buad 307 international marketing lars perner, instructor 1 international marketing culture consumer...

BUAD 307 INTERNATIONAL MARKETING Lars Perner, Instructor 1

INTERNATIONAL MARKETING

• Culture• Consumer buying power• Product strategies


An Effective Billboard Advertisement?

VERY DIRTY

CLOTHES

CLOTHES GETS WASHED WITH

THE ADVERTISED DETERGENT

BRAND

SQUEEKY CLEAN

CLOTHES


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


INTERNATIONALMARKETING

CULTURE

ECONOMICS

POLITICAL/LEGAL/

HISTORICAL

ENTRYSTRATEGY

MARKETINGMIX

PRODUCT

BELIEFS

EXPECTATIONS

BEHAVIORATTRIBUTIONS

PRICEPROMOTION

DISTRIBUTION

INVESTMENT PARTNERSHIPS

International Marketing: Considerations and Outcomes


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)


Culture impacts

• Behavior—customs of how and when products are used

• Expectations

• Interpretation of reality

• Relationships between people


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 man’s best friend


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


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


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 power—based on a weighted average of costs—in the respective country relative to U.S.


Demand for Currency Depends On

• Trade deficit (demand for foreign currency to fund this) or trade surplus (demand for country’s 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


Nominal vs. Purchase Parity Adjusted GDPs—Examples (2009)

Country Nominal GDP PPA Luxemburg $74,430 $57,640

Norway 86,440 56,050

United States 47,240 46,730

Japan 37,870 33,280

Argentina 7,570 14,120

Czech Republic 17,310 23,610

Mexico 8,920 14,110

China 3,590 6,770

Source: World Bank International Monetary Fund

The U.S. figures should theoretically be equal but small differences occur because of technical issues in weighing “basket of goods” for comparison.


GNP Per Capita by Country

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


Nominal vs. Purchasing Power Parity GNPs

05,000

10,00015,000

20,000

25,00030,000

35,00040,000

0 10,000 20,000 30,000 40,000

PPA


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


Approaches to Product Introduction

Not suitable for the Middle East!

● Customization ● Localization

● Adaptation ●Standardization


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


Standardization—Advantages

• 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


Standardization—Disadvantages

• Unnecessary features

• Vulnerability to trade barriers

• Strong local competitors


Product Adaptations

• Mandatory– Legal requirements– Infrastructure– Physical

requirements

• “Discretionary”– Local tastes– Fit into cultural

environment


Motivations for Adaptation

• Legal• Infrastructure• Consumer

demographics• Culture

– Religious impact– Cultural context of

use

• Local traditions/ customs—e.g.,– Food usage

occasions– Aesthetic

preferences

• Local usage conditions

• Pricing pressures/ tradeoffs


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 countries—may not be possible to make product legal in all


Physical Product vs. Communication Adaptations

Communication adaptations not needed (extension)

Communication adaptations needed

Product adaptations not needed (extension)

Some industrial equipment

Bicycle; fast food; chewing gum

Product adaptations needed

Gasoline; laundry detergent

Greeting cards

Domestic equivalent does not exist (product invention)

Compass-equipped prayer rug; hand powered washing machine


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)


Market Positioning Strategies Across Countries

• Häagen-Dazs—U.S. vs. Japan• Corona Beer—Mexico vs. U.S.• Mercedes-Benz—Europe vs.

U.S.• McDonald’s

– U.S.– Europe– Developing countries—e.g.,

China


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 countries—e.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

• “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


Promotion: Strategic and Tactical Objectives

• Awareness• Trial• Attitude toward the product

– Beliefs– Preference

• Temporary sales increases

EmergingMarkets/New Products

Mature markets/establishedproducts


Flops in the Transplantation of Advertising

• Man and his dog• “Follow the leader--

he’s on a Honda!”• Detergent ad• “Get your teeth

their whitest!”


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 one’s 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 1 international marketing culture consumer...

Documents

international context

power product strategies

best friend slide

definitions culture

dirty clothes clothes

cultural lessons diet

imported products

africa food demonstration