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Thrive in the Marketing
Environment:
The World Is Flat
Chapter Three
Chapter Objectives
 Understand the big picture of international
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

marketing and the decisions firms must make
when they consider globalization
Explain how international organizations such as
the World Trade Organization (WTO), economic
communities, and individual country regulations
facilitate and limit a firm’s opportunities for
globalization
Understand how factors in a firm’s external
business environment influence marketing
strategies and outcomes in both domestic and
global markets
Explain some of the strategies that a firm can
use to enter global markets
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Global
Marketing
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Take a Bow:
Marketing on the Global Stage
 The global marketplace
 World trade:
The flow of goods and services among
different countries—the value of all the
exports and imports of the world’s
nations
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Figure 3-1
North American Trade Flows
(in Billions of Dollars)
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Take a Bow:
Marketing on the Global Stage
 Countertrade:
A type of trade in which goods are paid
for with other items instead of with
cash
• Barter is common form of countertrade
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Countertrade
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Going Global?
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Figure 3-2
Steps in the Decision Process for
Entering Global
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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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Understand International,
Regional and Country Regulations
 Initiatives in international regulation
and cooperation help trade
• General Agreement on Tariffs and Trade
(GATT)
• World Trade Organization (WTO)
 Protectionism restricts trade
• Quotas, embargoes, and tariffs
 Economic communities help
to promote trade
World Trade Organization
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Environmental Scanning
Yields Opportunities
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TECHNOLOGICAL
ENVIRONMENT
ECONOMIC
ENVIRONMENT
COMPETITIVE
ENVIRONMENT
Global
Marketing
Environment
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POLITICAL/LEGAL
ENVIRONMENT
SOCIOCULTURAL
ENVIRONMENT
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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Table 3-2
Selected Comparisons of Economic and
Demographic Characteristics
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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
Economy.com
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Do sales of all goods
and services suffer in
a recession?
If not, name some
goods and services
that may in fact sell
better during a
recession than during
times of prosperity.
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Competitive
Environment
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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
• Product competition
• Brand competition
Name some examples of competition at
each level for the iPhone.
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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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Roadblocks
at the border
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The Political and Legal Environment:
Political Constraints 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:
Regulatory Constraints on Business

Regulatory constraints on
trade often restrict the
marketing of goods
• Local content rules
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Human rights issues may
limit foreign countries’
business opportunities
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The Sociocultural Environment
 Key sociocultural considerations:
• Demographics
• Cultural values
Individualism
Collectivism
• Social norms
and customs
• Language
• Ethnocentrism
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Market Entry Strategies
Exporting
Contractual
Agreements
COMMITMENT - RISK
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Strategic
Alliances
Direct
investment
Table 3.6
Market Entry Strategies
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How “Global” Should a Global
Marketing Strategy Be?
 Product-level decisions: the marketingmix strategy:
• Standardization vs. localization
Standardization:
Offer the same products in all markets
Localization:
Offer a customized marketing mix for
each country
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How “Global” Should a Global
Marketing Strategy Be?
 Tweaking the marketing
mix
• Product decisions:
 Straight
extension
strategy
 Product adaptation
strategy
 Product invention
strategy
 Backward invention
• 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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Group Activity
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Formulate either a brief standardized or local
strategy in a foreign country (of your choice)
for a product:
Make a SLEPT analysis
Describe how the it will affect weather to
chose standardized or localized strategy
Explain your strategy (the marketing mix).
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