International Marketing Study Guide

Global brand

brand that transcends beyond country of origin and it establishes a strong relationship with customers across different countries and cultures

Value

Benefits/price

In Cuba when Castro took control of American property

Confiscation

Top 3 GDP

1. US

2. China

3. Germany

% Change in the top 2

1. India

2. China

GDP per capita top 2

1. USA

2. Germany

Standardization

Developing standardized products marketed worldwide with a standardized marketing mix, essence of mass marketing

Adaptation

Minimizing standardization and customization in a way that minimizes costs while maximizing satisfaction, essence of segmentation. Think globally act locally (global localization)

Ethnocentric orientation

Standardization strategy

• Home country is superior

• sees only similarities in other countries

• assumes products that succeed at home will succeed elsewhere

• Standardized or extension approach

Poly centric orientation

adaptation strategy

• each country is unique

• each sub develops its own unique business and marketing strategies

• multinational

• localized approach that assumes products must be adapted to local market conditions

regiocentric adapation

Region is relevant geographical unit

• ex european union market

Some countries serve markets throughout the world but on a regional basis… ex GM having region specific strategies for decades

geocentric orientation

entire world is a potential market

• strives for integrated global strategies

• global or transnational company

• association with the HQ company

• Serving world markets from a single country or sources globally

• Combo of extension and adaptation

Forces driving global integration

• Multilateral trade agreements

• Converging market needs

• Transportation and communication improvements

• product development costs

• world economic trends

restraining forces of global integration

• management myopia and organizational culture

• national controls

• opposition to globalization

Heritage Foundation

Ranks economic freedom of different countries

Economic freedom: fundamental right of every human to control their own labor and property

Heritage ranking classifications

Free: 80-100

Mostly Free: 70-79.9

Moderately free: 60-69.9

Mostly unfree: 50-59

Repressed: 0-49.9

Main categories used for the rankings

Rule of law: property rights, gov integrity

Government size: tax burden, fiscal health

Regulatory efficiency: biz freedom, labor freedom

Open markets: trade freedom, investment freedom

US Heritage Ranking

25

Top two “free-est countries”

Singapore and Switzerland

Market development - low income

1100 or less

Market development- lower middle income

$1100- $4500

Market development- upper middle income

$4500-14,000

Market development- high income

greater than $14,000 

BRIC Countries that fall into lower middle income

India

BRIC countries that fall into uper middle income

Brazil, China, Russia

G-8

• Started with 6: US, Japan, France, Italy, Germany, UK 

• Then Canada 

• Then Russia (no longer) 

OECD

Organization for economic cooperation and development

• promote economic growth and financial stability

• 38 countries

The triad

US, EU and Japan

GATT

General agreement on tariffs and trade

Lacked enforcement power, replaced by WTO in 1995

WTO

World trade organization

Trade related negotiations, dispute mediator with a dispute settlement body, has enforcement power

PTA

Preferential Trade Agreements

Leads to economic integration, gives trading partners special treatment

Free trade area

• no internal barriers (tariffs, import quotas)

Customs union

• no internal barriers (tariffs, import quotas) among member countries

• common external barriers (tariffs, import quotas) to trade

Common market

• no internal barriers (tariffs, import quotas) among member countries

• common external barriers (tariffs, import quotas) to trade

• free movement of factors of production among members

Economic union

• no internal barriers (tariffs, import quotas) among member countries

• common external barriers (tariffs, import quotas) to trade

• free movement of factors of production among members

• Harmonization of economic and social policy (a single currency) within the union

USMCA

US, Mexico, Canada

Andean community

South America

Largest GDP: Colombia

Largest population: Colombia

Mercosur

South America

Largest GDP: Brazil

Largest population: Brazil

Caricom

Caribbean

21 Countries

Largest GDP: trinidad and tobago

Largest population: Haiti

ASEAN

Southeast Asia

Largest GDP: Indonesia

Largest population: Indonesia

EU

European union, economic union

Export destination: US

Import destination: China

GCC

Gulf Cooperation Council

Middle East, Oil

Largest GDP: Saudi Arabia

Largest population: Saudi Arabia

Africa Snapshot

• Countries with GDP per capita greater than India or China

• Complex

• Land mass larger than China, US, India, Europe, Argentina and New Zealand combined

