Download The Competitive Environment

Chapter 3
Thrive in the Marketing
Environment:
The World Is Flat
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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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
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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
World Trade Organization
 Countertrade:
A type of trade in which goods are paid for
with other items instead of with cash
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Figure 3-1
North American Trade Flows
(in Billions of Dollars)
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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?
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Figure 3-2
Decision Model for Entering Foreign
Markets
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Deciding to Go Global
 Must consider market conditions and
competitive advantage when making a
decision
– Chinese firms such
as Chery are now
exporting their brands
to other countries,
including the U.S.
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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
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It’s Debatable
Class Discussion Question
Do you think that the WTO can succeed
in eliminating trade barriers?
If so, what would be some of the positive
and negative aspects of achieving a truly
free marketplace? Could some countries
benefit at the expense of others?
Explain!
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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
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The World
Factbook
provides valuable
information on
many countries
Understanding Local Conditions
Marketers sometimes hire
specialized research firms,
like Asia Insight, to help
master the intricacies of
foreign markets
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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 infrastructure
Quality of country’s distribution, financial, and
communications systems
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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
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The Economic Environment:
The Business Cycle
 All economies go
through periods of:
– Prosperity
– Recession
– Recovery
– Depression
– Inflation
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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
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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
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The Competitive Environment:
Competition in the Macroenvironment
 Competition in the macroenvironment
(overall structure of industry)
– Monopoly
– Oligopoly
– Monopolistic competition
– Perfect competition
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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
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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
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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
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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
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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
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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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Table 3-5
Transparency Bribepayers Index
Rank
Country
1
2
3
9
28
29
30
Switzerland
Sweden
Australia
United States
Russia
China
India
2006 Index*
7.81
7.62
7.59
7.22
5.16
4.94
4.62
* Lower scores indicate a higher propensity to pay bribes
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Figure 3.3
Market-Entry Strategies
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How “Global” Should a Global
Marketing Strategy Be?
 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
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How “Global” Should a Global
Marketing Strategy Be?
Localization requires adaptation
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How “Global” Should a Global
Marketing Strategy Be?
 Tweaking the marketing mix
– Product decisions:
• Straight extension strategy:
Market existing product in foreign market
• Product adaptation strategy
Modifies product for foreign market
• Product invention strategy
Develops new product for foreign market
– Promotion decisions:
• Whether or not to modify
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How “Global” Should a Global
Marketing Strategy Be?
 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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Real People, Real Choices:
Decision Made at eBay
 Robert chose option 3
– Implementation:
eBay licensed the “WorldofGood.com”
brand and launched project with both
community 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
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
Keeping It Real: Fast-Forward to
Decision Time at Plan-It Marketing
 Meet Cindy Tungate, president of PlanIt 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?
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall
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permissionCopyright
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Printed
in theEducation,
United States
of America.
© 2009
Pearson
Inc.
Publishing as Prentice Hall
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Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall