INTERNATIONAL MARKETING 2

National factors within the international marketing environment social (cultural), political, economic and legal.

Country Analysis

ENVIRONMENTAL INFLUENCES ON INTERNATIONAL MARKETING

Socio/Cultural Language Religion Aesthetics Values and attributes Social organisation Material culture Legal Local domestic laws International law Home domestic law Political Operational restrictions Discriminatory restrictions Physical actions

Economic Developed economies Emerging economies Less developed economies Currency movements

Environmental Influences on International Marketing

Technological Satellite Communications ISDN Internet WWW The Electronic Superhighway

Global Perspective: Recent Events

Information technology boom of the late 1990s

The high-tech bust of 2001

Enron and WorldCom scandals

September 11th attacks on the World Trade Center and Pentagon

Wars in Afghanistan and Iraq

Global Perspective: Recent Events

International conflict among China, Taiwan, and the United States

2003 SARS outbreak in Asia

Global terrorism, e.g., Indonesia, Israel, India, and Morocco

Transcending these events, international commerce continued

Political Environment
The political environment of countries is a critical concern for the international marketer International law recognizes the sovereign right of a nation to allow or deny foreign firms to conduct

Sovereignty refers to both the powers exercised by a state in relation to other countries and the supreme powers exercised over its own members
A sovereign state is independent and free from all external control; enjoys full legal equality with other states; and governs its own territory

Political Risks of Global Business 1. Stability 2. Trade Policies and political sanctions

3. Nationalism

4. Terrorism 5. Cyber-terrorism

Stability of Government Policies

The stability or instability of prevailing government policies is a major concern of foreign businesses A change in government, whether by election or coup, does not always mean a change in the level of political risk Conversely, radical changes in policies toward foreign business can occur in the most stable governments as well. Radical shifts in government philosophy can occur when an opposing political party ascends to power, weakened economic conditions, Bias against foreign investment or conflicts between governments or Pressure from nationalist and selfinterest groups The ideal political climate for a multinational firm to conduct business is a stable, friendly government Be knowledgeable about the philosophies of all major political parties and their attitudes towards trade

Confiscation, Expropriation, and Domestication

Confiscation, the most severe political risk, is the seizing of a companys assets without payment

Expropriation is where the government seizes an investment, but some reimbursement for the assets is made; often the expropriated investment is nationalized to become a government run entity

Domestication occurs when the government mandates local ownership and greater national involvement in a foreign companys management

Nationalism
Nationalism refers to feelings of national pride and unity

Feelings of nationalism are manifested by: 1. Call to buy our countrys products only, e.g., Be Indian, Buy Indian 2. Restrictions on imports, restrictive tariffs, and other barriers to trade 3. Risks pertaining to NGOS and Social Activists

Domestic Severances and Political Sanctions India and Pakistan severed diplomatic relations many a times. US has imposed economic sanctions against Cuba, Libya, Iraq and Iran

Risk of Terrorism
Communal and Political Terrorism Kidnapping, Riots, Kidnapping, Expropriation. Threat to installations, machinery and property. Terrorism on netWebsite hackers, Internet highway, hijacking entire websites of international firms. The slammer and I LOVE YOU bugs virtually brought down Internet operations in America

Assessing Political Vulnerability

No absolute guidelines to assess if a firm faces political risks No specific guidelines to determine a products political vulnerability, but there are some generalizations

1. 2. 3. 4.

Politically sensitive products include those that: effect on the environment, exchange rates national and economic security affect public health, e.g., genetically modified (GM) foods

Forecasting Political Risk

Decide if risk insurance is necessary Devise an intelligence network and an early warning system

Develop contingency plans for unfavourable future political events Build a database of past political events for use in predicting future problems Interpret the data gathered by a companys intelligence network in order to advise and forewarn corporate decision makers about political and economic situations

Reducing Political Vulnerability

Relations between governments and MNCs are generally positive if the investment: improves the balance of payments by increasing exports or reducing imports through import substitution uses locally produced resources transfers capital, technology, and/or skills creates jobs, and/or

makes tax contributions

Reducing Political Vulnerability

MNCs can use the following strategies to minimize political vulnerability and risk:

Joint Ventures
Expanding the Investment Base Licensing

Planned Domestication Political Payoffs

How Government Influences Four Ps ?

