Thrive in the Marketing Environment: The World Is Flat Chapter 3 Thrive in the Marketing Environment: The World Is Flat

Chapter Objectives Understand the big picture of international marketing Explain the World Trade Organization, economic communities, and how countries protect local industries Understand how factors in the external business environment influence marketing strategies and outcomes Explain the strategies that a firm can use to enter global markets Understand the arguments for standardization vs. localization of marketing mix strategies in global markets Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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 licensed brand Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Global Marketing 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 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Deciding to Go Global “Go” or “no go” Is it in the best interest of the firm to remain in home market or to go where foreign business opportunities exist? Which global markets are most attractive? Must consider market conditions and competitive advantage when making a decision Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Road Blocks at the Borders Protectionism Quotas, embargoes, and tariffs Initiatives in international regulation and cooperation help trade General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) Economic communities help to promote trade Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Analyzing the Global Marketing Environment A company going global must understand local conditions in the targeted country, including the: Economic environment Competitive environment Technological environment Political/legal environment Sociocultural environment Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Economic Environment: Indicators of Economic Health Key economic indicators: Gross domestic product (GDP): Total dollar value of goods/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 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Economic Environment: Level of Economic Development 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 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Economic Environment: The Business Cycle All economies go through periods of: Prosperity Recession Recovery Depression Inflation Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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 publicly available government documents Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Competitive Environment: Competition in the Microenvironment Competition for consumer’s discretionary income Competition among products to satisfy the same consumer’s needs/wants Competition among brands offering similar goods/services on the basis of brand reputation or perceived benefits Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Competitive Environment: Competition in the Macroenvironment Competition in the macroenvironment (overall structure of industry) Monopoly Oligopoly Monopolistic competition Perfect competition Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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/sell a particular invention in that country Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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 don’t take advantage of consumers Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Political and Legal Environment: Political Influences 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 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Political and Legal Environment: Legal Influences on Business Regulatory constraints on trade often restrict the marketing of goods Also common—local content rules a portion of a product must consist of components supplied by industries in the host country or economic community Human rights issues may limit foreign countries business opportunities Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

The Sociocultural Environment Key Sociocultural considerations: Demographics Cultural values Collectivist vs. individualistic cultures Norms, customs, mores, and conventions Language Ethnocentrism: The tendency to prefer products from one’s own culture Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Ethical Issues in Global Business Truthfulness in business dealings varies by country Bribery: When someone voluntarily offers payment to get an illegal advantage Extortion: When someone in authority extracts payment under duress Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

How “Global” Should a Global Marketing Strategy Be? Choosing a market entry strategy: Exporting Contractual agreements Licensing Franchising Strategic alliances Joint venture Direct investment Born-global firms Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

How “Global” Should a Global Marketing Strategy Be? Choose a marketing-mix strategy: Standardization vs. localization Standardization: Offer the same products in all markets Localization: Offer a customized marketing mix for each country Once standardization or localization is chosen, it’s time to tweak the marketing mix Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

How “Global” Should a Global Marketing Strategy Be? Tweaking the marketing mix Product decisions: Straight extension strategy: Market existing product in foreign market Product adaptation strategy Modifies product for foreign market Product invention strategy Develops new product for foreign market Promotion decisions: Whether or not to modify Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

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 Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Real People, Real Choices: Decision Made at eBay Robert chose option 3 Implementation: eBay licensed the brand “WorldofGood.com” and launched project with both community and commerce platforms using search engine, banner, affiliate, e-mail and viral marketing, as well as PR/event marketing. Measuring success: Used metrics to measure operational business and co-branding strategy success Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Keeping It Real: Fast-Forward to Decision Time at Plan-It Marketing Meet Cindy Tungate, president of Plan-It Marketing, a marketing research firm Plan-It’s client Priceline needs help in planning its business The decision to be made: What marketing research strategy will maximize results for Priceline? Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall

Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2009 Pearson Education, Inc.   Publishing as Prentice Hall Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall