International

Marketing
Why International Marketing
Has Developed . . .
Economic
Comparative Trends Demographic
Advantage Trends

GROWTH OF
INTERNATIONAL
MARKETING Political Trends
Technology •alliances
Trends •trade agreements

Cultural and Social

Trends
 Colgate Marketers Try New
Tactics in Rural India

Percentage of rural households that use:

● Electricity 39%
● Piped water 18%
● Flush toilet 7%
● Wood as cooking fuel 77%
 Colgate Marketers Try New
Tactics in Rural India

Sales growth of selected products in rural India,

in millions of metric tons
1990 1994
● Toilet soap (45%) 158,919 231,064
● Shampoo (325%) 497 2,116
● Toothpaste (93%) 8,825 17,023
● Laundry Detergent (64%) 272,540 422,741
 Economic, Social & Political
Arguments for Free Trade

● Product specialization (economies of scale)

● Enlarged markets for company
● Access to new suppliers & products
● Larger variety of products to choose
● Competition/lower prices to consumers
● Caution: Politics are more powerful than
economics
 Economic, Social & Political
Arguments Against Free Trade
● Protection of an infant ● Conservation of
industry natural resources
● Buy domestic only ● Industrialization of a
restrictions (political) low-wage nation
● Need to keep money ● Employment
at home & encourage protection
capital accumulation ● National defense
● Maintenance of ● Retaliation &
standard of living & bargaining position
real wages
 Barriers to Trade,
Strangle Trade
● Customs & administrative procedures
■ Tariff classifications (taxes levied on imports)
■ Quotas: government-set limits on the quantity of
goods that can be imported over time.
■ Patent Restrictions & licensing requirements
● Standards (Safety Inspections)
■ labeling & marking standards
■ packaging Border
● Insurance rates & valuation
■ subsidies to companies
 What Worries Poor Countries
$120

$100

$80
E.U.
$60 U.S.
Mexico
$40 Turkey
Australia
$20

$0
2002 total farm support estimates in selected
nations, in billions of dollars.

Miller, Scott. “In Trade Talks, the Gloves Are Off.” WSJ, A12, July 15, 2003.
 Farm Subsidies
70%

60%
50%
Iowa
40% M innesota
30% M issouri
South Dakota
20% M ontana
10%
0%
Percent that goes to top 10% of farms

“Prairie Plutocrats.” WSJ, A18, Feb. 1, 2002.

 What Worries Rich Countries
4
3
3

2 Bangladesh
Nigeria
2
Indonesia
1 Russia
1 Egypt

0
Selected governments based on perceived
degree of corruptness on 1-10 scale, 1 as most
corrupt.

Miller, Scott. “In Trade Talks, the Gloves Are Off.” WSJ, A12, July 15, 2003.
 Commercial Corruption

Least Corrupt Most Corrupt

1. Iceland 70. Egypt/Poland/
2. Finland/New Zealand /Saudi Arabia
4. Denmark 78. China
16. Germany
17. USA 126. Russia
18. France 152. Nigeria
32. Taiwan 156. Haiti/Turkmenistan
40. Hungary/Italy 158. Bangladesh/Chad
Source: Transparency.0rg (July2006) Surveys-Indices, 2005, Perceptions
of 158 countries by employees of multinational firms, institutions & experts.
 Commercial Corruption & GDP

Number Population Gross Domestic Product

of Countries (in millions) (trillions of U.S. dollars)
Free 27 942 (17%) 18.8 (81%)
Partly Free 22 395 ( 7%) 1.1 ( 5%)
Mostly Not Free 13 1,645 (30%) 1.9 ( 8%)
Not Free 20 1,974 (36%) 1.1 ( 5%)
Not surveyed 109 546 (10%) 0.2 ( 1%)
____________________________________________________
191 5,502 23.1

Source: Freedom House (Research Institute), 1995 Survey

Findings
Sweatshops: an exploitation of labor
and/or a political and social issue

Issue: Sweatshops Are Better Than No

Shops!
● destroying jobs will not alleviate
poverty (+)
● decreases cost of goods (+/-)
● human dignity issue, social value(-)
 Kids at Work: a political, social &
economic issue
Estimated percentages of children who work
selected countries (1995)
Kenya 42%
Bangladesh 30%
Haiti 25%
Turkey 24%
Pakistan 17%
Mexico 7%
Visit www.freethechildren.org or
www.coopamerica.org Estimated total =246 million
 Women’s Non Farm Wages

● Tanzania 92% of men’s

● Australia 91%
● USA 75% (80%-2000)
● China 59%
● Japan* 50%
* Biggest disparity among industrial countries.
** Women perform 60% of world’s work, own 1% of world’s
land & earn 10% of world’s income.

