BA 497 Week 4, Day 1 04/23/12 International Market Update - Earth Day Us, EU and Japan filed a case at WTO

accusing China of pushing up the rare earth prices by limiteing their exports Arguments: more China has most rare earth minerals No middle in Chinas Middle Class Starbucks expansion into China and what its doing to the middle class Chinas consumers spend big on luxury but are price sensitive with other products Shanghai woman skipped lunch to save up for a jacket American products priced higher Chinese consumers buy Starbucks coffee for experience and status rather than coffee Why success? Invest heavily on training Higher standard of employee treatment, understand that in China their customers will pay more for luxury, position themselves a notch above the competition China has kept prices low for domestic buyers, while international firms have had to pay

Business Customs Business and Culture o Adapting to Cultures Imperatives Electives Exclusives o Methods of Doing Business Authority Objectives Communication Formality and tempo Gender o Negotiations Language Nonverbal behaviors Values Thanking and decision making processes Required Adaptation o What are adaptive traits? o How would you demonstrate adaptability?

Flexibility Open tolerance Humility Justice/fairness Ability to adjust to varying tempos Curiosity / interest Knowledge of the country Liking for others Ability to command respect Ability to integrate yourself into an environment o How do you know which cultural differences are important? Cultural Imperatives o Business customs and expectations that MUST be met and conformed to or avoided to be successful The significance of establishing friendship A persons demeanor is sometimes more critical than in other cultures Cultural Electives o More optional o Behavior or customs that you may wish to conform to or participate in but that are not required o A cultural elective in one country may be an imperative in another A lot of eating or drinking behaviors would fit here Cultural Exclusives o Customs or behavior patterns reserved exclusively for locals and from which a foreigner is barred Religious customs often fit in this category Joking about another cultures behaviors, customs politics, even some historical events Questions o What rituals or practices of the culture I am doing business with are reserved for the local population Ex. Jokes Kwintissential.com for business cultural norms Business Culture o Approaches to doing business can vary across cultures and within cultures

What is U.S. Business Culture Based on? o Master of Destiny o Independent enterprise as the instrument of social action o Reward based on merit o Objective analysis o Decentralized decision making o Never-ending quest for improvement o Competition producing efficiency What about other Cultures? o Personal relationships, family and friendships (as more important than work and used as criteria for selection) o Holistic decision making (vs rational) o Centralized decision making (only upper levels) o Cooperation and harmony (over competition and achievement) o Fatalistic view of the future (little perceived control over situations) Methods of Doing Business o How does level of authority relate to power distance? o What motivates people in their career? o How does who, when, and how affect communication o How are you most comfortable addressing people? o Comfortable business attire? o Dealing with time? Authority and Decision Making o Relationship to PD? High-powered distance culture? Pay attention to authority and hierarchy? YES Low power distance Not as much o Three typical authority patterns: Top-level management decisions Decentralized decisions Committee or group decisions o Questions What level of authority does the person you are interacting with have in making decisions? What is the best way to get the decision makers attention? Management Objectives and Aspirations o Understanding a managers objectives can be an important tool when doing international marketing o Broad Classifications Security and mobility Personal life (hours worked) Affiliation and social acceptance Power and achievement o Important questions What are the objectives of the person I am dealing with How do these objectives affect the decision he/ she could potentially make Personal Life: annual Hours worked o Singapore workers work the most hours per week o Norway works the least Communication Styles: Context o Managers often fail to develop even a basic understanding of just one other language

o Much business communication depends on implicit messages that are not verbalized Context: Low context dependent on explicit expression High context dependent on context or nonverbal communications (less direct) o Questions: How important is context? o What constitutes confirmation or denial in the language you are doing business? Communication Style: Formality o Formality Informal and hasty greetings and manners Level of respect and manners Must know formal rules Communication Style: Time o Tempo and Time: How you deal with time and use it o Monochronic time: on one thing at a time Divide time into small units and are concerned with promptness Most low-context cultures operate on M-time An agenda society o Polychronic time: doing may things at once Dominant in high-context cultures Allows for relationships to build and context to be absorbed as part s of highcontext cultures o Questions Are you losing out because you are not following tempo of client Economics of Time o Economics of time Is time money? Is time regarded as a scarce resource or as plentiful and indefinitely available Scheduling, deadlines, timetables, norms very strict re. time Products creates to save time Negotiations Emphasis o One basic element of business negotiations is the same in any country They relate to the product, its price and terms, services associated with the product, and finally, friendship between vendors and customers o How does culture influence negotiation behavior? o Caution regarding stereotypes Impact of Culture on Negotiation Behavior o Cultural differences cause 4 kinds of problems in international business negotiations: 1.Language 2.Nonverbal behaviors 3.Values 4.Thinking and decision-making processes Differences in Language and Nonverbal Behaviors o Where is variation greatest? Linguistic aspects and nonverbal behaviors or Verbal content? Linguistic aspects and nonverbal behaviors Differences in Values o Objectivity Separating people from the problem o Competitiveness and equality Japanese appear to be the best negotiators with the highest profits o Time

