Transcript Document

Webster University
International Marketing
MRKT 5980
The World Economic Pyramid
Annual per Capita Income*
Tiers
Population in Millions
More Than $20,000
75-100
$1,500-$20,000
1,500-1,750
Less Than $1,500
4,000
*Bases on Purchasing power parity in U.S. $.
SOURCE: U.N. World Development Reports
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Major Industrialized Countries of the
World
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Market Characteristics
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Population demographics
• Age distribution, life expectancies,
household size, urbanization.
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Income
• Distribution of low, medium, and high
incomes.
• Gross domestic product per capita.
• Purchasing power parity.
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Consumption patterns
• Income spent on necessities and luxuries.
• Product saturation or diffusion.
• Product form differences.
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Market Characteristics (continued)
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Availability and quality of infrastructure
• Rail traffic networks for distribution capabilities.
• Communication systems for marketing.
• Energy (electrical and fuel) consumption.
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Foreign involvement in the economy
• Degree of foreign direct investment in country or
in a specific industry.
• Rules governing foreign investment.
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Impact of the economic environment on social development
• Urbanization, life expectancy, literacy rates, etc.
• Physical Quality of Life Index (PQLI).
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Regional Economic Integration
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Levels of economic integration
• Free Trade Area
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Least restrictive.
Goods and services are freely trades among all members. Each
country maintains its own trade barriers for nonmembers.
• Customs Union
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Members establish a common trade policy with respect to
nonmembers.
• Common Market
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Factors of production mobility is emphasized. A common external
tariff is adopted.
• Economic Union
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Integration and harmonization of economic and monetary policies
is achieved leading to political union.
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Free Trade Area
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Eliminates tariff and quota
barriers among member
countries.
Each country is free to set its
own tariff and quota barriers
against nonmember countries.
Can be formed for certain
classes of goods or services
only.
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Customs Union Area
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Tariff and quota barriers among member
countries are eliminated.
Member countries establish common tariff and
trade barriers against nonmember countries.
Tariff revenues are shared among members
according to a prescribed formula.
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Common Market Area
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No trade barriers among member nations.
No restriction on the movement of labor, capital,
or technology across borders.
Member countries establish common tariff and
trade barriers against nonmember countries.
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Economic Union
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Has all the characteristics of a common
market.
Harmonizes taxation.
Harmonizes government spending.
Harmonizes monetary policies.
Establishes a common currency.
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European Integration
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Expected economic growth from:
• Eliminating transaction costs.
• Economies of scale will be attained as
production becomes concentrated.
• More intense competition from EU
companies.
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Operations from one country can be freely
expanded to other countries.
Products can be freely sold across borders to
millions of new consumers.
There is a “Fortress Europe” fear.
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North America Integration
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Is for purely economic reasons.
There are no constituencies for political
integration.
NAFTA.
“Maquiladoras”.
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NAFTA
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The North American Free Trade Agreement
(NAFTA) created the world’s largest free market.
• 390 million U.S., Canadian, and Mexican
consumers and a total output of $10
trillion.
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Free Trade Area of the Americas
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An agreement to form a regional
trading zone stretching from Point
Barrow, Alaska to Patagonia,
Argentina.
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Integration in Asia
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Association of Southeast Asian Nations
(ASEAN)
East Asia Economic Group
Asia-Pacific Economic Cooperation (APEC)
South Asian Association for Regional
Cooperation (SAARC)
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Integration in Africa and the Middle East
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Economic Community of West African
States (ECOWAS)
Afro-Malagasy Economic Union
East Africa Customs Union
West African Economic Community
Maghreb Economic Community
Gulf Cooperation Council (GCC)
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Political and Legal Environment
Home country political and legal environment
• The Environmental Superfund
• Intellectual property rights
• Gray markets
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Political and Legal Environment
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Embargoes and sanctions
• “…government actions to distort the free
flow of trade in goods, services, or ideas
for adversarial and political purposes.
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Export Control
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U.S. export control systems
• Export Administration Act (Commerce
Department)
• Munitions Control Act (State Department)
• Determinants for export controls
National security, foreign policy, short supply,
nuclear nonproliferation.
Dual-Use Items
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• Goods used for both military and civilian
purposes.
• Controlled for other purposes.
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Export license
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The U.S. Export Control System
Determinants for
Export Controls
•National
Security
•Foreign Policy
Decision Steps in the Export Licensing Process
Should a Given Product Be Exported
To a Given Country
•Short Supply
•Nuclear
Nonproliferation
To a Given End-user?
For a Particular End-user?
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Export Controls New Environment
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Foreign availability of high technology
products.
Export controls have moved from a “strategic
balance” to a ‘tactical balance” approach.
Increase in the speed and dissemination of
information and innovation.
Issue of equipment size.
How much of the latest technology is required
before a country may engage in dangerous
activities.
Loosening of mutual bonds between allied
nations.
