MGM 4273 INTERNATIONAL MARKETING PJJ 1 ST FACE-TO-FACE 14/9/13 SITI RAHAYU HUSSIN [email protected].

MGM 4273INTERNATIONAL MARKETING

PJJ 1ST FACE-TO-FACE14/9/13

SITI RAHAYU HUSSIN [email protected]

• First half : chapters 1-10• Second half : the rests of the book

1-3

International Marketing

• Performance of business activities designed to – Plan– Price – Promote, and – Direct the flow of a company’s goods and services

to consumers or users in more than one nation for a profit

1-4

The International Marketing Task

Exhibit 1.3

ANALYSIS & DECISION

• Environmental differences must be taken into account if firms are to market products and services at a profit in other countries– Laws– Customs– Cultures

1-6

• Ethnocentrism and the SRC can influence an evaluation of the appropriateness of a domestically designed marketing mix for a foreign market

• The most effective way to control the influence of ethnocentrism and the SRC is to recognize their effects on our behavior

SRC and Ethnocentrism

1-7

Framework for Cross-cultural Analysis

1. Define business problem or goal • Home-country vs. foreign-country cultural traits, habits,

or norms• Consultation with natives of the target country

2. Make no value judgments3. Isolate the SRC influence

• Examine it carefully to see how it complicates the problem

4. Redefine the problem • Without SRC influence • Solve for the optimum business goal situation

1-8

Stages of International Marketing Involvement

• No direct foreign marketing• Infrequent foreign marketing• Regular foreign marketing• International marketing• Global marketing

1-9

No Direct Foreign Marketing

• Products reach foreign markets indirectly– Trading companies– Foreign customers who contact firm– Wholesalers– Distributors– Web sites

• Foreign orders pique a company’s interest to seek additional international sales

1-10

Strategic Orientation

• Domestic market extension orientation• Multidomestic market orientation• Global market orientation

2-11

Global Perspective Trade Barriers – An International Marketer’s Minefield

• Countries take advantage of U.S. open markets while putting barriers in the way of U.S. exports

• Tariff and nontariff barriers to trade are major issues confronting international marketers

• To realize the benefits of the social, political, and economic changes, free trade must prevail throughout the global marketplace– WTO (World Trade Organization)

2-12

World Trade and U.S. Multinationals

• New global marketing opportunities• 1950s – U.S. companies began to export and

make significant investments in overseas marketing and production facilities

• 1960s – U.S. multinational corporations (MNCs) faced major challenges on two fronts– Resistance to direct investment– Increasing competition in export markets

2-13

• American MNCs confronted by a resurgence of competition from all over the world– NIC (Newly Industrialized Countries)– SOE (State-Owned Enterprises)

• The balance of merchandise trade– U.S. trade deficit

• U.S. dilemma of how to encourage trading partners to reciprocate with open access to their markets without provoking increased protectionism– WTO (World Trade Organization)– NAFTA– AFTA (American Free Trade Area)– APEC (Asia-Pacific Economic Cooperation Conference)

World Trade and U.S. Multinationals

2-14

Beyond the First Decade of the 21st Century

• U.S. economy has slowed dramatically• World growth (except China) also slowed

– The Organization for Economic Cooperation and Development (OECD) estimates 3% average annual growth for next 25 years

• Developing countries will grow faster– From an annual rate of 4% in the past quarter to a

rate of 6% for the next 25 years– Share of world output will range from one-sixth to

one-third

2-15

Beyond the First Decade of the 21st Century

• Level of intensity of competition will change as companies focus on gaining entry or maintaining their position – Emerging markets– Regional trade areas– Established markets in Europe, Japan, and the U.S.

• Smaller companies also seeking new markets– Novel approaches– Technological expertise

2-16

Protectionism

• Tariffs, quotas, and nontariff barriers are designed to protect markets from intrusions by foreign countries

• Nations utilize barriers to restrain entry of unwanted goods– Legal– Exchange– Psychological– Private market

2-17

Protection Logic and Illogic

• Arguments concerning protectionism on trade– Protection of infant industry– Protection of the home market– Need to keep money at home– Encouragement of capital accumulation– Maintenance of the standard of living and real wages– Conservation of natural resources– Industrialization of a low-wage nation– Maintenance of employment and reduction of unemployment– National defense– Increase of business size– Retaliation and bargaining

