Chapter 3 Thrive in the Marketing Environment: The World Is Flat.

Chapter 3

Thrive in the Marketing Environment:

The World Is Flat

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall3-2

Chapter Objectives Understand the big picture of international

marketing Explain the World Trade Organization, economic

communities, and how countries protect local industries

Understand how factors in the external business environment influence marketing strategies and outcomes

Explain the strategies that a firm can use to enter global markets

Understand the arguments for standardization vs. localization of marketing mix strategies in global markets


Real People, Real Choices: Decision Time at eBay

Which option should eBay undertake? – Option 1: Customize eBay by adding

additional categories for artisans’ products, but don’t create a separate brand

– Option 2: Create a completely separate, custom branded experience

– Option 3: Create a hybrid model using an independent marketplace and licensed brand


Global Marketing

World trade:The flow of goods and services among different countries—the value of all the exports and imports of the world’s nations

Countertrade: A type of trade in which goods are paid for with other items instead of with cash


Deciding to Go Global

“Go” or “no go”– Is it in the best interest of the firm to remain

in home market or to go where foreign business opportunities exist?

– Which global markets are most attractive?

Must consider market conditions and competitive advantage when making a decision


Road Blocks at the Borders

Protectionism– Quotas, embargoes, and tariffs

Initiatives in international regulation and cooperation help trade– General Agreement on Tariffs and Trade (GATT)– World Trade Organization (WTO)

Economic communities help to promote trade


Analyzing the Global Marketing Environment

A company going global must understand local conditions in the targeted country, including the:– Economic environment– Competitive environment– Technological environment– Political/legal environment– Sociocultural environment


The Economic Environment: Indicators of Economic Health

Key economic indicators:– Gross domestic product (GDP):

Total dollar value of goods/services a country produces within its borders in a year

– Gross national product (GNP):Value of all goods and services produced by a country’s citizens or organizations

– Economic infrastructureQuality of country’s distribution, financial, and communications systems


The Economic Environment: Level of Economic Development

Least developed country (LDC)– Economic base is often agricultural

Developing countries– Economy shifts emphasis from agriculture to

industry

Developed countries– Offer wide range of opportunities for

international marketers


The Economic Environment: The Business Cycle

All economies go through periods of:– Prosperity– Recession– Recovery– Depression– Inflation


The Competitive Environment:Analyzing the Market and Competition

Competitive intelligence: gathering and analyzing publicly available information about rivals to develop superior marketing strategies– Collected from news media, the Internet, and

publicly available government documents


The Competitive Environment:Competition in the Microenvironment

Competition in the microenvironment– Competition for consumer’s discretionary

income – Competition among products to satisfy the

same consumer’s needs/wants – Competition among brands offering similar

goods/services on the basis of brand reputation or perceived benefits


The Competitive Environment:Competition in the Macroenvironment

Competition in the macroenvironment (overall structure of industry)– Monopoly– Oligopoly– Monopolistic competition– Perfect competition


The Technological Environment

Technology:– Provides firms with important competitive

advantages– Profoundly affects marketing activities– Can transform industries

Patent: – Legal document giving inventors exclusive

rights to produce/sell a particular invention in that country


The Political and Legal Environment: Legal Influences on Business

Local, state, national, and global laws and regulations affect businesses

Purpose of American law:– To make sure businesses compete fairly with

each other – To make sure that businesses don’t take

advantage of consumers


The Political and Legal Environment: Political Influences on Business

Retaliatory actions against American businesses sometimes occur as a result of political activity or war

Political constraints on trade are commonly imposed:– Economic sanctions– Nationalization– Expropriation


The Political and Legal Environment: Legal Influences on Business

Regulatory constraints on trade often restrict the marketing of goods

Also common—local content rules – a portion of a product must consist of

components supplied by industries in the host country or economic community

Human rights issues may limit foreign countries business opportunities


The Sociocultural Environment

Key Sociocultural considerations:– Demographics– Cultural values

• Collectivist vs. individualistic cultures

– Norms, customs, mores, and conventions– Language– Ethnocentrism:

The tendency to prefer products from one’s own culture


Ethical Issues in Global Business

Truthfulness in business dealings varies by country

Bribery:When someone voluntarily offers payment to get an illegal advantage

Extortion:When someone in authority extracts payment under duress


How “Global” Should a Global Marketing Strategy Be?

Choosing a market entry strategy:– Exporting– Contractual agreements

• Licensing • Franchising

– Strategic alliances• Joint venture

– Direct investment– Born-global firms



Choose a marketing-mix strategy:– Standardization vs. localization

• Standardization: Offer the same products in all markets

• Localization: Offer a customized marketing mix for each country

– Once standardization or localization is chosen, it’s time to tweak the marketing mix



Tweaking the marketing mix– Product decisions:

• Straight extension strategy:Market existing product in foreign market

• Product adaptation strategyModifies product for foreign market

• Product invention strategyDevelops new product for foreign market

– Promotion decisions: Whether or not to modify



Tweaking the marketing mix– Price decisions:

Products are often more expensive to produce for foreign markets

• Free trade zones• Gray market goods • Dumping

– Distribution decisions:Getting the product to remote locations is often difficult


Real People, Real Choices: Decision Made at eBay

Robert chose option 3– Implementation:

eBay licensed the brand “WorldofGood.com” and launched project with both community and commerce platforms using search engine, banner, affiliate, e-mail and viral marketing, as well as PR/event marketing.

– Measuring success: Used metrics to measure operational business and co-branding strategy success


Keeping It Real: Fast-Forward to Decision Time at Plan-It Marketing

Meet Cindy Tungate, president of Plan-It Marketing, a marketing research firm

Plan-It’s client Priceline needs help in planning its business

The decision to be made: What marketing research strategy will maximize results for Priceline?


Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic,

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Chapter 3 Thrive in the Marketing Environment: The World Is Flat.

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