Introduction to International Marketing

Ch. 1: Scope and Challenge of International Marketing Ch.2: The Dynamic Environment of International Trade

Understanding International MarketingUnderstanding International Marketing

Market, Marketing, International marketingMarket, Marketing, International marketing Domestic vs. International MarketingDomestic vs. International Marketing

Strategic Orientation: domestic, Strategic Orientation: domestic, multidomestic, and globalmultidomestic, and global

Marketing mix: 4 PsMarketing mix: 4 Ps Environmental forces: Environmental forces: controllables vs. controllables vs.

uncontrollablesuncontrollables Environment and the marketing mixEnvironment and the marketing mix

7

The International Marketing MixThe International Marketing Mix

Political/legalforces

Economicforces

1

2

Environmentaluncontrollablescountry market A

Environmentaluncontrollablescountrymarket B

Environmentaluncontrollablescountrymarket C

Competitivestructure Competitive

Forces

Level of Technology

Price Product

Promotion Channels of distribution

Geography and

Infrastructure

Foreign environment(uncontrollable)

Structure ofdistribution

Economic climate

Cultural forces

3

45

6

7Political/

legalforces

Domestic environment(uncontrollable)

(controllable)

Environment and Marketing mix Environment and Marketing mix

   Environment

 Product

 Price

 Promotion

 Place  

 Economic 

       

 Competitive 

       

 Technological 

       

 Demographic 

       

 Geographic 

       

 Cultural 

       

 Political/legal 

       

Understanding International MarketingUnderstanding International Marketing

International MarketingInternational Marketing……. developing a mindset?. developing a mindset? Developing awarenessDeveloping awareness Self-Reference Criterion (SRC)Self-Reference Criterion (SRC) Adapting to local cultureAdapting to local culture

FPs’ Globalization IndexFPs’ Globalization Index Economic integrationEconomic integration Personal contactPersonal contact Political engagementPolitical engagement Technological connectivityTechnological connectivity

Global GovernanceGlobal Governance

Politics/PeacePolitics/Peace- United Nations- United Nations TradeTrade- World Trade Organization (WTO)- World Trade Organization (WTO) Money/FinanceMoney/Finance- International Monetary Fund - International Monetary Fund

(IMF)(IMF) DevelopmentDevelopment- World Bank- World Bank OverallOverall- G8 Nations (USA, Canada, UK, - G8 Nations (USA, Canada, UK,

France, Germany, Italy, Japan, and Russia)France, Germany, Italy, Japan, and Russia) Other international institutions/bodiesOther international institutions/bodies

Institutions in International TradeInstitutions in International Trade

World Economic and Trade Environment WTO, IMF, and World Bank in the World Economy

Role of the organizations Easing trade restrictions Protest against globalization

Multinationals in the global economy Role of American, European, Japanese, and Third

World multinationals on a timeline

|_______|________|_______|_______|_______|_______I1950 1960 1970 1980 1990 2000 2010

Protectionism and Trade BarriersProtectionism and Trade Barriers

Protectionism and Tariff BarriersProtectionism and Tariff Barriers Cost of protectionism: arguments for and againstCost of protectionism: arguments for and against Nontariff Barriers: Nontariff Barriers:

Quota and Import LicensesQuota and Import Licenses Domestic Subsidy and Economic StimuliDomestic Subsidy and Economic Stimuli Standards and documentation requirementsStandards and documentation requirements Boycotts and EmbargoesBoycotts and Embargoes Monetary barriersMonetary barriers Antidumping PenaltiesAntidumping Penalties

Balance of Payments (BOP) AccountBalance of Payments (BOP) Account

A. Current AccountA. Current Account Merchandise TradeMerchandise Trade ServicesServices Unilateral TransferUnilateral Transfer

C. International ReserveC. International Reserve Gold, Silver, and Precious MetalsGold, Silver, and Precious Metals Foreign CurrencyForeign Currency Special Drawing Rights (SDR)Special Drawing Rights (SDR)

B. Capital AccountB. Capital Account Portfolio InvestmentPortfolio Investment Direct InvestmentDirect Investment Short term loansShort term loans

D. Net Statistical D. Net Statistical DiscrepancyDiscrepancy

BOP Account must balance, BOP Account must balance, Equation: A+B = C+DEquation: A+B = C+D

Ch 1 and 2: Questions for DiscussionCh 1 and 2: Questions for Discussion

1.1. What is international marketing? How does it differ What is international marketing? How does it differ from domestic marketing?from domestic marketing?

2.2. What is “developing a mindset” in international What is “developing a mindset” in international marketing? How is it related to self-reference marketing? How is it related to self-reference criteria?criteria?

3.3. What is protectionism? Is it good (or bad) for an What is protectionism? Is it good (or bad) for an economy? How?economy? How?

4.4. Explain how nontraiff barriers affect trade.Explain how nontraiff barriers affect trade.5.5. What is subsidy? What is the effect of subsidy on What is subsidy? What is the effect of subsidy on

trade and economy?trade and economy?6.6. What is a BOP account? Explain the four subheads What is a BOP account? Explain the four subheads

of a BOP account. Why should an international of a BOP account. Why should an international marketing manager study the BOP account of a marketing manager study the BOP account of a country?country?

