1. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 1 INTERNATIONAL ISSUES IN E- COMMERCE, PART I Strategies Regional markets Risks Language issues Other cultural issues Legal/regulatory issues Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

2. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 2 Strategies Exclusionary –Solely domestic Inclusionary –“Passively” international –“Glocals” (adaptive approach) –“Globals” (standardized approach) Completely standardized (“Globals”) Completely adapted Middle ground

3. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 3 Evaluating Markets Economic viability –Income distribution and averages –Segment potential Internet readiness –“Least Internet Ready Areas of the World” (LIRAs) (35% of World population) –“Internet Ready Areas of the World” (IRAs) (50)% –“Internet Leaders” (15%)

4. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 4 Internet Readiness Indices Economist –Approximately 100 measures in 6 categories Technology infrastructure General business environment Consumer and business adoption of e-business Social/cultural conditions affecting Internet use Availability of e- business support services Information and Telecommunications (ITC) International Telecommunications Union –26 indicators-e.g., Technology infrasturctures Market conditions

5. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 5 Internet Readiness Criteria Infrastructure availability –Performance –Types of access available Cost of access –Metered –Unmetered –Dial-up issues Proportion of population with access

6. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 6 LIRAS Southern Mexico Andean countries Most of Brazil Sub-Saharan Africa Remotest former Soviet Republics Laos, Cambodia Chinese interior Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

7. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 7 IRAs Coastal India Parts of Brazil Northern Mexico, Mexico City Hungary Estonia Malaysia Former Soviet Republics closer to Europe Parts of China (e.g., Shanghai, Hong Kong) Reference: Carolyn Siegel (2006), Internet Marketing: Foundations and Applications, Houghton-Mifflin.

8. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 8 Internet Leaders U.S., Canada Western Europe Japan Australia New Zealand Taiwan South Korea Israel

9. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 9 Internet Penetration by Country, 2004 CountryUsersPopRatioPC_GDP Australia Brazil France Germany Hong Kong Italy Japan Netherlands Spain Sweden Switzerland UK US 8,408 12,484 13,781 27,034 2,699 15,772 31,097 7,758 8,331 4,609 3,009 20,953 141,390 19,547 176,030 59,766 83,253 7,303 57,716 176,195 16,068 40,077 8,877 7,302 59,778 280,562 0.43 0.07 0.23 0.32 0.37 0.27 0.18 0.48 0.21 0.52 0.41 0.35 0.50 $19,900 $3,070 $22,730 $23,560 $25,330 $19,390 $35,610 $24,330 $14,300 $25,400 $38,330 $25,120 $34,280 Japan Sweden Netherlands U.S. Brazil Australia Note accounting issues! Source: Nielsen.

10. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 10 Online Language Communities Sizable group of people communicating in the same language Not proportional to percentage of off-line speakers –Demographics of Internet users within a country –Willingness to use English or other language sites

11. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 11 Risks in International Expansion Over-expansion Brand dilution Over-estimation of revenue Under-estimation of costs Underestimation of competition Regulations

12. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 12 Area Issues Europe –High penetration rates; access outside home –Strong economies –Low credit card use –Competing technologies Interactive TV U.S./Canada –Canadian specialty shopping –High penetration rates –Weakening U.S. dollar; strengthening Canadian dollar Mexico –Growth potential –Low credit card penetration

13. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 13 More Regions Asia/Oceania –China/Japan Use of wireless technology for other purposes Low rates of credit card use –China Modest economic power –Japan Internet ordering through local merchants –South Korea High Internet penetration rate (45%) Faster high speed access than in the U.S. –Australia/New Zealand English language use Relatively similar culture to U.S. High shipping costs

14. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 14 Language Issues Prior to 2000, 96% of web sites were estimated to be in English, the “first language” of 6% of the World population 40.2% of online users are estimated to speak English to some extent 2000: Non-English speakers became majority of Internet users 75% of Europeans are multi-lingual; 90% of these include English Dangers of U.S. English –British English is international standard –“American” often perceived as misspelled –Use of slang Lesser distance to British English than to other European languages

15. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 15 Language Display Single-byte (Latin-based) vs. double- byte languages (Cyrillic, Arabic, Chinese, Japanese, Korean) –Characters may not be displayed correctly (“????” in Internet Explorer) –Conversion software –Brower adaptation may not be “backwards compatible” with other software

16. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 16 Translation Whole vs. part –FAQ, feedback forms, product specifications, warnings, shopping cart info, legal Quality of translation –Superficial –“De-centering” (“back translation) English language instruction as a product

17. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 17 Cultural Issues Color –Black as background “Stylish” in U.S. “Unlucky” in Asia, Europe, Latin America –Red as a “lucky” color in China but can be over-used –White and green are “unlucky” in Cina Symbolism –Dogs as pets –Numbers “Unlucky” numbers –4, 9, 13 (Japan) –4, 14 (China) “Lucky” numbers –1, 8 (China) Formality of communication

18. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 18 More Cultural Issues Measurement issues –Metric vs. U.S., British systems –Clothing sizes Representation of numbers –1,000.00 vs. 1.000,00 –Dates Offensive content –Specific body parts –“Revealing” content –Gestures

19. MKTG 476 INTERNATIONAL ISSUES Lars Perner, Instructor 19 Government Issues Regulation –Extraterritorial laws and regulations –Privacy “Safe Harbor” procedures –Encryption restrictions Extent of regulation –Protection of small businesses –Limitations on online advertising (China) Taxation Censorship Fraud