Webster University International Marketing MRKT 5980

1. Webster University International MarketingMRKT 5980

2. The World Economic Pyramid Annual per Capita Income* Tiers Population in Millions 75-100 More Than $20,000 $1,500-$20,000 1,500-1,750 Less Than $1,500 4,000 *Bases on Purchasing power parity in U.S. $. SOURCE: U.N. World Development Reports Webster University INTB 5000

3. Major Industrialized Countries of the World Webster University INTB 5000

4. Market Characteristics • Population demographics • Age distribution, life expectancies, household size, urbanization. • Income • Distribution of low, medium, and high incomes. • Gross domestic product per capita. • Purchasing power parity. • Consumption patterns • Income spent on necessities and luxuries. • Product saturation or diffusion. • Product form differences. Webster University INTB 5000

5. Market Characteristics (continued) • Availability and quality of infrastructure • Rail traffic networks for distribution capabilities. • Communication systems for marketing. • Energy (electrical and fuel) consumption. • Foreign involvement in the economy • Degree of foreign direct investment in country or in a specific industry. • Rules governing foreign investment. • Impact of the economic environment on social development • Urbanization, life expectancy, literacy rates, etc. • Physical Quality of Life Index (PQLI). Webster University INTB 5000

6. Regional Economic Integration • Levels of economic integration • Free Trade Area • Least restrictive. • Goods and services are freely trades among all members. Each country maintains its own trade barriers for nonmembers. • Customs Union • Members establish a common trade policy with respect to nonmembers. • Common Market • Factors of production mobility is emphasized. A common external tariff is adopted. • Economic Union • Integration and harmonization of economic and monetary policies is achieved leading to political union. Webster University INTB 5000

7. Free Trade Area • Eliminates tariff and quota barriers among member countries. • Each country is free to set its own tariff and quota barriers against nonmember countries. • Can be formed for certain classes of goods or services only. Webster University INTB 5000

8. Customs Union Area • Tariff and quota barriers among member countries are eliminated. • Member countries establish common tariff and trade barriers against nonmember countries. • Tariff revenues are shared among members according to a prescribed formula. Webster University INTB 5000

9. Common Market Area • No trade barriers among member nations. • No restriction on the movement of labor, capital, or technology across borders. • Member countries establish common tariff and trade barriers against nonmember countries. Webster University INTB 5000

10. Economic Union • Has all the characteristics of a common market. • Harmonizes taxation. • Harmonizes government spending. • Harmonizes monetary policies. • Establishes a common currency. Webster University INTB 5000

11. European Integration • Expected economic growth from: • Eliminating transaction costs. • Economies of scale will be attained as production becomes concentrated. • More intense competition from EU companies. • Operations from one country can be freely expanded to other countries. • Products can be freely sold across borders to millions of new consumers. • There is a “Fortress Europe” fear. Webster University INTB 5000

12. North America Integration • Is for purely economic reasons. • There are no constituencies for political integration. • NAFTA. • “Maquiladoras”. Webster University INTB 5000

13. NAFTA • The North American Free Trade Agreement (NAFTA) created the world’s largest free market. • 390 million U.S., Canadian, and Mexican consumers and a total output of $10 trillion. Webster University INTB 5000

14.   Free Trade Area of the Americas • An agreement to form a regional trading zone stretching from Point Barrow, Alaska to Patagonia, Argentina. Webster University INTB 5000

15. Integration in Asia • Association of Southeast Asian Nations (ASEAN) • East Asia Economic Group • Asia-Pacific Economic Cooperation (APEC) • South Asian Association for Regional Cooperation (SAARC) Webster University INTB 5000

16. Integration in Africa and the Middle East • Economic Community of West African States (ECOWAS) • Afro-Malagasy Economic Union • East Africa Customs Union • West African Economic Community • Maghreb Economic Community • Gulf Cooperation Council (GCC) Webster University INTB 5000

17. Political and Legal Environment • Home country political and legal environment • The Environmental Superfund • Intellectual property rights • Gray markets Webster University INTB 5000

18. Political and Legal Environment • Embargoes and sanctions • “…government actions to distort the free flow of trade in goods, services, or ideas for adversarial and political purposes. Webster University INTB 5000

19. Export Control • U.S. export control systems • Export Administration Act (Commerce Department) • Munitions Control Act (State Department) • Determinants for export controls • National security, foreign policy, short supply, nuclear nonproliferation. • Dual-Use Items • Goods used for both military and civilian purposes. • Controlled for other purposes. • Export license Webster University INTB 5000

20. The U.S. Export Control System Decision Steps in the Export Licensing Process Determinants for Export Controls Should a Given Product Be Exported • National Security • Foreign Policy • Short Supply • Nuclear Nonproliferation To a Given Country To a Given End-user? For a Particular End-user? Webster University INTB 5000

21. Export Controls New Environment • Foreign availability of high technology products. • Export controls have moved from a “strategic balance” to a ‘tactical balance” approach. • Increase in the speed and dissemination of information and innovation. • Issue of equipment size. • How much of the latest technology is required before a country may engage in dangerous activities. • Loosening of mutual bonds between allied nations. Webster University INTB 5000