The passage of time is viewed differently across cultures Differences in Thinking and Decision-Making o Western approach: sequential, problem solving o Eastern approach: holistic, relationship oriented with the goal of long-term mutual benefit o

BA 497 30 April 2012 Week 5: Day 1 (After Midterm) Marketing Research o What is available in OSU library online resources? o OSU library Resources Government docs (under Find Other Resources) International and Foreign Government Information Business and Economy Databases >> Business Business Source Premier Mintel National Trade Data Bank S&P Net Advantage Table Base Marketing Research in Global Markets o Whats different? Environment Risk, complications, scope o Does the actual marketing research PROCESS differ? No 1) Research Problem and Objectives, 2) Determine Source of Info, 3) Costs/Benefits, 4) Collect relevant Secondary and Primary Data, 5) Analyze, interpret, and summarize, 6) Communicate *Secondary information FIRST! o Difficulties within the process cause complications Unfamiliar environment clouds problem definition Availability, reliability, comparability, and validity of data Communication issues, willingness to respond, sampling issues

BA 497 05/07/12 Political and Legal Global Environments The Political Environment: A Critical Concern Critical Concern

o A current assessment of political philosophy and attitudes within a country is important in gauging the stability and attractiveness of a govt in terms of market potential Global Perspective o Role of govt Can control and restrict a companys activities By encouraging and offering support or By discouraging and banning or restricting its activities How are govts currently controlling business? International laws recognizes The sovereign right of a nation to grant or withhold permission to do business within its political boundaries and to control where its citizens conduct business Issues in political stability and attitudes o Nationalism/patriotism Feelings of national pride and unity The more a country feels threatened by some outside force or as the domestic economy declines, the more nationalistic it becomes in protecting itself against intrusions Appeals to nationalism through sports, advertising Mexico, enlgihs Canada & French Canada o Targeted Fear Important for marketers not to confuse nationalism with widespread fear or animosity directed at a country Appreciate that no nation-state , however secure, will tolerate penetration by a foreign company into its market and economy if it perceives a social, cultural, economic, or political threat to its well-being Global Perspective o The success or failure of firms around the world are to a large extent determined by firms ability to understand and take advantage of the different rules of the game often set in place based on the political environment o How firms play the game depend on how the rules are made, enforced, and changed o Many firms standard first question is about political risk The danger that political and military upheaval will change the rules of the game Is Revolution Good for Business? Egypt o Tourism? Provides 1 job in 7 (11% GDP) International arrivals 35-45% lower (costing $2 billion) BUT low cost sunshine and 5000 year history o Investors? Net outflow of FDI of 163 mill in 2011 But firms not leaving Egypt bc most populous nation, attractive central location, diversified economy Foreign banks lending money Bureaucrats treating business better (not just well connected) o Informal Economy Millions of small entrepreneurs mostly operating outside the law Hard to get numbers, not clear how many have been put out of work Informal enterprises employ 40% more workers than legally registered companies o Why more people? Redtape took an average of 500 days to register a small bakery in Egypt or 10 years to obtain a legal title to a vacant plot of land Stability of Government Policies o What issues affect political stability

Forms of govt Radical shifts in govt philosophy when an opposing political party ascend to power Pressure from nationalist and self-interest groups Weakened economic conditions Bias against foreign investment Conflicts between govts and/or animosity toward specific countries o A current assessment of political philosophy and attitudes is important in gauging the stability and attractiveness of a govt in terms of market potential Forecasting political risk o An attempt to forecast political instability to help management identify and evaluate political events and their potential influence on current and future international business decisions o If the risk seems unacceptable, investment discontinued Political Risk of Global Business o What can happen? Confiscation the seizing of assets without payment Expropriation the govt seizes an investment but some reimbursement for the assets is made Domestication when host countries gradually cause the transfer of foreign investments to national control and ownership through a series of govt decrees by mandating local ownership and greater national involvement in a companys management Economic Risks o Local content laws Countries often require a portion of any product sold within the country to have local content o Import restrictions Selective restrictions on the import of raw materials to force foreign industry to purchase more supplies within the host country and thereby create markets for locally industry o Exchange controls Restrictions on the exchange and convertibility o Tax controls Can be raised without warning A political risk when used as a means of controlling foreign investments o Price controls (often lower prices) Essential products that command considerable public interest o Labor problems Labor unions have strong govt support that they use effectively in obtaining special concessions from business Lessening Political Vulnerability: What can you do o Corporate philanthropy and global citizenship o Strategies to minimize political vulnerability and risk Local partners Joint ventures Expanding the investment base Licensing Planned domestication Political bargaining Political payoffs

