INTERNATIONAL MARKETING Culture Product strategies Legal issues

Learning Objectives Identify impact of culture on Values Perception of reality Product choices Response to marketing activity Identify advantages and disadvantages of product standardization, adaptation, and customization under different circumstances Identify some legal issues that must be considered by firms doing business abroad

An Effective Billboard Advertisement? VERY DIRTY CLOTHES CLOTHES GETS WASHED WITH THE ADVERTISED DETERGENT BRAND SQUEEKY CLEAN CLOTHES

LEARNING OUTCOME OBJECTIVES Identify the for forces impacting the marketer operating in varying cultural, legal, economic, and political environments Identify the increasingly competitive international market place Identify strategic opportunities for operating internationally Identify the interdependent nature of decisions made in the international context

International Marketing: Considerations and Outcomes MKT 465 COVERS INTERNATIONAL MARKETING IN MORE DETAIL

Definitions Culture: “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man as a member of society.” Alternative definition: “Meanings that are shared by most people in a group [at least to some extent]”. (Adapted from Peter and Olson, 1994) We tend to associate the word “culture” with behavior. However, the term is technically defined as a set of “shared meanings.” This, obviously, is a somewhat deeper definition, focusing more on the basis for the observed behaviors. A concept related to that of culture is socialization--the way that one learns to be part of a society. For example, mathematics books in the United States may focus on the calculation of interest, which is not a legitimate concept in most countries governed primarily by Muslim law. 4

Cultural Lessons Diet Coke is named Light Coke in Japan—dieting was not well regarded Red circle trademark was unpopular in Asia due to its resemblance of Japanese flag Packaging of products is more important in some countries than in U.S. Advertisement featuring man and dog failed in Africa—dogs were not seem as man’s best friend 5

More Cultural Lessons... Cologne ad featuring a man “attacked” by women failed in Africa Food demonstration did well in Chinese stores but not in Korean ones--older women were insulted by being “taught” by younger representatives Pauses in negotiations Level of formality 6

Approaches to Product Introduction ● Customization Standardization ● Adaptation Completely new product made for each country Products sold across the World are identical Adjustments are made in regions or countries to accommodate infrastructure, cultural, economic, or other differences Complete customization or standardization are rare—modest adjustments are usually made Not suitable for the Middle East!

Reasons for Standardization Avoiding high costs of customization, if applicable Technological intensity Reduced confusion International compatibility among product group components Faster spread of rapid life cycle products Convergence of global consumer tastes/needs Country of origin positioning

Standardization—Advantages Benefits Economies of scale More resources available for development effort Better quality possible Rapid product life cycles may make extensive adaptation infeasible

Standardization—Disadvantages Unnecessary features Vulnerability to trade barriers Strong local competitors

Product Adaptations Mandatory—required by laws of nature or laws of government Legal requirements Infrastructure “Discretionary”—not required by natural or human laws but often not really “optional” in practice (needed to compete with brands that do offer adaptations) Local tastes Fit into cultural environment

Mandatory Adaptation Issues Infrastructure differences—e.g., electricity supplies vary among countries in Voltage Frequency (time between flips in polarity under alternating current) Plugs Conflicting rules between countries—it may not be possible to make a product that would be simultaneously legal in both of two countries

Country of Origin Effects Perception of product quality (e.g., Japan, Germany) elegance and style (e.g., France, Italy) Historical associations Positioning strategies Emphasis on origin (e.g., French wine) De-emphasis/obfuscation of country of origin (e.g., French beer, American products with French language labels)

Flops in the Transplantation of Advertising Man and his dog “Follow the leader—he’s on a Honda!” Detergent ad “Get your teeth their whitest!”

International Brand Adaptations Chevy Nova did not do well in Latin America (“no va.”) A Japanese soft drink which did not sell well in English speaking countries…

U.S. Laws of Interest… Anti-trust: It is illegal for U.S. firms to participate in collusion and other anti-competitive activities abroad. Most countries have such laws; not all enforce these. Foreign Corrupt Influences Act: It is illegal for U.S. firms to pay bribes abroad. Anti-boycott laws: It is illegal for U.S. firms to participate in a boycott of Israel or even certify that one’s firm does not do business with Israel. Technically, it is illegal to participate in all non-U.S. Government sanctioned boycotts, but the emphasis is on Israel. Trading With the Enemy: It is illegal to trade at all (with few exceptions) with enemy certain states (e.g., North Korea, Iran, Libya). Exports of certain technologies (mostly with potential for military use) is heavily restricted. Extra-territoriality: U.S. courts will often take jurisdiction over cases of violations of U.S. law that occurred entirely abroad.