2-18

Trade Barriers• Tariffs• Quotas• Voluntary Export Restraints (VER)• Boycotts and embargoes• Monetary barriers

– Blocked currency– Differential exchange– Government approval

• Standards• Antidumping penalties

2-19

Types of Nontariff BarriersExhibit 2.6

3-20

GEOGRAPHY, HISTORY & INTERNATIONAL MARKETING

• A prospective international marketer should be reasonably familiar with the world, its climate, and topographic differences

• Geographic hurdles must be recognized as having a direct effect on marketing and the related activities of communications and distribution

3-21

History Perspective in Global Business

• History helps define a nation’s mission– How it perceives its neighbors– How it perceives itself– Its place in the world

• Insights into history are important for understanding current attitudes

• It is necessary to study culture as it is now as well as to understand culture as it was– A country’s history

3-22

History and Contemporary Behavior• Japanese history

– Seven centuries under the shogun feudal system– The isolation before the coming of Admiral Perry in 1853– Threat of domination by colonial powers– Rise of new social classes– Western influences– Humiliation of World War II– Involvement in the international community

• Historically, loyalty and service, a sense of responsibility, and respect for discipline, training, and artistry were stressed to maintain stability and order

• A historical perspective gives the foreigner a basis on which to begin developing cultural sensitivity and a better understanding of contemporary Japanese behavior

3-23

Geography and Global Markets

• Geography – an element of the uncontrollable environment that confronts every marketer– Affects a society’s culture and economy – Physical makeup limits a nation’s ability to supply

its people’s needs

3-24

Geography, Nature and Economic Growth

• As countries prosper, natural barriers are overcome

• Environmental issues– Disruption of ecosystems– Relocation of people– Inadequate hazardous waste management– Industrial pollution

3-25

Resources

• The availability of minerals and the ability to generate energy are the foundations of modern technology

• The principal supplements to human energy – Animals– Wood– Fossil fuel– Nuclear power– Ocean tides– Geothermal power– The sun

3-26

Resources

• United States in perspective– 1942 – nearly self-sufficient– 1950 – major importer– 1973-2000 – increased dependency from 36% to 66%– Mid-2000’s – predicted to be importing more than

70% of needs• The location, quality, and availability of resources

will affect the pattern of world economic development and trade well into the 21st century

3-27

Dynamics of Population Trends• Global population trends determine today’s

demand for goods– Rural/urban population shifts– Rates of growth– Age levels– Population control

• Changes in population will profoundly affect future demand

• The most important deterrent to population control is cultural attitudes about the importance of large families

3-28

World Population by Region – 2005-2050Life Expectancy at Birth – 2005-2010 (millions)

Exhibit 3.4

3-29

Worker Shortage and Immigration

• The free flow of immigration will help to ameliorate the dual problems of explosive population expansion in less-developed countries and worker shortage in industrialized regions

• Europe will need 1.4 billion immigrants over the next 50 years

• Japan and the U.S. will need 600 million immigrants between now and 2050

3-30

World Trade Routes• Progression of trade routes

– Overland– Sea routes– Air routes– The Internet

• Trade routes bind world together, minimizing:– Distance– Natural barriers – Lack of resources – Fundamental differences between and economies

• Trade routes represent attempts to overcome influence of geography– Causing economic and social imbalances

3-31

Communication Links

• Telegraph• Telephone• Television• Satellites• Computer• Internet

Cultural Dynamics in Assessing Global Markets

4-33

Chapter 4

• A complete and thorough appreciation of the origins and elements of culture may well be the single most important gain to a foreign marketer in the preparation of marketing plans and strategies

• Marketers can control the product offered to a market – its promotion, price, and eventual distribution methods – but they have only limited control over the cultural environment within which these plans must be implemented

4-34

• When a company is operating internationally each new environment that is influenced by elements unfamiliar and sometimes unrecognizable to the marketer complicates the task

• Special effort and study are needed to absorb enough understanding of the foreign culture to cope with the uncontrollable features

4-35

Global Perspective

• Culture deals with a group’s design for living• The successful marketer clearly must be a

student of culture• Markets are the result of the three-way

interaction of a marketer’s– Economic conditions– Efforts– All other elements of culture

• The use of something new is the beginning of cultural change– The marketer becomes a change agent

4-36

Culture’s Pervasive Impact

• Culture affects every part of our lives, every day, from birth to death, and everything in between

• As countries move from agricultural to industrial to services economies’ birthrates decline

• Consequences of consumption– Tobacco

• Culture not only affects consumption, it also affects production– Stomach cancer in Japan

4-37

Definitions and Origins of Culture

• Traditional definition of culture – Culture is the sum of the values, rituals, symbols, beliefs,

and thought processes that are learned, shared by a group of people, and transmitted from generation to generation

• Humans make adaptations to changing environments through innovation

• Individuals learn culture from social institutions– Socialization (growing up)– Acculturation (adjusting to a new culture)– Application (decisions about consumption and production)

4-38

We All Love Flowers – Why?