The International Legal Environment: Playing by the rules Global Perspective: The Pajama Caper o $8 cuban pajamas sold in Canada through Wa;-Mart Canada (subsidiary)

o American embargo against Cuba prohibits trade with Cuba, sale of Cuban products, and any US foreign Investment 1962 o Cuba began to encourage foreign investment (EU and Canada) in mid 90s o Helms Burton Act 1996 sanctions may be applied to non-US companies trading with Cuba o EU, Mexico, Canada, UK passed laws to counteract o Selling pajamas violates US law and subject to $1 million fine o But Canadian law prohibits Canadian companies from complying with American policies toward Cuba o Not selling pajamas violating Canadian law and subjet to $1.2 million fine Canada was not fined and kept contract o *Because no single, uniform international commercial law governing foreign business transactions exists, the international marketer must pay particular attention to laws of each country within which it operates o Laws governing business activities within and between countries are an integral part of the legal envt of international business o Securing expert legal advice is a wise decision when doing business in another country o The foundation of a legal system profoundly affects how the law is written, interpreted, and adjudicated Bases for Legal Systems o Common (Case) law Shaped by precedents and judicial decisions More flexibility based on interpretation i.e. US, UK, Australia, Canada, New Zealand, India o Civil or code (legislation) law Written law Less confrontational i.e. Germany, Japan, France, Austria, Italy, Greece, Mexico o Theocratic law (varies in extent Based on religious teaching i.e. Saudi Arabia, Iran Creating a Constitution o Justice Ruth Bader Ginsburg in Egypt To listen and learn as Egypt transitions to a constitutional democracy How could you assess the importance of the legal system in a country o Looking at lawyers per 100,000 people Jurisdiction in International Legal Disputes o No judicial body exists to deal with legal commercial problems arising between citizens of different countries o Legal disputes can arise in three situations: Between govts world court Between a company and a govt Between two companies o Which law governs? o Jurisdiction ins generally determined in one of three ways On the basis for jurisdictional clauses included in contracts (easiest) On the basis of where a contract was entered into On the basis of where the provisions of the contract were performed International Dispute Resolution: Conciliation o Least popular

o Conciliation is a nonbinding agreement between parties to resolve disputes by asking a third party to mediate differences o Conciliation sessions are private and all conferences between parties and the mediator are confidential o Although conciliation may be the friendlier rout to resolving disputes It is not legally binding An arbitration clause should be included in all conciliation agreements Arbitration o More formal mediation with enforceable decision But sometimes difficult to enforce o Contracts and other legal documents should include clauses specifying the use of arbitration to settle disputes o Arbitration clauses require agreement on two counts: The parties agree to arbitrate in the case of a dispute according to the rules and procedures of some arbitration tribunal They agree to abide by the awards resulting from the arbitration Litigation o Should be avoided o Seek settlement o Deterrents to litigation Creating a poor image and damaging public relations Potential for unfair treatment in a foreign court Relatively high cost and time required when bringing legal action Loss of confidentiality

Global Marketing Week 6, Day 2 (05/09/12) Global Weekly Updates India Frees sugar exports o Global sugar production is excelling, India had a bad sugar market due to high regulations. Government panel discussed liberalizing industry in April 2012 o Oldest industrial association in India established in 1032 when tariff protection was granted to the industry o ISMA interface between industry and govt o India entered sugar export market in 1957 with ISMA initative Indian govt opened sugar market by removing limits on sugar exports o Govt likely to cap shipments o Local prices remained low Dead Baby Pills o August 2011, pills sold with baby body parts (aborted o Corrupt Chinese medical staff are tipping off medical companies when babies die o Miracle Cure put pills in very high demand lots of smuggling o S. Korea customs upped security o Some reports claim that some babies had perished in Chinas notorious dying rooms o 38% of childbearing women have been sterilized o High Demand for alternative Chinese remedies many of which are old (2000 years) o Chinese have historically consumed human placentas to improve blood supply and circulation

o Capsules were confiscated and no punishment due to small amount and not intended for sale Book Article Aspirational Poor 4 billion people living on less than $2 per day Significance of BOP? o Represent $14 trillion in purchasing power o Aggregate buying power As a marketer, what could you do to serve them more effectively as o Consumers o Producers o Partners Misconceptions o With such low incomes there is little to spend on goods and services Aggregate buying power can be substantial o Focus on fulfilling basic needs and not waste money on nonessentials Consumers who cant afford major purchases do buy luxury items to improve their lives (houses, cars, etc) o Goods sold in BOP markets are so inexpensive that there is no room for new entrants to make a profit BOP often pay overall higher prices, opportunities for efficient competitors offering quality and low price o BOP consumers cannot use advanced technology Residents can learn very quickly how to use cell phones, PCs, and other technology o Global companies that target BOP markets will be criticized for exploiting the poor Offering basic goods and services that improve a countrys standard of living while earning a reasonable return and benefiting society o Barriers to business make it impossible to do business (corruption, illiteracy, bureaucracy, infrastructure) Entering in early stages may result in lower return on investment BUT gain a foothold in an economy that will someday be profitable Adapting to the BOP o What specific marketing issues were identified in the case Providing infrastructure for products to work properly PC kiosks in villages equipment to manage power outages, solar panels for extra electricity, satellite telephone hook up, train to use PCs Design products to function in local areas with inadequate product support Windup self-generating radio Cell phones (<$50) longer standby time and battery life, loud ring, solar powered Package products in usable sizes Shampoo in single serve sizes Provide credit in a market where credit purchases are not traditional Cemex cement for home expansion targets consumers who make less than $5/day consumers pay $11.50/week and received building materials to expand homes Examine manufacturing costs Computers for <$200 Distribution Strategies to gain market penetration to small and geographically scattered villages Unilevers empowered mothers who sell products in their villages Importance of women in economic development

