Thriving in the Marketing Environment: The World is Flat

1. Thriving in the Marketing Environment: The World is Flat

2. Chapter Objectives • Understand business ethics and explain how marketers practice ethical business behavior • Explain how firms practice social responsibility • Understand the big picture of international marketing, including world trade flows and the decision criteria firms use in their decisions to go global • Explain the WTO, economic communities, and how countries protect local industries by establishing roadblocks to foreign companies • Understand how factors in the external business environment influence marketing strategies and outcomes • Explain the strategies that a firm can use to enter global markets • Understand the arguments for standardization versus localization of marketing strategies in global markets

3. TUPPERWARE.COM Real People, Real Choices: Decision Time at Tupperware • Tupperware Brands Corporation (Rick Goings) • How to refresh brand perception? • Option 1: increase advertising in new markets • Option 2: utilize public relations • Option 3: build demand using word-of-mouth

4. INTERFACEINC.COM Welcome to theNew Era of Marketing • Adopt a global focus • Managers emphasis social profit: net benefit for a firm and society from the firm’s ethical practices and socially responsible behavior

5. Figure 3.1: Linking Ethics to Profits

6. Doing Good: Ethical Behaviorin the Marketplace • Business ethics: basic values that guide a firm’s behavior • Codes of ethics: written standards of behavior to which everyone in the organization must subscribe

7. PHILLIP MORRIS Consumerism: People Fighting Back • The social movement directed toward protecting consumers from harmful business practices • Consumer Bill of Rights: the right to be safe, be informed, be heard, and choose freely

8. Discussion • In 2006, the National Institutes of Health released the results of a study showing that young people tend to drink more in areas with more alcohol advertising compared to areas with less advertising • Do alcohol companies have an ethical obligation to curtail their advertising in order to decrease drinking rates among young people?

9. Ethics in the Marketing Mix • Making the product safe • Pricing the product fairly • Promoting the product ethically • Making the product available ethically

10. Discussion • Some people criticize advertising as being deceptive • Do you agree or disagree? • What would be the advantages and disadvantages to firms when they deceive consumers?

11. CORPORATE • RESPONSIBILITY • AT INTEL Doing It Right: PromotingSocial Responsibility • Social responsibility: organizations engaging in activities that have a positive effect on society and promote public good NFL Video

12. Doing It Right: Promoting Social Responsibility (cont’d) • Serving the Environment • Serving Society: Cause Marketing • Serving the Community:Promoting Cultural Diversity

13. Individual Activity • Write down some thoughts about how products/services have the potential to harm you individually • In your opinion, do any products “cross the line” when it comes to your level of comfort?

14. Global Marketing • World Trade: the flow of goods/services among different countries – the value of all exports/imports of the world’s nations • Countertrade: trading products between countries or supplying goods in return for tax breaks from local government (accounts for 25% of all world trade)

15. Figure 3.3: North America Trade Flows (in $billions)

16. Figure 3.4: Decision Model for Entering Foreign Markets

17. Making the Decision to Go Global • “Go” or “no go”: is it in the best interest of the firm to remain in home market or to go where opportunities exist? • Which global markets are most attractive? • Key to the decisions: market conditions and creating a competitive advantage

18. At the Borders • Protectionism: quotas, embargoes, and tariffs • World Trade Organization (WTO): to “help trade flow smoothly, freely, fairly, and predictably” • Economic communities promoting trade

19. Discussion • Do you think the WTO will succeed in eliminating world trade barriers? • What do you think are the positive and negative aspects of a totally free marketplace? • What countries will win and which will lose in such a world?