22. Import Controls • Tariffs • Voluntary restraint agreements • Quota systems • Administrative problems • Monetary and social costs to consumers while benefiting protected groups. • Downstream change in the composition of imports to circumvent narrowly defined protectionist measures. • The failure of protected firms become more efficient and competitive. Webster University INTB 5000

23. International Business Behavior and Regulations • Regulating international business behavior • Home countries may implement special laws and regulations to ensure that the international business behavior of firms headquartered within them is conducted within moral and ethical boundaries considered appropriate. • Methods • Boycotts • Antitrust Laws • Bribery and Corruption Laws Webster University INTB 5000

24. Go HomeForeigners Risk • Political risk • The risk of loss when investing in a given country caused by changes in a country’s political structure or policies. • Types of political risk • Ownership risk (property and life) • Operating risk (ongoing operations interference) • Transfer Risk (in shifting funds between countries) Webster University INTB 5000

25. Political Risk Webster University INTB 5000

26. Forms of Host Country Controls • Expropriation • Taking of private property with compensation. • Confiscation • Taking of private property without compensation. • Domestication • To gain control over foreign investment through demanding partial transfer of ownership and imposed regulations. • Raise tax rates. • Price controls. Webster University INTB 5000

27. Legal Differences and Restraints • The two major legal systems • Common law • Based on tradition and less dependent on statutes and codes than on precedent and custom. • Code law • Based on a comprehensive set of written statutes that spell out legal rules explicitly. Webster University INTB 5000

28. International Environment • International Politics • Political relations and conflicts between countries can have a profound impact on firms trying to do business internationally. • If relations between countries improve, business can benefit. • International Law • No enforceable body of international law exists. Firms are subject to home and host-country laws. • Areas of cooperation among nations • bilateral treaties guaranteeing fair treatment • patent and trademark protection Webster University INTB 5000

29. Defining the Issue • What is marketing research? • Traditional view • “the function that links the consumer, customer, and public to the marketer through information.” • Redefined view • “systematic and objective identification of information, collection, analysis and dissemination of information for the purpose of improving decision making related to the identification and solution of problems and opportunities in marketing.” Webster University INTB 5000

30. International versus Domestic Research • Similar but different • International research involves the use of similar tools and techniques as in domestic research, but the market environments differ. • The primary differences • New parameters • New environments • Number of factors involved • Broader definition of competition Webster University INTB 5000

31. The Need for Research • Reasons that firms may be reluctant to view international research as important: • Lack of sensitivity to differences in consumer tastes and preferences. • Limited appreciation for the different marketing environments abroad. • Lack of familiarity with national and international data sources and the inability to use them. • Actual but limited business experience in a country or with a specific firm may be used as a substitute for organized research. Webster University INTB 5000

32. Research Objectives • Research objectives vary from firm to firm because of the views of management, the corporate mission, and the marketing situation. • Information needs are linked closely to the level of international expertise in the firm. Webster University INTB 5000

33. Opportunity Analysis • Foreign-market opportunity analysis • Broad-brush approach to narrow down market possibilities. • Cursory analysis of general market variables- total and per capita GNP, mortality rates, and population data. • Individual market data, product data,market trends, and restrictions. • Consideration of governmental restrictions. Webster University INTB 5000

34. Going International Webster University INTB 5000

35. Secondary Data Sources • Governments • International organizations • Service organizations • Directories and Newsletters • Electronic Information Services • Other firms Webster University INTB 5000

36. Research • Primary research • Conducted to fill specific information needs. • Essential to strategic marketing plan formation. • Useful in international market segmentation. • Determining information requirements • Formulate research questions to determine precisely the information that is sought. Webster University INTB 5000

37. Determining Research Administration • Centralized • The research specifications are designed by the home office and forwarded to country operations for implementation. • Coordinated • An intermediary such as an outside research agency brings headquarters and country operations together. • Decentralized • Corporate headquarters establishes the broad thrust of research and delegates design and implementation to the local countries. Webster University INTB 5000

38. Research Techniques • Interviews • Knowledge persons are a valuable information resource (personal bias must be discounted). • Goal, obtain in-depth information instead of a wide variety of information. • Focus groups • Interaction within a group about a specific topic. • Ideal size, 7-10. • Observation • Observation results can be influenced by presence of the observer. • Surveys • Gather quantitative rather than qualitative information through personal or remote contact with the subject population. Webster University INTB 5000

39. Designing the Survey Questionnaire • Question format • Structured or unstructured. • Direct or indirect. • Ensure data equivalence. • Question content • Consider interviewee’s ability and willingness to answer. • Adapt questions to societal constraints. • Question wording • Use simple unambiguous words, terms and questions. • Check for errors using translation-re-translation approach and alternative wording for questions. • Pretest the survey. Webster University INTB 5000

40. The Sampling Plan • System data must be: • Relevant • Timely • Flexible • Accurate • Exhaustive • Convenient Webster University INTB 5000

41. Environmental Scanning • One method consist of obtaining factual input. • Use of Content Analysis. • Conducted by inside and outside corporate groups. Webster University INTB 5000