BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 1

International Marketing

Trade policyCultureConsumer buying powerProduct strategies

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 2

Obstacles to Trade: Protectionism

Differing interests of consumers and manufacturersBenefits of trade tend to be more diffused than benefits to specific groups of protectionism

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 3

Approaches to Protectionism

TariffsQuotas“Voluntary” export restrictionsSubsidies to domestic producers/exportersNon-tariff barriers

legal obstaclesdifferential treatment

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 4

Cultural LessonsDiet Coke is named Light Coke in Japan--dieting was not well regardedRed circle trademark was unpopular in Asia due to its resemblance of Japanese flagPackaging 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

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 5

More Cultural Lessons...

Cologne ad featuring a man “attacked” by women failed in AfricaFood demonstration did well in Chinese stores but not in Korean ones--older women were insulted by being “taught” by younger representativesPauses in negotiationsLevel of formality

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 6

Product StrategiesExtent of product change

Standardization: Attempt at global productCustomization: Specific product for each marketAdaptation: Some changes made to product

• Physical: Product changes (e.g., voltage, size, taste)• Communications: Positioning

More issues when we considered product strategy in general

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 7

Physical Product vs. Communication Adaptations

Communication adaptations not needed (extension)

Communication adaptations needed

Product adaptations not needed (extension)

Some industrial equipment; some electrical 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

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 8

CONSUMER INCOMES AND BUYING POWER

Measuring country wealthgross domestic product“purchase parity” vs. nominal

Government role in the economyTax burdenServices provided by the Government—e.g., health care, education

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 9

Nominal vs. Purchase Parity Adjusted GNPs--ExamplesCountry Nominal GNP PPA

United States 28,740 28,740

Japan 37,850 23,400

Argentina 8,570 9,950

Czech Republic 5,200 11,380

Mexico 3,680 8,120

Russia 2,740 4,190

Source: World Bank (http://www.worldbank.org/data/databytopic/gnppc97.pdf)

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 10

Market Entry StrategiesExporting

Low investmentLow control of promotion

LicensingLow investmentLow control of promotion, positioning, and qualityAble to benefit from existing distribution and market knowledge

Joint ventureConsiderable investmentMore controlAble to benefit from partner’s experienceMust work with partner

Direct investmentLarge investmentRiskyGreater controlMay lack knowledge of market

BSAD 110 INTERNATIONAL MARKETING Lars Perner, Instructor 11

U.S. Laws of Interest to firms with U.S. InvolvementAnti-trust

Foreign Corrupt InfluencesAnti-boycott lawsTrading With the Enemy