8/28/2011

International Marketing
14th Edition P h i l i p R. C a t e o r a M a r y C. G i l l y John L. Graham

Developing a Global Vision Through Marketing Research

Chapter 8
McGraw-Hill/Irwin International Marketing 14/e

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

What Should You Learn?

The importance of problem definition in international research The problems of availability and use of secondary data Quantitative and qualitative research methods Multicultural sampling and its problems in less developed countries Sources of secondary data How to analyze and use research information
8-2

Global Perspective Japan Test Market for the World

Enterprises with international scope of operations
Need for current, accurate information magnified

Marketing research
The systematic gathering, recording, and analyzing of data to provide information useful in marketing decision making

International marketing research involves two complications

Information must be communicated across cultural boundaries The environments within which the research tools are applied are often different in foreign markets

8-3

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Breadth and Scope of International Marketing Research

Types of information needed by research
General information about the country, area, and/or market Information to forecast future marketing requirements

By anticipating social, economic, consumer, and industry trends within specific markets or countries

Specific market information used to make and develop marketing plans

Product Promotion Distribution Price decisions

8-4

Breadth and Scope of International Marketing Research

Unisys Corporations planning steps for collecting and assessing the following types of information
1. 2. 3. 4. 5. Economic Cultural, sociological; and political climate Overview of market conditions Summary of the technological environment Competitive situation

8-5

Top 20 Countries for Marketing Research Expenditures (millions of dollars)

Exhibit 8.1

8-6

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The Research Process

Research process steps
1. Define the research problem and establish research objectives 2. Determine the sources of information to fulfill the research objectives 3. Consider the costs and benefits of the research effort 4. Gather relevant data from secondary or primary sources, or both 5. Analyze, interpret, and summarize the results 6. Effectively communicate the results to decision makers

Research steps are similar for all countries

Variations and problems can occur in implementation

Differences in cultural and economic development

8-7

Defining the Problem and Establishing Research Objectives

The major difficulty is converting a series of often ambiguous business problems into tightly drawn and achievable research objectives The first, most crucial step in research is more critical in foreign markets because an unfamiliar environment tends to could problems definition Other difficulties in foreign research stem from failures to establish problem limits broad enough to include all relevant variables

8-8

Problems of Availability and Use of Secondary Data

U.S. government provides comprehensive statistics for United States Marketing data not matched in other countries
Quality Quantity Exceptions are Japan and several European countries

Continuing efforts to improve data collection

United Nations Organization for Economic Cooperation and Development (OECD)

8-9

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Availability and Reliability of Data

Most countries simply do not have governmental agencies that collect on a regular basis the kinds of secondary data readily available in the U.S. Researchers language skills impede access to information
Requires native speaker of language

Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data
Less-developed countries prone to optimism Willful errors Adjusted reporting

8-10

Comparability of Data
Issues with data (especially in less developed, countries)
Data can be many years out of date Data collected on an infrequent and unpredictable schedule

Too frequently, data are reported in different categories or in categories much too broad to be of specific value

8-11

Validating Secondary Data

Questions to judge the reliability of secondary data sources
Who collected the data? Would there be any reason for purposely misrepresenting the facts? For what purposes was the data collected? How was the data collected? Are the data internally consistent and logical in light of known data sources or market factors?

Checking the consistency of one set of secondary data with other data of known validity
An effective and often-used way of judging validity

The availability and accuracy of recorded secondary data increase with level of economic development
8-12

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Gathering Primary Data Quantitative and Qualitative Research

Primary data
Data collected specifically for the particular research project

Quantitative research
Usually a large number of respondents Respondents answer structured oral or written questions using a specific response format (such as yes/no) or to select a response from a set of choices Responses can be summarized in percentages, averages, or other statistics

Toto a Japanese firm with the premiers quantitative research on bathroom and toilet technology

8-13

Gathering Primary Data Quantitative and Qualitative Research

Qualitative research
If questions are asked, they are almost always open-ended or indepth Seeks unstructured responses that reflect the persons thoughts and feelings on the subject