• Geography• History• Technology and economics• Social institutions• Cultural values• Aesthetics as symbols

4-39

Social Institutions• Family

– Nepotism – Role of extended family– Favoritism of boys in some cultures

• Religion– First institution infants are exposed to outside the home– Impact of values systems– Misunderstanding of beliefs

• School– Affects all aspects of the culture, from economic development to consumer

behavior– No country has been successful economically with less than 50% literacy

4-40

Social Institutions• The media

– Media time has replaced family time• TV• Internet

• Government– Influences the thinking and behaviors of adult citizens

• Propaganda• Passage, promulgation, promotion, and enforce of laws

• Corporations– Most innovations are introduced to societies by companies– Spread through media– Change agents

4-41

Elements of Culture

• Cultural values– Individualism/Collectivism Index– Power Distance Index– Uncertainty Avoidance Index– Cultural Values and Consumer Behavior

4-42

Hofstede’s Indexes Language, and Linguistic Distance

Exhibit 4.5

4-43

Cultural Sensitivity and Tolerance

• Being attuned to the nuances of culture so that a new culture can be viewed objectively, evaluated and appreciated– Cultures are not right or wrong, better or worse,

they are simply different– The more exotic the situation, the more sensitive,

tolerant, and flexible one needs to be

4-44

Cultural Change

• Dynamic in nature – it is a living process• Paradoxical because culture is conservative

and resists change– Changes caused by war or natural disasters– Society seeking ways to solve problems created by

changes in environment– Culture is the means used in adjusting to the

environmental and historical components of human existence

4-45

Cultural Borrowing

• Effort to learn from others’ cultural ways in the quest for better solutions to a society’s particular problems– Imitating diversity of other makes cultures unique– Contact can make cultures grow closer or further

apart• Habits, foods, and customs are adapted to fit

each society’s needs

4-46

Similarities – An Illusion

• A common language does not guarantee a similar interpretation of word or phrases– May cause lack of understanding because of

apparent and assumed similarities• Just because something sells in one country

doesn’t mean it will sell in another– Cultural differences among member of European

Union a product of centuries of history

Chapter 5

Culture, Management Style, and

Business Systems

5-48

Summary

• Some cultures appear to emphasize the importance of information and competition while others focus more on relationships and transaction cost reductions

• Businesspersons working in another country must be sensitive to the business environment and must be willing to adapt when necessary

• Understanding the culture you are entering is the only sound basis for planning

• Business behavior is derived in large part from the basic cultural environment in which the business operates and, as such, is subject to the extreme diversity encountered among various cultures and subcultures

5-49

Summary

• Environmental considerations significantly affect the attitudes, behavior, and outlook of foreign businesspeople

• Varying motivational patterns inevitably affect methods of doing business in different countries

• The international trader must be constantly alert and prepared to adapt when necessary

• No matter how long in a country, the outsider is not a local – in many countries that person may always be treated as an outsider

• Assuming that knowledge of one culture will provide acceptability in another is a critical mistake

5-50

Required Adaptation• Adaptation is a key concept in international

marketing• Ten basic criteria for adaptation

1) open tolerance2) flexibility3) humility4) justice/fairness5) ability to adjust to varying tempos6) curiosity/interest7) knowledge of the country8) liking for others9) ability to command respect10) ability to integrate oneself into the environment

5-51

The Impact of American Culture on Management Style

• “Master of destiny” viewpoint• Independent enterprise as the instrument of

social action• Personnel selection and reward based on merit• Decisions based on objective analysis• Wide sharing in decision making• Never-ending quest for improvement• Competition producing efficiency

5-52

Authority and Decision Making

• Influencers of the authority structure of business:– High PDI Countries

• Mexico, Malaysia

– Low PDI Countries• Denmark, Israel

• Three typical authority patterns:– Top-level management decisions– Decentralized decisions– Committee or group decisions

5-53

Communication Styles

• Face-to-face communication– Managers often fail to develop even a basic understanding of just one other

language– Much business communication depends on implicit messages that are not

verbalized

• Internet communications– Nothing about the Web will change the extent to which people identify with

their own language and cultures• 78% of today’s Web site content is written in English• An English e-mail message cannot be understood by 35% of all Internet users

– Country-specific Web sites– Web site should be examined for any symbols, icons, and other nonverbal

impressions that could convey and unwanted message

5-54

Marketing Orientation

• A company’s marketing orientation has been positively related to profits (U.S.)