Product - Local Content Law Price - Government Approval for Price Changes Promotion - Permissible Budget Determined by Local Authorities, Ad. restrictions Place - Mandated Distribution Channel or Territory

Legal System
International lawsWTO rules, Agreements, treaties Host country laws Country specific Home Country lawsAnti-trust regulations, Anti-corruption laws Common laws Civil laws Theocratic laws Contract laws Jurisdiction Property rights Private actionsTheft, Piracy, blackmail, fraud Foreign Corrupt Practices Act

How does law affect marketing?

Prohibition
alcohol, tobacco, sex, GM foods

Restrictions
children

Obligations
Packaging
contents, languages, child-proof

Environmental standards
emissions, disposal

Ownership and access to market

mandatory joint ventures

Sanitary & Phytosanitary (SPS) regulations

Sanitary (human and animal health) measures and phytosanitary (plant health) Often used as non-tariff barrier (NTB)
eg fireblight big dispute with Australia

Essential to preserve good reputation of exports

eg Listeria in NZ cheese to Holland

Economic Risks
International firms face a variety of economic risks

Governments can impose restraints on business activity to: a) Protect national security b) Protect an infant industry c) To conserve scarce foreign exchange d) Raise revenue e) Retaliate against unfair trade practices

Historical Perspective In Global Business

Historical insights of a country are important for understanding:

Attitudes about the role of government and business

Relations between Managers and Subordinates Sources of Management Authority

Attitudes toward Foreign Corporations

History and Contemporary Behaviour

1. Historical events between nations influence business and history 2. Why do the Japanese have such strong loyalty toward their companies?

3. Why is a distribution system so difficult for an outsider to develop?

4. Why are decisions made by consensus?

Geography and Global Markets

Study of geography is important in the evaluation of markets

Need to be knowledgeable about the effects of geographic diversity on the economic profiles of various nations

Climate and topography are examined as facets of the broader and more important elements of geography

Climate and Topography

Products may require special cooling or lubrication to function adequately in tropical zones

Climate differences in Europe caused BoschSiemens to alter its washing machines

Geographic terrain such as mountain ranges in a country can influence transportation of products, e.g., Bogot to Medelln by road takes 10 to 12 hours

Geography, Nature, and Economic Growth Linkage exists between geographic location and economic growth Association between landlocked countries and level of economic development

Countries with hostile climates associated with economic stagnation

Countries that suffer the most from major calamities are among the poorest in the world, which influences ability to market products

World Trade Routes and Communication Links Knowledge about trade routes over land, sea, and air important in making marketing decisions The majority of world trade is among the most industrialized and industrializing countries of Europe, North America, and Asia Need to be aware about communication linksthe underpinning of all commerce Impact of the Internet revolution especially for global marketing of products

Sustainable Development: Key Propositions There is a crucial and potentially positive link between economic development and the environment

The costs of inappropriate economic policies on the environment are very high
Addressing environmental problems requires that poverty be reduced Economic growth must be guided by prices that incorporate environmental values
Since environment problems pay no respect to borders, global and regional collaboration is sometimes needed to complement national and regional regions

Natural Resources
Importance of natural resources especially to manufacturing of products

Supply of natural resources not endless Human labour provides the preponderance of energy in many countries

Importance of oil and gas in world energy consumption

Global Population Trends

Important to know about current population trends because people constitute markets for various categories of goods Necessary to know about: (1) rural/urban population shifts (2) rates of growth (3) age levels, and (4) population control (5) rural-urban migration of world population (6) population decline and aging (7) worker shortage and immigration

Definitions and Origins of Culture

Culture is the sum of the values, rituals, symbols, beliefs, and thought processes that are learned, shared by a group of people, and transmitted from generation to generation Culture has been conceptualized as: 1. Software of the mind culture is a guide for humans on how to think and behave; it is a problem-solving tool An invisible barrier a completely different way of organizing life, of thinking, and of conceiving the underlying assumptions about the family and the state, the economic system, and even Man himself A thicket

2.