Qualitative research interprets people in the sample Qualitative research is helpful in revealing the impact of sociocultural factors on behavior patterns and in developing research hypotheses
8-14

Problems of Gathering Primary Data

Hinges on the ability of the researcher to get correct and truthful information that addresses research objectives Problems in international marketing research
Stem from differences among countries Range from inability or unwillingness of respondents to communicate their opinions Inadequacies in questionnaire translation

8-15

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Ability to Communicate Opinions

Formulating opinions about a product or concept
Depends on the respondents ability to recognize the usefulness of such a product of concept Product or concept must be understood and used in community

The more complex the concept, the more difficult it is to design research that will help the respondent communicate meaningful opinions and reactions
Gerber has more experience in trying to understand consumers with limitations

Babies can neither answer questions or fill out questionnaires

8-16

Willingness to Respond
Cultural differences provide best explanation for unwillingness or inability of many to respond to research surveys The role of the male, the suitability of personal gender-based inquiries, and other genderrelated issues can affect willingness to respond Less direct measurement techniques and nontraditional data analysis methods may also be more appropriate

8-17

Sampling in Field surveys

Problems in sampling stem from the lack of adequate demographic data and available lists from which to draw meaningful samples Affected by a lack of detailed social and economic information
No officially recognized census information No other listings that can serve as sampling frames Incomplete and out-of-date telephone directories No accurate maps of population centers

8-18

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Language and Comprehension

The most universal survey research problem in foreign countries is the language barrier Literacy poses yet another problem Marketers use three different techniques to help ferret out translation errors ahead of time
Back translation Parallel translation Decentering

8-19

Multicultural Research a Special Problem

As companies become global marketers and seek to standardize various parts of the marketing mix across several countries, multicultural studies become more important Multicultural research involves dealing with countries that have different languages, economies, social structures, behavior, and attitude patterns In some cases the entire research design may have to be different between countries to maximize the comparability of the results
8-20

Research on the Internet a Growing Opportunity

One billion users in more than 200 countries
One-sixth in U.S.

International Internet use is growing almost twice as fast as American use Uses for Internet in international research
Online surveys and buyer panels Online focus groups Web visitor tracking Advertising measurement Customer identification systems E-mail marketing lists Embedded research Observational research
8-21

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Estimating Market Demand

To assess current product demand and forecast future demand
Requires reliable historical data

When the desired statistics are not available, a close approximation can be made
Using local production figures plus imports, with adjustments for exports and current inventory levels

Two methods of forecasting demand

Expert opinion

The key in using expert opinion to help in forecasting demand is triangulation

Analogy

Assumes that demand for a product develops in much the same way in all countries as comparable economic development occurs in each country

8-22

Personal Computer and Mobile Phone Diffusion Rate (per 1,000 people)
Exhibit 8.2
Personal Computer Mobil Phone

8-23

Problems in Analyzing and Interpreting Research Information

Accepting information at face value in foreign markets is imprudent The foreign market researcher must posses three talents to generate meaningful marketing information
1. The researcher must posses a high degree of cultural understanding of the market in which research is being conducted 2. A creative talent for adapting research methods is necessary 3. A skeptical attitude in handling both primary and secondary data is helpful

8-24

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Responsibility for Conducting Marketing Research

A company in need of foreign market research can rely on an outside foreign-based agency or domestic company with a branch in that country A trend toward decentralization of the research function is apparent
Local analysts appear to be able to provide information more rapidly and accurately

Control rests in hands closer to the market

Disadvantage lies in ineffective communications with homeoffice executives

Unwarranted dominance of large-market studies in decisions about global standardization

8-25

Responsibility for Conducting Marketing Research

A comprehensive review of the different approaches to multicountry research suggests
Ideal approach is to have local researchers in each country, Close coordination between the client company and the local research companies

Two stages of analysis are necessary

Individual-country level Multi-country level

8-26

Communicating with Decision Makers

Gathered information must be given to decision makers in a timely manner Decision makers should be directly involved not only in problem definition and questions formulation, but also in the fieldwork Even when both managers and customers speak the same language and are from the same culture, communication can become garbled in either direction