Why? More likely to improve living conditions, reinvest in family, more reliable, plan, purchase, build social capital in communities, support others, role in product acceptance Marketing & BOP Global Brand o Youre exploring the idea of marketing to the BOP Is your global brand already there? Is your global brand an appropriate product? What are some of the basic marketing issues that you need to consider What would you need to do differently? How would you evaluate the potential of a BOP market segment for your product? o Discuss options for your global brand and its potential for the BOP The Other Side of the Story o Is it an example of shameless, far-fetched corporate poor-washing through an agenda for boosting profits packaged as a poverty antidote? o Is it exploitation to profit from selling soap, shampoo, personal computers, and ice cream to people with little disposable income? o Can making loans to customers whose income is less than $100 monthly at interest rates of 20% to purchase TVs, cell phones, and other consumer durables to be justified? o Is making profits from people with little disposable income and often not enough to eat stimulating economic growth and not capitalist exploitation? Another Option o Microfinance and BOP Loans given to entrepreneurs too oor to qualify for traditional bank loans Very small loans can make a disproportionate difference to a person at the BOP o Muhammed Yunus Founder of Grameen Bank Received 2006 Nobel Prize for Peace Talking about his first loan and the start of Grameen Bank How did/does the global meltdown affect the BOP o Drop in Cpaital and Investment Both private investors and aid Private dropped from $1 trillion to $165 Billion o Drop in commodity prices Reliance on commodities for revenues o Reduced trade and export earnings Developed country imports from emerging countries dropped between 6 and 12 % o Lower labour remittances Workers sent back remittances ($300 billion)

BA 497 Week 7, Day 1 (05/14/2012) Finishing: Bottom of the Pyramid But not just looking for economic progress o Many countries see in economic growth the achievement of social as well as economic goals Improved health and welfare of citizens, better education, more effective government, reduction in social inequities, ethics improvements

o Ca this be done by business more explicitly? Yes Social Business at BOP o Social Business Business to do good, impact on people not profit Business with a social purpose, cause-driven o How would you market yogurt to the BOP using a social business model How would change your business model? What are your objectives? Bottom line? Success? How would you change your product? Price? Production? Distribution? Target Market? Grameen Danone o Objective 1: provide children with key nutrients missing from their diet in rural Bangladesh o O2: alleviate poverty through a community based business model o Target Market: Children o Product: fortified yogurt Shakti Doi (power yogurt) contains protein, vitamins, minerals, and micronutrients o Size: 80 grams o Price: 7 cents o Sources: local raw materials, local labor Emerging Markets o Emerging markets are where the majority of the worlds trade growth will occur Will account for 75% of the worlds total growth in the next decade and beyond o Demand Diversity of consumption patterns across countries What are needs?? Where is money spent? What are segments? o Level of economic and market development More developed economy = greater variety of marketing functions o More developed countries spend less income on food Stages of Economic Development o The UN groups countries into 3 categories: MDCs (more-developed countries) LDCs (less-developed countries) LLDCs (least-developed countries o NICs (newly industrialized countries) Countries experiencing rapid economic expansion and industrialization and do not exactly fit as LDCs or MDCs BEMs, BRICs, N11s o Why have some countries grown rapidly and others not? NIC Growth Factors o Why have some countries grown rapidly and other not? Political stability in policies affecting their development Economic/legal reforms Entrepreneurship Planning Outward orientation Factors of production Targeted industries for growth Privatization BRICs o Brazil, Russia, India, and China o What do they have in common?

