International Marketing :International Marketing


Why International Marketing Has Developed . . . :Why International Marketing Has Developed . . . GROWTH OF INTERNATIONAL MARKETING Economic Trends Cultural and Social Trends Demographic Trends Political Trends alliances trade agreements Comparative Advantage Technology Trends


Colgate Marketers Try New Tactics in Rural India :Colgate Marketers Try New Tactics in Rural India Percentage of rural households that use: Electricity 39% Piped water 18% Flush toilet 7% Wood as cooking fuel 77%


Colgate Marketers Try New Tactics in Rural India :Colgate Marketers Try New Tactics in Rural India Sales growth of selected products in rural India, in millions of metric tons 1990 1994 Toilet soap (45%) 158,919 231,064 Shampoo (325%) 497 2,116 Toothpaste (93%) 8,825 17,023 Laundry Detergent (64%) 272,540 422,741


Economic, Social & Political Arguments for Free Trade :Economic, Social & Political Arguments for Free Trade Product specialization (economies of scale) Enlarged markets for company Access to new suppliers & products Larger variety of products to choose Competition/lower prices to consumers Caution: Politics are more powerful than economics


Economic, Social & Political Arguments Against Free Trade :Economic, Social & Political Arguments Against Free Trade Protection of an infant industry Buy domestic only restrictions (political) Need to keep money at home & encourage capital accumulation Maintenance of standard of living & real wages Conservation of natural resources Industrialization of a low-wage nation Employment protection National defense Retaliation & bargaining position


Barriers to Trade, Strangle Trade :Barriers to Trade, Strangle Trade Customs & administrative procedures Tariff classifications (taxes levied on imports) Quotas: government-set limits on the quantity of goods that can be imported over time. Patent Restrictions & licensing requirements Standards (Safety Inspections) labeling & marking standards packaging Insurance rates & valuation subsidies to companies


What Worries Poor Countries :What Worries Poor Countries Miller, Scott. “In Trade Talks, the Gloves Are Off.” WSJ, A12, July 15, 2003.


Farm Subsidies :Farm Subsidies “Prairie Plutocrats.” WSJ, A18, Feb. 1, 2002.


What Worries Rich Countries :What Worries Rich Countries Miller, Scott. “In Trade Talks, the Gloves Are Off.” WSJ, A12, July 15, 2003.


Commercial Corruption :Commercial Corruption Least Corrupt Most Corrupt 1. Iceland 70. Egypt/Poland/ 2. Finland/New Zealand /Saudi Arabia 4. Denmark 78. China 16. Germany 17. USA 126. Russia 18. France 152. Nigeria 32. Taiwan 156. Haiti/Turkmenistan 40. Hungary/Italy 158. Bangladesh/Chad Source: Transparency.0rg (July2006) Surveys-Indices, 2005, Perceptions of 158 countries by employees of multinational firms, institutions & experts.


Commercial Corruption & GDP :Commercial Corruption & GDP Number Population Gross Domestic Product of Countries (in millions) (trillions of U.S. dollars) Free 27 942 (17%) 18.8 (81%) Partly Free 22 395 ( 7%) 1.1 ( 5%) Mostly Not Free 13 1,645 (30%) 1.9 ( 8%) Not Free 20 1,974 (36%) 1.1 ( 5%) Not surveyed 109 546 (10%) 0.2 ( 1%) ____________________________________________________ 191 5,502 23.1 Source: Freedom House (Research Institute), 1995 Survey Findings


Sweatshops: an exploitation of labor and/or a political and social issue :Sweatshops: an exploitation of labor and/or a political and social issue Issue: Sweatshops Are Better Than No Shops! destroying jobs will not alleviate poverty (+) decreases cost of goods (+/-) human dignity issue, social value(-)


Kids at Work: a political, social &economic issue :Kids at Work: a political, social &economic issue Estimated percentages of children who work selected countries (1995) Kenya 42% Bangladesh 30% Haiti 25% Turkey 24% Pakistan 17% Mexico 7% Visit www.freethechildren.org or www.coopamerica.org Estimated total =246 million


Women’s Non Farm Wages :Women’s Non Farm Wages Tanzania 92% of men’s Australia 91% USA 75% (80%-2000) China 59% Japan* 50% * Biggest disparity among industrial countries. ** Women perform 60% of world’s work, own 1% of world’s land & earn 10% of world’s income. Source: WSJ,29Aug1995,A1


Slide 17:World & Regional Trade Alliances* GATT -- Dumping OECD WTO OPEC NAFTA NATO CAFTA MERCOSUR *Facilitate free trade among members


Regional Trade Alliances, Markets, and Agreements :Regional Trade Alliances, Markets, and Agreements The Common Market of the Southern Cone (MERCOSUR) An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America