8-27

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Managing the Cultural Barrier in International Marketing Research

Exhibit 8.3

8-28

Summary
The basis objective of the market research function is providing management with information for more accurate decision making Customer attitudes about providing information to a researcher are culturally conditioned Foreign market information surveys must be carefully designed to elicit the desired data and at the same time not offend the respondents sense of privacy

8-29

Summary
Many foreign markets have inadequate or unreliable bases of secondary information Three keys to successful international marketing research
The inclusion of natives of the foreign culture on research teams The use of multiple methods and triangulation The inclusion of decision makers, even top executives, who must on occasion talk directly to or directly observe customers in foreign markets

8-30

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8/28/2011

International Marketing
14th Edition P h i l i p R. C a t e o r a M a r y C. G i l l y J o h n L. G r a h a m

Emerging Markets
Chapter 9
McGraw-Hill/Irwin International Marketing 14/e

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

What Should You Learn?

The political and economic changes affecting global marketing The connection between the economic level of a country and the marketing task Marketings contribution to the growth and development of a countrys economy The growth of developing markets and their importance to regional trade The political and economic factors that affect stability of regional market groups The NIC growth factors and their role in economic development
9-2

Global Perspective Wal-Mart, Tide, and Three-Snake Wine

China and emerging markets will account for 75% of the worlds total growth next decade and beyond New patterns of consumer behavior are emerging
Countries prosper People are exposed to new ideas and behavior patterns via global communication networks Old stereotypes, traditions, and habits are cast aside or tempered A pattern of economic growth and global trade will extend well into the 21st century

Three multinational market regions

Europe, Asia, and America
9-3

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Marketing and Economic Development

The stage of economic growth
Affects the attitudes toward foreign business activity The demand for goods The distribution systems found within a country The entire marketing process

Static economy Dynamic economy Economic development

Means an increase in GDP and implies a widespread distribution of increased income Economic development presents two challenges

Study of economic development is necessary to gain empathy regarding the economic climate within developing countries Study of state of economic development with respect to market potential, including the present economic level and the economys growth potential
9-4

Stages of Economic Development

The United Nations groups countries into three categories
MDCs (more-developed countries) LDCs (less-developed countries) LLDCs (least-developed countries)

Newly Industrialized Countries (NICs)

Countries that are experiencing rapid economic expansion and industrialization Do not exactly fit as LDCs or MDCs Have moved away from restrictive trade practices Instituted significant free market reforms

9-5

Standards of Living for Selected Countries

Exhibit 9.1

9-6

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NIC Growth Factors

Economic growth factors for NICs
Political stability in policies affecting their development Economic and legal reforms Entrepreneurship Planning Outward orientation Factors of production Industries targeted for growth Incentives to force a high domestic rate of savings and to direct capital to update the infrastructure, transportation, housing, education, and training Privatization of state-owned enterprises (SOEs) that placed a drain on national budgets
9-7

Information Technology, the Internet, and Economic Development

New, innovative electronic technologies are key to a sustainable future for developed and developing nations The Internet accelerates the process of economic growth by speeding up the diffusion of new technologies to emerging economics Wireless technologies greatly reduce the need to lay down a costly telecom infrastructure to bring telephone service to areas not now served Substantial investments in the infrastructure to create easy access to the Internet and other aspects of IT are being made by governments and entrepreneurs

9-8

Objectives of Developing Countries

Industrialization is the fundamental objective of most developing countries Economic growth is seen as the achievement of social as well as economic goals
Better education Better and more effective government Elimination of many social inequities Improvements in moral and ethical responsibilities

Privatization is currently a major economic phenomenon in industrialized as well as in developing countries

9-9

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Infrastructure and Development

Infrastructure represents those types of capital goods that serve the activities of many industries The quality of an infrastructure directly affects a countrys economic growth potential and the ability of an enterprise to engage effectively in business The less developed a country is the less adequate the infrastructure is for conducting business Countries begin to lose economic development ground when their infrastructure cannot support an expanding population and economy
9-10