Physically large, significant populations, considerable markets for large variety of products, growth rate (or potential), political importance in region, regional economic drivers o NOT one single enormous market but several very large markets between AND within the countries Within segments for marketers: China city segments based on tiers and rural segments based on geographic region India geographic regions Russia based on attitudes toward old vs modern Russia Brazil affluence Next 11 (N11s) o Countries expected to expand and grow with high population growth, rising incomes Bangladesh, Egypt, Indonesia, Iran, South Korea, Nigeria, Pakistan, the Philippines, Turkey, Vietnam, Mexico Why? High population growth Growing pool of potential customers Significant potential Open to trade Rising incomes

Global Markets Multinational Market Regions and Market Groups Global Perspective o Multinational Market regions those groups of countries that seek mutual economic benefit from reducing trade and tariff barriers o Goal are economic benefits for all participants and associated peace o One concerncooperative trade groups will become regional trading blocs without trade restrictions internally but with borders protected from outsiders La Raison d Etre o The advantages of economic union must be clear-cut and significant, and the benefits must greatly outweigh the disadvantages before nations forgo any part of their sovereignty o Many rethinking levels of integration (Greece) Factors o Economic Larger markets Need common economic base Economically stronger members need to allow for needs of weaker members o Political Comparable aspirations Sovereignty is important o Geography Distance Time zones Physical barriers o Culture More similar, more likely to succeed Perceptions and beliefs Benefits and Problems o Benefits

Sometimes easier to deal with greater and more uniform market Access to greater base of consumers o Problems Protectionism Hamper imports from outside Too much integration Patterns of Multinational Cooperation o Multiple forms of cooperation low to high integration Regional cooperating groups (APEC) Asia Pacific Agreement to develop industries and business, commitment to cooperation Least professional, informal Free trade area (NAFTA) Reduce or eliminate tariffs among partner countries Countries maintain individual tariffs for external countries Customs union (Arab Customs Union) goal, not there yet Reduce or eliminate tariffs among partner countries Common external tariffs on imports from external countries Common market (Mercosur) Reduce or eliminate tariffs among partner countries Common external tariffs Flow of labor and capital among partner countries Economic and Political Partnership (EU, CIS becoming more closely tied) All of the above and political and economic integration Asia Pacific Economic Cooperation o Group formed in 1989 o What is APEC and why is it important? o Provides a formal structure for the major governments of the Asian Pacific Rim region, including the US and Canada, to discuss their mutual interest in open trade and economic collaboration o Common goal and commitment To open trade To increase economic collaboration To sustain regional growth and development To strengthen the multilateral trading system To reduce barriers to investment and trade without detriment to other economies Africa o Little economic integration because of the the political instability and the unstable economic base o Economic Community of West African States (ECOWAS) Striving for free trade and economic and moentary integration BUT Plagued with financial problems, conflict within the group, and inactivity on the part of some members o Southern African Development Community (SADC) Approved free trade and in process IS the most advanced and viable of Africas regional organizations Middle East o The Middle East has been less aggressive in the formation of successfully functioning multinational market groups o A long history of border disputes and persisting ideological differences will have to be overcome o Arab Common Market (ACO) 22 countries

Set goals but not there yet o Economic Cooperation Organization (ECO) 10 countries (Iran, Pakistan, Turkey) Trade volume very low among members o Creation of the Organization of the Islamic Conference (OIC) 60 countries and over 650 million Muslims worldwide The member countries vast natural resources, substantial capital, and cheap labor force are seen as the strengths of the OIC NAFTA o 1994 a single market of 360 million people and a $6 trillion GNP o NAFTA requires the three countries to remove all tariffs and barriers to trade over 15 years, but each country will have it sown tariff arrangements with nonmember countries o The elimination of trade and investment barriers among Canada, Mexico, and the Unite States creates one of the largest and riches markets in the world Association of SE Asian Nations +3 o ASEAN and AFTA o Goals of the ASEAN and AFTA Economic integration and cooperation through complementary industry programs Preferential trading, including reduces tariff and nontariff barriers Guaranteed member access to market throughout the region Harmonized investment incentives Southern Cone Free Trade Area (Mercosur) o Mercosur (including Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay) is the 2nd larges common-market agreement in the Americas after NAFTA and 3rd largest in the world o Since its inception, Mercosur has become the most influential and successful free trade area in South America o Treaty calls for common market that allows for free movement of goods, capital, labor, and services and uniform external tariff Economic & Political Partnership: EU o Economic and political partnership Unique and evolving European parliament Council of European union European commission o European Union Series of treaties and agreements (ECSC, Rome, EEX, Maastricht, Lisbon)

Global Marketing Strategy Global Marketing Management o Globalization vs localization o Standardization vs customization What is best for marketers Who argues for standardization Efficiently and standardization accountants Marketers do I need to customize Planning for Global Markets o What is successful marketing planning? Successful planning is evaluating company objectives, including managements commitment and philosophical orientation to international business o Other: objectives and resources and international commitment International Planning Process

o Product, price, place, promotion (preliminary analysis, adapting the marketing mix of target markets (phase 1&2) o Develop marketing plan, implementation and control (phase 3&4) Alternative Market Entry Strategies 4 methods of foreign entry

o o Direct exporting or to distributor

BA 497 Week 7 Day 2 (05/16/12) Market update: Egypt illegal digging. Increased 100 fold in last 16 months landmark areas 5697 illegal digs since anti-Mubarak uprising in 2011 (known) Illicit trading and smuggling abroad, death by digs, killings over thief disputes Blame? Failure of police to take charge, lake of effective security, recent increases in security Products and Services for Consumers Modifying the car for the American Market o More powerful engine o Softer ride o More substantial cup holders o Lower emissions Global vs Adapted Products o Standardized products worldwide or differentiated product adapted or redesigned for culturally distinct markets? o What should you do? When? Why?