Regional Trade Alliances, Markets, and Agreements :Regional Trade Alliances, Markets, and Agreements The North American Free Trade Agreement (NAFTA)


Slide 20:Regional Trade Alliances, Markets, and Agreements Pacific Rim Nations


Global Demographic Forces :Global Demographic Forces Market Size and Growth


Historical Population Growth of the World :source: Bureau of the Census, US Dept. of Commerce; prior to 1950, Rand and McNally & co. Historical Population Growth of the World


European Com. Population at a Glance :European Com. Population at a Glance Population Growth (in millions) 2000 2020 2000-2020 Belgium 10.0 10.1 0.1 Denmark 5.1 4.8 -0.3 France 57.2 58.3 1.1 Germany 59.5 54.7 -4.8 Greece 10.4 10.7 0.3 Ireland 4.3 5.2 .9 UK 56.4 56.1 -0.3 Spain 42.2 45.4 3.2 Italy 58.6 57.5 -1.1 Estimated 2% growth Overall


Population Growth Rates1994 to 2020 :Population Growth Rates1994 to 2020 Europe 2% Peru 10- Russia Columbia 19.9% Canada 2-9.9% Argentina U.S.A Austria China 20%+ Brazil


Some FactsSource: CIA World Factbook (2004) :Some FactsSource: CIA World Factbook (2004) Percentage living on $1 dollar per day: Indonesia 8%, India 35%, China 25%


GlobalEconomic Forces :GlobalEconomic Forces


A Comparative Economic Analysis :A Comparative Economic Analysis Country GDP POP Per Capita GDP Japan $34,344 USA(99) 9.2 trillion 276 million $32,900 Germany $25,724 France $24,433 Britain $24,231 India 1.2 trillion 919.9 million $1,360 Iran 0.3 trillion 66.1 million $4,720 Australia(99) .4 tril $9,255 Source:WSJ 30May01,B4


International Financial Exchanges :International Financial Exchanges Exchange Rates - indicate the value of one nation’s money in terms of the money of another nation Foreign Exchange Market - Manufacturers and foreign traders want payment in their own currencies. Money is exchanged (bought and sold) through this market Balance of Payments - The flow of funds between nations. A favorable balance of payments (surplus) exists when more funds come into a country than go out. Balance of Trade - a total accounting of the goods and services bought from and sold to other countries


Balance of Trade: Deficit/Surplus :Balance of Trade: Deficit/Surplus US (1997) (1999) (2005) Exports $932.3 663 bil x Imports $1,050 912 bil x Deficit $113.7 249 bil. 759bil. Exports Imports


Record Deficit :Record Deficit Ip, Greg. “Trade Gap Widens to Record Level.” WSJ, A2, Feb 21, 2003.


Trans-Atlantic Services :Trans-Atlantic Services In Billions Of Dollars King, Neil Jr. “EU Seeks Changes in U.S. Regulation of Services.” WSJ, A3, Feb. 25, 2003.


Imports :Globalization or just Globaloney :Imports :Globalization or just Globaloney US imports in 1994 are only slightly bigger now (11%) than they were in 1880 (8%).


Exports and GNP :Exports and GNP Exports as a Percentage of GNP USA 7-11% Japan 13% United Kingdom 21% Germany 27% Canada 29%


Expensive Manpower :Expensive Manpower Rhoads, Christopher. “In Deep Crisis, Germany Starts To Revamp Vast Welfare State.” WSJ, A1, July 10, 2003.


Labor Costs :Labor Costs Average Manufacturing Sector Wages in U.S. Dollars Rhoads, Christopher. “Burden of History.” WSJ, A1, December 6, 2002


Global Social Forces :Cultural values Religious beliefs Global Social Forces


Examples of Cultural Differences :A Doggie Bag, S’il Vous Plait’ (WSJ,5Oct06,D1) A free lunch from last night’s dinner – the American Dietetic Assoc. 2002 survey indicates 91% of Americans take leftovers home occasionally & 32% do it on a regular basis. England – renaissance era referenced that hosts used oversized napkins in those days because they ate with their hands but also to provide a huge container for leftovers SW China –Guizhou Province - tables are set with chopsticks, napkins & doggie bags with a drawing of a pooch. Examples of Cultural Differences


Examples of Cultural Differences :Singapore – People do not like to waste food or money. Taking leftovers is expected. Bangkok – leftovers are the norm, even scalding hot soup is poured into clear plastic bags tied with a red rubber band. (WSJ,5Oct06,D1) Japan – discourages public self expression - 20% read internet blogs ex. “demon wife diaries” (WSJ. 5Oct.2006,B1) Some government’s are wary of public criticism. Bangkok has monarchy laws & Singapore prohibits outdoor demonstrations & politicians have defamation lawsuits to protect their reputations from slander. Examples of Cultural Differences


Pakistan Women Look to Bhutto to Improve a Bitter Existence :Pakistan Women Look to Bhutto to Improve a Bitter Existence NESCO puts women’s illiteracy in Pakistan at 84.8% Women are barred from the doors of engineering and medical schools by laws restricting the number of female students.