Infrastructure of Selected Countries

Exhibit 9.2

9-11

Marketings Contributions
Marketing (or distribution) is not always considered meaningful to those responsible for planning Marketing is an economys arbitrator between productive capacity and consumer demand The marketing process is the critical element in effectively utilizing production resulting from economic growth Instrumental in laying the groundwork for effective distribution
9-12

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Marketing in a Developing Country

Marketing efforts
Must be keyed to each situation Custom tailored to each set of circumstances

Must provide for optimum utility

Marketer must evaluate existing level of market development and receptiveness

The more developed an economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions become to perform marketing functions

Demand in a developing country

Three distinct kinds of markets in each country

Traditional rural/agricultural sector Modern urban/high-income sector Transitional sector usually represented by low-income urban slums

9-13

Evolution of the Marketing Process

Exhibit 9.3

9-14

Marketing in a Developing Country

Demand in a developing country (continued)
Tomorrows markets will include expansion in industrialized countries and the development of the transitional and traditional sectors of less-developed nations New markets also means that the marketer has to help educate the consumer The companies that will benefit are the ones that invest when it is difficult and initially unprofitable

Bottom-of-the-pyramid markets
Bottom-of-the-pyramid markets (BOPMs) consisting of the 4 billion people with incomes of less than $1,200 across the globe Most often concentrated in the LDCs and LLDCs
9-15

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Consumption Patterns in Selected Countries

Exhibit 9.4

9-16

Dynamic Transformation of BOPM Clusters

Exhibit 9.5

9-17

Developing Countries and Emerging Markets

The U.S. Department of Commerce estimates
Over 75% of the expected growth in world trade over the next two decades will come from the more than 130 developing and newly industrialized countries

Big emerging markets share important traits

Are all physically large Have a significant populations Represent considerable markets for a wide range of products Have strong rates of growth or the potential for significant growth Are of major political importance within their regions Are regional economic drivers Will engender further expansions in neighboring markets as the grow

Because many lack modern infrastructure, much of the expected growth will be in industrial sectors
9-18

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Big Emerging Markets

Exhibit 9.6

9-19

Latin America
Most countries have moved from military dictatorships to democratically elected governments The trend toward privatization of state-owned enterprises followed a period in which governments dominated economic life for most of the 20th century Today many Latin American countries are at roughly the same stage of liberalization that launched the dynamic growth in Asia during the 1980s and 1990s In a positive response to these reforms, investors have invested billions of dollars
9-20

Eastern Europe and the Baltic States

Countries that rapidly instituted the broadest freemarket policies and implemented the most radical reforms have prospered most Eastern Europe
Privatizing state-owned enterprises Establishing free market pricing systems, Relaxing import controls Wrestling with inflation

The Baltic States

Estonia, Latvia, and Lithuania

All three countries started off with roughly the same legacy of inefficient industry and Soviet-style command economics All three Baltic countries are WTO members and as of 2004, EU members
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Asia
Asia has been the fastest-growing area in the world for the past three decades Asian-Pacific Rim
Four Tigers (Hong Kong, South Korea, Singapore, Taiwan) First countries in Asia to move from a status of developing countries to newly industrialized countries

China
After U.S., most important single market is China Two major events that occurred in 2000 are having a profound effect on Chinas economy

Admission to the WTO U.S. granting China normal trade relations on a permanent basis
9-22

Asia
China (continued)
China has two important steps to take if the road to economic growth is to be smooth

Improving human rights Reforming the legal system

The American embassy in China has seen a big jump in complaints from disgruntled U.S. companies Two Chinas

One a maddening bureaucratic, bottomless money pit The other an enormous emerging market

9-23

Asia
Hong Kong
Hong Kong reverted to China in 1997 when it became a special administrative region (SAR) of the Peoples Republic of China The Hong Kong government negotiates bilateral agreements and makes major economic decisions on its own The keys to Hong Kongs economic success

Free market philosophy Entrepreneurial drive Absence of trade barriers Well-established rule of law Low and predictable taxes Transparent regulations Complete freedom of capital movement