o What do you do with your product/service and why? o Standardization makes sense only when there is adequate demand for the standardized products Costs must be balanced with demand Quality o The COST and QUALITY of a product are among the most important criteria by which purchases are made o Quality is essential for success in todays competitive global market o The decision to standardize or adapt a product is crucial in delivering quality o Customers know what is good and what is not o How do other marketing mix factors affect quality? Physical or Mandatory Requirements for Adaptation o Product homologation mandatory changes based on local requirements Primary reason for product adaptation o Product adaptation dictated by the following requirements Legal size, safety, quality Economic size related to cost Political gain local support with changes Technological focus on local needs Climate meet geographic needs Laurie Bridges OSU librarian Products and Culture o A product is not just a product (in most cases) A product is the sum of the physical and psychological satisfactions it provides the user Functional Symbolic Experiential The need for cultural adaptation depends on cultural differences in Product use Perception o Soup, cake, and diet coke Soup, Cake, and Diet Coke o No one bought condensed soup. Dry packaged soup was more popular (could take ownership) o Cake mix vs buying an elaborately decorated cake o Diet Coke The word diet has an unfavorable connotation Now, coca cola light Analyzing Product Components for Adaptation

o o Core issues: computer manuals, diapers, soup o Package issues: coke Selling Condoms in the Congo o Image and communicating with packaging Thinking about the customer Who is the audience? Designing the packaging that communicates with this audience What are the messages of branded products vs generic? How does the packaging affect behavior Similarities? Differences? Innovative Products and Adaptation o Determining the degree of newness as perceived by the intended market o Diffusion o Consumption behavior The World is NOT flat o At least in terms of new product adoption Study examined time from product launch to sales spike Average time across research spanning 27 years, 8 products, and 55 countries Large variations (in product adoption) across product categories, countries, and regions International diffusion or spillover effects Product perceived as a new idea to consumers and how fast the product will spread across the country or region Spillover Effects, Some Findings o Countries more influential in spillovers tend to (if you can enter this country, you can most likely enter neighboring countries successfully): Be larger Have higher Economic wealth Have more exports o Countries more susceptible to spillovers tend to: Have lower economic wealth Be more receptive to tourists Have higher population density o Effects are stronger The closer the countries are, both geographically and economically o Take off of a product in the US will increase the probability of take off in Canada by 24% Other examples: Product in France, Belgium increases by nearly 50%

Some Findings o Take-off Time Fast = Western Europe and North America Slow = South America, Africa, Middle East, and Australasia o Spillover effects High clout countries (influential countries) = Hong Kong, Taiwan, Germany, France, and U.S. Low clout countries = Singapore, Vietnam Pakistan, and China o What does this mean? If takeoff hasnt occurred after a certain period of time, consider withdrawing Ideal introduction not only fast in time to takeoff BUT also have strong influence or clout on other more susceptible countries A lot of buzz about China and India BUT both countries have been (in recent history) slow in adopting new innovations AND are huge and require a lot of resources SO introduce in smaller and more innovative countries that have clout with neighboring countries

BA 497 Week 8, Day 1 (21 May 2012) International market update: United states and Colombia enter free trade agreement o Deal signed in 2006, went into effect Tuesday, multiple oppositions from students, business communities, small farmers o Protests turned violent. New FTA means potential boost for Colombias economic growth, eliminate tariffs between the two countries. o Problems for Colombia: Small scale beef and dairy farmers will be hurt Coffee already has to be imported Pakistan restores twitter after block o Messages deemed offensive to Islam blocked twitter after it refused to remove the material o Worried about freedom of speech o BBC world news channel was taken off air in Pakistan after broadcasting something deemed objectionable by Pakistanian govt o First attempt was to block Facebook and Youtube

Global Products Fast Food around the world o Fast foot has been changed do to dominate religions in other cultures Tambrands Case o Girls education is a primary focus of development efforts in developing countries (parts of Asia, Africa, and Latin America) o Education is believed to have positive long-term economic and social effects o Most effective: providing sanitary care and education