• Other countries have more traditional approach– Production orientation (consumers will prefer products that

are widely available)– Product orientation (consumers will favor products that

offer the most quality performance, or innovative features)– Selling orientation (consumers and businesses alike will not

buy enough without prodding)

• Encouraging a marketing orientation across global business units can be difficult

5-55

Gender Bias in International Business

• Women represent only 18% of the employees who are chosen for international assignments

• In many cultures women not typically found in upper levels of management, and are treated very differently from men– Asia, Middle East, Latin America

• Prejudices toward women in foreign countries• Cross-mentoring system

– Lufthansa• Executives who have had international experience

– More likely to get promoted,– Have higher rewards, and have – Greater occupational tenure

5-56

Ethical and Socially Responsible Decisions

• Difficulties arise in making decisions, establishing policies, and engaging in business operations in five broad areas

– Employment practices and policies– Consumer protection– Environmental protection– Political payments and involvement in political affairs of the country– Basic human rights and fundamental freedoms

• Laws are the markers of past behavior that society has deemed unethical or socially irresponsible

• Ethical principles to help the marketer distinguish between right and wrong, determine what ought to be done, and justify actions

– Utilitarian Ethics– Rights of the Parties– Justice or Fairness

5-57

Culture’s Influence on Strategic Thinking

• British-American– Individualistic

• Japan & Germany– Communitarian

• In the less individualistic cultures labor and management cooperate

• A competitive, individualistic approach works well in the context of an economic boom

• Fourth kind of capitalism – – Common in Chinese cultures– Predicted by culture

5-58

Dimensions of Culture, A SynthesisExhibit 5.7

I n t e r n a t i o n a l M a r k e t i n g I n t e r n a t i o n a l M a r k e t i n g

The Political Environment:

a Critical Concern

Chapter 6

1 4 t h E d i t i o nP h i l i p R. C a t e o r a

M a r y C. G i l l yJ o h n L . G r a h a m

McGraw-Hill/IrwinInternational Marketing 14/e

Copyright © 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

6-60

Summary• The foreign firm

– Must strive to make its activities politically acceptable or it may be subjected to a variety of politically condoned harassment

• The foreign marketer frequently faces the problem of uncertainty of continuity in government policy

• Marketing firms accepted under one administration might find its activities undesirable under another – As governments change political philosophies

• Unfamiliar or hostile political environment does not necessarily preclude success for foreign marketers– If the company becomes a local economic asset and responds creatively to the

issues raised by political and social activities– If a company is considered vital to achieving national economic goals, the host

country often provides an umbrella of protection

6-61

Global Perspective

• A crucial reality of international business – Both host and home governments are integral partners

• A government controls and restricts a company’s activities – By encouraging and offering support – By discouraging and banning or restricting its activities

• International law recognizes the sovereign right of a nation – To grant or withhold permission to do business within its

political boundaries – To control where its citizens conduct business

6-62

Stability of Government Policies• Issues that can affect the stability of a government

– Radical shifts in government philosophy when an opposing political party ascends to power

– Pressure from nationalist and self-interest groups– Weakened economic conditions– Bias against foreign investment– Conflicts between governments

• Five main political causes of international market instability – Some forms of government seem to be inherently unstable– Changes in political parties during elections can have major effects on trade

conditions– Nationalism– Animosity targeted toward specific countries– Trade disputes themselves

6-63

Targeted Fear and/or Animosity• Marketers should not confuse nationalism with

a widespread fear or animosity directed at a particular country– Toyota in the U.S. (1980s)– Animosity toward the United States in France– The unhappiness of citizens and politicians in many other countries concerning

the war in Iraq• No nation-state, however secure, will tolerate

penetration by a foreign company into its market and economy – If it perceives a social, cultural, economic, or political threat to its well-being