9-24

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Asia
Taiwan
Mainland-Taiwan economic ties are approaching a crossroads as both countries enter the World Trade Organization Three direct links must be faced because each country has joined the WTO and the rules insist that members should communicate over trade disputes and other issues

India
Five-point agenda

Improving the investment climate Developing a comprehensive WTO strategy Reforming agriculture, food processing and small scale industry Eliminating red-tape Instituting better corporate government

9-25

Newest Emerging Markets

The U.S. decision to lift the embargo against Vietnam
If Vietnam follows the same pattern of development as other Southeast Asian countries, it could become another Asian Tiger

The United Nations lifting of the embargo against South Africa

South Africa has an industrial base that will help propel it into rapid economic growth The South African market also has a developed infrastructure

Vietnam and South Africas future development

Will depend on government action and external investment by other governments and multinational firms
9-26

Strategic Implications for Marketing

As a country develops
Incomes change Population concentrations shift Expectations for a better life adjust to higher standards New infrastructures evolve Social capital investments made

When incomes rise, new demand is generated at all income levels for everything from soap to cars If a company fails to appreciate the strategic implications of the $10,000 Club, it will miss the opportunity to participate in the worlds fastestgrowing global consumer segment
9-27

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Emerging Competition
Growing global competition
Automobile makers in from China, Russia, and India Computers Space technology Appliances Commercial aircraft

Firms in emerging countries making substantial investments around world Global market will be revitalized and reorganized by these new corporate powerhouses
9-28

Summary
Foreign marketers must be able to
Rapidly react to market changes Anticipate new trends within constantly evolving market segments that may not have existed as recently as last year

As nations develop their productive capacity, all segments of their economies will feel pressure to improve The impact of these political, social and economic trends will continue to be felt throughout the world IT will speed up the economic growth in every country
9-29

Summary
Marketers must focus on devising plans designed to respond fully to each level of economic development Big emerging markets may present special problems
But they are promising markets for a broad range of products now and in the future

Emerging markets create new marketing opportunities for MNCs as new market segments evolve

9-30

10

International Marketing
14th Edition P h i l i p R. C a t e o r a M a r y C. G i l l y John L. Graham

Multinational Market Regions and Market Groups

Chapter 10
McGraw-Hill/Irwin International Marketing 14/e

Copyright 2009 by The McGraw-Hill Companies, Inc. All rights reserved.

What Should You Learn?

The reason for economic union Patterns of international cooperation The evolution of the European Union Strategic implications for marketing in Europe Evolving patterns of trade as eastern Europe and the former Soviet states embrace the free-market system The trade linkage of NAFTA and South America and its regional effects The development of trade within the Asia-Pacific Rim
10-2

Global Perspective Might Free Trade Bring Peace to the Middle East?
Multinational market regions those groups of countries that seek mutual economic benefit from reducing trade and tariff barriers
Most important global trends today

The world is awash in economic cooperative agreements as countries look for economic alliances to expand access to free markets
WTO 151 members and 31 observers

Governments and businesses worry that the EU, NAFTA, and other cooperative trade groups will become regional trading blocs without internal trade restrictions but with borders protected from outsiders
10-3

La Raison dEtre
Successful economic union
Requires favorable economic, political, cultural, and geographic factors as a basis for success

The advantages of economic union must be clear-cut and significant

Benefits must greatly outweigh the disadvantages before nations forgo any part of their sovereignty

In the past, a strong threat to the economic or political security of a nation was the impetus for cooperation Recent creation of multinational market groups has been driven by the fear that not to be part of a vital regional market group is to be left on the sidelines
10-4

Economic Factors
Markets are enlarged through
Preferential tariff treatment for participating members Common tariff barriers against outsiders

Nations with complementary economic bases

Least likely to encounter frictions in the development and operation of a common market unit

Economic union must have agreements and mechanisms in place to settle economic disputes The demise of the Latin American Free Trade Association (LAFTA)
Result of economically stronger members not allowing for the needs of the weaker ones