20. The Global Marketing Environment • A company going global must understand local conditions in the targeted country • Understanding the external environment: economic, competitive, technological, political, and cultural factors affect marketers’ global strategies

21. The Economic Environment: Indicators of Economic Health • Economic health = market potential for firm • Gross domestic product (GDP): total dollar value of goods/services a country produces within its borders in a year • Per capita GDP: total GDP/number of citizens

22. Indicators of Economic Health (cont’d) • Gross national product (GNP): the value of all goods/services produced by a country whether in its borders or not • Economic infrastructure: quality of country’s distribution, financial, and communications systems

23. Level of Economic Development • Less developed country (LDC) • Economic base is often agricultural • Attractive markets for staples and inexpensive items • Developing countries • Economy shifts emphasis from agriculture to industry • Developed countries • Offer wide range of opportunities for international marketers

24. The Business Cycle • Prosperity • Recession • Recovery • Depression • Inflation

25. The Competitive Environment • 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

26. The Competitive Environment (cont’d) • Competition in the microenvironment • Competition for consumer’s discretionary income • Competition among products to satisfy the same consumer’s needs/wants • Competition among brands offering similar goods/services on the basis of brand reputation or perceived benefits

27. The Competitive Environment (cont’d) • Competition in the macroenvironment (overall structure of industry) • Monopoly • Oligopoly • Monopolistic competition • Perfect competition

28. The Technological Environment • Technology provides firms with important competitive advantages • Patent: legal document giving inventors exclusive rights to produce/sell a particular invention in that country

29. The Political and Legal Environment • Local, state, national, and global laws and regulations affect businesses • The law in the United States • To make sure businesses compete fairly with each other • To make sure that businesses don’t take advantage of consumers

30. The Political and Legal Environment (cont’d) • Political Constraints on Trade • Economic sanctions • Nationalization • Expropriation • Regulatory constraints on trade • Local content rules: a proportion of a product must consist of components supplied by industries in the host country or economic community • Human rights issues

31. The Sociocultural Environment • Demographics • Cultural values • Collectivist versus individualistic cultures • Norms, customs, mores, and conventions • Language • Ethnocentrism: the tendency to prefer products from one’s own culture

32. Discussion • Some countries have criticized U.S. business for exporting American culture • What about American culture might be objectionable? • Can you think of some products that U.S. marketers export that can be objectionable to some foreign markets?

33. Group Activity • What global external environment factors would you consider to be critically relevant for the following products (form a small group and pick one of the products listed below): • Coffee • Cars • Video games • Sporting events • Computers • Soda

34. How “Global” Should a Global Marketing Strategy Be? • Market-entry strategy: the level of commitment to operate in another country Figure 3.4

35. LOGITECH How “Global” Should a Global Marketing Strategy Be? (cont’d) • Exporting • Contractual agreements • Licensing • Franchising • Strategic alliances • Joint venture • Direct investment • Born-global firms

36. Global Marketing: Choosing a Marketing Mix Strategy • Standardization vs. localization • Standardization: offer the same products in all markets • Localization: offer a customized marketing mix for each country

37. Global Marketing: Choosing a Marketing Mix Strategy (cont’d) • Product decisions • Straight extension strategy • Product adaptation strategy • Product invention strategy • Backward invention • Promotion decisions: whether or not to modify promotions

38. Global Marketing: Choosing a Marketing Mix Strategy (cont’d) • Price decisions • Free trade zones • Gray market goods • Dumping • Distribution decisions

39. Group Activity • Form a small group and formulate either a brief standardized or local strategy in a foreign country (of your choice) for one of the following products: • Tide laundry detergent • Verizon cellular phone service • Direct TV service • Hollister clothing • Weber gas barbecue grills

40. Real People, Real Choices • Tupperware Brands Corporation (Rick Goings) • Rick chose option 2: Utilize public relations • Since the campaign launched in April 2005, Tupperware has seen a significant increase in the number of media exposures it has gotten

41. Discussion • The World Trade Organization seeks to eventually remove all barriers to world trade. • Do you think this will ever be a reality? • What do you think are the positive and negative aspects of a totally free marketplace? • Which countries will win and which will lose in such a world?

42. Marketing in Action Case:You Make the Call • What is the decision facing New Balance? • What factors are important in understanding this decision situation? • What are the alternatives? • What decision(s) do you recommend? • What are some ways to implement your recommendation?

43. Keeping it Real: Fast Forward to Next Class Decision Time at Plan-it Marketing • Meet Cindy Tungate, president Plan-it Marketing, a marketing research firm • Plan-it’s client Priceline needs help in planning its business • The decision: What marketing research strategy will maximize results for Priceline?