Marketing Consumer Services Globally o Importance of services in Global Marketing o Fastest growing sector of international trade

o Services account for 25-40% of the value of all international trade o Industries? Transportation, travel/tourism, financial, insurance o *Consumer services Characteristics: o Intangibility o Inseparability o Heterogeneity: each experience is not the same o Perishability Opportunities Barriers Services can be difficult to standardize because expectations and circumstances for service delivery differ widely Most services are performed in direct relation to local customers so service attributes are more dependent on culture o How would services vary globally? o Service failures Western cultures more likely to complain to business Individualistic countries more like to engage in Negative WOM and less likely to engage in positive WOM vs Collectivist o Waiting Western cultures impatient (US most impatient) Switzerland and US vs organized waiting High power distance ok to bypass line Doing/Being doing: task centered vs being: person centered where known customers shown preference o Brands in International Markets o Very important o Most valuable resource a company has o A global brand is the worldwide us of a name, term, sign, symbol, design, or combination thereof intended to identify goods or services of one seller and to differentiate them from those of competitors National and private brand o National and Private Brand o Majority of brands throughout the world were originally conceived on a national level and not as international brands o National Acquiring national brand names Nationalistic pride impact on brands o Private brands Growing as challengers to manufacturers brands Are quality products at low prices o Country of Origin Effect and Global Brands o Consumers have broad but somewhat vague stereotypes about specific countries and specific product categories that they judge best. o Foreign branding changes consumer perceptions of products COE more important in early stages of decision making (quality vs purchase intent) o Many perceptions of COE vary by country o The more technical the product, the less positive is the perception of one manufactured in a less-developed or newly industrializing country o Made in USA, Made in China

o Country of origin effect (COE): any influence that the country of manufacture, assembly, or design has on a consumers positive or negative perception of a product Integrated Marketing Communications one of the most difficult aspects of developing a global brand o How consistent does your communication have to be? o Going global o Difficult to pull together a completely global campaign o Axe Indonesia, Turkey, UK, US o Beer China vs US o Path to purchase barriers to building preference and promoting purchase o Advertising creates awareness and preference o Problems: Different legal ages for purchase Distribution is restricted (by state - US) US finding one particular brand among all the brands on the shelves Soln: in store displays need to work together with advertising, make it easy for consumers to locate your brand China price is a bigger barrier Soln: lowering price through price promotions has greater influence but lowers margins, loyalty promos o Global Perspective o Integrated marketing communications (IMC) Personal selling Sales promotions Public relations Advertising Sponsorship o Personal Selling o The companys sales force is on the front line of a marketing organization o The largest personnel requirement abroad for most companies is the sales force o The recent emphasis on using local personnel operating in their own lands has highlighted the importance of adapting US managerial techniques to local needs o The development of an effective marketing organization calls for careful recruiting, selecting, training, motivating, and compensating of personnel and their families

BA 497 Week 8, Day 2 (05/23/2012) Update: Cutting funding on moon missions Obama in response to the struggling economy. 2013, looking to shift remaining funding from discoveries in Mars to Space Technology. Personal Selling Continued Motivating/Evaluating Salespeople/Incentives o Formal realistic evaluation Must deserve salary Sales figures average Target negotiated Rewards & sanctions based on results o Individualism

o Low PD, UA, explicit o Internal incentive Cannot be dismissed Close personal ties Boss knows best motivate not achieve o Collectivism o High PD, UA, implicit Who is the decision maker? o High power distance More centralized decision making Budgetary power located at the top Target contacts atht e top while keeping friendly contacts at intermediate levels o Low power distance Decentralized decision making Financial thresholds for decisions at each level Level of contact proportionate to financial amount of sales contract Persuasive Strategies o Self-confidence good or bad? High perceived as arrogant vs too little perceived as lacking credibility Long term orientation: soft sell vs hard sell people vs product Price vs Quality Sales Promotions o Sales promotions Some universals: Stimulate consumer purchases and improve retailer or middlemen effectiveness and cooperation Short term efforts directed to the consumer or retailer to get them to take action o I.E. Samples, gifts, contests, pop displays, etc o In markets with media limitations, the percentage of the promotional budget allocated to sales promotions may have to be increased o Major constraints? o Issues/constraints: Level of literacy Lower literacy coupon response lower, therefore visual and oral promotion important (films and free samples popular) Target market Suitability of prizes (cars or bicycles, small or large household items, sporting equipment or more practical appliances) o Cash sometime illegal Perceived status of promotion Coupons viewed as middle class vs low class (price consciousness) Signal of free not always self evident Poor quality - they cant sell it so they are giving it away vs naivety of manufacturer lets take as much as possible Public Relations o Building an international profile Companies Countries The role of public relations (PR) is creating good relationships with the popular press and other media to help companies communicate messages to customers, the general public, and governmental regulators

