Lesson+6

=Lesson 6: Chapter 16 - Global Marketing and Consumer Behavior=

Chapter Summary

 * International marketing involves marketing activities between sellers and buyers indifferent countries.
 * Thrends that influence global marketing opportunities include expanded communcations, technology, changing political situations, increased competition, and changing demographics.
 * The four elements of the marketing mix are product, price, place, and promotion.
 * A marketing plan is used to plan, communicate, and implement global marketing activities.
 * The international marketing environment consists of geographic elements, economic conditins, social and cultural influences, and political and legal factors.
 * Consumer behavior is influence by physical and emotional needs, geographic and demographic factors, personality and psychographic factors, and social and cultural factors.
 * Methods used to segment markets include demographics, psychographics, buying behavior, and product benefits.


 * See Global Marketing Presentation for Important terms and concepts for this chapter**


 * Notes from the 4Ps of Marketing Video**

Access the International Journal of Sports Marketing HERE

Introduction to International Marketing

 * International marketing** is simply the application of marketing principles to more than one country. However, there is a crossover between what is commonly expressed as __international marketing__ and __global marketing__, which is a similar term. For the purposes of this lesson on international marketing and those that follow it, international marketing and global marketing are interchangeable.

The intersection is the result of the process of internationalisation. Many American and European authors see international marketing as a simple extension of exporting, whereby the marketing mix is simply adapted in some way to take into account differences in consumers and segments. It then follows that global marketing takes a more standardised approach to world markets and focuses upon sameness, in other words the similarities in consumers and segments. So let's take a look at some generally accepted definitions.

What is International Marketing?
> "At its simplest level, international marketing involves the firm in making one or more marketing mix decisions across national boundaries. At its most complex level, it involves the firm in establishing manufacturing facilities overseas and coordinating marketing strategies across the globe." Doole and Lowe (2001).

Environment analysis for international marketing
One of the fundamental steps that needs to be taken prior to beginning international marketing is the //environmental analysis//. Of course there are many tools on Marketing Teacher that would prove useful at this stage such as lessons on the [|marketing environment], [|PEST Analysis], [|SWOT Analysis], [|POWER SWOT] and [|Five Forces Analysis]. However, the very specific and unique nature of each individual nation needs to be looked into. Below we consider the nature of an //international PEST Analysis//, and the influence of //tariff and non-tariff barriers//.

An International PEST Analysis.
PEST is a well-known and widely applied tool when considering the external nature of the domestic market. However, it is equally as useful when applied to the nature of the international marketing environment. International PEST Analysis would consider: Political Economic Socio-cultural Technology
 * How easy will it be to move from purely domestic to international marketing?
 * Would your business benefit from inward foreign investment?
 * What is the nature of competition within each individual market, and how will companies from other nations compete when you meet with them head-to-head in unfamiliar countries?
 * Many other factors that are specific to your organization or industry.
 * Is there any historical relationship between countries that would benefit or hinder international marketing?
 * What is the influence of communities or unions for trading? E.g. The European Union and its authority over European laws and regulation.
 * What kind of international and domestic laws will your business encounter?
 * What is the nature of politics in the country that you are targeting, and what is their view on encouraging foreign competition from overseas?
 * What is the level of new industrial growth? E.g. China is experiencing terrific industrial growth.
 * What is the impact of currency fluctuations on exchange rates, and do your home market and your new international market - share a common currency? E.g. Polish companies trading in Eire will use Euros.
 * There are of course the usual economic indicators that one needs to be aware of such as inflation, Gross Domestic Product (GDP), levels of employment, national income, the predisposition of consumers to spend savings or to use credit, as well as many others.
 * Culture, religion and society are of huge importance.
 * What are the cultural norms for doing business? E.g. is there a form of barter?
 * Will cultural norms impact upon your ability to trade overseas? E.g. Putonghua is very difficult for many Western people to learn.
 * Do copyright, intellectual property laws or patents protect technology in other countries? E.g. China and Jordan do not always respect international patents.
 * Does your technology conform to local laws? E.g. electrical items that run on non-domestic currents could be dangerous.
 * Are technologies at different stages in the Product Life Cycle (PLC) in various countries? E.g. versions/releases of software.

