different European markets
• As long as products from lower-priced markets could not
move to higher-priced markets, differential price
schemes worked
– Badedas Shower Gel
• Companies initiating uniform pricing policies
• Reducing the number of brands to focus advertising and
promotion efforts
– Nestle
– Unilever
10-102
Summary
• Marketing efficiency affected by:
–
–
–
–
Development of mass markets
Encouragement of competition
Improvement of personal income
Various psychological market factors
• Production efficiency
– Derives from specialization
– Mass production for mass markets
– Free movement of the factors of production
• Multinational market groups provide great
opportunity for the creative marketer
10-103
Summary
• Market groupings make it economically feasible
to enter new markets and to employ new
marketing strategies
• Market groupings intensify competition by
protectionism within a market group but may
foster greater protectionism between regional
markets
• Mercosur and ASEAN+3 suggest the growing
importance of economic cooperation and
integration
10-104