1. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 1 International Marketing Trade policy Culture Consumer buying power Product strategies

2. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 2 Obstacles to Trade: Protectionism Differing interests of consumers and manufacturers Benefits of trade tend to be more diffused than benefits to specific groups of protectionism

3. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 3 Approaches to Protectionism Tariffs Quotas “Voluntary” export restrictions Subsidies to domestic producers/exporters Non-tariff barriers legal obstacles differential treatment

4. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 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. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 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. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 6 The Whole vs. Parts

7. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 7 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)

8. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 8 Hofstede’s Cultural Dimensions Individualism (vs. collectivism) Power distance Masculine vs. feminine Strong vs. weak uncertainty avoidance Short vs. long term orientation (Confucianist dynamics) “The Foolish Old Man Who Moved the Mountain” Based on interviews with IBM executives throughout the World--1980s

9. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 9 Negotiation Content Non-task sounding Task-related exchange of information Persuasion Concessions and agreements

10. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 10 Geography--Surprisingly Impactful U.S. and most Western European areas are highly generally accessible Compare to areas in the developing World: China Russia Latin America (even Mexico), Africa Communication vs. shipping

11. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 11 Climate and Topography: The Case of Latin America 4,500 by 3,000 miles (at widest) 48% forests West coast dominated by mountain ranges 5% of land arable Natural barriers inhibiting growth Large proportion of residents in cities; people in rural areas often do not associate themselves with countries

12. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 12 Climate and Topography: The Case of Latin America 4,500 by 3,000 miles (at widest) 48% forests West coast dominated by mountain ranges 5% of land arable Natural barriers inhibiting growth Large proportion of residents in cities; people in rural areas often do not associate themselves with countries

13. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 13 China: Geography Very rapid progress on Shanghai infrastructure Rural villages are difficult to access Strong regional differences even within the country

14. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 14 Some Issues in Culture Time monochronic vs. polychronic meanings Personal space preferred distance territoriality interaction with/ignoring people in close proximity Symbols colors historical associations Friendship and acquaintance Agreements Etiquette

15. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 15 Eastern vs. Western Culture Differences in Values Perceptions of Objects Reality –Stability vs. change –Control Perceived roles

16. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 16 Perceived Control Over Reality World is not generally seen as predictable Trends are not expected to continue Individual has little control over the world BUT Outcome is believed to be tied to effort, not individual skill

17. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 17 More Tendencies Westeners tend to rate themselves More unique than average and what they are “Above average” in ability Easteners tend to rate themselves Less unique than they really are “Below average”

18. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 18 Proverbs Western: “The early bird gets the worm” Eastern: “The first bird in the flock gets shot” “A nail that stands out will be hammered down.”

19. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 19 Values IssueWestern ValueEastern Value Distinctiveness of people Want to be distinctiveNot valued; emphasis on tie to group Perceived controlSignificant; values determine choices Modest—societal values are already established EmphasisSuccess and achievement; relationships may get in the way Best outcome for relevant group (e.g., family, work group) Self-esteemStrive to feel good; assurances wanted Tied to belonging with group RelationshipsEquality or superior positionClearly defined; hierarchical RulesSame rules apply to allDepend on context and relationship Source: Richard E. Nisbett, The Geography of Thought: How Asians and Westeners Think Differently … and Why, New York, 2003, The Free Press

20. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 20 Some implications Thanking people—for things they are clearly supposed to do? Why the need for a choice between 40 different brands of cereal?

21. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 21 Socialization Western textbook: “See Dick run. See Dick play. See Dick run and play.” Chinese: “Big brother takes care of little brother. Big brother loves little brother. Little brother loves big brother.”

22. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 22 Perception of People Western: People have characteristics independent of the situation Fundamental attribution error: People attribute their own behavior to the circumstances but that of others to innate characteristics. Eastern: Person is connected; behavior is the result of specific roles played at the time

23. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 23 Contrasting Advertising Perspectives (Aithison 2002) Western “Atomistic”—broken down to smallest component parts “Unique selling propositions” “How to” Positioning May be “dull and boring” “Copy focused” Asian Holistic “Everything relates to everything else” How things “fit together” and “relate” Visual and oral Jim Aitchison, How Asia Advertises, New York: Wiley, 2002.

24. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 24 Advertising Content Comparisons American: Individual benefit and pleasure (e.g., “Make your way through the crowd) Korean Collective values (e.g., “We have a way of bringing people together)

25. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 25 Debate and Conflict “The first person to raise his voice has lost the argument.” (Chinese proverb) Use of indirection and projection Face-to-face vs. anonymous comments Western adversarial “rule of law” based on consistent universal ideals vs. solution for the case at hand in context

26. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 26 Relationships, Education, and Work Western Standing out; being “better” Self perceived favorably Self-esteem building Work longer on successful job Eastern Harmony Must “weed out” personal characteristics that might annoy others Taught self-criticism Not recognized in profession until after many years of practice Work longer on unsuccessful job

27. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 27 Physical Product vs. Communication Adaptations

28. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 28 CONSUMER INCOMES AND BUYING POWER Measuring country wealth gross domestic product “purchase parity” vs. nominal Government role in the economy Tax burden Services provided by the Government— e.g., health care, education

29. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 29 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 of country of origin (e.g., French beer, American products with French language labels)

30. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 30 Nominal vs. Purchase Parity Adjusted GNPs—Examples (2003) Source: World Bank (http://www.worldbank.org/data/databytopic/GNIPC.pdf)http://www.worldbank.org/data/databytopic/GNIPC.pdf

31. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 31 The Hamburger Standard (from the Economist) CountryLocal Price in US$Buying power relative to U.S. U.S.$2.711.00 Britain3.14.75 Egypt1.352.00 Mexico2.181.24 China1.202.26 Switzerland4.590.59

32. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 32 Market Entry Strategies Exporting Low investment Low control of promotion Licensing Low investment Low control of promotion, positioning, and quality Able to benefit from existing distribution and market knowledge Joint venture Considerable investment More control Able to benefit from partner’s experience Must work with partner Direct investment Large investment Risky Greater control May lack knowledge of market

33. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 33 Market Positioning Strategies Across Countries Häagen-Dazs—U.S. vs. Japan Corona Beer—Mexico vs. U.S. Mercedes-Benz—Europe vs. U.S. McDonald’s U.S. Europe Developing countries—e.g., China

34. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 34 U.S. Laws of Interest to firms with U.S. Involvement Anti-trust Foreign Corrupt Influences Anti-boycott laws Trading With the Enemy

35. MKTG 370 INTERNATIONAL MARKETING Lars Perner, Instructor 35 The International Life Cycle Market for older technology tends to exist in less developed countries Manufacturing of older generation technology-- e.g., Pentium I computers Resale of capital equipment—e.g., DC 8 aircraft, old three part canning machines Some countries tend to be more receptive to innovation than others “Leap frogging” Going directly from old technology to the very newest, skipping intermediate step (e.g., wireless rather than wired technology) Shortening of product life cycles