Top Ten 2000 U.S. TradingPartners ($ billions)

Canada $176.4 $229.2 $405.6 -$52.8Mexico 111.7 135.9 247.6 -24.2Japan 65.3 146.5 211.8 -81.3China 16.3 100.0 116.3 -83.8Germany 29.3 558.7 88.0 -29.5United Kingdom 41.5 43.5 85.0 -1.9South Korea 27.9 40.3 68.2 -12.4Taiwan 24.4 40.5 64.9 -16.1France 21.0 29.0 50.0 -8.0Singapore 17.4 19.6 37.0 -2.2

Country U.S. Exports U.S. Imports Total Surplus/Deficit

The Nationality of the World’s 100 Largest Industrial Corporations (by country of origin)

United States 67 47 47 33 32 24 24 36Germany 13 13 8 12 14 14 13 12Britain 7 7 5 6 4 1 2 5France 4 11 5 10 6 12 13 11Japan 3 7 12 18 23 37 29 22Italy 2 3 3 4 4 3 4 3Netherlands-United Kingdom 2 2 2 2 2 2 2 --Netherlands 1 3 1 1 1 2 2 5 Switzerland 1 1 2 3 3 3 5 3Argentina -- -- 1 -- -- -- -- --Belgium -- 1 1 -- -- -- -- 1Brazil -- 1 -- 1 1 -- -- -- Canada -- 2 3 -- -- -- -- --India -- -- 1 -- -- -- -- --Kuwait -- -- 1 -- -- -- -- --Mexico -- 1 1 1 1 -- 1 --Venezuela -- 1 1 1 1 -- 1 --South Korea -- -- 4 2 4 2 4 --Sweden -- -- 1 2 1 -- -- --South Africa -- -- 1 1 -- -- -- --Spain -- -- -- 2 2 -- -- --Turkey -- -- -- -- 1 -- -- --China -- -- -- -- -- -- -- 2

1963 1979 1984 1990 1993 1995 1996 2000

U.S. Current Account by Major Components, 1990-1999 ($ billions)

Merchandise Tradea. Exports $201.8 $219.9 $215.9 $224.0 $246.6 $319.9 $362.1 $389.3 $416.9 $440.4 $456.9

b. Imports 268.9 332.4 338.1 368.5 409.9 446.4 477.4 498.3 491.0 536.5 589.4

c. Balance -67.1 -112.5 -122.2 -144.5 -160.3 -126.5 -115.2 -109.0 -74.1 -96.1 -132.5

Business Servicesa. Exports 42.3 44.3 46.2 51.8 59.4 69.1 116.5 136.6 153.7 164.4 174.5

b. Imports 35.8 42.3 47.2 51.0 58.0 63.2 86.9 98.7 101.6 104.4 112.7

c. Balance +6.6 +2.0 -1.0 +0.8 +1.4 +5.9 +29.6 +37.9 +52.1 +60.0 +61.8

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html. Februarly 1998Irwin/McGraw-Hill

1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993

U.S. Current Account by Major Components, 1983-96 ($ billions)

International Investment Incomea. Receipts 77.3 85.9 88.8 90.1 103.8 108.2 152.5 160.3 136.9 114.4 113.9b. Payments 52.4 67.4 62.9 67.0 83.4 105.6 138.9 139.6 122.1 109.9 109.0c. Balance +24.9 +18.5 +25.9 +23.1 +20.4 +2.6 +13.6 +20.7 +14.8 +4.5 +4.0

Total Goods and Servicesa. Exports 334.4 360.8 360.6 375.0 424.8 507.8 641.4 696.8 717.0 731.4 755.6b. Imports 371.2 455.6 460.7 498.6 565.3 629.6 718.2 754.9 730.7 767.3 827.3c. Balance -36.8 -94.8 -100.1 -123.6 -140.5 -121.8 -76.7 -58.1 -13.7 -35.9 -71.7

Net unilateral transfers -9.5 -12.2 -15.0 -15.3 -13.4 -13.6 -26.1 -33.7 +6.7 -31.9 -32.0

Current accountbalance -46.2 -107.0 -115.1 -138.9 -153.9 -135.4 -102.8 -91.8 -7.0 -67.8 -103.7

SOURCES: Survey of Current Business, U.S. Department of Commerce, Bureau of Economic Analysis. http://www.stat-usa.gov/BEN/heal/sch.html.February 1998.

Buying Boom for Asia, 1995-2000

Millions of households approaching $18,000 per year buying power Indexed to Singapore prices

14.4

32.5

73.3

1991 1995 2000

What the added Between 1993 andmiddle class will 1995 2000buy (In million) Bedrooms 32 116Living Rooms 16 58Kitchens 16 58Bathrooms 32 116Living space (sq.m.) 1,200 4,350Large appliances 16 58Televisions 24 87Telephones 24 87Cars 16 58

SOURCE: Bill Saporito, “Where the Global Action Is.” Fortune, Autumn-Winter 1993, p.64.

The Price of ProtectionismIndustry Total Costs to Number of Cost per

Consumers Jobs Saved Job Saved(in $ millions)

Textiles and apparel $27,000 640,000 $ 42,000

Carbon Steel 6,800 9,000 $ 750,000

Autos 5,800 55,000 $ 105,000

Dairy products 5,500 25,000 $ 220,000

Shipping 3,000 11,000 $ 270,000

Meat 1,800 11,000 $ 160,000

SOURCE: Michael McFadden, “Protectionism Can’t Protect Jobs,” Fortune, May11, 1987, pp. 125.