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Import Controls
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Tariffs
Voluntary restraint agreements
Quota systems
• Administrative problems
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Monetary and social costs to consumers
while benefiting protected groups.
Downstream change in the composition
of imports to circumvent narrowly
defined protectionist measures.
The failure of protected firms become
more efficient and competitive.
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International Business Behavior and
Regulations
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Regulating international business behavior
• Home countries may implement special laws and regulations to
ensure that the international business behavior of firms
headquartered within them is conducted within moral and ethical
boundaries considered appropriate.
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Methods
• Boycotts
• Antitrust Laws
• Bribery and CorruptionWebster
Laws
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Risk
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Political risk
• The risk of loss when investing in a given
country caused by changes in a country’s
political structure or policies.
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Types of political risk
• Ownership risk (property and life)
• Operating risk (ongoing operations
interference)
• Transfer Risk (in shifting funds between
countries)
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Political Risk
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Forms of Host Country Controls
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Expropriation
• Taking of private property with
compensation.
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Confiscation
• Taking of private property without
compensation.
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Domestication
• To gain control over foreign investment
through demanding partial transfer of
ownership and imposed regulations.
• Raise tax rates.
• Price controls.
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Legal Differences and Restraints
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The two major legal systems
• Common law
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Based on tradition and less dependent on
statutes and codes than on precedent
and custom.
• Code law
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Based on a comprehensive set of written
statutes that spell out legal rules explicitly.
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International Environment
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International Politics
• Political relations and conflicts between countries can
have a profound impact on firms trying to do
business internationally.
• If relations between countries improve, business can
benefit.
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International Law
• No enforceable body of international law exists.
Firms are subject to home and host-country laws.
• Areas of cooperation among nations
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bilateral treaties guaranteeing fair treatment
patent and trademark protection
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Defining the Issue
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What is marketing research?
• Traditional view
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“the function that links the consumer, customer, and
public to the marketer through information.”
• Redefined view
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“systematic and objective identification of information,
collection, analysis and dissemination of information for
the purpose of improving decision making related to
the identification and solution of problems and
opportunities in marketing.”
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International versus Domestic Research
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Similar but different
• International research involves the
use of similar tools and techniques as
in domestic research, but the market
environments differ.
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The primary differences
• New parameters
• New environments
• Number of factors involved
• Broader definition of competition
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The Need for Research
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Reasons that firms may be reluctant to view international
research as important:
• Lack of sensitivity to differences in consumer
tastes and preferences.
• Limited appreciation for the different
marketing environments abroad.
• Lack of familiarity with national and
international data sources and the inability to
use them.
• Actual but limited business experience in a
country or with a specific firm may be used as
a substitute for organized research.
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Research Objectives
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Research objectives vary from firm to firm
because of the views of management, the
corporate mission, and the marketing situation.
Information needs are linked closely to the level
of international expertise in the firm.
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Opportunity Analysis
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Foreign-market opportunity analysis
• Broad-brush approach to narrow down
market possibilities.
• Cursory analysis of general market
variables- total and per capita GNP,
mortality rates, and population data.
• Individual market data, product
data,market trends, and restrictions.
• Consideration of governmental
restrictions.
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Going International
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Secondary Data Sources
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Governments
International
organizations
Service organizations
Directories and
Newsletters
Electronic Information
Services
Other firms
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Research
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Primary research
• Conducted to fill specific information needs.
• Essential to strategic marketing plan formation.
• Useful in international market segmentation.
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Determining information requirements
• Formulate research questions to determine precisely
the information that is sought.
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Determining Research Administration
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Centralized
• The research specifications are designed by
the home office and forwarded to country
operations for implementation.
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Coordinated
• An intermediary such as an outside research
agency brings headquarters and country
operations together.
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Decentralized
• Corporate headquarters establishes the broad
thrust of research and delegates design and
implementation to the local countries.
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Research Techniques
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Interviews
• Knowledge persons are a valuable information resource
(personal bias must be discounted).
• Goal, obtain in-depth information instead of a wide
variety of information.
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Focus groups
• Interaction within a group about a specific topic.
• Ideal size, 7-10.
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Observation
• Observation results can be influenced by presence of the
observer.
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Surveys
• Gather quantitative rather than qualitative information
through personal or remote contact with the subject
population.
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Designing the Survey Questionnaire
• Question format
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Structured or unstructured.
Direct or indirect.
Ensure data equivalence.
• Question content
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Consider interviewee’s ability and willingness to answer.
Adapt questions to societal constraints.
• Question wording
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Use simple unambiguous words, terms and questions.
Check for errors using translation-re-translation approach
and alternative wording for questions.
Pretest the survey.
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The Sampling Plan
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System data must
be:
• Relevant
• Timely
• Flexible
• Accurate
• Exhaustive
• Convenient
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Environmental Scanning
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One method consist of obtaining factual input.
Use of Content Analysis.
Conducted by inside and outside corporate
groups.
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