INTERNATIONAL MARKETING

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INTERNATIONAL MARKETING

• Trade policy
• Culture
• Consumer buying power
• Product strategies

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International Marketing Considerations and
Outcomes
BELIEFS
INVESTMENT
PARTNERSHIPS
CULTURE
EXPECTATIONS
ENTRY STRATEGY
BEHAVIOR
ATTRIBUTIONS
INTERNATIONAL MARKETING
MARKETING MIX
ECONOMICS
POLITICAL/ LEGAL/ HISTORICAL
PRODUCT
PRICE
PROMOTION
DISTRIBUTION
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An Effective Billboard Advertisement?
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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

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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

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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

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Contrasting Advertising Perspectives (Aithison
2002)

• Western
• Atomisticbroken down to smallest component
  parts
• Unique selling propositions
• How to
• Positioning
• May be dull and boring
• Copy focused

• Asian
• Holistic
• Everything relates to everything else
• How things fit together and relate
• Visual and oral

Jim Aitchison, How Asia Advertises, New York
Wiley, 2002.
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Advertising Content Comparisons

• American
• Individual benefit and pleasure (e.g., Make your
  way through the crowd)
• Korean
• Collective values (e.g., We have a way of
  bringing people together)

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High vs. Low Context Languages

• How precisely does language delineate what is
  being said?
• Language information conveyors Subjects,
  objects, tense, gender, singularity
• Language richness (words with meanings of
  different shades)

German Latin Great languages for puns!
Spanish French
English Japanese
Chinese
Low
High context context
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Japanese consumers expect to see what the food
looks like before ordering
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Some Writing Patterns
English Romance Judaic
Asian
Going in circles to avoid being perceived as
overly assertive or causing loss of face.
Detours are expected to maintain interest and
politeness
Straight to the point conciseness valued theme
expressed
But thats another story.
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Ambiguity An Example

• Haipotential meanings
• Yes, I agree
• Yes, I hear what you are saying
• (I hear you are saying something)

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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
• purchase parity vs. nominal

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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

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Nominal vs. Purchase Parity Adjusted
GNPsExamples (2007)
Slight inconsistencythe numbers are not quite
equal due to the calculation method
PPP GNI is measured in current international
dollars which, in principal sic, have the same
purchasing power as a dollar spent on GNI in the
U.S. economy. Because PPPs provide a better
measure of the standard of living of residents of
an economy, they are the basis for the World
Banks calculations of poverty rates at 1 and 2
a day. Emphasis added. The correct wording
would have been , in principle, .).
Source World Bank http//siteresources.worldban
k.org/DATASTATISTICS/Resources/GNIPC.pdf
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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

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Approaches to Product Introduction
?Standardization
? Adaptation
? Localization
? Customization
Not suitable for the Middle East!
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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

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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

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StandardizationDisadvantages

• Unnecessary features
• Vulnerability to trade barriers
• Strong local competitors

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Product Adaptations

• Mandatory
• legal requirements
• infrastructure
• physical requirements
• Discretionary
• local tastes
• fit into cultural environment

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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

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Mandatory Adaptation Issues

• Choices in approach to mandatory
  conditions--examples
• Power drills with noise suppression filters
• Non-public ear piercing in Japan
• Distribution and promotion implications
• Arbitrary standards (e.g., TV, DVD players)
• Conflicting rules between countriesmay not be
  possible to make product legal in all

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Compatibility Issues

• Basic requirements
• E.g., voltage, infrastructure, plugs
• Compatibility
• Ability to be used within a local system (e.g.,
  frequencies, electronic protocols)
• Multi-system compatibility
• Product can be set to operate within several
  standards

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Compatibility Issues

• Basic requirements
• E.g., voltage, infrastructure, plugs
• Compatibility
• Ability to be used within a local system (e.g.,
  frequencies, electronic protocols)
• Multi-system compatibility
• Product can be set to operate within several
  standards

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Physical Product vs. Communication Adaptations
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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 of country of origin
  (e.g., French beer, American products with French
  language labels)

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Market Positioning Strategies Across Countries

• Häagen-DazsU.S. vs. Japan
• Corona BeerMexico vs. U.S.
• Mercedes-BenzEurope vs. U.S.
• McDonalds
• U.S.
• Europe
• Developing countriese.g., China

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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 equipmente.g., DC 8 aircraft,
  old three part canning machines
• Some countries tend to be more receptive to
  innovation than others

• 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

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Promotion Strategic and Tactical Objectives
Emerging Markets/ New Products

• Awareness
• Trial
• Attitude toward the product
• Beliefs
• Preference
• Temporary sales increases

Mature markets /established products
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Constraints on Global Communications Strategies

• Language barriers
• Cultural barriers
• Local attitudes toward advertising
• Production/cost
• Media availability
• Advertising regulations

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Flops in the Transplantation of Advertising

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

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Symbolism

• Green Health in U.S. in Latin America, jungle
  (associated with danger)
• Marlboro man freedom in U.S. dusty, unappealing
  life in Hong Kong
• Perfume against raindrop Cool, refreshing
  feeling to Europeans symbol of fertility to some
  Asians

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Cultural Dimensions in Advertising

• Directness vs. indirectness
• Comparative advertising
• Humor appeal
• Gender roles
• Explicitness
• Sophistication
• Popular vs. traditional culture
• Information content vs. fluff

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Advertising Standardization Advantages

• Economies of scale
• Consistent image
• Appeal to global consumer segments
• Conservation/maximum utilization of creative
  talent
• Cross-fertilization--moving knowledge across
  markets

Essentially parallel to product/ positioning
standardization
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Disadvantages

• Cultural differences
• Advertising and promotional regulations
• Market lifecycle stage (maturity)
• Local commitment to campaign (Not-invented-here)

Again, parallel to product/ positioning
standardization
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Humor

• Humor appears to be a universal phenomenon
• However, there are great differences in form
  across the World
• Differences expectations ? differences in
  perceived irony
• Puns and language specific expressions
• A can a week is all we ask worked in U.S. but
  was seen as silly in Canada

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Values

• Americans tend to emphasize individuals in other
  cultures, standing out from the group may not be
  desirable
• Perception of comparative advertising

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U.S. Laws of Interest to firms with U.S.
Involvement

• Anti-trust Standards of fair competition
• Foreign Corrupt Influences 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.