Chapter 3:

International Marketing
Environment ( Cultural,
Economic, and Technological )

The key difference between domestic marketing
and marketing on an international scale is the
multidimensionality and complexity of the many
foreign country markets a company may operate
in.
An international manager needs a knowledge
and awareness of these complexities and the
implications they have for international
marketing management.
Task of Global Marketers
Study and understand the cultures of
countries in which they will be doing business

Understand how an unconscious reference to
their own cultural values, or self-reference
criterion, may influence their perception of the
market

Incorporate this understanding into the
marketing planning process

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Society, Culture and
Global Consumer Culture
Cultureways of living, built up by a group of human
beings, that are transmitted from one generation to
another

Culture has both conscious and unconscious
values, ideas, attitudes, and symbols

Culture is acted out in social institutions

Culture is both physical (clothing and tools) and
nonphysical (religion, attitudes, beliefs, and values)
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Social Institutions
Family
Education
Religion
Government
Business

These institutions
function to reinforce cultural norms

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Material and
Nonmaterial Culture
Physical Culture
Clothing
Tools
Decorative
art
Body
adornment
Homes

Abstract Culture
Religion
Perceptions
Attitudes
Beliefs
Values

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Society, Culture, and
Global Consumer Culture
Culture is the collective programming of the
mind that distinguishes the members of one
category of people from those of another.
Geert Hofstede

A nation, an ethic group, a gender group, an
organization, or a family may be considered
as a category.

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Society, Culture, and
Global Consumer Culture
Global consumer cultures are emerging
Persons who share meaningful sets of consumption-
related symbols
Pub culture, coffee culture, fast-food culture,
credit card culture

Primarily the product of a technologically
interconnected world
Internet
Satellite TV
Cell phones

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Attitudes, Beliefs, and Values
Attitudelearned tendency to respond in a
consistent way to a given object or entity

Beliefan organized pattern of knowledge that
an individual holds to be true about the world

Valueenduring belief or feeling that a specific
mode of conduct is personally or socially
preferable to another mode of conduct

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Religion
The worlds major
religions include Buddhism,
Christianity, Hinduism,
Islam, and Judaism and are
an important source of
beliefs, attitudes, and
values.

Religious tenets, practices,
holidays, and history impact
global marketing activities.

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Aesthetics
The sense of what is
beautiful and what is
not beautiful

What represents good
taste as opposed to
tastelessness or even
obscenity

Visualembodied in
the color or shape of
a product, label, or
package

Stylesvarious
degrees of
complexity, for
example, are
perceived differently
around the world

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Aesthetics and Color
Redassociated with blood, wine-making, activity, heat,
and vibrancy in many countries but is poorly received in
some African countries.

Bluesince the pigment was rare, ancient Egyptians,
Chinese, Mayans associated it with royalty and divinity.
Half of interviewees state blue is the favorite color.

Whiteidentified with purity and cleanliness in the West,
with death in parts of Asia.

Graymeans inexpensive in Japan and China, but high
quality and expensive in the U.S.
White
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In England
and the U.S.,
Something
Blue on a
brides garter
symbolizes
fidelity
The Meaning of Color
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Red signifies
good luck and
celebration in
China
Yellow
indicates a
merchant in
India
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Dietary Preferences
Dominos Pizza pulled out of Italy because its
products were seen as too American with bold
tomato sauce and heavy toppings.

Subway had to educate Indians about the benefits
of sandwiches because they do not normally eat
bread.

Although some food preferences are deeply rooted
in culture, global dietary preferences are converging.
Pasta, pizza, sushi, other ethic foods

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Language and Communication
Linguistic Category Language Example
Syntax-rules of sentence
formation
English has relatively fixed word
order; Russian has relatively free
word order.
Semantics-system of
meaning
Japanese words convey nuances of
feeling for which other languages
lack exact correlations; yes and
no can be interpreted differently
than in other languages.
Phonology-system of
sound patterns
Japanese does not distinguish
between the sounds l and r;
English and Russian both have l
and r sounds.
Morphology-word
formation
Russian is a highly inflected
language, with six different case
endings for nouns and adjectives;
English has fewer inflections.
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Language and Communication
Pronounced shu
Sounds like I hope
you have bad luck.
Sounds like
break into pieces
or fall apart.
Sounds like
death or
the end.
In China, it is bad luck to give these three items.
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Marketings Impact on Culture

Universal aspects of the cultural environment
represent opportunities to standardize elements
of a marketing program

Increasing travel and improved communications
have contributed to a convergence of tastes and
preferences in a number of product categories

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McDonaldization of Culture
Eating is at the heart of
most cultures and for
many it is something on
which much time,
attention and money are
lavished. In attempting to
alter the way people eat,
McDonaldization poses a
profound threat to the
entire cultural complex of
many societies.
Sociologist George Ritzer

Many people resent the
breaking down of
cultural barriers that
occurs when global
firms expand into new
markets.
The Slow Food Movement
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High- and Low-Context Cultures
High Context
Information resides in
context
Emphasis on
background, basic
values, societal status
Less emphasis on legal
paperwork
Focus on personal
reputation

Saudi Arabia, Japan

Low Context
Messages are explicit
and specific
Words carry all
information
Reliance on legal
paperwork
Focus on non-personal
documentation of
credibility


Switzerland, U.S., Germany

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High- and Low-Context Cultures
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Hofstedes Cultural Typology
Power Distance

Individualism/Collectivism

Masculinity

Uncertainty Avoidance

Long-term Orientation

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Hofstedes Five Dimensions of National Culture
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Hofstedes Five Dimensions of National Culture
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Marketing Implications of Social and Cultural
Environments

Cultural factors must be considered when
marketing consumer and industrial
products