• Over 1000 languages

• Economic growth is markedly different from country to country

• Seychelles has the largest GDP at 22k

• Higher GDP at north and south coast, low GDP in the middle

Characteristics of African consumers

• pro africa

• Status conscious

• religious

• traditional

• cost conscious

• performance focused

factors to consider before entering african market

• Political instability 

• Infrastructure status 

• Legislative and regulatory environment 

• Corporate social responsibility 

Working age population trends

• Positive growth: Africa and India 

• Negative growth: China and Europe 

Culture

“ “Culture is the collective programming of the mind that distinguishes the members of one category of people from those of another.” - Geert Hofstede

Can be a nation, ethnic group, gender group, organization or family. Transmited from one generation to another

social institutions culture

family, education, religion, government, business

Red

Poorly received in some Middle Eastern countries

White

death in parts of asia, clean in west

Gray

Inexpensive in china and japan, expensive in the US

Yellow

merchant in india

Verbal communication

English

Non verbal

Westerners are verbal, asians value non verbal communication.

Slow food market

Oppose fast food expansion and its impact on local culture 

Self reference criterion

tendency to use your own cultural values to evaluate others, creates cultural myopia

Reduce cultural myopia

1. Define the problem in terms of home country

2. Define the problem in host country

3. Isolate the SRC influence

4. Redefine the problem without the SRC influence and solve it

Stages of adoption process

1. Awareness 

2. Interest 

3. Evaluation 

4. Trial 

5. Adoption 

Product life cycle

Introduction

Growth

Maturity

Decline

Consumers in introduction

innovators, 3%

consumers in growth

early adopters, 13%

consumers in maturity

early and late majority, 68%

Consumrs in decline

laggards, 16%

Environmental sensitivity

extent to which products must be adapted to fit culture specific needs of different markets

ex: integrated circuits (low sensitivity low adaptation), computers in the middle, and food is high for both

OPIC

overseas private investment corporation 

Impact of perceived political risk

difficult time attracting foreign investment

Expropriation

dispossess a foreign company, compensation is provided

confiscation

no compensation

Nationalization

government takes control of some or all of the enterprises in a industry

Creeping expropriation

Limits economic activities by imposing restrictions like quotas for local nationals

World Court or International Court of Justice

Judicial arm of UN, settles disputes between nations

Common Law

Laws passed down via habit and word of mouth

USA, English influenced countries, India

Civil law

books, statutes

Brazil, Russia, China, French Spanish influence

Islamic Law

Koran: civil law

Hadith: based on Muhammed, common law

Jurisdiction

court’s authority to rule on issues arising outside of a nation’s borders, courts have jurisdiction if the company is doing business where the court sits

Patent

exclusive right to make, use, sell an invention for a specified period of time

Trademark

distinctive mark, motto, device, embelm to distinguish it from competing products

Copyright

establishes ownership of a written, recorded performed or filmed creative work

Counterfeiting

unauthorized copying and production of a product

Imitation

Uses a product name that differs slightly from a well known brand

Piracy

unauthorized publication or reproduction of a copyrighted work

Antitrust alws

Encourage competition

Good for consumer as it keeps prices low, increases innovation, better quality

Licensing

Contractual agreement ¨ in which a licensor allows a licensee to use patents, trademarks, trade secrets, technology, and other intangible assets in return for royalty payments or other forms of compensation.

Trade secrets

¨They are confidential information or knowledge that has commercial value and is not in the public domain and for which steps have been taken to keep it secret.

Personal sources

2/3 of info

Contact with distributors, consumers, suppliers, consultants, gov officials

Direct sensory perception

using senses to find out firsthand what is going on

Steps in research process

1. Define the problem

2. Identify the info requirement

3. choose a unit of analysis

4. examine data availability and value of research

5. design the research

6. analyze the data

7. present the findings

Awareness of SRC positive effects

• conduct market research

• minimizes home country bias

• increases managements receptiveness

Existing markets

consumers needs are already being served, info readily availably

latent potential market

an undiscovered market; demand would be there if product was there

incipient potential market

market will emerge if trend continues

Comparability

results can be used to make valid comparisons between the countries covered by the research

Emic analysis

studies culture from within, uses culture’s own meanings and values, less comparability but higher precision

Etic analysis

Studies culture from the outside, used in multi-country studies, enhances comparability but minimizes precision

CIVETS

New brics

Columbia

Indonesia

Vietnam

Egypt

Turkey

South Africa

CIVET characteristics

diverse economies, fast growing, low labor costs, unstable political environments, potential to produce large returns

1. Indonesia

2. South Africa

6. Columbia

Smalles civet

Indonesia

Largest civet

columbia

Largest bric

India

Smallest bric

Russia