International Marketing

1. International Marketing • Trade policy • Culture • Consumer buying power • Product strategies

2. Obstacles to Trade: Protectionism • Differing interests of consumers and manufacturers • Benefits of trade tend to be more diffused than benefits to specific groups of protectionism

3. Approaches to Protectionism • Tariffs • Quotas • “Voluntary” export restrictions • Subsidies to domestic producers/exporters • Non-tariff barriers • legal obstacles • differential treatment

4. Cultural Lessons • Diet Coke is named Light Coke in Japan--dieting was not well regarded • Red circle trademark was unpopular in Asia due to its resemblance of Japanese flag • Packaging of products is more important in some countries than in U.S. • Advertisement featuring man and dog failed in Africa--dogs were not seem as man’s best friend

5. More Cultural Lessons... • Cologne ad featuring a man “attacked” by women failed in Africa • Food demonstration did well in Chinese stores but not in Korean ones--older women were insulted by being “taught” by younger representatives • Pauses in negotiations • Level of formality

6. The Whole vs. Parts

7. Definitions • Culture: “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man as a member of society.” Alternative definition: “Meanings that are shared by most people in a group” [at least to some extent]. (Adapted from Peter and Olson, 1994)

8. Hofstede’s Cultural Dimensions Based on interviews with IBM executives throughout the World--1980s • Individualism (vs. collectivism) • Power distance • Masculine vs. feminine • Strong vs. weak uncertainty avoidance • Short vs. long term orientation (Confucianist dynamics) • “The Foolish Old Man Who Moved the Mountain”

9. Negotiation Content • Non-task sounding • Task-related exchange of information • Persuasion • Concessions and agreements

10. Geography--Surprisingly Impactful • U.S. and most Western European areas are highly generally accessible • Compare to areas in the developing World: • China • Russia • Latin America (even Mexico), Africa • Communication vs. shipping

11. Climate and Topography: The Case of Latin America • 4,500 by 3,000 miles (at widest) • 48% forests • West coast dominated by mountain ranges • 5% of land arable • Natural barriers inhibiting growth • Large proportion of residents in cities; people in rural areas often do not associate themselves with countries

12. Climate and Topography: The Case of Latin America • 4,500 by 3,000 miles (at widest) • 48% forests • West coast dominated by mountain ranges • 5% of land arable • Natural barriers inhibiting growth • Large proportion of residents in cities; people in rural areas often do not associate themselves with countries

13. China: Geography • Very rapid progress on Shanghai infrastructure • Rural villages are difficult to access • Strong regional differences even within the country

14. Time monochronic vs. polychronic meanings Personal space preferred distance territoriality interaction with/ignoring people in close proximity Symbols colors historical associations Friendship and acquaintance Agreements Etiquette Some Issues in Culture

15. Eastern vs. Western Culture • Differences in • Values • Perceptions of • Objects • Reality • Stability vs. change • Control • Perceived roles

16. Perceived Control Over Reality • World is not generally seen as predictable • Trends are not expected to continue • Individual has little control over the world • BUT • Outcome is believed to be tied to effort, not individual skill

17. More Tendencies • Westeners tend to rate themselves • More unique than average and what they are • “Above average” in ability • Easteners tend to rate themselves • Less unique than they really are • “Below average”

18. Proverbs • Western: “The early bird gets the worm” • Eastern: • “The first bird in the flock gets shot” • “A nail that stands out will be hammered down.”

19. Source: Richard E. Nisbett, The Geography of Thought: How Asians and Westeners Think Differently … and Why, New York, 2003, The Free Press Values

20. Some implications • Thanking people—for things they are clearly supposed to do? • Why the need for a choice between 40 different brands of cereal?

21. Socialization • Western textbook: “See Dick run. See Dick play. See Dick run and play.” • Chinese: “Big brother takes care of little brother. Big brother loves little brother. Little brother loves big brother.”

22. Perception of People • Western: People have characteristics independent of the situation • Fundamental attribution error: People attribute their own behavior to the circumstances but that of others to innate characteristics. • Eastern: Person is connected; behavior is the result of specific roles played at the time

23. Western “Atomistic”—broken down to smallest component parts “Unique selling propositions” “How to” Positioning May be “dull and boring” “Copy focused” Asian Holistic “Everything relates to everything else” How things “fit together” and “relate” Visual and oral Contrasting Advertising Perspectives (Aithison 2002) Jim Aitchison, How Asia Advertises, New York: Wiley, 2002.

24. Advertising Content Comparisons • American: • Individual benefit and pleasure (e.g., “Make your way through the crowd) • Korean • Collective values (e.g., “We have a way of bringing people together)

25. Debate and Conflict • “The first person to raise his voice has lost the argument.” (Chinese proverb) • Use of indirection and projection • Face-to-face vs. anonymous comments • Western adversarial “rule of law” based on consistent universal ideals vs. solution for the case at hand in context

26. Relationships, Education, and Work • Western • Standing out; being “better” • Self perceived favorably • Self-esteem building • Work longer on successful job • Eastern • Harmony • Must “weed out” personal characteristics that might annoy others • Taught self-criticism • Not recognized in profession until after many years of practice • Work longer on unsuccessful job

27. Physical Product vs. Communication Adaptations

28. CONSUMER INCOMES AND BUYING POWER • Measuring country wealth • gross domestic product • “purchase parity” vs. nominal • Government role in the economy • Tax burden • Services provided by the Government—e.g., health care, education

29. Country of Origin Effects • Perception of product • quality (e.g., Japan, Germany) • elegance and style (e.g., France, Italy) • Historical associations • Positioning strategies • Emphasis on origin (e.g., French wine) • De-emphasis/obfuscation of of country of origin (e.g., French beer, American products with French language labels)

30. Nominal vs. Purchase Parity Adjusted GNPs—Examples (2003) Source: World Bank (http://www.worldbank.org/data/databytopic/GNIPC.pdf)

31. The Hamburger Standard (from the Economist)

32. Exporting Low investment Low control of promotion Licensing Low investment Low control of promotion, positioning, and quality Able to benefit from existing distribution and market knowledge Joint venture Considerable investment More control Able to benefit from partner’s experience Must work with partner Direct investment Large investment Risky Greater control May lack knowledge of market Market Entry Strategies

33. Market Positioning Strategies Across Countries • Häagen-Dazs—U.S. vs. Japan • Corona Beer—Mexico vs. U.S. • Mercedes-Benz—Europe vs. U.S. • McDonald’s • U.S. • Europe • Developing countries—e.g., China

34. U.S. Laws of Interest to firms with U.S. Involvement • Anti-trust • Foreign Corrupt Influences • Anti-boycott laws • Trading With the Enemy

35. Market for older technology tends to exist in less developed countries Manufacturing of older generation technology--e.g., Pentium I computers Resale of capital equipment—e.g., DC 8 aircraft, old three part canning machines Some countries tend to be more receptive to innovation than others “Leap frogging” Going directly from old technology to the very newest, skipping intermediate step (e.g., wireless rather than wired technology) Shortening of product life cycles The International Life Cycle