10-5

Political Factors
State sovereignty
One of the most cherished possessions of any nation Relinquished only for a promise of significant improvement of the national position through cooperation

The importance of political unity to fully achieve all the benefits of economic integration
Has driven EC countries to form the European Union

10-6

Geographic and Temporal Proximity and Cultural Factors

Geographic and temporal proximity
Recent research demonstrates that differences across time zones are more important than physical distances Trade tends to travel more easily in north-south directions then it did in ancient times Countries that are widely separated geographically have major barriers to overcome in attempting economic fusion

Cultural factors
The more similar the culture, the more likely a market is to succeed because members understand the outlook and viewpoints of their colleagues

10-7

Patterns of Multinational Cooperation

Regional cooperation groups
Governments agree to participate jointly to develop basic industries beneficial to each economy

Free trade area

An agreement between two or more countries

To reduce or eliminate customs duties and nontariff trade barriers among partner countries Members maintain individual tariff schedules for external countries

Customs union
Enjoys free trade areas reduced or eliminated internal tariffs Adds a common external tariff on products imported from countries outside the union
10-8

Patterns of Multinational Cooperation

Common market
Eliminates all tariffs and other restrictions on internal trade, Adopts a set of common external tariffs Removes all restrictions on the free flow of capital and labor among member nations

Political union
Involves complete political and economic integration, either voluntary or enforced Commonwealth a voluntary organization that provides for the loosest possible relationship classified as economic integration Two new political unions came into existence in the 1990s

The Commonwealth of Independent States (CIS) The European Union (EU)

10-9

Global and Multinational Market Groups

Market potential needs to be viewed in the context of regions of the world rather than country by country
The globalization of markets The restructuring of the Eastern European bloc into independent market-driven economies The dissolution of the Soviet Union into independent states The worldwide trend toward economic cooperation Enhanced global competition

10-10

European Market Regions

Exhibit 10.1

10-11

European Economic Area

Exhibit 10.2

10-12

A Brief History of European Integration

Of all the multinational market groups, none is more secure in its cooperation or more important economically than the European Union Historically, standards have been used to effectively limit market access The Single European Act
Removed all barriers to trade Made the European Community a single internal market Proposed a wide variety of new commercial policies, including single European standards

10-13

From the European Coal and Steel Community to Monetary Union

Exhibit 10.3

10-14

A Brief History of European Integration

EU Institutions
Form of federal pattern with executive, parliamentary, and judicial branches

European Commission Council of Ministers European Parliament Court of Justice Regulations binding the member states directly and having the same strength as national laws Directives also binding the member states but allowing them to choose the means of execution Decisions addressed to a government, an enterprise, or an individual, binding the parties named

European Union uses three legal instruments

1.

2.

3.

10-15

A Brief History of European Integration

European Free Trade Association and European Economic Area
Formed by Britain for those European nations not willing to join the EEC but wanting to participate in a free trade area EFTA will most probably dissolve as its members join either the European Economic Area (EEA) or the EU European Economic Area a single market with free movement of goods, services, and capital The EEA is governed by a special Council of Ministers composed of representatives from EEA member nations

10-16

European Union
Ratification of the Maastricht Treaty (1992) Economic and Monetary Union Treaty of Amsterdam Expansion of the European Union

10-17

The Euro
Exhibit 10.4

10-18

The Commonwealth of Independent States

Formed after aborted coup against Gorbachev and dissolution of USSR
Included the remaining 12 republics after the formation of the Baltic States

The CIS is a loose economic and political alliance with open borders but no central government The 12 members of the CIS share a common history of central planning
Their close cooperation could make the change to a market economy less painful Differences over economic policy, currency reform, and control of the military may break them apart
10-19

Commonwealth of Independent States (CIS)

Exhibit 10.5

10-20

North American Free Trade Agreement

NAFTA Canada, Mexico, and the United States
A single market of 360 million people with a $6 trillion GNP Ratified and became effective in 1994 Requires the removal of all tariffs and barriers to trade over 15 years All tariff barriers dropped in 2008 Improves all aspects of doing business within North America Creates one of the largest and richest markets in the world Job losses have not been as drastic as once feared, in part because companies have established maquiladora plants in anticipation of the benefits from NAFTA

