Download The Competitive Environment

Thrive in the Marketing
Environment:
The World Is Flat
Chapter Three
Chapter Objectives
 Understand the big picture of international



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
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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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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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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Global Means Growth
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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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It’s Debatable
Class Discussion Question
Watch the YouTube video
discussing product piracy.
Product
Piracy
Do you think that the WTO can succeed
in reducing, or eliminating product
piracy? If so, how?
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Environmental Scanning
Yields Opportunities
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Figure 3-3
Elements of the External Environment
The World
Fact book
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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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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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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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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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Table 3-3
Partial List of Significant American
Legislation Relevant to Marketers
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Table 3-4
U.S. Regulatory Agencies and
Responsibilities
FTC.gov
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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

Human rights issues may
limit foreign countries’
business opportunities
• U.S. Generalized System
of Preferences (GSP)
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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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It’s Debatable
Class Discussion Question
America has been rocked in recent
years by numerous business scandals.
Do you think that the individualistic
cultural orientation found in the U.S. it
to blame?
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When is a Bribe Not a Bribe?
Ethical Issues in Global Business
 What is considered to be ethical
business behavior 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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Table 3-5
Transparency Bribepayers Index
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Table 3.6
Market Entry Strategies
country
risk.com
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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
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Real People, Real Choices:
Decision Made at eBay
 Robert chose option 3
• Why do you think that Robert chose to
license the brand “WorldofGood.com”
and launch the marketplace on a
platform independent from eBay?
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Keeping It Real: Fast-Forward to
Decision Time at Plan-It Marketing
 Meet Ryan Garton, director of
Consumer Insights at Discover
Financial Services
 Ryan lacks an integrated approach to
evaluating how new product ideas fit
with consumers’ desires
 The decision to be made:
Should the process used to screen new
product ideas be changed?
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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America
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