1. Thrive in the Marketing Environment: The World Is Flat Chapter Three

2. 3-2 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Chapter Objectives  Understand the big picture of international marketing and the decisions firms must make when they consider globalization  Explain how international organizations such as the World Trade Organization (WTO), economic communities, and individual country regulations facilitate and limit a firm’s opportunities for globalization  Understand how factors in a firm’s external business environment influence marketing strategies and outcomes in both domestic and global markets  Explain some of the strategies that a firm can use to enter global markets

3. 3-3 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Time at eBay  Which option should eBay undertake? Option 1: Customize eBay by adding additional categories for artisans’ products, but don’t create a separate brand Option 1: Customize eBay by adding additional categories for artisans’ products, but don’t create a separate brand Option 2: Create a completely separate, custom-branded experience Option 2: Create a completely separate, custom-branded experience Option 3: Create a hybrid model using an independent marketplace and licensed brand Option 3: Create a hybrid model using an independent marketplace and licensed brand

4. 3-4 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Take a Bow: Marketing on the Global Stage  The global marketplace  World trade: The flow of goods and services among different countries—the value of all the exports and imports of the world’s nations

5. 3-5 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-1 North American Trade Flows (in Billions of Dollars)

6. 3-6 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Take a Bow: Marketing on the Global Stage  Countertrade: A type of trade in which goods are paid for with other items instead of with cash Barter is common form of countertrade Barter is common form of countertrade

7. 3-7 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Global Means Growth

8. 3-8 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-2 Steps in the Decision Process for Entering Global

9. 3-9 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Deciding to Go Global  Must consider market conditions and competitive advantage when making a decision Chinese firms such as Chery are now exporting their brands to other countries, including the U.S. Chinese firms such as Chery are now exporting their brands to other countries, including the U.S.

10. 3-10 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Understand International, Regional and Country Regulations  Initiatives in international regulation and cooperation help trade General Agreement on Tariffs and Trade (GATT) General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO) World Trade Organization (WTO)  Protectionism restricts trade Quotas, embargoes, and tariffs Quotas, embargoes, and tariffs  Economic communities help to promote trade World Trade Organization

11. 3-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. It’s Debatable Class Discussion Question Watch the YouTube video discussing product piracy. Watch the YouTube video discussing product piracy. Do you think that the WTO can succeed in reducing, or eliminating product piracy? If so, how? Do you think that the WTO can succeed in reducing, or eliminating product piracy? If so, how? Product Piracy

12. 3-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Environmental Scanning Yields Opportunities

13. 3-13 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-3 Elements of the External Environment The World Fact book

14. 3-14 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Economic Environment: Indicators of Economic Health  Key economic indicators: Gross domestic product (GDP): Total dollar value of goods/services a country produces within its borders in a year Gross domestic product (GDP): Total dollar value of goods/services a country produces within its borders in a year Gross national product (GNP): Value of all goods and services produced by a country’s citizens or organizations Gross national product (GNP): Value of all goods and services produced by a country’s citizens or organizations Economic infrastructure Quality of country’s distribution, financial, and communications systems Economic infrastructure Quality of country’s distribution, financial, and communications systems

15. 3-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3-2 Selected Comparisons of Economic and Demographic Characteristics

16. 3-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Economic Environment: Level of Economic Development  Least developed country (LDC) Economic base is often agricultural Economic base is often agricultural  Developing countries Economy shifts emphasis from agriculture to industry Economy shifts emphasis from agriculture to industry  Developed countries Offer wide range of opportunities for international marketers Offer wide range of opportunities for international marketers

17. 3-17 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Economic Environment: The Business Cycle  All economies go through periods of: Prosperity Prosperity Recession Recession Recovery Recovery Depression Depression Inflation Inflation Economy.com Do sales of all goods and services suffer in a recession? If not, name some goods and services that may in fact sell better during a recession than during times of prosperity.

18. 3-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Competitive Environment: Analyzing the Market and Competition  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 Collected from news media, the Internet, and publicly available government documents

19. 3-19 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Competitive Environment: Competition in the Microenvironment  Competition in the microenvironment Competition for consumer’s discretionary income Competition for consumer’s discretionary income Product competition Product competition Brand competition Brand competition Name some examples of competition at each level for the iPhone. Name some examples of competition at each level for the iPhone.