Tariff and Non-Tariff Barriers.
There are a number of fences that companies need to plan for when initialising international marketing. Tariff and non-tariff barriers are still very common, even today. //Tariff barriers// are charges imposed upon imports - so they are a form of import taxation. This could mean that your margins are reduced so much that trading overseas becomes too unprofitable. However they are normally transparent and you can plan to take them into account. //Non-tariff barriers// are trickier to spot. Governments sometimes act in favour of their own domestic industries rather than allow competition from overseas. Bureaucracy is a hurdle often encountered by exporting companies - it takes many forms and includes unnecessary hold-ups and red tape. Quotas are another form of non-tariff barrier i.e. restricting the quantity of a product that can be imported into a particular country. =The International Market Entry Evaluation Process=

Step One - Country Identification
The World is your oyster. You can choose any country to go into. So you conduct country identification - which means that you undertake a general overview of potential new markets. There might be a simple match - for example two countries might share a similar heritage e.g. the United Kingdom and Australia, a similar language e.g. the United States and Australia, or even a similar culture, political ideology or religion e.g. China and Cuba. Often selection at this stage is more straightforward. For example a country is nearby e.g. Canada and the United States. Alternatively your export market is in the same trading zone e.g. the European Union. Again at this point it is very early days and potential export markets could be included or discarded for any number of reasons.
 * [[image:http://marketingteacher.com/image/content/international_marketing_research.gif caption="International Market Entry Evaluation Process"]] ||
 * International Market Entry Evaluation Process ||

Step Two - Preliminary Screening
At this second stage one takes a more serious look at those countries remaining after undergoing preliminary screening. Now you begin to score, weight and rank nations based upon macro-economic factors such as currency stability, exchange rates, level of domestiv consumption and so on. Now you have the basis to start calculating the nature of market entry costs. Some countries such as China require that some fraction of the company entering the market is owned domestically - this would need to be taken into account. There are some nations that are experiencing political instability and any company entering such a market would need to be rewarded for the risk that they would take. At this point the marketing manager could decide upon a shorter list of countries that he or she would wish to enter. Now in-depth screening can begin.

Step Three - In-Depth Screening
The countries that make it to stage three would all be considered feasible for market entry. So it is vital that detailed information on the target market is obtained so that marketing decision-making can be accurate. Now one can deal with not only micro-economic factors but also local conditions such as marketing research in relation to the marketing mix i.e. what prices can be charged in the nation? - How does one distribute a product or service such as ours in the nation? How should we communicate with are target segments in the nation? How does our product or service need to be adapted for the nation? All of this will information will for the basis of segmentation, targeting and positioning. One could also take into account the value of the nation's market, any tariffs or quotas in operation, and similar opportunities or threats to new entrants.

Step Four - Final Selection
Now a final shortlist of potential nations is decided upon. Managers would reflect upon strategic goals and look for a match in the nations at hand. The company could look at close competitors or similar domestic companies that have already entered the market to get firmer costs in relation to market entry. Managers could also look at other nations that it has entered to see if there are any similarities, or learning that can be used to assist with decision-making in this instance. A final scoring, ranking and weighting can be undertaken based upon more focused criteria. After this exercise the marketing manager should probably try to visit the final handful of nations remaining on the short, shortlist.

Step Five - Direct Experience
Personal experience is important. Marketing manager or their representatives should travel to a particular nation to experience firsthand the nation's culture and business practices. On a first impressions basis at least one can ascertain in what ways the nation is similar or dissimilar to your own domestic market or the others in which your company already trades. Now you will need to be careful in respect of self-referencing. Remember that your experience to date is based upon your life mainly in your own nation and your expectations will be based upon what your already know. Try to be flexible and experimental in new nations, and don't be judgemental - it's about what's best for your company - happy hunting.

**International Marketing and Culture**
**What is the influence of culture on international marketing?**
 * Culture** is the way that we do things around here. Culture could relate to a country (national culture), a distinct section of the community (sub-culture), or an organization (corporate culture). It is widely accepted that you are not born with a culture, and that it is learned. So, culture includes all that we have learned in relation to values and norms, customs and traditions, beliefs and religions, rituals and artefacts (i.e. tangible symbols of a culture, such as the Sydney Opera House or the Great Wall of China).

Therefore **international marketing** needs to take into account the local culture of the country in which you wish to market.
 * [[image:http://marketingteacher.com/image/content/terpstra.gif caption="Terpstra"]] ||
 * Terpstra ||

The **Terpstra and Sarathy Cultural Framework** helps marketing managers to assess the cultural nature of an international market. It is very straight-forward, and uses eight categories in its analysis. The Eight categories are Language, Religion, Values and Attitudes, Education, Social Organizations, Technology and Material Culture, Law and Politics and Aesthetics.

Language
With language one should consider whether or not the national culture is predominantly a high context culture or a low context culture (Hall and Hall 1986). The concept relates to the balance between the verbal and the non-verbal communication. In a low context culture spoken language carries the emphasis of the communication i.e. what is said is what is meant. Examples include Australia and the Netherlands. In a high context culture verbal communications tend not to carry a direct message i.e. what is said may not__ be what is meant. So with a high context culture hidden cultural meaning needs to be considered, as does body language. Examples of a high context cultures include Japan and some Arabic nations.