Average Household Consumption of Beverages in Liters :source: LeMonde, Feb 15-21, 1968, overseas edition weekly Average Household Consumption of Beverages in Liters Country Milk Wine Beer France 103 116 28 Germany 100 7 46 Holland 153 2 11 Italy 87 95 2


Beer Consumption Per Capita in Liters/InhabitantSource: World Drink Trends 2000 Ed. :Beer Consumption Per Capita in Liters/InhabitantSource: World Drink Trends 2000 Ed.


Comparative Consumption :Comparative Consumption


Housing Space Per Person :Housing Space Per Person in square meters U.S. Germany Britain Japan’s target France Japan 61.8 37.2 35.2 32.0 30.7 25.0


Payroll Taxes :Payroll Taxes Germany France Hungary Poland U K U.S. Ireland 52% 46 29.4 48.0 43 31.1 24.5 Source: EU states are urged to cut taxes, WSJ, 12May2004, A13


Wake-up Call: Customer-service Era Arrives Late in Germany, With Phone Giant Trying to Change :Wake-up Call: Customer-service Era Arrives Late in Germany, With Phone Giant Trying to Change # of employees per 10,000 phone lines Productivity


Global Environment:Consumer Ethnocentrism :Global Environment:Consumer Ethnocentrism Affirmative: Consumers should be discouraged (ex., peer pressure) from purchasing foreign products . . (because it adversely affects this nation’s productivity.) Negative: Consumers should not be discouraged from purchasing foreign goods . . (because competition will force domestic manufacturers to become more efficient and produce higher quality products.)


Consumer Ethnocentrism “Made In America” :Consumer Ethnocentrism “Made In America” Consumers that believe… American made products are better than foreign products… by education. No college 61% Some college 45% College graduate 39% (Am. Demographics (1986)


Global Corporation :Global Corporation Operates throughout the world (or major regions) the world is a single entity


Slide 53:General Electric United States Electrical Equip. 90,840 HSBC Group United Kingdom Banking 48,404 Royal Dutch/Shell Group Netherlands Energy 128,108 Ford Motor Company United States Autos & Trucks 145,348 General Motors United States Autos & Trucks 178,174 Exxon United States International Oil 120,279 Toyota Japan Automobiles 95,181 IBM United States Computer Syst. 78,505 Travelers Group United States Insurance 37,609 Citicorp United States Banking 34,697 Nippon Tel & Tel Japan Telecomm. 77,019 Chase Manhattan United States Banking 30,381 ING Group Netherlands Financial Serv. 38,724 AT&T United States Telecomm. 51,319 Philip Morris United States Tobacco 56,114 Company Country Business Revenue ($ mil.) The Fifteen Largest Global Public Corporations* *Composite ranking based on revenues, assets, profits, and market value. Source: “The World Super Fifty,” Forbes, July 27, 1998, p. 118.


Brands that Span the Globe :Brands that Span the Globe Branch, Shelly. “ACNielsen Gives 43 Brands Global Status.” WSJ, B8, Oct. 31, 2001.


Customization Versus Globalization of Marketing Strategy :Globalization Customization Versus Globalization of Marketing Strategy


Slide 56:Customization Customization Versus Globalization of International Marketing Strategies


Strategy DecisionsFor Multinational Markets :Strategy DecisionsFor Multinational Markets Standardized--------------------------Customized Marketing Strategy Criteria:

Alternative Methods of Market Entry and Risk Levels :Alternative Methods of Market Entry and Risk Levels Indirect Exporting Direct Exporting Licensing Joint Ventures Direct Investment Via domestic export management companies Via in-house dept. overseas sales office independent distress Franchise or technical contracts Joint ownership of foreign facilities Wholly-owned facilities in host country Maximum Risk Minimum Risk Moderate Risk


China Admitted to World Trade Org. :China Admitted to World Trade Org. New franchising system in China Offers protection to foreign companies China sets and enforces protection rules WSJ, 1-25-05 60% of 17,000 McDonald’s are franchisees 66% of 12,000 KFC’s


Global Economy :Global Economy Ideal: goods, services, skills and ideas move freely across geographic borders. Reality: produces global cutthroat competition and constant churning forces that may result in economic turmoil for some. Constant changes such as... - Growth and retrenchment. - Hiring and firing. - Optimism and fear ALL AT THE SAME TIME!


GlobalEconomy :GlobalEconomy Dark Side Of Freer Global Markets - Political Backlash From Middle Class (Workers) Over Growing Job Insecurity Freer Global Markets - Increase Income Gaps Between and Within Nations