Environmental sensitivity reflects the
extent to which products must be adapted
to the culture-specific needs of different
national markets
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Environmental Sensitivity
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Independent of social class and income,
culture is a significant influence on
consumption and purchasing

Food is the most culturally-sensitive
category of consumer goods
Dehydrated Knorr Soups did not gain popularity in the U.S. market that
preferred canned soups
Starbucks overcame cultural barriers in Great Britain and today has
over 700 locations

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Economic environment
It is important that the international marketer has
an understanding of economic developments
and how they impinge on the marketing
strategy.
This understanding is important at a world level
in terms of the world trading infrastructure such
as world institutions and trade agreements
Firms need to be aware of the economic policies
of countries and the direction in which a
particular market is developing economically in
order to make an assessment as to whether they
can profitably satisfy market demand and
compete with firms already in the market.
One of the key challenge facing companies is:
- the question as to how they can develop an
integrated strategy across a number of
international markets when there are divergent
levels of economic development.
Such disparities often make it difficult to have a
cohesive strategy, especially in pricing.
The developed economies
The developed economies of the North American Free
Trade Area (NAFTA), European Union (EU) and
Japan account for 80 per cent of world trade.
For many firms this constitutes much of what is termed
the global market.
Even though many companies call themselves global,
most of their revenues and profits will be earned from
these markets.
It is from these developed economies that the global
consumer with similar lifestyles, needs and desires
emanates.
However, emerging markets are now coming more
economically powerful and moving up the ranks,
especially such countries as Brazil, Russia, India and
China.
The emerging economies
Brazil, Russia, India and China, (the BRIC economies)
are having:
A huge and growing demand for everything from
automobiles to cellular phones
Viewed as key growth markets where there is an
evolving pattern of government-directed economic
reforms, lowering of restrictions on foreign investment
and increasing privatization of state-owned monopolies.
Such markets often have what is termed as a dual
economy.
Usually there tends to be a wealthy urban professional
class alongside a poorer rural population.
Income distribution tends to be much more skewed
between the haves and the
have nots than in developed countries.
China now has a middle class of 100 million which is
forecast to grow to 500 million in the next century.
Brazil and Indonesia have middle classes of 25 million
each.
Less developed countries
This group includes underdeveloped countries and less developing
countries.
The main features are:
- a low GDP per capita
- a limited amount of manufacturing activity; and
- a very poor and fragmented infrastructure
Typical infrastructure weaknesses are in transport, communications,
education and healthcare.
In addition, the public sector is often slow-moving and bureaucratic.
It is common to find that less developed countries (LDCs) are
heavily reliant on one product and often on one trading partner.
In many LDCs this product is the main export earner.
- In Angola, for instance, the sole export is oil
- Sudan oil accounts for 99 per cent of their exports.
- In addition, three-quarters of LDCs depend on their main
trading partner for more than one-quarter of their
export revenue
The risks posed to the LDC by changing patterns of supply and
demand are great
Currency risks
International marketing transactions invariably take place between
currency movements are an important aspect of the international
economic environment.
Foreign exchange parities are likely to change on a regular if
unpredictable basis.
World currency movements, stimulated by worldwide trading and
foreign exchange dealing, are an additional complication in the
international environment.
Businesses that need to swap currencies to pay for imported goods,
or
Because they have received foreign currency for products they have
exported, can find themselves squeezed to the point where they
watch their profits disappear.
Technological environment
Technology is a major driving force both in international marketing
and in the move towards a more global marketplace.
The impact of technological advances can be seen in all aspects of
the marketing process.
The ability to:
gather data on markets,
management control capabilities, and,
the practicalities of carrying out the business function internationally
have been revolutionized in recent years with the advances in
electronic communications.
In emerging economies consumers are jumping from no telephone
to the latest in global communications
technology.
Wireless application protocol (WAP) technology allows
online services to be available to mobile phone users on the move,
wherever they happen to be in the world.
The use of Global System for Mobile Communications
(GSM) technology enables mobile phone operators to determine the
location of a customer globally to send them relevant and timely
advertising messages.
THE INTERNET AND THE WORLD WIDE WEB
(WWW)
The Internet and the access gained to the World Wide Web has
revolutionized
international marketing practices.
Firms ranging from a few employees to large multinationals have
realized the potential of marketing globally online and so have
developed the facility to buy and sell their products and services
online to the world.
The Internet has meant huge opportunities for small and
medium-sized enterprises (SMEs) and rapid
internationalization for many.
It has enabled them to :
substantially reduce the costs of reaching international
customers,
reduce global advertising costs, and
made it much easier for small niche products to find a
critical mass of customers
For all companies, the implications of being able to market goods
and services online have been far reaching.
The Internet has led to an explosion of information
to consumers, giving them the potential to source products from the
cheapest supplier in the world.
This has led to the increasing standardization of prices
across borders or, at least, to the narrowing of price differentials as
consumers become more aware of prices in different countries and
buy a whole range of
products via the net.
The Internet, by connecting end-users and producers
directly, has:
reduced the importance of traditional intermediaries
in international marketing (i.e. agents and distributors)
The critical resource possessed by this new breed of
cybermediary is information rather than inventory.
The Internet has also become a powerful tool for
supporting networks both internal and external to the
firm.

It has become the efficient new medium for conducting
worldwide market research and gaining feedback from
customers.
Thus the Internet produces a fundamentally different environment
for international
marketing and requires a radically different strategic approach
affecting all aspects of the marketing process.

~ end of part 2~
Group Activity
Please go back to your group and answer the following:
Analyze the Cultural, Economic and Technological
characteristics surrounding your chosen
company/product based on its country of origin.
Present your findings in the class