Religion
The nature and complexity of the different religions an international marketer could encounter is pretty diverse. The organization needs to make sure that their products and services are not offensive, unlawful or distasteful to the local nation. This includes marketing promotion and branding.
 * In China in 2007 (which was the year of the pig) all advertising which included pictures of pigs was banned. This was to maintain harmony with the country's Muslim population of around 2%. The ban included pictures of sausages that contained pork, and even advertising that included an animated (cartoon) pig.
 * In 2005 France's Catholic Church won a court injunction to ban a clothing advertisement (by clothing designers Marithe and Francois Girbaud) based upon Leonardo da Vinci's Christ's Last Supper.

Values and Attitudes
Values and attitudes vary between nations, and even vary within nations. So if you are planning to take a product or service overseas make sure that you have a good grasp the locality before you enter the market. This could mean altering promotional material or subtle branding messages. There may also be an issue when managing local employees. For example, in France workers tend to take vacations for the whole of August, whilst in the United States employees may only take a couple of week's vacation in an entire year. > //"We've poured you a beer and we've had the camels shampooed, we've saved you a spot on the beach. We've even got the sharks out of the pool,".// > Then, from a bikini-clad blonde, come the tag line: > //"So where the bloody hell are you?"//
 * In 2004, China banned a Nike television commercial showing U.S. basketball star LeBron James in a battle with animated cartoon kung fu masters and two dragons, because it was argued that the ad insults Chinese national dignity.
 * In 2006, Tourism Australian launched its ad campaign entitled //"So where the bloody hell are you?"// in Britain. The $130 million (US) campaign was banned by the British Advertising Standards Authority from the United Kingdom. The campaign featured all the standard icons of Australia such as beaches, deserts, and coral reefs, as well as traditional symbols like the Opera House and the Sydney Harbour Bridge. The commentary ran:

Education
The level and nature of education in each international market will vary. This may impact the type of message or even the medium that you employ. For example, in countries with low literacy levels, advertisers would avoid communications which depended upon written copy, and would favour radio advertising with an audio message or visual media such as billboards. The labelling of products may also be an issue.
 * In the People's Republic of China a nationwide system of public education is in place, which includes primary schools, middle schools (lower and upper), and universities. Nine years of education is compulsory for all Chinese students.
 * In Finland school attendance is compulsory between the ages of 7 and 16, the first nine years of education (primary and secondary school) are compulsory, and the pupils go to their local school. The education after primary school is divided to the vocational and academic systems, according to the old German model.
 * In Uganda schooling includes 7 years of primary education, 6 years of secondary education (divided into 4 years of lower secondary and 2 years of upper secondary school), and 3 to 5 years of post-secondary education.

Social Organizations
This aspect of Terpstra and Sarathy's Cultural Framework relates to how a national society is organized. For example, what is the role of women in a society? How is the country governed - centralized or devolved? The level influence of class or casts upon a society needs to be considered. For example, India has an established caste system - and many Western countries still have an embedded class system. So social mobility could be restricted where caste and class systems are in place. Whether or not there are strong trade unions will impact upon management decisions if you employ local workers.

Technology and Material Culture
Technology is a term that includes many other elements. It includes questions such as is there energy to power our products? Is there a transport infrastructure to distribute our goods to consumers? Does the local port have large enough cranes to offload containers from ships? How quickly does innovation diffuse? Also of key importance, do consumers actually buy material goods i.e. are they materialistic?
 * Trevor Baylis launched the clockwork radio upon the African market. Since batteries were expensive in Africa and power supplies in rural areas are non-existent. The clockwork radio innovation was a huge success.
 * China's car market grew 25% in 2006 and it has overtaken Japan to be the second-largest car market in the world with sales of 8 million vehicles. With just six car owners per 100 people (6%), compared with 90% car ownership in the US and 80% in the UK, the potential for growth in the Chinese market is immense.

Law and Politics
As with many aspects of Terpstra and Sarathy's Cultural Framework, the underpinning social culture will drive the political and legal landscape. The political ideology on which the society is based will impact upon your decision to market there. For example, the United Kingdom has a largely market-driven, democratic society with laws based upon precedent and legislation, whilst Iran has a political and legal system based upon the teachings and principles Islam and a Sharia tradition.

Aesthetics
Aesthetics relate to your senses, and the appreciation of the artistic nature of something, including its smell, taste or ambience. For example, is something beautiful? Does it have a fashionable design? Was an advert delivered in good taste? Do you find the color, music or architecture relating to an experience pleasing? Is everything relating to branding aesthetically pleasing?