1. International Terrorism and Marketing: managing the unthinkable Prof. Michael R. Czinkota Georgetown University czinkotm@georgetown.edu

2. Part I: Definition and Concerns   International terrorism is the systematic threat or use of violence across borders to attain a political goal or communicate a political message through fear, coercion, or intimidation of particular persons or the general public (Czinkota,Knight and Liesch, 2004)   A key distinction from other disasters: Terrorists respond to preventive measures

3. Measurement Concerns 1. 1.Terrorism has direct and indirect effects   immediate consequence   subsequent actions, regulations, new policies 2. 2.Analyses at three levels:   primary –individual and firm   micro- industry, value chain   macro- global environment

4. Measurement Concerns (cont.) 3. 3.Ongoing uncertainties about:   meaning of terms   clarity of data 4. 4.Different threats and perceptions REQUIRE A RESEARCH TEAM marketing, music, physics, psychology…

5. Part II Why Marketing ? 1.Marketing deals with consumers and markets  Terrorists disrupt consumer demand  Terrorism affects supply 2. Marketers are the first responders  Imports and exports  Distribution and logistics  Communication with buyers and suppliers  Administration of pricing shifts

6. Why Marketing ? (cont.) 3.Marketers are trained to develop empathy  Practice of Professions  Understand unintended consequences 4.Marketers are well trained to cope with cultural issues  Use of Language  Power of Persuasion

7. Part III Some Research Propositions based on a Meta Analysis Firms may increasingly consider terrorism when evaluating foreign markets

8. Terrorism may Become the Next Segmentation Base

9. ■ The more a country or region is affected by terrorism, the less foreign firms may be likely to purchase from that area ■ Firms may make essential inputs themselves rather than buy them from suppliers in terrorism threatened environments abroad

10. ■ Firms may diversify their base of suppliers in order to assure greater flexibility and continuity ■ To reduce their exposure to terrorism, firms may decrease their foreign direct investment activities and substitute exports

11. ■ Terrorists want “bang” for the buck ■ (Rich) governments can protect targets ■ (Rich) companies can change business models ■ Protection leads to softer targets

12. IV. SOME EARLY RESEARCH RESULTS

13. Facts  633 survey and interview responses  Firms from US, EU, Asia, and Latin America  Mostly International and Global Firms  1/3 large, 1/3 medium, and 1/3 small in size  ¾ have 10+ years of international business experience  ½ sell more than 20% of production abroad.

14. Chief Concerns  Fluctuating Exchange Rates  Rising Oil Prices  Effects and Threats of Terrorism

17. Shareholders Reward Investment in Preparation

31. Some Early Conclusions  How quickly we forget  We are still unprepared  We do not plan sufficiently  Cost/Price tension  Cost components cannot be isolated

32. The Good News  We are not terrified  More similarities than differences  Trade relations are strong  Continued interest in international activities  Cultural convergence is the direction