CHAPTER 3 Think Globally Act Ethically

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CHAPTER 3Think Globally/Act Ethically
M A R K E T I N G
Real People, Real Choices Fourth Edition
Michael R. Solomon Greg W. Marshall
Elnora W. Stuart
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What do these firms have in common?
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Ethics in the Marketing Mix

• Making a product safe
• Pricing the product fairly
• Promoting the product ethically
• Puffery versus deceptive advertising
• Firms found guilty for deceptive advertising by
  the FTC may be fined and required to run
  corrective advertising
• Making the product available ethically
• slotting allowances

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Social Responsibility

• Management philosophy in which organizations
  engage in activities that have a positive effect
  on society and promote the public good
• Tools of social responsibility
• environmental stewardship
• cause marketing
• cultural diversity

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Figure 3.2 Entering Foreign Markets
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Figure 3.3 North American Trade Flows
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Market Conditions to Consider

• How much domestic demand exists for the firms
  products?
• What is the potential for market demand abroad?
• Is the firm able to secure a competitive
  advantage in foreign markets?
• What competitive advantages does each country
  have relative to competing countries?

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Borders and Roadblocks

• Protectionism is a government policy which seeks
  to provide home companies an advantage over
  foreign companies by implementing trade barriers
• Import quotas
• Embargos
• Tariffs
• Red tape

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WTO

• Objective to help trade flow smoothly, freely,
  fairly, and predictably
• Role acts as a forum for negotiations among
  countries, settles trade disputes, and assists
  developing countries with training programs

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Economic Communities

• Countries band together to form an alliance
• Such economic communities coordinate trade
  policies and ease restrictions on trade across
  the member borders
• EU (European Union)
• NAFTA (North American Free Trade Agreement)
• ASEAN (Association of Southeast Asian Nations

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Indicators of Economic Health

• Gross Domestic Product (GDP) - the dollar value
  of goods and services a country produces within
  its borders within one year
• Gross National Product (GNP) - the value of all
  goods and services produced by a countrys
  individuals or organizations, whether in or out
  of country borders

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Economic Development

• Less Developed Countries (LDC)
• lowest stage of economic development
• Developing Countries
• economies shift from agriculture to industry
  standards of living, education, and use of
  technology rise
• Developed Countries
• economically advanced countries the G7 countries
  (US, UK, Canada, France, Italy, Germany, Japan)

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People in Developing Countries
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Political and Legal Environment

• Political Issues
• economic sanctions
• nationalization
• expropriation
• Regulatory Issues
• product requirements
• local content rules
• Human Rights Issues

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Cultural Environment
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Cultural Values

• Collectivist Cultures
• Venezuela
• Pakistan
• Taiwan
• Thailand
• Greece

• Individualist Cultures
• United States
• Australia
• Great Britain
• Canada
• The Netherlands

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Norms and Customs

• Custom - norm handed down from the past that
  controls basic behaviors
• More - a custom with a strong moral overtone
• Conventions - norms regarding the conduct of
  everyday life

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Ethnocentrism

• The tendency to prefer products or people of
  ones own culture over those from other countries
• Ethnocentric consumers are likely to feel
  ethically wrong in buying products from other
  countries because they want to support their
  domestic economy

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Figure 3.4 Market Entry Strategies
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Standardization versus Localization

• Standardization suggests that greater
  efficiencies and economies of scale are generated
  when all marketing is the same in each country
• Localization recognizes that customer
  satisfaction will be highest when the marketing
  mix is tailored to local needs and wants

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Product Decisions

• Sell the same product in the new market (straight
  extension strategy)
• Modify the product for the new market (product
  adaptation strategy)
• Develop a brand new product for that new market
  (product invention strategy)

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Toyota Corolla Iceland
Toyota has selected its Corolla to be a world car
that is sold in all markets from Egypt to Iceland
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Promotional Decisions

• Will the same promotional message work in the
  different markets?
• Standardized strategies are more likely to work
  when cultural factors are similar, and when
  target customers are in cosmopolitan urban areas
• Consider targeting similar groups across national
  boundaries rather than country-by-country
  expansion

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Price Decisions

• Costs associated with transportation, tariffs,
  differences in currency exchange rates, and
  bribes may make a product more expensive in one
  country than another
• Gray marketing - unauthorized party imports
  products and sells them for less
• Dumping - a company prices its products lower
  than at home in order to establish a market

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Distribution Decisions