3.

ch3_9

A CULTURAL FRAMEWORK
Religion

Language

Values & Attitudes

Aesthetics

Cultures

Education

Law & Politics Technology & Material Culture

Social Organisations

Cultural Dynamics Culture refers to the human-made part of human environment the sum total of knowledge, beliefs, art, morals, laws, customs, and any other capabilities and habits acquired by humans as members of society Importance of culture in international marketing A successful marketer must be a student of culture Culture is pervasive in all marketing activities in pricing, promotion, channels of distribution, product, packaging, and styling Understanding culture can determine success or failure in international marketing

Cultures Pervasive Impact

Culture influences every part of our lives Cultures impact on birth rates in Taiwan, Japan, and Singapore

Birthrates have implications for sellers of diapers, toys, schools, and colleges Consumption of different types of food influence is culture: Chocolate by Swiss, seafood by Japanese preference, beef by British, wines by France and Italy Even diseases are influenced by culture: stomach cancer in Japan, and lung cancer in Spain

Origins of Culture: History

1. The impact of specific events in history can be seen reflected in technology, social institutions, cultural values, and even consumer behavior For e.g., American trade policy depended on tobacco being the original source of the Virginia colonys economic survival in the 1600s

2. The military conflicts in the Middle East in 2003 bred new cola brands, Mecca Cola, Muslim Up, and Arab Cola

Origins of Culture: Geography

1. Geography, which includes climate, topography, flora, fauna, and microbiology, influences our social institutions 2. Two researchers suggest that geography influences everything from history to presentday cultural values 3. First, Jared Diamond states that historically innovations spread faster east-to-west than north-to-south

4. Second, Philip Parker reports strong correlations between the latitude (climate) and the per capita GDP of countries

Origins of Culture: Political Economy 1. For most of the 20th Century three approaches to governance competed for world dominance: Fascism, Scientific Socialism , and Capitalist democracy/free enterprise

2. Fascism fell in 1945; Socialist Camp dismantled in the 1990s

3. Necessary to appreciate the influence of the political economy on social institutions and cultural values and ways of thinking

Origins of Culture: Technology

1. Technological innovations also impact institutions and cultural

2. Jet aircraft, air conditioning, televisions, computers, and the internet have all influenced culture

3. Arguably the greatest impact is the pill that has allowed women to have careers and freed men to spend more time with kids

Origins of Culture: Social Institutions

Social institutions including family, religion, school, the media, government, and corporations all affect culture The family, social classes, group behaviour, age groups, and how societies define decency and civility are interpreted differently within every culture (1) Family behaviour varies across the world, e.g., extended families living together to Dad washing dishes (2) Religious value systems differ across the world, e.g., Muslims not allowed to eat pork to Hindus not allowed to consume beef

Origins of Culture: Social Institutions

(3) School and education, and literacy rates affect culture and economic growth (4) Media (magazines, TV, the Internet) influences culture and behaviour (5) Government policies influence the thinking and behaviors citizens of adult citizens, e.g., the French government offers new birth bonuses of $800 given to women as an incentive to increase family size (6) Corporations influence culture via the products they market, e.g., MTV

Elements of Culture
International marketers must design products, distribution systems, and promotional programs with due consideration to culture, which was defined as including five elements: 1. 2. 3. 4. 5. Cultural values Rituals Symbols Beliefs, and Thought processes

Analyzing Sociocultural Factors

Uncertainty Avoidance
Power Distance

Culture
Time Orientation Masculinity

Individualism

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

High and Low Context cultures

High Context Culture
A culture in which meaning is determined by non-verbal cues, social relationships, and indirect communication such as metaphors and aphorisms (statement of principles). So it pays more attention to physical environment in which the message takes place. Relatively little information is found in the explicit message. More sensitive to non-verbal cues Example:- Dramas and Imagery are often found to be appropriate in France and Japan

Low Content Culture

A culture in which less emphasis is placed on the social context and more emphasis is placed on words, directness and time (deadlines and schedules). So it relies more on the explicit message to carry most of the information. There is little reliance on non-verbal cues. For example, In US people rely less on the context in which the message is given in interpreting the content.

Elements of Culture: Cultural Values

1. 2. 3. Differences in cultural values, which is found to exist among countries, affects consumer behaviour Hofstede, who studied over 90,000 people in 66 countries, found that the cultures differed along four primary dimensions: Individualism/Collective Index (IDV), which focuses on self-orientation Power Distance Index (PDI), which focuses on authority orientation Uncertainty Avoidance Index (UAI), which focuses on risk orientation; and Masculinity/Femininity Index (MAS), which focuses on assertiveness and achievement (also whether patriarchal domination is visibly decisive)

4.