• Trade disputes

6-64

Political Risks of Global Business

• Confiscation – the seizing of a company’s assets without payment

• Expropriation – where the government seizes an investment but makes some reimbursement for the assets

• Domestication – when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of government decrees – Mandating local ownership – Greater national involvement in a company’s

management

6-65

Economic Risks

• Exchange controls– Stem from shortages of foreign exchange held by a

country• Local-content laws

– Countries often require a portion of any product sold within the country to have local content

• Import restrictions– Selective restrictions on the import of raw materials to

force foreign industry to purchase more supplies within the host country and thereby create markets for local industry

6-66

Economic Risks

• Tax controls– A political risk when used as a means of controlling foreign

investments• Price controls

– Essential products that command considerable public interest • Pharmaceuticals• Food• Gasoline

• Labor problems– Labor unions have strong government support that they use

effectively in obtaining special concessions from business

6-67

Political Sanctions

• One or a group of nations may boycott another nation– Stopping all trade between the countries – Issuing sanctions against trade of specific products

• U.S. boycotts of trade with Cuba/Iran

• History indicates that sanctions are often unsuccessful in reaching desired goals– Particularly when ignored by other major nations’ traders

6-68

Cyberterrorism and Cybercrime

• Each wave of viruses – Gets more damaging – Spreads so rapidly that considerable harm is done before it

can be stopped• Tools for cyberterrorism

– Can be developed to do considerable damage • To a company, • An entire industry• A country’s infrastructure

• Mounting concern over the rash of attacks– Business leaders and government officials addressed a Group

of Eight conference

6-69

Politically Sensitive Products and Issues

• Politically sensitive products– Perceived to have an effect on the environment,

exchange rates, national and economic security, and the welfare of people

– Are publicly visible or subject to public debate • Health is often the subject of public debate, and

products that affect or are affected by health issues can be sensitive to political concern

• The European Union has banned hormone-treated beef for more than a decade


The International Legal Environment:Playing by the Rules

Chapter 7





7-71

What Should You Learn?• The four heritages of today’s legal systems• The important factors in jurisdiction of legal

disputes• Issues associated with jurisdiction of legal

disputes and the various methods of dispute resolution

• The unique problems of protecting intellectual property rights internationally

7-72

What Should You Learn?• How to protect against piracy and

counterfeiting• The legal differences between countries and

how the differences can affect international marketing plans

• The different ways U.S. laws can be applied to U.S. companies operating outside the United States

• The many issues of evolving cyberlaw

7-73

Summary• Businesses face a multitude of problems in their efforts

to develop successful marketing programs– Varying legal systems of the world and their effect on business transactions

• Political climate, cultural differences, local geography, different business customs, and the stage of economic development must be taken into account

• Legal questions must also be considered– Jurisdictional and legal recourse in disputes– Protection of intellectual property rights – Extended U.S. law enforcement– Enforcement of antitrust legislation by U.S. and foreign governments

7-74

Summary

• The Internet creates a new set of legal entanglements

• The freedom that now exists on the World Wide Web will only be a faint memory before long

• Prudent path to follow at all stages of foreign marketing operations is one leading to competent counsel, well versed in the intricacies of the international legal environment


Developing a Global Vision Through

Marketing Research

Chapter 8





8-76

What Should You Learn?• The importance of problem definition in

international research• The problems of availability and use of

secondary data• Quantitative and qualitative research methods• Multicultural sampling and its problems in less

developed countries• Sources of secondary data• How to analyze and use research information

8-77

Global Perspective Japan – Test Market for the World

• Enterprises with international scope of operations– Need for current, accurate information magnified

• Marketing research– The systematic gathering, recording, and analyzing of

data to provide information useful in marketing decision making

• International marketing research involves two complications– Information must be communicated across cultural

boundaries– The environments within which the research tools are

applied are often different in foreign markets

8-78

Summary

• The basis objective of the market research function is providing management with information for more accurate decision making

• Customer attitudes about providing information to a researcher are culturally conditioned

• Foreign market information surveys must be carefully designed to elicit the desired data and at the same time not offend the respondent’s sense of privacy

8-79

Summary

• Many foreign markets have inadequate or unreliable bases of secondary information

• Three keys to successful international marketing research– The inclusion of natives of the foreign culture on

research teams– The use of multiple methods and triangulation– The inclusion of decision makers, even top

executives, who must on occasion talk directly to or directly observe customers in foreign markets

