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Define International Marketing
The performance of business activities is 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.
What does the inner circle depict
The controllable elements that constitute a marketer’s decision area
What 5 elements go inside the inner circle?
Price, product, promotion, channels of distribution, and research activities
What does the second circle encompass?
The uncontrollable environmental elements at home that have some effect on foreign-operation decisions.
What factors go in the second circle?
Political and legal forces, economic climate, competitive structure
What does the outer circle represent?
The elements of the foreign environment for each foreign market within which the marketer operates
What are the foreign market uncontrollables?
Political/legal forces, Economic forces, competitive forces, level of technology, structure of distribution, geography and infrastructure, cultural forces
During Environmental Adaptation, International marketers should:
-Interpret the influence of each uncontrollable element on the market
-Adjust marketing efforts to cultures in which they are not attuned
-Be aware of own frame of reference when evaluating markets
Define Self Reference Criterion(SRC)
Unconscious reference to own cultural values, experiences, knowledge; problematic when used as basis for decisions
Define Ethnocentrism
One’s own country, culture, or country is best; most problematic when affluent countries work with less affluent
How to be Vigilant of SRC and Ethnocentrism to Avoid Business Errors:
define situation in home country’s cultural traits, habits, or norms
define situation in foreign country’s cultural traits, habits or norms through consultation with natives.
Isolate SRC influence in situation and carefully examine how it complicates the issue
Redefine situation without the SRC influence and solve for optimum business goal solution
International marketing vs Global marketing
What happens in the stage of International Marketing?
In this stage, a firm has planned production and marketing to many countries around the world with specific targets for each overseas country market
International marketing vs Global marketing
What happens in the stage of Global Marketing?
The firm starts viewing the world, including their home market, as one market.
What was the General Agreement on Tariff and Trade Agreement (GAAT)?
Worldwide agreement after WWII provided a process to reduce tariffs and create an agency to serve as a watchdog over world trade.
What is the World Trade Organization (WTO)?
Expansion of GAAT structure as a stand-alone institution, all 164 members must participate and adhere to the rules.
What is a nations Balance of Payments?
Presents an overall view of its international economic position and is an important economic measure used by treasuries, central banks, and other government agencies whose responsibility is to maintain external and internal economic stability.
What is a Current Account in Balance of Payments?
A record of all merchandise exports, imports, and services plus unilateral transfer of funds. Primary interest.
What is a Capital Account in Balance of Payments?
A record of direct investment, portfolio investment, and short-term capital movements to and from countries.
What is a Reserves Account in the Balance of Payments?
A record of exports and imports of gold, increases or decreases in foreign exchange, and increases or decreases in liabilities to foreign central banks.
Define Protectionism
A world of tariffs, quotas, and non-tariff barriers are designed to protect a country’s markets from intrusion by foreign companies.
Why can protectionism be harmful?
-Contributes to country’s industrial inefficiency
-Detracts from nation’s adjustment to world situation
-Higher prices for consumers
Why is free trade typically beneficial?
-More people willing to purchase
-Higher purchasing power for the average consumer
-Agreements like NAFTA result in higher income levels
-More job opportunities
Define Tariff
A tax imposed by a government on goods entering at its borders
Define a non-tariff
Any barriers other than tariff (quotas, boycotts, monetary barriers, and market barriers)
Tariff barriers tend to increase when:
-inflationary pressures
-special interests’ privileges
-Government control and political considerations in economic affairs
-The number of tariffs resulting from countries impacted by your country’s tariffs(reciprocity)
What are the downsides of Tariffs?
-Arbitrary, discriminatory
-Require constant administration and supervision
-Trade war
-Tend to restrict Manufacturers’ supply sources, Choices available to consumers, competition
Define Quota
A specific unit or dollar limit applied to a particular type of good restricts the quantity of a specific item that can be imported: tends to increase prices
What is an import license?
Sometimes required by countries to regulate an imported commodity, limits quantity’s on a case-to-case basis
Define Voluntary Export Restraints(VERs)
-The exporting country sets the limits
-Also referred to as orderly market agreements(OMAs)
-Common in textiles, clothing, steel, agriculture, and automobiles
Define a boycott
Restricts the purchase and importation of goods and services from other countries.
What is an embargo?
A refusal to sell to another country
What are Monetary Barriers?
Governments may use exchange-control restrictions to regulate international trade
-Blocked currency
-Government approval, exchange permits
What are standards?
Protect health, safety, and product quality
What are antidumping penalties?
Designed to prevent foreign producers from “predatory pricing”, the practice whereby a foreign producer intentionally sells its products for less than the cost of production to undermine the competition and take control of the market.
Why is History important in International Marketing?
-Helps define a nation’s “mission,” how it perceives its neighbors, self, and place in world
-It is important in understanding many aspects of a culture
Why is Geography important in International Marketing?
-Study of Earth’s surface, climate, continents, countries, peoples, industries, and resources
-Important to understand when evaluating market potential
What Geographical features impede economic growth and trade?
Mountains, oceans, seas, and jungles
What factors can lead to economic stagnation?
-Climate and topography
-Civil wars
-Poor environmental policies
-Natural disasters
What is sustainable development?
Approach toward economic growth described as a cooperative effort among businesses, environmentalists, and others to seek growth with “wise resource management, equitable distribution of benefits, and reduction of negative efforts on people and the environment from the process of economic growth.”
What energy sources contribute over 60 percent of world energy consumption?
oil and gas
What are some things that control population growth?
-Adequate incomes
-Higher literacy levels
-universal access to healthcare
-Family planning
-improved nutrition
-beliefs about importance of large family
Dynamics of Global Population Trends
-Rural/Urban migration
-Population Decline
-Aging
What has helped the expansion of trade?
Continuous improvements in electronic communication
Define Culture
Sum of values, rituals, symbols, beliefs, and thought processes that are learned and shared by a group of people, then transmitted from generation to generation
What are the elements of culture?
values, rituals, symbols, beliefs, thought process
What are cultural values?
the importance of things and ideas
What are the four primary dimensions of cultural values?
-Individualism/Collectivism
-Power distance
-Uncertainty/avoidance
-Masculinity/Feminity
define individualist cultures
Each member of society is primarily concerned with his or her own interest and those of the immediate family.
define collectivist cultures
All of society's members are integrated into cohesive in-groups. (Japanese and other Asian cultures)
Define Power distance Index(PDI)
This is the extent to which the less powerful members of a society accept power to be distributed unequally.
Uncertainty Avoidance Index (UAI)
The extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations
define masculinity
A society in which men are expected to be assertive, competitive, and concerned with material success, and women fulfill the role of nurturer: Japan and Austria.
define femininity
describes a society in which the social roles of men and women overlap, with neither gender exhibiting overly competitive behavior
define rituals
Patterns of behavior and interaction that are learned and repeated
define symbols
Culture is communication; Includes ability to accurately interpret symbols
define Linguistic Distance
Determine differences in values across countries and the amount of trade between countries
define beliefs
Mainly stem from religious training, varies by culture
Define culture borrowing
learn from other cultures to solve society’s problems
Marketing strategy is judged culturally in terms of:
acceptance, resistance, or rejection
define cultural congruence
marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance.
define unplanned change
introduce a product and hope for the best.
Planned Change
deliberately set out to change those aspects of the culture offering resistance to predetermined marketing goals.