20. 3-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Competitive Environment: Competition in the Macroenvironment  Competition in the macroenvironment (overall structure of industry) Monopoly Monopoly Oligopoly Oligopoly Monopolistic competition Monopolistic competition Perfect competition Perfect competition

21. 3-21 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Technological Environment  Technology: Provides firms with important competitive advantages Provides firms with important competitive advantages Profoundly affects marketing activities Profoundly affects marketing activities Can transform industries Can transform industries  Patent: Legal document giving inventors exclusive rights to produce/sell a particular invention in that country Legal document giving inventors exclusive rights to produce/sell a particular invention in that country

22. 3-22 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Political and Legal Environment: Legal Influences on Business  Local, state, national, and global laws and regulations affect businesses  Purpose of American law: To make sure businesses compete fairly with each other To make sure businesses compete fairly with each other To make sure that businesses don’t take advantage of consumers To make sure that businesses don’t take advantage of consumers

23. 3-23 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3-3 Partial List of Significant American Legislation Relevant to Marketers

24. 3-24 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3-4 U.S. Regulatory Agencies and Responsibilities FTC.gov

25. 3-25 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Political and Legal Environment: Political Constraints on Business  Retaliatory actions against American businesses sometimes occur as a result of political activity or war  Political constraints on trade are commonly imposed: Economic sanctions Economic sanctions Nationalization Nationalization Expropriation Expropriation

26. 3-26 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Political and Legal Environment: Regulatory Constraints on Business  Regulatory constraints on trade often restrict the marketing of goods Local content rules Local content rules  Human rights issues may limit foreign countries’ business opportunities U.S. Generalized System of Preferences (GSP) U.S. Generalized System of Preferences (GSP)

27. 3-27 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. The Sociocultural Environment  Key sociocultural considerations: Demographics Demographics Cultural values Cultural values  Individualism  Collectivism Social norms and customs Social norms and customs Language Language Ethnocentrism Ethnocentrism

28. 3-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. It’s Debatable Class Discussion Question America has been rocked in recent years by numerous business scandals. America has been rocked in recent years by numerous business scandals. Do you think that the individualistic cultural orientation found in the U.S. it to blame? Do you think that the individualistic cultural orientation found in the U.S. it to blame?

29. 3-29 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. When is a Bribe Not a Bribe? Ethical Issues in Global Business  What is considered to be ethical business behavior varies by country  Bribery: When someone voluntarily offers payment to get an illegal advantage  Extortion: When someone in authority extracts payment under duress

30. 3-30 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3-5 Transparency Bribepayers Index

31. 3-31 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3.6 Market Entry Strategies country risk.com country risk.com

32. 3-32 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?  Product-level decisions: the marketing- mix strategy: Standardization vs. localization Standardization vs. localization  Standardization: Offer the same products in all markets  Localization: Offer a customized marketing mix for each country

33. 3-33 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?  Tweaking the marketing mix Product decisions: Product decisions:  Straight extension strategy  Product adaptation strategy  Product invention strategy  Backward invention Promotion decisions: Promotion decisions:  Whether or not to modify

34. 3-34 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?  Tweaking the marketing mix Price decisions: Price decisions:  Products are often more expensive to produce for foreign markets –Free trade zones –Gray market goods –Dumping Distribution decisions: Distribution decisions:  Getting the product to remote locations is often difficult

35. 3-35 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Real People, Real Choices: Decision Made at eBay  Robert chose option 3 Why do you think that Robert chose to license the brand “WorldofGood.com” and launch the marketplace on a platform independent from eBay? Why do you think that Robert chose to license the brand “WorldofGood.com” and launch the marketplace on a platform independent from eBay?

36. 3-36 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Keeping It Real: Fast-Forward to Decision Time at Plan-It Marketing  Meet Ryan Garton, director of Consumer Insights at Discover Financial Services  Ryan lacks an integrated approach to evaluating how new product ideas fit with consumers’ desires  The decision to be made: Should the process used to screen new product ideas be changed?

37. 3-37 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America