1 4 t h E d i t i o nP h i l i p R. C a t e o r aM a r y C. G i l l yJ o h n L. G r a h a m

1 4 t h E d i t i o nP h i l i p R. C a t e o r aM a r y C. G i l l yJ o h n L. G r a h a m


Emerging Markets

Chapter 9



9-81

What Should You Learn?• The political and economic changes affecting global

marketing • The connection between the economic level of a country

and the marketing task• Marketing’s contribution to the growth and development of

a country’s economy• The growth of developing markets and their importance to

regional trade• The political and economic factors that affect stability of

regional market groups• The NIC growth factors and their role in economic

development

9-82

Stages of Economic Development• The United Nations groups countries into three categories

– MDCs (more-developed countries)– LDCs (less-developed countries)– LLDCs (least-developed countries)

• Newly Industrialized Countries (NICs) – Countries that are experiencing rapid economic expansion and

industrialization – Do not exactly fit as LDCs or MDCs– Have moved away from restrictive trade practices– Instituted significant free market reforms

9-83

Information Technology, the Internet, and Economic Development

• New, innovative electronic technologies are key to a sustainable future for developed and developing nations

• The Internet accelerates the process of economic growth by speeding up the diffusion of new technologies to emerging economics

• Wireless technologies greatly reduce the need to lay down a costly telecom infrastructure to bring telephone service to areas not now served

• Substantial investments in the infrastructure to create easy access to the Internet and other aspects of IT are being made by governments and entrepreneurs

9-84

Infrastructure of Selected CountriesExhibit 9.2

9-85

Marketing’s Contributions

• Marketing (or distribution) is not always considered meaningful to those responsible for planning

• Marketing is an economy’s arbitrator between productive capacity and consumer demand

• The marketing process is the critical element in effectively utilizing production resulting from economic growth

• Instrumental in laying the groundwork for effective distribution

9-86

Marketing in a Developing Country• Marketing efforts

– Must be keyed to each situation– Custom tailored to each set of circumstances

• Must provide for optimum utility

• Marketer must evaluate existing level of market development and receptiveness– The more developed an economy, the greater the variety of marketing

functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions

• Demand in a developing country– Three distinct kinds of markets in each country

• Traditional rural/agricultural sector• Modern urban/high-income sector• Transitional sector usually represented by low-income urban slums

9-87

Evolution of the Marketing ProcessExhibit 9.3

9-88

• Demand in a developing country (continued)– Tomorrow’s markets will include expansion in industrialized

countries and the development of the transitional and traditional sectors of less-developed nations

– New markets also means that the marketer has to help educate the consumer

– The companies that will benefit are the ones that invest when it is difficult and initially unprofitable

• Bottom-of-the-pyramid markets– Bottom-of-the-pyramid markets (BOPMs) – consisting of the 4

billion people with incomes of less than $1,200 across the globe– Most often concentrated in the LDCs and LLDCs

Marketing in a Developing Country

9-89

Developing Countries and Emerging Markets

• The U.S. Department of Commerce estimates – Over 75% of the expected growth in world trade over the next two decades

will come from the more than 130 developing and newly industrialized countries

• Big emerging markets share important traits – Are all physically large– Have a significant populations– Represent considerable markets for a wide range of products– Have strong rates of growth or the potential for significant growth– Are of major political importance within their regions– Are regional economic drivers– Will engender further expansions in neighboring markets as the grow

• Because many lack modern infrastructure, much of the expected growth will be in industrial sectors

9-90

Big Emerging Markets

Exhibit 9.6

9-91

Asia• Asia has been the fastest-growing area in the world for the past

three decades• Asian-Pacific Rim

– Four Tigers (Hong Kong, South Korea, Singapore, Taiwan)– First countries in Asia to move from a status of developing

countries to newly industrialized countries• China

– After U.S., most important single market is China– Two major events that occurred in 2000 are having a

profound effect on China’s economy• Admission to the WTO• U.S. granting China normal trade relations on a permanent basis

9-92

Asia

• China (continued)– China has two important steps to take if the road to

economic growth is to be smooth

• Improving human rights

• Reforming the legal system

– The American embassy in China has seen a big jump in complaints from disgruntled U.S. companies

– Two Chinas • One a maddening bureaucratic, bottomless money pit• The other an enormous emerging market

