1. INTERNATIONAL MARKETING
Culture
Product strategies
Due to the loss of two Mondays to holidays this semester, the coverage of International Marketing has been curtailed somewhat. However, international issues will be integrated into the coverage of other topics.

2. Learning Objectives Identify impact of culture on
Values
Perception of reality
Product choices
Response to marketing activity
Identify the impact of levels of income, costs of living, and fluctuating exchange rates
Identify advantages and disadvantages of product standardization, adaptation, and customization under different circumstances

3. An Effective Billboard Advertisement?
VERY DIRTY CLOTHES
CLOTHES GETS WASHED WITH THE ADVERTISED DETERGENT BRAND
SQUEEKY CLEAN CLOTHES
Note that many Middle Eastern languages are written from right to left, rather than from left to right the way it is done in most Western languages. Thus, the sequence may be viewed as going in the other direction.

4. International Marketing: Considerations and Outcomes
MKT 465 COVERS INTERNATIONAL MARKETING IN MORE DETAIL
International Marketing issues are covered in more detail in MKT 465: Global Marketing.

5. 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

6. 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
These are examples intended to illustrate. You are not expected to know the specific examples for the exam. 5

7. 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

8. Very Brief Review of Economics
Exchange rates
Floating (supply and demand)
Fixed
Trade balances and their impact on exchange rates
Global trade implies that purchasers in one country must pay others. Although, as we will see later, transactions often take the form, at least in part, of barter, it is often necessary that a buyer or seller convert money from one currency to another. While certain currencies are “closed,” so that it is generally not possible to freely convert money into some other form, active markets exist for the exchange of others.
Between 1947 and the early 1970s, exchange rates between major currencies were “fixed” according to the Bretton Woods Agreement, which also established the first GATT. However, in the 1970s, it became infeasibly expensive for members to support the dollar at its artifically high level, and “floating” exchange rates resulted. Here, the prices of various currencies are essentially determined by supply and demand. Note that, while in the old days, U.S. currency was backed by gold, those who hold American dollars are no longer guaranteed to be able to convert their dollars. The value of the U.S. dollar, and many other currencies, is entirely based on confidence in the currency.
One might wonder what keeps a country from going excessively overboard and buying excessively. Basically, when a country spends more than it earns abroad, its currency will experience downward pressure as its supply increases relative to demand. Thus, the value of the currency will decline, and foreign imports will become less attractive as they become more expensive. Conversely, the country’s products will tend to decline in cost (as measured in foreign currency) abroad, and its exports will tend to increase.
There are, however, some complications to this picture. One way to increase the “demand” for currency is to borrow heavily abroad. Thus, because of its heavy borrowing, U.S. interest rates, compared to the rest of the World, are rather heavy, and a strong demand for the dollar exists (so that investors can lend this currency to American borrrowers).

9. 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
Firms face a choice of alternatives in marketing their products across markets. An extreme strategy involves customization, whereby the firm introduces a unique product in each country, usually with the belief tastes differ so much between countries that it is necessary more or less to start from “scratch” in creating a product for each market. On the other extreme, standardization involves making one global product in the belief the same product can be sold across markets without significant modification—e.g., Intel microprocessors are the same regardless of the country in which they are sold. Finally, in most cases firms will resort to some kind of adaptation, whereby a common product is modified to some extent when moved between some markets—e.g., in the United States, where fuel is relatively less expensive, many cars have larger engines than their comparable models in Europe and Asia; however, much of the design is similar or identical, so some economies are achieved. Similarly, while Kentucky Fried Chicken serves much the same chicken with the eleven herbs and spices in Japan, a lesser amount of sugar is used in the potato salad, and fries are substituted for mashed potatoes.
Not suitable for the Middle East!

10. 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
There are certain benefits to standardization. Firms that produce a global product can obtain economies of scale in manufacturing, and higher quantities produced also lead to a faster advancement along the experience curve. Further, it is more feasible to establish a global brand as less confusion will occur when consumers travel across countries and see the same product. On the down side, there may be significant differences in desires between cultures and physical environments—e.g., software sold in the U.S. and Europe will often utter a “beep” to alert the user when a mistake has been made; however, in Asia, where office workers are often seated closely together, this could cause embarrassment.

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

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

13. 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
Adaptations come in several forms. Mandatory adaptations involve changes that have to be made before the product can be used—e.g., appliances made for the U.S. and Europe must run on different voltages, and a major problem was experienced in the European Union when hoses for restaurant frying machines could not simultaneously meet the legal requirements of different countries. “Discretionary” changes are changes that do not have to be made before a product can be introduced (e.g., there is nothing to prevent an American firm from introducing an overly sweet soft drink into the Japanese market), although products may face poor sales if such changes are not made. Discretionary changes may also involve cultural adaptations—e.g., in Sesame Street, the Big Bird became the Big Camel in Saudi Arabia.

14. 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

15. Some Examples of Mandatory Adaptations
Artificial sweeteners permitted (different types are approved for use in different countries)
Product specifications (e.g., alcohol percentage in beverages)
Warning labels
Safety features
Noise suppression filters
Anti-pollution features

16. 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!”
Advertising messages may fail both because of translation issues and because of culturally inappropriate content.