Individualism/Collectivism Index

1. 2. 3. 4.

The Individualism/Collective Index refers to the preference for behavior that promotes ones self-interest High IDV cultures reflect an I mentality and tend to reward and accept individual initiative Low IDV cultures reflect a we mentality and generally subjugate the individual to the group Collectivism pertains to societies in which people from birth onward are integrated into strong, cohesive groups, which protect them in exchange for unquestioning loyalty

Power Distance Index

1. 2. 3. 4.

The Power Distance Index measures power inequality between superiors and subordinates within a social system Cultures with high PDI scores tend to be hierarchical and value power and social status High PDI cultures indicate that those who hold power are entitled to privileges Cultures with low PDI scores value equality and reflect egalitarian views

Uncertainty Avoidance Index

1.

The Uncertainty Avoidance Index measures the tolerance of uncertainty and ambiguity among members of a society High UAI cultures are highly intolerant of ambiguity, experience anxiety and stress, accord a high level of authority to rules as a means of avoiding risk Low UAI cultures are associated with a low level of anxiety and stress, a tolerance of deviance and dissent, and a willingness to take risks

2.

3.

Cultural Values and Scores

Country or Region
Arab Countries Australia Brazil Canada Colombia Finland France Germany Great Britain Greece Guatemala India

IDV Score*
38 90 38 80 13 63 71 67 89 35 6 48

PDI Score **
80 36 69 39 67 33 68 35 35 60 95 77

UAI Score ***

68 51 76 48 80 59 86 65 35 112 101 40

Indonesia
Iran Japan Mexico Netherlands New Zealand Pakistan South Korea Taiwan Turkey United States Uruguay Venezuela

14
41 46 30 80 79 14 18 17 37 91 36 12

78
58 54 81 38 22 55 60 58 66 40 61 81

48
59 92 82 53 49 70 85 69 85 46 100 76

Range of Scores
Range of Scores * IDV United States, 91 Guatemala, 6 **PDI Malaysia, 100 Austria, 11 ***UAI Greece, 112 Singapore, 8

Analysis of socio-cultural factors

Several Latin American countries cluster high on power distance but low on individualism. A marketing design stressing on equality and individualism may be well accepted in English speaking countries but not well received in Latin American countries. Another distinguishing cultural trait is the importance of verbal communication. In US and most of Europe, business relationships are written down often through formal contracts. But in China and South Korea, non-verbal cues are important. In China, business relationships are formalized just by a handshake and trust and honour are more important than legal arrangements.

Country Clusters

2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

Impact on Host Country Culture

Ethical issues such as Cultural imperialism triggered by ethnocentrism.
Critics of USA firms entering foreign markets claim that US products and services overwhelm the local culture, often replacing its food, music, movies and traditions with those of the West. In Iran, the government has forbidden celebration of Valentines Day. Despite that, Valentines Day has become a popular holiday among the youths. These Iranians are exposed to Valentines Day through the Internet and satellite TV, two information sources government can not control. Holiday-themed products arrive through underground distribution channels and are displayed at local shops. Risking legal actions, florists, gift shops, and restaurants make special accommodations for the holiday. But there is mounting discontent against this as many Iranians view this as a threat to their culture. Malaysian authorities banned a TV ad featuring Brad Pitts face in a Toyota ad because they thought the ad was humiliating for Asians and represented US propaganda. In Muslim countries, ads showing women in bathing suits is viewed as obscene.

Time Orientation
6. P-Time versus M-Time

M-time, or monochronic time, typifies most North Americans, Swiss, Germans, and Scandinavians Most low-context cultures operate on M-time concentrating on one thing at a time P-time, or polychronic time, is more dominant in high-context cultures P-time is characterized by multi-tasking and by a great involvement with people

Analysis of socio-cultural factors

Power Distance
Willingness to accept social inequality as natural.

Uncertainty avoidance
Extent to which society relies on orderliness, consistency, structure, and formalized procedures to address issues of daily life.

Masculinity
Extent to which dominant values are male oriented. A lower masculinity ranking indicates that men and women are treated equally in all aspects. Higher masculinity indicates male domination.

Time orientation
A country tending to have long-term orientation values long term commitments and is willing to accept longer term horizon for, say, success of new product introduction.

