INTERNATIONAL MARKETING

Culture Consumer buying power Product strategies

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

An Effective Billboard Advertisement?

CLOTHES GETS WASHED WITH THE ADVERTISED DETERGENT BRAND

VERY DIRTY CLOTHES

SQUEEKY CLEAN CLOTHES

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

International Marketing: Considerations and Outcomes

BELIEFS INVESTMENT PARTNERSHIPS

CULTURE

EXPECTATIONS

BEHAVIOR ATTRIBUTIONS

ENTRY STRATEGY

ECONOMICS POLITICAL/ LEGAL/ HISTORICAL

BUAD 307

INTERNATIONAL MARKETING

MARKETING MIX

PRODUCT

PROMOTION

PRICE

DISTRIBUTION
INTERNATIONAL MARKETING
Lars Perner, Instructor

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)

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

Culture impacts
Behaviorcustoms of how and when products are used Expectations Interpretation of reality Relationships between people

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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 mans best friend
BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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 powerbased on a weighted average of costsin the respective country relative to U.S.
BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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Demand for Currency Depends On

Trade deficit (demand for foreign currency to fund this) or trade surplus (demand for countrys 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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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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 BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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GNP Per Capita by Country

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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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na s Purchas ng Po er Par t

Ps

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

PPA

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INTERNATIONAL MARKETING

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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

16

Approaches to Product Introduction

Adaptation Customization Localization Standardization

Not suitable for the iddle East!

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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StandardizationAdvantages
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

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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StandardizationDisadvantages
Unnecessary features Vulnerability to trade barriers Strong local competitors

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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Product Adaptations
Mandatory
Legal requirements Infrastructure Physical requirements

Discretionary
Local tastes Fit into cultural environment

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

21

Motivations for Adaptation

Legal Infrastructure Consumer demographics Culture
Religious impact Cultural context of use

Local traditions/ customse.g.,

Food usage occasions Aesthetic preferences

Local usage conditions Pricing pressures/ tradeoffs

Lars Perner, Instructor

BUAD 307

INTERNATIONAL MARKETING

22

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 countriesmay not be possible to make product legal in all

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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Physical Product vs. Communication Adaptations

Communication adaptations not needed (extension) Product adaptations Some industrial not needed equipment (extension) Product adaptations Gasoline; laundry needed detergent Communication adaptations needed

Bicycle; fast food; chewing gum

Greeting cards

Domestic equivalent Compass-equipped prayer rug; hand does not exist powered washing machine (product invention)

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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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)
BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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Market Positioning Strategies Across Countries

Hagen-DazsU.S. vs. Japan Corona Beer Mexico vs. U.S. Mercedes-Benz Europe vs. U.S. McDonalds
U.S. Europe Developing countriese.g., China

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

26

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 countriese.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
BUAD 307

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

INTERNATIONAL MARKETING

Lars Perner, Instructor

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Promotion: Strategic and Tactical Objectives

Awareness Trial Attitude toward the product
Beliefs Preference E erging arkets/ New Products

Temporary sales increases

ature arkets /established products

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

28

Flops in the Transplantation of Advertising

Man and his dog Follow the leader-hes on a Honda! Detergent ad Get your teeth their whitest!

BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

29

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 ones 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.
BUAD 307

INTERNATIONAL MARKETING

Lars Perner, Instructor

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