International Marketing

1
International Marketing
2
Why International Marketing Has Developed . . .
Economic Trends
Demographic Trends
Comparative Advantage
GROWTH OF INTERNATIONAL MARKETING

• Political Trends
• alliances
• trade agreements

Technology Trends
Cultural and Social Trends
3
P G 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

4
P G 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

5
Economic Arguments for Free International Trade

• Product specialization (economies of scale)
• Enlarged markets for company
• Access to new suppliers products
• Larger variety of products to consumer
• Competition/lower prices to consumers
• Caution Politics are more powerful than
  economics

6
Economic, Social Political Arguments for
Market Protection

• Protection of an infant industry
• Protection of the home market
• 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

7
Barriers to Trade

• Tariffs - special taxes on imports to make
  the foreign product more expensive
• Quotas - government-set limits
  on the quantity of goods that
  can be imported.
• Nationalization
• Buy Domestic Restrictions

8
Barriers to Trade, Strangle Trade

• Patent Restrictions
• licensing requirements
• Customs administrative procedures
• valuation systems, tariff classifications
• Standards(Safety Inspections)
• packaging, labeling, marking standards.
• Insurance Rates
• subsidies to export companies

9
What Worries Poor Countries
Miller, Scott. In Trade Talks, the Gloves Are
Off. WSJ, A12, July 15, 2003.
10
What Worries Rich Countries
Miller, Scott. In Trade Talks, the Gloves Are
Off. WSJ, A12, July 15, 2003.
11
Commercial Corruption

• Corruption ranking in 1996, based on the level of
  corruption in a country perceived by employees of
  multinational firms and institutions
• Most Corrupted Least Corrupted
• 1. Nigeria 38. Japan
• 2. Pakistan 39. Austria
• 3. Kenya 40. U.S.
• 16. Ecuador 52. Sweden
• 17. Mexico 53. Denmark
• 18. Thailand 54. New Zealand

12
Commercial Corruption,1995 Survey Findings

• 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)

13
Sweatshops an economic, political, and social
issue

• Issue Sweatshops Are Better Than No Shops
• destroying jobs wont alleviate
• poverty ()
• decreases cost of goods (/-)
• human dignity issue (social value)

14
Kids at Work a political, social economic
issue

• Top estimated percentages of children who work
  full or part-time in selected countries, 1995
  data
• Kenya 42
• Bangladesh 30
• Haiti 25
• Turkey 24
• Pakistan 17

15
Kids at Work

• Bottom estimated percentages of children who work
  full or part-time in selected countries, 1995
  data
• Indonesia 10
• Vietnam 9
• Philippines 8
• Mexico 7
• Malaysia 3

16
Womens Non Farm Wages

• Tanzania 92 of mens
• Australia 91
• USA 75
• China 59
• Japan 50
• Biggest disparity among industrial countries.
• Women perform 60 of worlds work,
  own 1 of worlds land
  and earn 10 of worlds income.

Source WSJ,29Aug1995,A1
17
Regional Trade Alliances, Markets, and Agreements
The North American Free Trade Agreement (NAFTA)
18
Regional Trade Alliances, Markets, and Agreements
Pacific Rim Nations
19
Regional Trade Alliances, Markets, and Agreements
The European Union (EU)
EU Country
Neutral
20
World Regional Trade Alliances, and Agreements

• General Agreement on Tariffs and Trade (GATT) --
  Dumping
• OECD
• World Trade Organization (WTO)
• OPEC
• NAFTA
• NATO

21
Global Demographic Forces
Market Size and Growth
22
Historical Population Growth of the World
23
E.C. Population at a Glance

• Projected population
• Population growth
• (In millions) (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

24
E.C. Population at a Glance

• Projected Population
• Population Growth
• (in millions) (in millions)
• 2000 2020 2000-2020
• Italy 58.6 57.5 -1.1
• Luxembourg 0.4 0.3
  -0.1
• Netherlands 15.1 14.9 -.2
• Portugal 11.2 12.2 1.0
• Spain 42.2 45.4
  3.2
• UK 56.4 56.1 -0.3

25
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

26
Life Expectancy

• Female male

82.1
Japan France U.S. Britain
76.1
80.3
72.0
78.8
72.0
78.0
72.7
27
GlobalEconomic Forces
28
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

SourceWSJ 30May01,B4
29
A Comparative Economic Analysis of Canada,
Switzerland, and the United States
Canada
United States
Switzerland
Land area (sq. mi.)
3,560,219
15,355
3,539,227
Population (millions)
29.12
7.25
267.96
8
472
76
Population density
(persons per sq. mi.)
GDP, 1995 ( billions)
623
176
6,955
GDP per capita
21,031
24,809
26,438
Source U.S. Bureau of the Census, Statistical
Abstract of the United States, 1997, 117th ed.
(Washington D.C. U.S. Government Printing
Office, 1997), pp. 829-831, 839, 845.
30
International Financial Exchanges

• Exchange Rates - indicate the value of one
  nations 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

31
Balance of Trade Deficit/Surplus

• US (1997) (1999)
• Exports 932.3 billion 663 bil
• Imports 1.05 trillion 912 bil
• Deficit 113.7 billion 249 bil.