Elements of Culture: Rituals, and Symbols Rituals are patterns of behaviour and interaction that are learned and repeated vary from country to country, e.g., extended lunch hours in Spain and Greece

Language as Symbols: the languages of time, space, things, friendships, and agreements

French attempting to preserve the purity of their language

Elements of Culture: Rituals, and Symbols In Canada, language has been the focus of political disputes including secession Differences in language vocabulary varies widely

Aesthetics as Symbols: the arts, folklore, music, drama, and dance of a culture influences marketing

Whose English?

United States 1. 2. 3. 4. 5. 6. 7. Trunk Hood Convertible Top Elevator Toilet Bathroom Vacuum

United Kingdom 1. 2. 3. 4. 5. 6. 7. Boot Bonnet Hood Lift W.C. Tub or Shower Hoover

Cultural Differences
When Nike learned that this stylized Air logo resembled Allah in Arabic script, it apologized and pulled the shoes from distribution.

Cultural Mistakes
Pepsodents promise of white teeth backfired in Southeast Asia where chewing of betel nuts makes yellow teeth not only common but quite acceptable. The brewer Carlsberg had to add a third elephant to its Beer label in Africa where two elephants symbolizes bad luck. In China, Japan and many other Asian countries, white colour represents mourning as is purple in many Latin American countries. Gold is a strong positive colour for the Chinese, but not in combination with black, as is the Benson & Hedges cigarette branding. IKEA, an international furniture retail brand based in Sweden, uses blue and yellow, the colours of the Swedish flag--- but not in Denmark where that colour combination has a negative connotation because of period of Swedish occupation. Cologne ad featuring a man attacked by women failed in Africa as obscene

Cultural Mistakes
The name Coca-Cola in China was first rendered as Ke-kou-ke-la. Unfortunately, the Coke company did not discover until after thousands of signs had been printed that the phrase means bite the wax tadpole or female horse stuffed with wax depending on the dialect. Coke then researched 40,000 Chinese characters and found a close phonetic equivalent ko-kou-ko-le, which can be loosely translated as happiness in the mouth. In Taiwan, the translation of the Pepsi slogan Come alive with the Pepsi Generation came out as Pepsi will bring your ancestors back from the dead. Also in Chinese, the Kentucky Fried Chicken slogan finger-lickin good came out as eat your fingers off. In an effort to boost orange juice sales in predominantly continental breakfast eating England, a campaign was devised to extol the drinks eye-opening, pick-meup qualities. Hence the slogan, Orange juice. It gets your pecker up. Food demonstration did well in Chinese stores but not in Korean ones--older women were insulted by being taught by younger representatives

Elements of Culture: Beliefs and Thought Processes

Beliefs, which stem from religious training, vary from culture to culture

Examples:

The western aversion to the number 13 or refusing to walk under a ladder Japanese concern about Year of the Fire Horse The Chinese practice of Feng Shui in designing buildings

Thought processes also vary across cultures

Examples:

Asian and Western thinking

In summary, marketers must consider larger cultural consequences of marketing actions

Factual versus Interpretive Cultural Knowledge

There are two kinds of knowledge about cultures both of which are necessary Interpretive knowledge is the ability to understand and appreciate the nuances of different cultural traits and patterns, e.g., the meaning of time, and attitudes toward people Interpretive knowledge requires a degree of insight It is dependent on past experience for interpretation It is prone to misinterpretation if ones SRC (Self-Reference Criteria) is used

Factual knowledge is usually obvious and must be learned, e.g., different meanings of colours, and different tastes; it deals with a facts about a culture

Cultural Cohort group

Cultural cohort, a segmentation concept based on anthropologists cross-cultural studies, is a group of people from multiple cultures who share a common characteristic. From a marketer's perspective, a cohorts common characteristic is (or results in) a specific need, want, or desire.
For example, new mothers around the world want their babies to be happy. Thus products such as Pampers disposable diapers appeal to mothers irrespective of nationality.

Youth market is one of the most distinct global cohort groups and a particularly important global target by marketers like Nike, Adidas, Pepsi and Nokia. But even within this cohort, further segmentation can be done based on values, personalities and lifestyles. A study has found six different segments of global youth market.
Thrills and Chills (18%) fun, friends, irreverence, sensation Upholders (16%) family, custom, tradition, respect for individuals Quiet achievers (15%) success, anonymity, anti-individualism, social optimism Resigned (14%) fun, friends, family, low expectations Bootstrappers (14%) achievement, individualism, optimism, determination, power World Savers (12%) environment, humanism, fun, friends

MTV is an example of powerful worldwide media vehicle that reaches the global youth market.