Source: WSJ,29Aug1995,A1
World & Regional Trade Alliances*

● GATT -- Dumping
■ OECD
■ WTO
■ OPEC
■ NAFTA
■ NATO
■ CAFTA
■ MERCOSUR

*Facilitate free trade among members

 Regional Trade Alliances, Markets,
and Agreements
● The Common Market of the
Southern Cone (MERCOSUR)
■ An alliance that promotes
the free circulation of
goods, services, and
production factors, and
has a common external
tariff and commercial policy
among member nations in
South America
 Regional Trade Alliances, Markets, and
Agreements
The North American Free Trade Agreement (NAFTA)
Regional Trade Alliances,
Markets, and Agreements
Pacific Rim Nations
Global Demographic Forces
Market Size and Growth
 Historical Population
Growth of the World
C o n t i n e n et
L an d A r ea 1%6 5 01 7 5 0 1 8 5 0 1 9 5 0 1 9 9 4 2 0 0 0
N o r t h A m e r i c a1 6 .2 5 5 39 166 289
S o u t h A m e r i c a1 1 .9 8 7 20
L a tin A m e r ica 166 474
E u rope 6 .6 100 140 265 392 509
A sia 3 0 .1 3 3 5 4 7 6 7 5 4 1 ,3 6 8 3 ,3 4 4
A fr i c a 2 0 .2 100 95 95 281 701
F orm er U S S R 180 296
O cean ia 5 .7 2 2 2 12 28
A n ta r ctica 9 .3
source: Bureau of the Census, US Dept. of Commerce; prior to 1950, Rand
W o r ld 10 0 5 5 0 7 2 5 1 ,1 7 52 ,5 6 55 ,6 4 16 ,3 0
European Com. Population at a Glance
Population Growth
(in millions) 2000 2020 2000-2020
Belgium 10.0 10.1 0.1
Denmark 5.1 4.8 -0.3
France 57.2 58.3 1.1
Germany 59.5 54.7 -4.8
Greece 10.4 10.7 0.3
Ireland 4.3 5.2 .9
UK 56.4 56.1 -0.3
Spain 42.2 45.4 3.2
Italy 58.6 57.5 -1.1

Estimated 2% growth Overall

 Population Growth Rates
1994 to 2020

Europe 2%
Peru 10-
Russia Columbia 19.9%
Canada 2-9.9%
Argentina U.S.A
Austria China 20%+
Brazil
 Some Facts
Source: CIA World
Indonesia India Factbook
Thailand U.S.(2004)
U.K. Germany

Population, in millions 238.5 1,065 64.8 293 60 82

14 years and younger 29.4% 31.70% 24.1% NA NA NA

Life expectancy 69.3 64 71.4 77.43 78.27 78.54

Birth rate 21.11 22.8 16.04 14.13 10.88 8.45

Death rate 6.26 8.38 6.94 8.34 10.19 10.44

Literacy rate 87.9% 59.50% 92.6 NA NA NA

GDP (U.S. dollars) $3,661 3,019 7,851 37,800 27,700 27,600

Percentage living on $1 dollar per day: Indonesia 8%, India 35%, China 25%
 Global
Economic Forces
 A Comparative Economic
Analysis

Country GDP POP Per Capita GDP

Japan $34,344
USA(99) 9.2 trillion 276 million $32,900
Germany $25,724
France $24,433
Britain $24,231
India 1.2 trillion 919.9 million $1,360
Iran 0.3 trillion 66.1 million $4,720
Australia(99) .4 tril $9,255
Source:WSJ 30May01,B4
International Financial
Exchanges
● Exchange Rates - indicate the value of one nation’s
money in terms of the money of another nation
● Foreign Exchange Market - Manufacturers and
foreign traders want payment in their own currencies.
Money is exchanged (bought and sold) through this
market
● Balance of Payments - The flow of funds between
nations. A favorable balance of payments (surplus) exists
when more funds come into a country than go out.
● Balance of Trade - a total accounting of the goods
and services bought from and sold to other countries
Balance of Trade: Deficit/Surplus
US (1997) (1999) (2005)
Exports $932.3 663 bil x
● Imports $1,050 912 bil x
● Deficit $113.7 249 bil. 759bil.

