International Marketing Midterm

5 Most Imprtant Trends Affecting Global Business

1. Rapid Growth of the World Trade Organization and retional free trade areas

2. Acceptance of the free market system

3. Growing middle class in developing countries

4. Impact of the Internet, mobile phones, and other global media on the dissolution of national borders.

5. Mandate to properly manage the resources and global environment

International Marketing

The performance of business activities designed to plan, price, promote, and direct the flow of a company's goods and services to consumers or users in more than one nation for a profit.

Uncontrollable environment

the difference between marketing and international marketing

controllable risk factors

Risk factors a person can act upon to change.

examples of controllable risk factors

Firm Characteristics such as:

Price

Product

Promotion

Place (channels of distribution)

Research

Domestic Environment Uncontrollables

Factors in a company's home country over which the company has little or no control or influence.

includes:

political and legal forces

economic climate

competitive forces

Foreign Environment Uncontrollables

Factors in the foreign market over which a business operating in its home country has little or no control or influence.

Includes:

political and legal forces

economic climate

geography and infrastructure

level of technology

structure of distribution

level of technology.

4 P's of Marketing

Product, Price, Place, Promotion

Self-Reference Criterion (SRC)

unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions

Ethnocentrism

Belief in the superiority of one's nation or ethnic group.

Steps to Control Influence of SRC and Ethnocentrism

1. Recognize effects on our behavior

2. Recognize similarities between countries

3. Conduct cross-cultural analysis

5 stages of international marketing involvement (Reactive [2] Proactive [3])

1. No Direct Foreign Marketing

2. Infrequent Foreign Marketing

1. Regular Foreign Marketing

2. International Marketing

3. Global Marketing

No Direct Foreign Marketing (Reactive)

In this stage, a company does not send its products overseas directly, but its products may become available in other countries through intermediaries or middlemen such as trading companies. Occasional internet sales because of a request from an overseas customer may also fall into this category.

Infrequent Foreign Marketing (reactive)

*Caused by temporary surpluses

---Sales to foreign markets are made as goods become available

*Firm has little or no intention of maintaining continuous market representation

---Foreign sales activity declines and is withdrawn when domestic demand increases

Regular Foreign Marketing (Proactive)

*Dedicated production capacity for foreign markets

Strategy:

-Firm employs domestic or foreign intermediaries

-Uses its own sales force or sales subsidiaries

*Products are adapted for foreign markets as domestic demand grows

*Firms depend on profits from foreign markets

International Marketing (Proactive)

*Fully committed and involved in foreign markets and international activities

*Production takes place on foreign soil earning firms the MNC (Multinational Corporation) title

*Fedders being "proactive:"

--Looked to Asia for future growth after stymied U.S. sales

--Designed new types of air conditioner unit for the Chinese market

---Plan to introduce new product in the U.S!

Global Marketing (Proactive)

*The firm sees the world as one market!

*Market segmentation is now defined by income levels, usage patterns, or other factors that span the globe. NOT by borders

*More than half of its revenues come from abroad

*The firm has a global perspective

Events that disrupted world trade in the 1st half of the 20th century

Depression Era (1930s) and 2 world wars

Smoot-Halwey act raising tariffs; 60 countries retaliated

Events that disrupted world trade in the 2nd half of the 20th century

Social Marxism VS Capitalism

GATT

General Agreement on Tariffs and Trade; international trade organization that encourages free trade by lowering tariffs and other trade restrictions

WTO

The World Trade Organization - an international body that enforces agreements that reduce barriers to international trade; successor to the GATT

NAFTA (North American Free Trade Agreement)

an important trade agreement creating a huge zone of cooperation on trade and economic issues in North America

APEC

Asia Pacific Economic Corporation

balance of payments

a measure of the total flow of money into or out of a country

current account

in the balance of payments, records transactions involving the export or import of goods and services

capital account

in the balance of payments; records transactions involving the purchase and sale of assets (investments & short-term capital)

reserves account

a record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks

payments

costs of goods imported.

spending by U.S. tourists overseas.

new overseas investments.

cost of foreign military and economic aid.

receipts

income received from the sale of goods and/or services; also, slips of paper documenting a purchase

trade surplus

when a country exports more than it imports

trade deficit

situation in which a country imports more than it exports

Protectionism

the theory or practice of shielding a country's domestic industries from foreign competition by taxing imports.

pro-protectionism arguments

protection of infant industry

national defense

industrialization of a low-wage nation

trade barriers

restrictions to free trade; Taxes, quotas, and other restrictions on goods entering or leaving a country.

