Thriving in the Marketing
Environment:
The World is Flat
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
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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
TUPPERWARE.COM
3
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
INTERFACEINC.COM
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Figure 3.1: Linking Ethics to Profits
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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
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
PHILLIP MORRIS
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Discussion
• In 2006, the National Institutes of Health
released the results of a study showing
that young people tend to drink more in
areas with more alcohol advertising
compared to areas with less advertising
 Do alcohol companies have an ethical obligation to
curtail their advertising in order to decrease drinking
rates among young people?
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Ethics in the Marketing Mix
•
•
•
•
Making the product safe
Pricing the product fairly
Promoting the product ethically
Making the product available ethically
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Discussion
• Some people criticize advertising as being
deceptive
 Do you agree or disagree?
 What would be the advantages and disadvantages to
firms when they deceive consumers?
10
Doing It Right: Promoting
Social Responsibility
• Social responsibility:
organizations
engaging in activities
that have a positive
effect on society and
promote public good
NFL Video
CORPORATE
RESPONSIBILITY
AT INTEL
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Doing It Right: Promoting Social
Responsibility (cont’d)
• Serving the Environment
• Serving Society: Cause Marketing
• Serving the Community:
Promoting Cultural Diversity
12
Individual Activity
• Write down some thoughts about how
products/services have the potential to
harm you individually
 In your opinion, do any products “cross the line” when
it comes to your level of comfort?
13
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)
14
Figure 3.3: North America Trade Flows
(in $billions)
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Figure 3.4: Decision Model for
Entering Foreign Markets
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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
17
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
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Discussion
• Do you think the WTO will succeed in
eliminating world trade barriers?
• What do you think are the positive and
negative aspects of a totally free
marketplace?
• What countries will win and which will lose
in such a world?
19
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
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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
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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
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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
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The Business Cycle
•
•
•
•
•
Prosperity
Recession
Recovery
Depression
Inflation
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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
25
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
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The Competitive Environment (cont’d)
• Competition in the macroenvironment
(overall structure of industry)
 Monopoly
 Oligopoly
 Monopolistic competition
 Perfect competition
27
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
28
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
29
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
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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
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Discussion
• Some countries have criticized U.S.
business for exporting American culture
 What about American culture might be objectionable?
 Can you think of some products that U.S. marketers
export that can be objectionable to some foreign
markets?
32
Group Activity
• What global external environment factors would
you consider to be critically relevant for the
following products (form a small group and pick
one of the products listed below):






Coffee
Cars
Video games
Sporting events
Computers
Soda
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How “Global” Should a Global
Marketing Strategy Be?
• Market-entry strategy: the level of commitment
to operate in another country
Figure 3.4
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How “Global” Should a Global
Marketing Strategy Be? (cont’d)
• Exporting
• Contractual agreements
 Licensing
 Franchising
• Strategic alliances
 Joint venture
• Direct investment
• Born-global firms
LOGITECH
35
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
36
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
37
Global Marketing: Choosing a
Marketing Mix Strategy (cont’d)
• Price decisions
 Free trade zones
 Gray market goods
 Dumping
• Distribution decisions
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Group Activity
• Form a small group and formulate either a
brief standardized or local strategy in a
foreign country (of your choice) for one of
the following products:
 Tide laundry detergent
 Verizon cellular phone service
 Direct TV service
 Hollister clothing
 Weber gas barbecue grills
39
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
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Discussion
• The World Trade Organization seeks to
eventually remove all barriers to world trade.
• Do you think this will ever be a reality?
• What do you think are the positive and negative
aspects of a totally free marketplace?
• Which countries will win and which will lose in
such a world?
41
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?
42
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?
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