Imports

Exports
 Record Deficit
450
400
350
1992
300
1994
250
1996
200 1998
150 2000
100 2002
50
0
The U.S. trade balance in billions of dollars.

Ip, Greg. “Trade Gap Widens to Record Level.” WSJ, A2, Feb 21, 2003.
 Trans-Atlantic Services
90
80
70
60
1993
50
1996
40 1999
30 2001
20
10
0
U.S. Service Exports U.S. Service Imports

In Billions Of Dollars

King, Neil Jr. “EU Seeks Changes in U.S. Regulation of Services.” WSJ, A3, Feb. 25, 2003.
Imports :Globalization
or just Globaloney

US imports in
1994 are only
slightly bigger
now (11%) than
they were in
1880 (8%).
 Exports and GNP

Exports as a Percentage of GNP

● USA 7-11%
● Japan 13%
● United Kingdom 21%
● Germany 27%
● Canada 29%
 Expensive Manpower
$30.00
East Germany
$25.00 West Germany
Norway
$20.00 Sweden
Denmark
$15.00
Belgium
$10.00 U.S.
Japan
$5.00 Finland
Netherlands
$0.00 Luxembourg
Average Hourly Wage

Rhoads, Christopher. “In Deep Crisis, Germany Starts To Revamp Vast Welfare State.” WSJ, A1, July 10, 2003.
 Labor Costs
30

25

20
1980
15 1990
1996
10 2001

0
Germany Japan U.S. U.K

Average Manufacturing Sector Wages in U.S. Dollars

Rhoads, Christopher. “Burden of History.” WSJ, A1, December 6, 2002

 Global Social Forces
Cultural values

Trend
s
Religious
Government
beliefs
“policy”
 Examples of Cultural Differences
A Doggie Bag, S’il Vous Plait’ (WSJ,5Oct06,D1)
A free lunch from last night’s dinner – the American
Dietetic Assoc. 2002 survey indicates 91% of
Americans take leftovers home occasionally & 32%
do it on a regular basis.
● England – renaissance era referenced that hosts
used oversized napkins in those days because they
ate with their hands but also to provide a huge
container for leftovers
● SW China –Guizhou Province - tables are set with
chopsticks, napkins & doggie bags with a drawing of
a pooch.
 Examples of Cultural Differences
● Singapore – People do not like to waste food or
money. Taking leftovers is expected.
● Bangkok – leftovers are the norm, even scalding hot
soup is poured into clear plastic bags tied with a red
rubber band. (WSJ,5Oct06,D1)
● Japan – discourages public self expression - 20%
read internet blogs ex. “demon wife diaries” (WSJ.
5Oct.2006,B1)
● Some government’s are wary of public criticism. Bangkok has
monarchy laws & Singapore prohibits outdoor demonstrations
& politicians have defamation lawsuits to protect their
reputations from slander.
Pakistan Women Look to Bhutto to
Improve a Bitter Existence

NESCO puts women’s illiteracy in Pakistan

at 84.8%

Women are barred from the doors of

engineering and medical schools by laws
restricting the number of female students.
Average Household Consumption of
Beverages in Liters

Country Milk Wine Beer

● France 103 116 28
● Germany 100 7 46
● Holland 153 2 11
● Italy 87 95 2

source: LeMonde, Feb 15-21, 1968, overseas edition weekly

 Beer Consumption Per Capita in
Liters/Inhabitant
Source: World Drink Trends 2000 Ed.

Country 1996 1997 1998 1999 2000

Rank

1 Czech 157.3 161.4 161.1 159.4 159.3

Republic
2 Ireland 145.6 153.4 153.9 154.7 155.7
3 Germany 131.9 131.2 127.5 127.5 128.5
11 USA 83.7 83.3 83.7 84.4 84.3
15 Venezuela 75.1 74.5 78.8 75.2 76.3
 Comparative Consumption
120%

100%
All Countries
80% North America
Latin America
60%
Europe
40% Ex-USSR
Asia
20%

0%
Brush Radio Shower Bath Shampoo
teeth listen hair
 Housing Space Per Person
● in square meters
U.S. 61.8