Tarriff

A tax on imported goods

Quota

A limit placed on the quantities of a product that can be imported

import license

used to administer an import quota; a license specifying the volume of imports allowed

voluntary export restraint

a self-imposed limitation on the number of products shipped to a particular country; quota set by exporting country

Boycott

absolute restriction against the purchase and and importation of certain goods and/or services from other countries

Embargo

A ban on trade

Blocked currency

refusing to allow an importer to exchange its national currency for the seller's currency

Government approval

In countries where there is a severe shortage of foreign exchange, an exchange permit to import foreign goods is required from the government

Standards

trade barrier used to protect health, safety, and product quality, but can discriminate

Antidumping Penalties

Taxes/duties applied to foreign products that are dumped in one's country

Dumping

selling products in a foreign country at lower prices than those charged in the producing country

Domestic Subsidies and Economic Stimuli

1. Often used in agriculture

2. Example = Bank Bailouts

3. Gives companies who received them an unfair advantage

Omnibus Trade and Competitiveness Act of 1988

this act focuses on assisting businesses to be more competitive in world markets as well as on correcting perceived injustices in trade practices

Market Access, Export Expansion, Import Relief

4 important outcomes of Uruguay Round of 1994 (GATT)

•Eliminated barriers in services trade

•Eliminated foreign investment restrictions

•Protection of intellectual property rights

•Creation of WTO

IMF (International Monetary Fund)

provides loans to countries but NOT for specific projects

3 Objectives:

surveillence

tech assistance and training

lending

World Bank Group

a development bank that provides loans, policy advice, technical assistance, and knowledge-sharing services to low- and middle-income countries in an attempt to reduce poverty in the developing world

anti-globalization

Major international movement that protests the development of the global economy on the grounds that it makes the rich richer and keeps poor regions in poverty while exploiting their labor and environments; the movement burst onto the world stage in 1999 with massive protests at a meeting of the World Trade Organization in Seattle.

Taiping Rebellion

(1850-1864) A revolt by the people of China against the ruling Manchu Dynasty because of their failure to deal effectively with the opium problem and the interference of foreigners. Horrific civil war killing 20-40 million

Manifest Destiny

the 19th-century doctrine or belief that the expansion of the US throughout the American continents was both justified and inevitable.

Monroe Doctrine

A statement of foreign policy which proclaimed that Europe should not interfere in affairs within the United States or in the development of other countries in the Western Hemisphere and vice versa.

Roosevelt Corollary

Roosevelt's 1904 extension of the Monroe Doctrine, stating that the United States has the right to protect its economic interests in South And Central America by using military force

Geography and Global Markets

•An element of the uncontrollable environment

•Affects a society's culture and economy

•Physical makeup limits a nation's ability to supply its people's needs

Climate and Topography

altitude, humidity and temperature extremes can affect product functionality

Geography, Nature, and Economic Growth

Poorer countries suffer disproportionately bc prosperous countries can overcome natural barriers and disasters

Unilever's Sustainable Living Plan

•Integral part of business; not just a corporate social responsibility initiative

Environmental Initiatives & Social Initiatives

Ben & Jerry's selling "save our Swirled" ice cream for climate justice

marks the global climate talks in paris 2015

Lifebuoy total to handwash

Unilever's handwashing campaign to help prevent deadly infectious diseases. (5 mill children die of diarrhea)

dove body wash

unilever's bottle requires 15% less plastic and opensourced technology for others to use

comfort one rinse

unilever's product - uses 20% less water saving 10 million pools

sure compressed aerosol deodorant

unilever's product - 50% propellant gas & 25% less aluminum with recyclable packaging