Imports
Exports
32
Full Year Trade Balance

• (Selected Asian Countries-97)
• Japan -55.7 billion
• Hong Kong 4.8 billion
• Indonesia - 4.6 billion
• Malaysia - 7.2 billion
• Thailand - 5.3 billion
• Singapore - 2.3 billion

Buying Auto parts Computer Accessories Crude
oil
33
Trans-Atlantic Services
In Billions Of Dollars
King, Neil Jr. EU Seeks Changes in U.S.
Regulation of Services. WSJ, A3, Feb. 25, 2003.
34
Record Deficit
Ip, Greg. Trade Gap Widens to Record Level.
WSJ, A2, Feb 21, 2003.
35
Globalization or just Globaloney

• US imports in 1994 are only slightly bigger now
  (11) than they were in 1880 (8).

36
Exports and GNP

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

37
Expensive Manpower
Rhoads, Christopher. In Deep Crisis, Germany
Starts To Revamp Vast Welfare State. WSJ, A1,
July 10, 2003.
38
Labor Costs
Average Manufacturing Sector Wages in U.S. Dollars
Rhoads, Christopher. Burden of History. WSJ,
A1, December 6, 2002
39
Global Social Forces
Cultural values
Religious beliefs
40
Cultural Differences in a World Environment

• Beware when bearing gifts in foreign lands - and
  watch it when it comes to the color
• Brazil- Purple is a death color, Scotch is more
  popular than bourbon
• England - Apparel and soap are considered a bit
  personal. White lilies suggest death, but other
  flowers are okay
• Hong Kong - White is for funerals, but Red is
  popular in all Chinese-speaking areas.

41
Cultural Differences in a World Environment

• Taiwan - Knives may wound a friendship. Dont
  give a clock because the word for clock sounds
  like the one for terminate.
• West Germany - If you give cutlery, ask for a
  coin in payment so you wont cut the friendship.
  A gift of red roses to a woman means you really
  care for her.

42
Pakistan Women Look to Bhutto to Improve a Bitter
Existence

• NESCO puts womens 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.

43
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

44
Comparative Consumption
45
Housing Space Per Person

• in square meters
• U.S.
• Germany
• Britain
• Japans target
• France
• Japan

61.8
37.2
35.2
32.0
30.7
25.0
46
Working Hours Per Year

• in thousands
• Japan
• Britain
• U.S.
• Japans target
• France
• Germany

2.12
1.95
1.94
1.80
1.68
1.59
47
Wake-up Call Customer-service Era Arrives Late
in Germany, With Phone Giant Trying to Change

• of employees per 10,000 phone lines

Productivity
48
Global EnvironmentConsumer Ethnocentrism

• Affirmative Consumers should be discouraged
  (ex., peer pressure) from purchasing foreign
  products . . (because it adversely affects this
  nations 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.)

49
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)

50
Global Corporation

• Operates throughout the
• world (or major regions)
• the world is a single entity

51
The Fifteen Largest Global Public Corporations
Company Country Business Revenue (
mil.)

• General Electric United States Electrical
  Equip. 90,840
• HSBC Group United Kingdom Banking 48,404
• Royal Dutch/Shell Group Netherlands Energy 128,1
  08
• 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
• ATT United States Telecomm. 51,319
• Philip Morris United States Tobacco 56,114

Composite ranking based on revenues, assets,
profits, and market value. Source The World
Super Fifty, Forbes, July 27, 1998, p. 118.
52
Brands that Span the Globe
Branch, Shelly. ACNielsen Gives 43 Brands Global
Status. WSJ, B8, Oct. 31, 2001.
53
Customization Versus Globalization of Marketing
Strategy

• Globalization

54
Customization Versus Globalization of
International Marketing Strategies

• Customization

55
Strategy DecisionsFor Multinational Markets

• Standardized--------------------------Customized
• Marketing Strategy Criteria
• ltSimilarity of Cultures and Customer Behavior?
• ltAccess to shared media product ?
• ltAvailable distribution ?, Buying Power ?, etc...

Successful companies realize a simple truthAll
consumers are not alike
56
Alternative Methods of Market Entry and Risk
Levels
Indirect Exporting
Direct Exporting
Direct Investment
Licensing
Joint Ventures
Via domestic export management companies
Franchise or technical contracts
Wholly-owned facilities in host country
Joint ownership of foreign facilities
Via in-house dept. overseas sales
office independent distress
Moderate Risk
Maximum Risk
Minimum Risk
57
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!

58
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