Resistance to Change
Although some cultures embrace change, others are resistant to it

Examples of cultures that resist change: Working women in Masculine societies like Saudi Arabia Acceptance of genetically modified foods (or Frankenfood) in Europe

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)

Planned and Unplanned Cultural Change Cultures that are resistant to change represent a major hurdle in marketing products

Cultural change can be accomplished by: First, determine which cultural factors conflict with an innovation, thus creating resistance to its acceptance Second, change those factors from obstacles to acceptance into stimulants for change Third, marketers can cause change by introducing an idea or product and deliberately setting about to overcome resistance and to cause change that accelerates the rate of acceptance Firms can use a strategy of planned change by deliberately changing those aspects of the culture offering resistance to predetermined marketing goals, e.g., introducing western foods and baseball into Japan

Management Styles Around the World

Cross-cultural differences influence management styles in the following areas:

1. Authority and Decision Making 2. Management Objectives and Aspirations 3. Communication Styles 4. Formality and Tempo 5. P-Time versus M-Time 6. Negotiations Emphasis

Differences in Management Styles Around the World

1. Differences in Authority and Decision Making In high-PDI countries subordinates are not likely to contradict bosses, but in low-PDI countries they often do

Three typical patterns exist: top-level management decisions, decentralized decisions, and committee or group decisions
2. Differences in Management Objectives and Aspirations towards:

Security especially of lifetime employment Affiliation and Social Acceptance by neighbors and fellow workers Power and Achievement Orientation sought by managers Importance of personal/family life over work and profit

Differences in Management Styles Around the World

3. Differences in Communication Styles

According to Edward T. Hall, the symbolic meanings of time, space, things, friendships, and agreements, vary across cultures In some cultures, messages are explicit; the words carry most of the information. In other cultures ... less information is contained in the verbal part of the message since more is in the context Communication in a high-context culture depends heavily on the contextual (who says it, when it is said, how it is said) or nonverbal aspects of communication Communication in a low-context culture depends more on explicit, verbally expressed communications Hall places eleven cultures along a high-context/low-context continuum

Differences in Management Styles Around the World

4. Differences in Communication Styles

Level of formality in addressing business clients by first name Level of formality in addressing your boss by first name Tempo or speed in getting down to business Perception of time varies in many cultures

5. Differences in Negotiations Emphasis Differences with respect to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers

Gender Bias in International Business

The gender bias against women managers exists in some countries

Women are not accepted in upper level management roles in Asian, Middle Eastern, and Latin American

Gender bias poses significant challenges in cross-cultural negotiations

Business Ethics
Business ethics is complex in the international marketplace because value judgments differ widely among culturally diverse groups Corruption varyingly defined from culture to culture Existence of different levels of corruption, bribery, and fraud The Foreign Corrupt Practices Act 1997: Imprisonment for bribery Bribery creates a major conflict between ethics and profitability

Bribery: Variations on a Theme

Bribery:

Voluntarily offered payment by someone seeking unlawful advantage

Extortion:

Payments are extracted under duress by someone in authority from a person seeking only what they are lawfully entitled

Bribery: Variations on a Theme

Lubrication:

Involves a relatively small sum of cash, a gift, or a service given to a low-ranking official in a country where such offerings are not prohibited by law

Subornation:

Involves giving large sums of moneyfrequently not properly accounted fordesigned to entice an official to commit an illegal act on behalf of the one offering the bribe; involves breaking the law

Ethical and Socially Responsible Decisions Areas of decision making where ethical issues arise:

1. 2. 3. 4.

employment practices and policies, consumer protection, environmental protection, political payments and involvement in political affairs of the country, and 5. basic human rights and fundamental freedoms

A Framework for Ethical Precepts

Three ethical principles that provide a framework for distinguishing between right and wrong:
Does the action optimize the common good or benefits of all constituencies? And, who are the pertinent constituencies?

(1) Utilitarian ethics

(2) Rights of the parties

Does the action respect the rights of the individuals involved?

(3) Justice or fairness

Does the action respect the canons of justice or fairness to all parties involved?