9-93

Asia

• Hong Kong– Hong Kong reverted to China in 1997 when it became a special

administrative region (SAR) of the People’s Republic of China– The Hong Kong government negotiates bilateral agreements and

makes major economic decisions on its own– The keys to Hong Kong’s economic success

• Free market philosophy• Entrepreneurial drive• Absence of trade barriers• Well-established rule of law• Low and predictable taxes• Transparent regulations• Complete freedom of capital movement

9-94

Asia• Taiwan

– Mainland-Taiwan economic ties are approaching a crossroads as both countries enter the World Trade Organization

– “Three direct links” must be faced because each country has joined the WTO and the rules insist that members should communicate over trade disputes and other issues

• India– Five-point agenda

• Improving the investment climate• Developing a comprehensive WTO strategy• Reforming agriculture, food processing and small scale industry• Eliminating red-tape• Instituting better corporate government

9-95

Newest Emerging Markets

• The U.S. decision to lift the embargo against Vietnam– If Vietnam follows the same pattern of development as other Southeast Asian

countries, it could become another Asian Tiger

• The United Nations’ lifting of the embargo against South Africa– South Africa has an industrial base that will help propel it into rapid economic

growth– The South African market also has a developed infrastructure

• Vietnam and South Africa’s future development– Will depend on government action and external investment by other

governments and multinational firms

9-96

Strategic Implications for Marketing

• As a country develops– Incomes change– Population concentrations shift– Expectations for a better life adjust to higher standards– New infrastructures evolve– Social capital investments made

• When incomes rise, new demand is generated at all income levels for everything from soap to cars

• If a company fails to appreciate the strategic implications of the $10,000 Club, it will miss the opportunity to participate in the world’s fastest-growing global consumer segment

9-97

Summary• Foreign marketers must be able to

– Rapidly react to market changes– Anticipate new trends within constantly evolving market

segments that may not have existed as recently as last year

• As nations develop their productive capacity, all segments of their economies will feel pressure to improve

• The impact of these political, social and economic trends will continue to be felt throughout the world

• IT will speed up the economic growth in every country

9-98

Summary

• Marketers must focus on devising plans designed to respond fully to each level of economic development

• Big emerging markets may present special problems – But they are promising markets for a broad range

of products now and in the future• Emerging markets create new marketing

opportunities for MNCs as new market segments evolve


Multinational Market Regions

and Market Groups

Chapter 10





10-100

What Should You Learn?

• The reason for economic union• Patterns of international cooperation• The evolution of the European Union• Strategic implications for marketing in Europe• Evolving patterns of trade as eastern Europe and the

former Soviet states embrace the free-market system• The trade linkage of NAFTA and South America and its

regional effects• The development of trade within the Asia-Pacific Rim

10-101

Strategic Implications for Marketing in Europe

• Multinational groups spell opportunity – Through access to greatly enlarged markets with reduced or abolished

country-by-country tariff barriers and restrictions• World competition will intensify

– As businesses become stronger and more experienced in dealing with large market groups

• Opportunities– Economic integration creates large mass markets for the marketer

• Market barriers– Initial aim of a multinational market is to protect businesses

that operate within its borders• Reciprocity

– If a country does not open its market to an EU firm, it cannot expect to have access to the EU market

10-102

Marketing Mix Implications• In the past, companies often charged different prices in

different European markets• As long as products from lower-priced markets could not

move to higher-priced markets, differential price schemes worked– Badedas Shower Gel

• Companies initiating uniform pricing policies • Reducing the number of brands to focus advertising and

promotion efforts– Nestle– Unilever

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Summary

• Marketing efficiency affected by:– Development of mass markets– Encouragement of competition– Improvement of personal income– Various psychological market factors

• Production efficiency – Derives from specialization– Mass production for mass markets– Free movement of the factors of production

• Multinational market groups provide great opportunity for the creative marketer

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Summary

• Market groupings make it economically feasible to enter new markets and to employ new marketing strategies

• Market groupings intensify competition by protectionism within a market group but may foster greater protectionism between regional markets

• Mercosur and ASEAN+3 suggest the growing importance of economic cooperation and integration

MGM 4273 INTERNATIONAL MARKETING PJJ 1 ST FACE-TO-FACE 14/9/13 SITI RAHAYU HUSSIN [email protected].

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Transcript of MGM 4273 INTERNATIONAL MARKETING PJJ 1 ST FACE-TO-FACE 14/9/13 SITI RAHAYU HUSSIN [email protected].