Culture & Public Relations o Intended to build trust and credibility o Crisis: to maintain goodwill by responding to criticism, explaining actions and countering messages that may damage o Cultural Variance in Making contacts Managing relationships Disclosing information Developing arguments Dealing with nationalistic feelings Cultural Differences in PR o Often comes through with disasters Sense of responsibility to community Sense of privacy (for company) Low profile *Switzerland vs high profile (Japan) Model of Free Press varies Freedom sometimes restricted by the government Advertising o Of all the elements in marketing and communications, advertising is most often affected by cultural differences o Balance between standardization and customization The role of advertising is to interpret r translate the qualities of products and services in terms of consumer needs, wants, desires, and aspirations. The emotional appeals, symbols, persuasive approaches and other ad characteristics must coincide with cultural norms. Legal Constraints o Comparative advertising Held in low esteem in some countries forbidden to denigrate competing brands o Advertising of specific products o Control of advertising on television o Accessibility to broadcast media o Limitations on length and number of commercials Cultural Issues o View that it is a waste of money Viewed as a parasitic activity and consumers pay for the cost of advertising o Morality Immoral to spend too much on advertising (sometimes strictly controlled or forbidden) o Attitudes toward advertising US least negative vs Greece and New Zealand o Tastes and Preferences Information Germans have a preference for highly informative advertising (compared to many other countries) Humor More popular in UK than US and France and even less in Germany Type of humor

Communication Cultural Issues o Ad appeals Implicit (Japan soft sell) vs explicit (US hard sell)

Diagnosticity of info: Symbolism (France, Italy, Sweden) vs Informational (German, Taiwan) vs Argument/Problem solution (US) Humor black humor (UK), gloating (German), self-enhancing and defeating (US), creating a bond (Japan) o Characters Prefer characters they can identify with Gender roles often reflects stereotypes to varying degrees Gender roles stereotype. Women less likely in work situations, AGE Sponsorship: relationship between brand and entity Advertising vs Sponsorship o Advertising Paid, non-personal communication through media about a product by a sponsor identified in a message that is intended to inform or persuade a particular audience More direct o Sponsorship A relationship between a marketer and property in which the marketer pays in return for access to exploitable commercial potential associated with the property Less explicit Leveraging o Sponsorship has been characterized as a license to spend more money o Sponsorship is not a stand-alone activity o Finding ways to communicate to consumers/fans you are a sponsor o Finding way to maximize effect of sponsorship Leveraging in Practice o Successful leveraging spending ratio (Activiation:Sponsorship) People buy the toy but dont buy the batteries that will keep the toy running (Jeff Henderson, Chick-fil-A sponsorships and Event Marketing Manager) o Why? Strong activation discourages competitors from trying to ambush your sponsorship

Week 9 (only class day) BA 497 International Market update: Flame Malware Flame, info vacuum government backed? 600 computers attacked in Iran, Israel, Sudan, Syria, Lebanon, Saudi Arabia, Egypt toolkit, not a weapon. Simlar to stuxnet, precisely targeted, intelligent program Are these shorts too short UAEdresscode twitter campaign Goal of campaign: persuade expats and tourists to dress more modestly Breaking barriers culture adapt or avoid Integrated Marketing Channels Global Perspective o Ubiquitous: found everywhere

Tanzania and Uganda represent the majority of coca cola sales A product must be made accessible to the target market at ana dffordable price Getting the product to the target market can be a costly process Forging an aggressive and reliable channel of distribution may be the most critical and challenging task facing the international marketer o Competitive advantage will reside with the marketer best able to build the most efficient channel from among the alternatives available Channel of Distribution Structures o All consumer and industrial products eventually go thorugh a distribution process Physical handling and distribution of goods Passage of ownership Buying and selling negotiations between producers and middlemen Buying and selling negotiations between middlemen and customers o Each country market has a distribution structure through which goods pass from producer to user Channel Structures o Import Oriented or traditional Sellers market importer controls fixed supply at higher prices to a small number of affluent customers Demand exceeds supply o Mass consumption philosophy Buyers market one supplier does not dominate and highly developed channel exists o Relationship oriented Protected structure serves consumers who make small, frequent purchases at small convenient locations Many small middlemen with small retailers Difficult to change relationships Retail structures o Japan a lot of independent G and bakers (more small business) o US high on supermarkets Large Scale Retail Store law and its Successor o Daitenho the Large-Scale Retail Store Law Large stores must have approval from the prefecture government All proposals first judged by the Ministry of International Trade and Industry (MITI) If all local retailers unanimously agreed, the plan was approved Could be a lengthy process Applied to both domestic and foreign companies o Replaced by the Large-Scale Retail Store Location Act of June 2000 MITI out of the process Relaxed restrictions Rural Communities o Issues? Rural and remote villages that are difficult and costly to access Untapped consumer market Lack of choice for consumers Global Perspective an export Sale: From Trade show to Installation o Specific export mechanics occur when goods are shipped from one country to another. o Most countries control the movement of goods crossing their borders imports and exports o The international marketer must meet the legal requirements involved in moving goods from one country to another Export regulations Import regulations o o o o

The Exporting Process Exporting o General declaration of type of product, its value, and its destinations o Validated formal application authorizing exportations (technology, security products, specific countries) o Export Declaration reporting purposes ($$) o Commercial invoice what, where goods produces, use to calc tariffs o Bill of lading contract between sender and carrier o Consular invoice obtained from consul of importing country