1. Thriving in the Marketing Environment: The World is Flat

2. 2 Chapter Objectives Understand business ethics and explain how marketers practice ethical business behavior Explain how firms practice social responsibility Understand the big picture of international marketing, including world trade flows and the decision criteria firms use in their decisions to go global Explain the WTO, economic communities, and how countries protect local industries by establishing roadblocks to foreign companies 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 versus localization of marketing strategies in global markets

3. 3 Real People, Real Choices: Decision Time at Tupperware Tupperware Brands Corporation (Rick Goings) How to refresh brand perception?  Option 1: increase advertising in new markets  Option 2: utilize public relations  Option 3: build demand using word-of-mouth

4. 4 Welcome to the New Era of Marketing Adopt a global focus Managers emphasis social profit: net benefit for a firm and society from the firm’s ethical practices and socially responsible behavior

5. 5 Doing Good: Ethical Behavior in the Marketplace Business ethics: basic values that guide a firm’s behavior Codes of ethics: written standards of behavior to which everyone in the organization must subscribe

6. 6 Consumerism: People Fighting Back The social movement directed toward protecting consumers from harmful business practices Consumer Bill of Rights: the right to be safe, be informed, be heard, and choose freely

7. 7 Ethics in the Marketing Mix Making the product safe Pricing the product fairly Promoting the product ethically Making the product available ethically

8. 8 Doing It Right: Promoting Social Responsibility Social responsibility: organizations engaging in activities that have a positive effect on society and promote public good

9. 9 Doing It Right: Promoting Social Responsibility (cont’d) Serving the Environment Serving Society: Cause Marketing Serving the Community: Promoting Cultural Diversity

10. 10 Global Marketing World Trade: the flow of goods/services among different countries – the value of all exports/imports of the world’s nations Countertrade: trading products between countries or supplying goods in return for tax breaks from local government (accounts for 25% of all world trade)

11. 11 Making the Decision 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 opportunities exist? Which global markets are most attractive? Key to the decisions: market conditions and creating a competitive advantage

12. 12 At the Borders Protectionism: quotas, embargoes, and tariffs World Trade Organization (WTO): to “help trade flow smoothly, freely, fairly, and predictably” Economic communities promoting trade

13. 13 The Global Marketing Environment A company going global must understand local conditions in the targeted country Understanding the external environment: economic, competitive, technological, political, and cultural factors affect marketers’ global strategies

14. 14 The Economic Environment: Indicators of Economic Health Economic health = market potential for firm Gross domestic product (GDP): total dollar value of goods/services a country produces within its borders in a year Per capita GDP: total GDP/number of citizens

15. 15 Indicators of Economic Health (cont’d) Gross national product (GNP): the value of all goods/services produced by a country whether in its borders or not Economic infrastructure: quality of country’s distribution, financial, and communications systems

16. 16 Level of Economic Development Less developed country (LDC)  Economic base is often agricultural  Attractive markets for staples and inexpensive items Developing countries  Economy shifts emphasis from agriculture to industry Developed countries  Offer wide range of opportunities for international marketers

17. 17 The Business Cycle Prosperity Recession Recovery Depression Inflation

18. 18 The Competitive Environment 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

19. 19 The Competitive Environment (cont’d) 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

20. 20 The Competitive Environment (cont’d) Competition in the macroenvironment (overall structure of industry)  Monopoly  Oligopoly  Monopolistic competition  Perfect competition  The overall pattern of changes or fluctuations of an economy

21. 21 The Technological Environment Technology provides firms with important competitive advantages Patent: legal document giving inventors exclusive rights to produce/sell a particular invention in that country

22. 22 The Political and Legal Environment Local, state, national, and global laws and regulations affect businesses The law in the United States  To make sure businesses compete fairly with each other  To make sure that businesses don’t take advantage of consumers

23. 23 The Political and Legal Environment (cont’d) Political Constraints on Trade  Economic sanctions  Nationalization  Expropriation Regulatory constraints on trade  Local content rules: a proportion of a product must consist of components supplied by industries in the host country or economic community Human rights issues

24. 24 The Sociocultural Environment Demographics Cultural values  Collectivist versus individualistic cultures Norms, customs, mores, and conventions Language Ethnocentrism: the tendency to prefer products from one’s own culture

25. 25 How “Global” Should a Global Marketing Strategy Be? (cont’d) Exporting Contractual agreements  Licensing  Franchising Strategic alliances  Joint venture Direct investment Born-global firms

26. 26 Global Marketing: Choosing a Marketing Mix Strategy Standardization vs. localization  Standardization: offer the same products in all markets  Localization: offer a customized marketing mix for each country

27. 27 Global Marketing: Choosing a Marketing Mix Strategy (cont’d) Product decisions  Straight extension strategy  Product adaptation strategy  Product invention strategy  Backward invention Promotion decisions: whether or not to modify promotions

28. 28 Global Marketing: Choosing a Marketing Mix Strategy (cont’d) Price decisions  Free trade zones  Gray market goods  Dumping Distribution decisions

29. 29 Real People, Real Choices Tupperware Brands Corporation (Rick Goings) Rick chose option 2: Utilize public relations  Since the campaign launched in April 2005, Tupperware has seen a significant increase in the number of media exposures it has gotten

30. 30 Marketing in Action Case: You Make the Call What is the decision facing New Balance? What factors are important in understanding this decision situation? What are the alternatives? What decision(s) do you recommend? What are some ways to implement your recommendation?

31. 31 Keeping It Real: Fast-Forward to Next Class Decision Time at Plan-It Marketing Meet Cindy Tungate, president Plan-it Marketing, a marketing research firm Plan-it’s client Priceline needs help in planning its business The decision: What marketing research strategy will maximize results for Priceline?