International Marketing

INTERNATIONAL MARKETING

• Culture

• Consumer buying power

• Product strategies

BUAD 307 INTERNATIONAL MARKETING Lars Perner, Instructor

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An Effective Billboard Advertisement?

VERY

DIRTY

CLOTHES

CLOTHES GETS

WASHED WITH

THE

ADVERTISED

DETERGENT

BRAND

SQUEEKY

CLEAN

CLOTHES


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LEARNING OUTCOME OBJECTIVES

• Appreciate the for forces impacting the marketer operating in varying cultural, legal, economic, and political environments

• Appreciate the increasingly competitive international market place

• Understand strategic opportunities for operating internationally

• Appreciating the interdependent nature of decisions made in the international context


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International Marketing: Considerations and

Outcomes

BELIEFS

INVESTMENT PARTNERSHIPS

CULTURE

EXPECTATIONS

BEHAVIOR

ENTRY

STRATEGY

ATTRIBUTIONS

ECONOMICS

INTERNATIONAL

MARKETING

MARKETING

MIX

POLITICAL/

LEGAL/ PRODUCT PROMOTION PRICE

HISTORICAL

DISTRIBUTION


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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 )


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Culture impacts

• Behavior—customs of how and when products are used

• Expectations

• Interpretation of reality

• Relationships between people


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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


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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


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Japanese consumers expect to see what the food looks like before ordering


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Very Brief Review of Economics

• Exchange rates

– Floating (supply and demand)

– Fixed

• Trade balances and their impact on exchange rates

• Measuring country wealth

– Gross domestic product

– Nominal vs. “Purchasing power parity”

• Nominal: Amount of dollars that can be bought with the amount of income. Used for imported products.

• Purchasing power parity adjusted: The buying power —based on a weighted average of costs —in the respective country relative to

U.S.


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Demand for Currency Depends On

• Trade deficit (demand for foreign currency to fund this) or trade surplus (demand for country’s currency)

• Interest rates: Higher interest rates (real) attract foreign investors (especially for “stable” U.S. bonds and equities)

• Inflation: Reduces the attractiveness of holding the currency


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Nominal vs. Purchase Parity Adjusted GDPs —

Examples (2009)

Country

Luxemburg

Norway

United States

Japan

Argentina

Czech Republic

Mexico

China

Nominal GDP

$74,430

86,440

47,240

37,870

7,570

17,310

8,920

3,590

The U.S. figures should theoretically be equal but small differences occur because of technical issues in weighing “basket of goods” for comparison.

PPA

$57,640

56,050

46,730

33,280

14,120

23,610

14,110

6,770

Source: World Bank

International Monetary Fund


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GNP Per Capita by Country

Source: World Bank — http://datafinder.worldbank.org/gni-per-capita-ppp


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Nominal vs. Purchasing Power Parit y GNPs

40,000

35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

0 10,000 20,000 30,000 40,000

BUAD 307 INTERNATIONAL MARKETING

PPA

Lars Perner, Instructor

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Cautions on Interpreting Per Capita Figures

• Averages are not very meaningful!

– Regional variations

– Socio-economic differences

• Comparison to U.S. dollar and U.S. costs is arbitrary


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Approaches to Product Introduction

● Customization

● Adaptation

● Localization

●Standardization

Not suitable for the Middle East!


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Reasons for Standardization

• Avoiding high costs of customization, if applicable

• Technological intensity

– Reduced confusion

– International compatibility among product group components

– Faster spread of rapid life cycle products

• Convergence of global consumer tastes/needs

• Country of origin positioning


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Standardization —Advantages

• Benefits

– Economies of scale

– More resources available for development effort

• Better quality

– Enhanced customer preference (?)

– Realistic when all cultural needs cannot be met

• Global customers

• Global segments


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Standardization —Disadvantages

• Unnecessary features

• Vulnerability to trade barriers

• Strong local competitors


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Product Adaptations

• Mandatory

– Legal requirements

– Infrastructure

– Physical requirements

• “Discretionary”

– Local tastes

– Fit into cultural environment


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Motivations for Adaptation

• Legal

• Infrastructure

• Consumer demographics

• Culture

– Religious impact

– Cultural context of use

• Local traditions/ customs —e.g.,

– Food usage occasions

– Aesthetic preferences

• Local usage conditions

• Pricing pressures/ tradeoffs


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Mandatory Adaptation Issues

• Choices in approach to mandatory conditions--examples

– Power drills with noise suppression filters

• “Arbitrary” standards (e.g., TV,

DVD players)

• Conflicting rules between countries —may not be possible to make product legal in all


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Physical Product vs.

Communication Adaptations

Product adaptations not needed

(extension)

Communication adaptations not needed (extension)

Communication adaptations needed

Some industrial equipment

Product adaptations needed

Gasoline; laundry detergent

Bicycle; fast food; chewing gum

Greeting cards

Domestic equivalent does not exist

(product invention)

Compass-equipped prayer rug; hand powered washing machine


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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 country of origin (e.g., French beer,

American products with French language labels)


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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


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The International Life Cycle

• Market for older technology tends to exist in less developed countries

– Manufacturing of older generation technology-e.g., Pentium III computers

– Resale of capital equipment no longer considered adequate in more developed countries—e.g., DC 8 aircraft, old three part canning machines

• Some countries tend to be more receptive to innovation than others and will adopt new technology more quickly

• “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


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Promotion: Strategic and Tactical

Objectives

Emerging

Markets/

New Products

• Awareness

• Trial

• Attitude toward the product

– Beliefs

– Preference

• Temporary sales increases

Mature markets

/established products


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Flops in the Transplantation of

Advertising

• Man and his dog

• “Follow the leader-he’s on a Honda!”

• Detergent ad

• “Get your teeth their whitest!”


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U.S. Laws of Interest to firms with U.S.

Involvement

• Anti-trust: Standards of fair competition. Not all countries have or enforce such laws.

• Foreign Corrupt Influences Act: Bribery illegal for U.S. firms.

• Anti-boycott laws: Illegal to boycott Israel or even certify that one’s firm does not do business with Israel. Technically illegal to participate in other non-U.S. Government sanctioned boycotts but emphasis is on Israel.

• Trading With the Enemy: Illegal to trade at all

(with few exceptions) with enemy states.

Limits on technology that can be exported.

• Extra-territoriality: U.S. courts will often take jurisdictions of cases of violations of U.S. law occurring entirely abroad.


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International Marketing

INTERNATIONAL MARKETING

An Effective Billboard Advertisement?

LEARNING OUTCOME OBJECTIVES

Definitions

Culture impacts

Cultural Lessons

More Cultural Lessons...

Very Brief Review of Economics

GNP Per Capita by Country

Approaches to Product Introduction

Reasons for Standardization

Standardization —Advantages

Standardization —Disadvantages

Product Adaptations

Motivations for Adaptation

Mandatory Adaptation Issues

Country of Origin Effects

The International Life Cycle

Promotion: Strategic and Tactical

Objectives

Flops in the Transplantation of

Advertising

Related documents

Products

Support

International Marketing