Urban migration/Urbanization

A shift in population from rural areas to the city. Typically caused by industrialization and the search for new jobs, health care, and education

Culture

the enduring behaviors, ideas, attitudes, values, and traditions shared by a group of people and transmitted from one generation to the next

Important in all marketing activities, especially promotion

Marketers

every person or organization that has products, services, or ideas to sell

Marketers

"agents of change" via innovative products

(Ex: iphone, uber, amazon)

Hoefstede

had the view that culture was "Software of the mind" and how we are programmed

Edward Hall

had the view that culture was invisible and not 100% evident

Jared Diamond's Theory

- Environmental determinism:

people benefit from where they are located geographically

- people with a surplus of food can have specification of labor and advance in society

Innovation spread faster from east to west than north to south

Philip Parker

reports strong correlations between the latitude (climate) and the per capita GDP of countries

*Living further fromthe equator requires culture to be more innovative

political-economic system

efforts by state leaders to manage an economy according to specific ideological principles

◦Fascism

◦Communism

◦Democracy/free enterprise

birth control pill

most important technology developed

social institutions

systems and structures within society that shape the activities of groups and individuals

◦Family

◦Religion

◦School

◦Media

◦Government

◦Corporations

Family Influences

Social Institution

◦Lower birth and marriage rates

◦Nepotism

◦Role of extended family

◦Favoritism of boys in some cultures

Gender equality is changing

Religion Influence

Social institution

◦Major Religion

◦First institution infants are exposed to outside the home

◦Impact of values systems

◦Misunderstanding of beliefs (Chanel and the Koran)

Major Religions

Christianity, Islam, Hinduism, Buddhism, Confucianism

school

Most important social institution

Literacy Rate

The percentage of a country's people who can read and write.

Indication of economic development

media

social institution that has reduced influence of family

Government

The institution through which a society makes and enforces its public policies

less influential than other institutions

(ex: birth bonus, open defecation free)

Corporation

social institution

◦Spread through media

◦Change agents via innovations

Elements of Culture

values, rituals, symbols, beliefs, thought processes

cultural values

a society's deeply held beliefs about right and wrong ways to live

*importance of things and ideas

Geert Hofstede's Cultural Dimensions

- Individualism v collectivism

- Power distance

- Uncertainty avoidance

- Masculinity v femininity

- Time orientation

Rituals

◦Patterns of behavior and interaction that are learned and repeated

◦Coordinate interactions and set expectations

(ex: Marriages, funerals, baptisms, graduations)

Symbols

Terms, concepts, or items that represent specific meanings by accepted convention.

Linguistic Distance

the measure of difference between languages; an important factor in determining the amount of trade between nations

*individualism decreases as distance from English increases

aesthetics

a set of principles concerned with the nature and appreciation of beauty, especially in art.

(ex: Art, music, dance, architecture, folklore, metaphors, dress)

Beliefs

specific ideas that people hold to be true

-Superstitions play a large role in a society's belief system

(Ex: Western cultures—13 is unlucky, China—8 connotes prosperity, "Feng Shui"

Cultural Sensitivity

Being attuned to the nuances of culture so that it can view objectively, evaluated, and appreciated

cultural borrowing

the process by which a culture takes ideas from other cultures

how society attempts to solve problems created by changes in environment

2 factors determining innovation acceptance

Degree of interest

Degree of disruption

cultural congruence

involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance

barriers

Lack of empathy for other cultures can create ______.

Cultural Imperatives

are the business customs and expectations that must be met and conformed to or avoided if relationships are to be successful.

Cultural Electives

- areas of behaviour or customs that one may wish to conform to or participate in but are not required

- a symbolic attempt to participate in electives may help to establish rapport

- a cultural elective in one country may be an imperative in another

Cultural Exclusives

customs or behavior patterns reserved exclusively for the locals and from which the foreigner is barred and must not participate

Master of Destiny

people can substantially influence the future; they are in control of their own destinies