The International Marketing Environment Global Marketing & Communications Christine Sorensen

Learning Objectives To consider the Marketing Environment on a global scale To be aware of the legal differences between countries that affect international marketing To consider the effects of protectionism on world trade To be aware of different types of trade barriers To understand how the political environment can assist or close foreign markets To consider the strategic implications of regional market groups and international agreements

The International Marketing Environment Social/cultural Language religion aesthetics values &attributes social organisation material culture Legal Local domestic laws International law Home domestic law Political Operational restrictions Discriminatory restrictions Physical actions Technological Satellite communications ISDN WWW Internet The electronic superhighway Economic Developed economies Emerging economies Less developed economies Currency movements Environmental influences on international marketing

REGIONAL BREAKDOWN OF GLOBAL POPULATION Other Asia Africa India China Latin America Europe North America 0 0.5 1.0 1.5 2.0 2.5 Source: United Nations 1995 2050

World’s megacities By 2010, 50% of people were living in urban areas By 2015, the top 5 largest cities will be: Tokyo-Japan 26.4 million Bombay- India 26.1 million Lagos- Nigeria 23.2 million Dhaka-Bangladesh 21.1 million Sao Paulo-Brazil 20.4 million Source: United Nations

Economic Environment World has varying levels of - Big impact on - Economic conditions Economic development GNP per capita Big impact on - Market development Pricing Competition

World economies Developed triad Economies (Japan, USA, Western Europe). account for 80% of world trade Increasing competition for top economic power rankings from China and S Korea Emerging Economies BRIC (Brasil, Russia, India, China ?) MIKT (Mexico, Indonesia, South Korea and Turkey), huge and growing consumer demand government directed economic reforms ‘dual economy’ Less Developed Countries (LDCs) low GDP, limited manufacturing base infrastructure weaknesses heavy reliance on one product/one trading partner

The Emerging Economies Countries emerging from the ranks of LDC’s Key growth markets - China, Mexico, Brazil, Chile, India, Hungary, Poland, Turkey, Czech Republic, South Africa, Russia. Growth in consumer demand

Similarities in these countries Economic reform Lowering restrictions on foreign investment Increasing privatisation Dual economies High inflation (but getting under control) New opportunities for international marketing firms

Less developed countries(LDC’s) Includes underdeveloped and developing countries Main features low GDP per capita limited manufacturing activity poor infrastructure heavily reliant on one product e.g. Colombia (coffee), Cuba (sugar) Mali (cotton) Nigeria (oil), Jamaica (base metal ores)

Dual Economy – Coping with the economic disparity The poor population of developing countries constitutes a huge market

Legal Environment Three dimensions: 3 dimensions in the legal environment: local domestic law: different in every country international law: issues include piracy, treaties, patents etc domestic laws in the home country: export controls, plus duty to abide by national laws in all activities

Legal factors can affect: Contracts Advertising The product - packaging - safety The target market Trade marks and brand names Patents and piracy Green issues Red tape

Source: Keegan and Green (2008: 455) Legal factors influence marketing communication– an Example (Saudi Arabia) No commercial television advertising was allowed prior to May 1986. Non-censored films cannot be advertised Women may appear only in those commercials that relate to family affairs, and their appearance must be in a decent manner that ensures feminine dignity Women must wear a long suitable dress that fully covers her body except face and palms Source: Keegan and Green (2008: 455)

Political environment Consider the political regime and its attitude to business and level of risk ‘A risk due to a sudden or gradual change in the local political environment that is disadvantageous or counter productive to foreign firms and markets’

Political issues Political parties Nationalism Political risk

Goals of protectionism Protect local jobs Protect infant industries Encourage investment in home market Encourage import substitution Prevent dumping Promote political objectives

Barriers to World Trade 850 ways of reducing imports have been identified - (Onkvisit & Shaw) Many countries overtly protect their manufactured goods There are also many covert barriers

Tariff and Non-Tariff Barriers to Trade Specific country Purpose Time length Import restraints Tariff rates Production, distribution and consumption Tariffs Market entry barriers Government participation in trade Customs and entry procedures Product requirements Quotas Financial control Other policies and requirements Non-tariff barriers Source: Onkvisit and Shaw (1988) Marketing Barriers in International Trade, Business Horizons, June

Tariff barriers Direct taxes and charges imposed on imports Most common forms:- Specific:- charges imposed on particular products either by weight or volume Ad valorem:- straight % of the import price Discriminatory: tariff charged against goods from a specific country

Non-Tariff Barriers Increasing…. Increased government participation (subsidies) Customs entry procedures (red tape) Quotas Product requirements Financial control exchange Market limitation

3 Areas Of Initiative To Encourage Free Trade: Need for international capital – IBRD (International Bank for Reconstruction & Development) International liquidity: IMF (International Monetary Fund) Liberalisation of trade & tariffs :GATT/WTO (World Trade Organisation)

Technological Environment Shrinking communications The Internet and WWW The Dual technology/cultural paradox

The International Marketing Environment Social/cultural Language religion aesthetics values &attributes social organisation material culture Legal Local domestic laws International law Home domestic law Political Operational restrictions Discriminatory restrictions Physical actions Technological Satellite communications ISDN WWW Internet The electronic superhighway Economic Developed economies Emerging economies Less developed economies Currency movements Environmental influences on international marketing

References Czinkota and Ronkainen (2002), International Marketing, Thomson South-Western. De Mooij (2003), Global Marketing and Advertising, Understanding Global Paradoxes, Sage. Keegan and Green (2008), Global Marketing, Prentice Hall. Kotler and Armstrong (2006), Principles of Marketing, Prentice Hall.