Germany 37.2

Britain 35.2

Japan’s target 32.0

France 30.7
Japan
 Payroll Taxes
● Germany 52%
● France 48.0
● Hungary 46
● Poland 43
● UK 31.1
● U.S. 29.4
● Ireland 24.5

Source: EU states are urged to cut taxes, WSJ, 12May2004, A13

Wake-up Call: Customer-service Era Arrives Late
in Germany, With Phone Giant Trying to Change

• # of employees per 10,000 phone lines

NTT ( Ja p a n )
US B a b y B e lls a v g .
1
Fr a n c e Te le c o m
B r itis h Te le c o m
0 50 100 De u ts c h e Te le ko m

Productivity
 Global Environment:
Consumer Ethnocentrism

● Affirmative: Consumers should be discouraged

(ex., peer pressure) from purchasing foreign
products . . (because it adversely affects this
nation’s productivity.)

● Negative: Consumers should not be discouraged

from purchasing foreign goods . . (because
competition will force domestic manufacturers to
become more efficient and produce higher quality
products.)
 Consumer Ethnocentrism
“Made In America”
● Consumers that believe… American made
products are better than foreign products…
by education.
No college 61%
Some college 45%
College graduate 39%

(Am. Demographics (1986)

 Global Corporation
● Operates throughout the
world (or major regions)
● the world is a single entity
 The Fifteen Largest Global Public Corporations*
Company Country Business Revenue
($ mil.)

General Electric United States Electrical Equip. 90,840

HSBC Group United Kingdom Banking 48,404
Royal Dutch/Shell Group Netherlands Energy 128,108
Ford Motor Company United States Autos & Trucks 145,348
General Motors United States Autos & Trucks 178,174
Exxon United States International Oil 120,279
Toyota Japan Automobiles 95,181
IBM United States Computer Syst. 78,505
Travelers Group United States Insurance 37,609
Citicorp United States Banking 34,697
Nippon Tel & Tel Japan Telecomm. 77,019
Chase Manhattan United States Banking 30,381
ING Group Netherlands Financial Serv. 38,724
AT&T United States Telecomm. 51,319
Philip Morris United States Tobacco 56,114

*Composite ranking based on revenues, assets, profits, and market value.

Source: “The World Super Fifty,” Forbes, July 27, 1998, p. 118.
 Brands that Span the Globe
80%
70%
Marlboro
60% Coke
50% Pepsi
Kellogg's
40%
Campbell's
30% Budweiser
20% Pampers
Nescafe
10%
Gillette
0% Benson & Hedges
Percentage Sales Outside Of The Home
Market

Branch, Shelly. “ACNielsen Gives 43 Brands Global Status.” WSJ, B8, Oct. 31, 2001.
Customization Versus Globalization of
Marketing Strategy
• Globalization
Customization Versus Globalization of
International Marketing Strategies

• Customization
 Strategy Decisions
For Multinational Markets

Standardized--------------------------Customized
Marketing Strategy Criteria:
<Similarity of Cultures and Customer Behavior?
<Access to shared media & product ?
<Available distribution ?, Buying Power ?, etc...

Successful companies realize a simple truth:

All consumers are not alike
 Alternative Methods of Market
Entry and Risk Levels

Indirect Direct Joint Direct

Exporting Exporting Licensing
Ventures Investment
Via domestic Franchise or
export technical Wholly-owned
management contracts facilities in
companies Joint host country
Via in-house dept.
ownership
overseas sales office
of foreign
independent
facilities
distress
Moderate Risk
Minimum Risk Maximum Risk
China Admitted to World Trade Org.
● 60% of 17,000 McDonald’s are franchisees
● 66% of 12,000 KFC’s
● New franchising system in China
■ Offers protection to foreign companies
■ China sets and enforces protection rules

WSJ, 1-25-05
 Global
Economy
● Ideal: goods, services, skills and ideas move
freely across geographic borders.
● Reality: produces global cutthroat competition
and constant churning forces that may result in
economic turmoil for some.
● Constant changes such as...
- Growth and retrenchment.
- Hiring and firing.
- Optimism and fear ALL AT THE SAME TIME!
 Global ?
Economy

Dark Side Of Freer Global Markets

- Political Backlash From Middle Class (Workers)

Over Growing Job Insecurity

➔ Freer Global Markets

- Increase Income Gaps Between and Within Nations