10-21

Key Provisions of NAFTA

Exhibit 10.6

10-22

Latin American Economic Cooperation

Southern Cone Free Trade Area Mercosur
Argentina, Bolivia, Brazil, Chile, Paraguay, and Uruguay

Second-largest common-market agreement in the Americas after NAFTA Most influential and successful free trade area in South America Negotiations have been under way since 1999 for the first region-to-region
free trade accord

Free trade agreement between the EU and Mercosur

DR-CAFTA

Latin American Integration Association Caribbean Community and Common Market (CARICOM) NAFTA to FTAA or SAFTA?
10-23

Market Regions of the Americas

Exhibit 10.7

10-24

Association of Southeast Asian Nations

Goals of the ASEAN
Economic integration and cooperation through complementary industry programs Preferential trading, including reduced tariff and nontariff barriers Guaranteed member access to markets throughout the region Harmonized investment incentives

Four major events account for the vigorous economic growth of the ASEAN countries
The ASEAN governments commitment to deregulation, liberalization, and privatization of their economies The decision to shift their economies from commodity based to manufacturing based The decision to specialize in manufacturing components in which they have a comparative advantage Japans emergence as a major provider of technology and capital necessary to upgrade manufacturing capability and develop new industries

10-25

Far Eastern Market Group

Exhibit 10.8

10-26

Asia-Pacific Economic Cooperation

APEC was formed in 1989
Provides formal structure for major governments to discuss mutual interests in open trade and economic collaboration Includes all major economies of the region and the most dynamic, fastest-growing economies in the world

Common goal and commitment to:

Open trade Increase economic collaboration Sustain regional growth and development Strengthen the multilateral trading system Reduce barriers to investment and trade without detriment to other economies

10-27

Africa
Little actual economic integration
Characterized by political instability in recent decades Unstable economic base

Two most active regional cooperative groups

Economic Community of West African States (ECOWAS)

Plagued with financial problems, conflict within the group, and inactivity on the part of members
Most advanced and viable of Africas regional organizations

Southern African Development Community (SADC)

10-28

African Union Countries and Other Market Groups

Exhibit 10.9

10-29

Middle East
Middle East has been less aggressive in the formation of successfully functioning multinational market groups
A long history of border disputes and persisting ideological differences will have to be overcome

Arab Free Trade Area (GAFTA) Economic Cooperation Organization (ECO) Creation of the Organization of the Islamic Conference (OIC)
Represents 60 countries and over 650 million Muslims worldwide Member countries vast natural resources, substantial capital, and cheap labor force are seen as the strengths of the OI
10-30

10

Strategic Implications for Marketing in Europe

Multinational groups spell opportunity
Through access to greatly enlarged markets with reduced or abolished country-by-country tariff barriers and restrictions

World competition will intensify

As businesses become stronger and more experienced in dealing with large market groups

Opportunities
Economic integration creates large mass markets for the marketer

Market barriers
Initial aim of a multinational market is to protect businesses that operate within its borders

Reciprocity
If a country does not open its market to an EU firm, it cannot expect to have access to the EU market
10-31

Marketing Mix Implications

In the past, companies often charged different prices in different European markets As long as products from lower-priced markets could not move to higher-priced markets, differential price schemes worked
Badedas Shower Gel

Companies initiating uniform pricing policies Reducing the number of brands to focus advertising and promotion efforts
Nestle Unilever

10-32

Summary
Marketing efficiency affected by:
Development of mass markets Encouragement of competition Improvement of personal income Various psychological market factors

Production efficiency
Derives from specialization Mass production for mass markets Free movement of the factors of production

Multinational market groups provide great opportunity for the creative marketer
10-33

11

Summary
Market groupings make it economically feasible to enter new markets and to employ new marketing strategies Market groupings intensify competition by protectionism within a market group but may foster greater protectionism between regional markets Mercosur and ASEAN+3 suggest the growing importance of economic cooperation and integration
10-34

12