Ethical Issues in Global Marketing: Environmental Concerns

Waste Management 80/20 Rule: 80% of waste created by 20% of the population Many developing countries dont manage waste well

Case in Point: Mexico Cleans Up Its Act

Challenge
To manage environmental impact while undergoing economic expansion. Using funds provided by North American Commission for Environmental Cooperation (CEC) and the North American Development Bank (NADBank) improved air quality. Mexico now produces lower levels of some pollutants than either the U.S. or Canada and have lower energy use per capita. Proving environmental impact can be managed.

Answer

Results

Ethical Concerns in International Marketing

Global Labour Issues

Fair Wages Working conditions Child Labour

Impact on Host Country Culture

Cultural imperialism Active, formal policy Subtle, general attitude

Cultures Influence on Strategic Thinking Culture influences managers thinking about business strategy The British-American individualistic view of capitalism typifies adversarial relationships among labour, management, and government The communitarian form of capitalism in Japan and Germany are typified by cooperation among government, management, and labor, particularly in Japan

The Chinese emphasis on guanxi (ones network of personal connections) is a kind of capitalism manifested by culture

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 seen as mans best friend

Study Slides

Glossary
Countertrade: Trade between two countries where goods are traded for other goods and not for hard currency. Cultural imperialism: The belief that ones own culture is superior to that of other nations. Exchange rate: The measure of how much one currency is worth in relation to another. Globalization of production: Also known as offshoring, refers to manufacturers procurement of goods and services from around the globe to take advantage of national differences in the cost and quality of various factors of production. Gross Domestic Product (GDP): The market value of the goods and services produced by a country in a year. Gross National Income (GNI): GDP plus the net income earned from investments abroad. Infrastructure: The basic facilities, services, and installations needed for a community or society to function. Trade deficit: Occurs when a country imports more goods than it exports. Trade surplus: Occurs when a country exports more goods than it imports.

Country market environments different

Economic Environment (Purchasing Power, Competitive Intensity, Economys Health)

1. Fiscal policies - tax rates and spending programs of government 2. Monetary policies - regulate money supply

Country market environments different

Financial Environment
1. Exchange rate - price of one currency in relation to another 2. Exchange rate fluctuations can adversely or favorably affect performance of a firm

Country market environments different

Political Environment
1. Tariff barriers - taxes on imports paid to customs officials include a. Specific - fixed amount per physical unit of import b. Ad -valorem ( on the value ) - percentage of estimated value of import 2. Nontariff barriers include a. Import quotas b. Exchange controls c. Buy-domestic policies d. administrative red tape

Country market environments different ?

Cultural Environment
1. Differences encourage marketing adaptations 2. Similarities encourage standardization 3. Balancing the two is a key to success

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

Cultural Environment

Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally.

Elements of Culture
1. Material Culture
Technology Economics

2. Social Institutions
Family Education Political structures The media

Elements of Culture
3. Humans and the universe
Belief systems

4. Aesthetics
Graphic and plastic arts Folklore Music, drama, dance

5. Language

Cultural Knowledge
1. Factual
Different meanings of colors, different tastes, traits indigenous to a culture Ability to understand and appreciate fully the nuances of different cultural traits and patterns
Meaning of time, attitudes toward other people/certain objects, etc.

2. Interpretive

Cultural Dimensions
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

Based on interviews with IBM executives throughout the World--1980s

Home Country Frame of Reference (SRC)

Evaluation of foreign country patterns from a personal perspective

No right or wrong, just different

Some Issues in Culture

Time
monochronic vs. polychronic meanings

Symbols
colors historical associations

Personal space
preferred distance territoriality interaction with/ignoring people in close proximity

Friendship and acquaintance Agreements Etiquette

Eastern vs. Western Culture

Differences in
Values Perceptions of
Objects Reality
Stability vs. change Control

Perceived roles

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

More Tendencies
Westerners tend to rate themselves
More unique than average and what they are Above average in ability

Easterners tend to rate themselves

Less unique than they really are Below average

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.

Values
Issue
Distinctiveness of people Perceived control

Western Value
Want to be distinctive Significant; values determine choices

Eastern Value
Not valued; emphasis on tie to group Modestsocietal values are already established

Emphasis

Success and achievement; relationships may get in the way

Strive to feel good; assurances wanted

Best outcome for relevant group (e.g., family, work group)

Tied to belonging with group

Self-esteem

Relationships
Rules

Equality or superior position

Same rules apply to all

Clearly defined; hierarchical

Depend on context and relationship

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.

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; behaviour is the result of specific roles played at the time

Contrasting Advertising Perspectives

Western
Atomisticbroken 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

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)

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

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

Physical Product vs. Communication Adaptations

Communication adaptations not needed (extension) Product Some industrial adaptations not equipment; some needed electrical (extension) equipment Product Gasoline; laundry adaptations detergent needed Communication adaptations needed Bicycle; fast food; chewing gum Greeting cards

Domestic Compass-equipped prayer rug; hand equivalent does powered washing machine not exist (product invention)

An Example Of Global Marketing

Cultural Impact of Global Marketing: Critical Contentions

Global corporations displace & homogenize developing country cultures Cultural imperialism (Barber 1996; Cavanaugh & Mander
2002; Klein 1999)

Foreign companies have greater power than local cultural producers who suffer economic losses. Global marketing & big American brands are especially problematic (Johannson 2004).

Cultural Impact of Global Marketing: Defending Contentions

Consumers should be able to choose their own cultural goods, regardless of origin. Marketing new cultural goods increases choice & ultimately enriches local cultures. Cultural protectionism serves special interests, not society at large. Distinguishing between foreign & domestic culture is difficult (Witkowski 2005).
Steel drums resulted from cultural mixing.

Research Purpose
Both sides agree that global marketing leads to cultural change, but disagree on how to evaluate its consequences. This research approaches marketing & cultural change as a corporate responsibility issue. By auditing their cultural footprint in emerging markets, companies will minimize doing cultural harm, while maximizing cultural gains.

Food Marketing & Culture

Food is a key element of national & local cultures (Watson 1997). Because food consumption is deeply cultural, global food marketing can instigate cultural change in the less affluent world. Food marketing is politically charged:
Anti-global critics have targeted companies such as Nestl and McDonalds. Issues: food marketing & obesity, genetically modified & organic foods, geographic food names (Witkowski, Seider & Laberanz 2006).

Key Analytic Concepts

Cultural footprint: Representation of all cultural impacts, beneficial & detrimental, that companies introduce to local cultures. Global food marketing: Modern foods sold in modern venues, usually by large, Western corporations. Local culture: Everyday life lived by ordinary people in specific places (Watson 1997). Local food marketing: Traditional foods sold by local producers & vendors. Developing countries: All but the worlds 30 richest nations.

Global v. Local Food Products & Retail Venues

Global Marketing
Food Products

Local Marketing

Processed Standardized (even when adapted) Highly packaged Heavily Promoted Often imported Supermarkets & hypermarkets Convenience store chains Caf & fast-food restaurants chains

Less processed Less standardized Less packaged Less heavily promoted Locally produced Farm gate Periodic markets Small, independent, single-line grocery stores Street vending Neighborhood cafes & traditional restaurants

Retail Venues

Factors Moderating Cultural Footprints

Level of economic development Country size & history Geographic region within country Urban v. rural areas Demographic group
Rich v. poor Male v. female Adults v. children Ethnic & religious group

Dimensions of the Cultural Footprint

Food symbols & meanings
Food as fun, brand identity, bonding via shared meaning

Food consumption rituals

Food acquisition patterns, service interactions, food preparation

Food & Family Life

Children as consumers, eating alone & snacking

Nutrition & heath

Food safety, consumer education, over-nutrition

Global Food Marketing, Local Culture & Corporate Responsibility

Unplanned v. planned change (Cateora &
Graham 2005)

Measurement models
Triple bottom line Social accounting (Zadek 1998) Balanced scorecard (Kaplan 2002) Family of measures (Sawhill & Williamson 2001)

Cultural footprint audit

Auditing the Cultural Footprint of food Marketing in Developing Countries

Cultural Changes likely to Cultural Changes likely to be beneficial be detrimental
Short Term

Wider food availability Better quality and safer foods Lower food prices Greater food selection Higher food management standards More informed food consumers Greater gender equality in food service Bonding divergent groups

Hardship for some local food retailers Diminished demand for domestic brands Displacement of some traditional foods Subversion of family-based food socialization Over-nutrition leading to obesity and chronic health problems

Longer Term

Cultural Footprint Images

Local culture Global food marketing

As companies see their cultural footprint

As the critics see it