International Marketing 15th edition

Philip R. Cateora, Mary C. Gilly, and John L. Graham

McGraw-Hill/Irwin Copyright 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

Introduction

Economic growth and global trade has extended well into the 21st century Three multinational markets are crucial: The Americas, Europe, and Asia Within each of these markets are fully industrialized dust a ed nations, at o s, rapidly ap d y industrializing dust a g nations, and less developed nations , miles, , and cultural distances can be Time zones, a major concern and many U.S. companies have organized their international operations according di to these h concerns
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Overview

The importance of marketing and economic development Stages of economic development, economic growth factors, objectives of developing countries, infrastructure and development, and marketings contributions Marketing in developing countries g Emerging g g Markets ( (BEMs) ) and the Americas Big
NAFTA, DR-CAFTA, MERCOSUR, LAEC, FTAA, SAFTA

Strategic Implications for Marketing

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Global Perspective Desnynchronosis? Something George Cl Clooney C Caught ht Up U I In Th The Ai Air? ?

According to the Encyclopedia Britannica Physiological desnychronization desnychronization is caused by Physiological transmeridian (east-west) travel between different time zones Most people find it difficult to travel eastward, adapting a shorter day as opposed to a longer one For international travelling executives executives, jet lag can be a major concern Jet lag g can cause extreme fatigue, g , sleep p J disturbances, loss of concentration, disorientation, malaise, sluggishness, gastrointestinal upset, and loss of appetite
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Marketing and 9 Economic Development (1 of 2)

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 consumption patterns are rigid Dynamic economy consumption patterns change h rapidly idl
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Marketing and 9 Economic Development (2 of 2)

Economic development is generally understood to mean an i increase i in the h average per capita i gross domestic product (GDP) and implies a widespread distribution of increased income Economic development, today, also means rapid economic growth and increases in consumer demand

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Stages of Economic Development (1 of 2)

The United Nations groups countries into three categories MDCs (more-developed countries Canada, g France, Germany, y Japan, p and the United England, States) LDCs (less-developed countries Asia and Latin America) LLDCs (least-developed countries Central Africa and Asia) ) NICs (Newly Industrialized Countries Chile, Brazil, Mexico, South Korea, Singapore, and Taiwan)
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Stages of Economic Development (2 of 2)

NICs (Newly Industrialized Countries)

C Countries t i th that t are experiencing i i rapid id economic i expansion i and industrialization Do not exactly fit as LDCs or MDCs Have moved away from restrictive trade practices Instituted significant free market reforms Brazil B il is i a good d example l of f an NIC NIC, exporting ti everything thi from alcohol-based fuels to carbon steel. Brazilian orange juice, poultry, soybeans, and weapons compete with U.S. products d t for f foreign f i markets. k t The Th B Brazilian ili aircraft i ft manufacturer, Embraer provides a substantial portion of the commuter aircraft used in the U.S. and elsewhere
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Standards of Living in the Eight Most Populous American Countries

Exhibit 9.2

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Economic 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 p ( (SOEs) ) that p placed a drain on national budgets
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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 The Th internet i t t allows ll f for i innovative ti services i at ta relatively inexpensive cost Wireless technologies greatly reduce the need to lay down a costly telecom infrastructure to bring telephone service to areas not now served
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Objectives of Developing Countries

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

Privatization is the norm and currently a major economic phenomenon in industrialized as well as in developing countries
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Infrastructure and Development

Infrastructure represents those types of capital goods that serve the activities of many industries such as paved roads, railroads, seaports, communication networks, etc. 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
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Infrastructure of Most Populous American Countries

Exhibit 9.3

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Marketings Contributions
Marketing (or distribution) is not always considered id d meaningful i f l to those h responsible ibl f for planning Marketing M k ti i is an economys arbitrator bit t b between t productive capacity and consumer demand The marketing process is the critical element in effectively utilizing production resulting from economic growth Marketing is instrumental in laying the groundwork for effective distribution g
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Marketing in a 9 Developing Country (1 of 3)

Marketing efforts must be keyed to each situation i i and d custom tailored il d to each h set of f circumstances
A promotional program for a population that is 50% illiterate is vastly different from a program for a p population p that is 95 95% literate

In evaluating the potential in a developing country, y the marketer must look at two areas:
Level of market development Demand in developing countries
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Marketing in a 9 Developing Country (2 of 3)

Level of market development
Marketer k must evaluate l existing i i level l l of f market k development and receptiveness The more developed an economy economy, the greater the variety of marketing functions demanded, and the more sophisticated and specialized the institutions b become t to perform f marketing k ti f functions ti Part of the marketers task when studying an economy g environment will is to determine what in the foreign be useful and how much adjustment will be necessary to carry out stated objectives

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Evolution of the Marketing Process

Exhibit 9.4

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Marketing in a 9 Developing Country (3 of 3)

Demand in developing countries - Three distinct ki d of kinds f markets k in i each h country
Traditional rural/agricultural sector Modern M d urban/high-income b /hi h i sector Transitional sector usually represented by lowincome urban slums

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Consumption Patterns in Most Populous American Countries

Exhibit 9.5

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BEMs and Markets of the Americas

Big Emerging Markets (BEMs) The Americas

North American Free Trade Agreement (NAFTA) United States Central American Free Trade Agreement-Dominican Republic Free Trade Agreement (DR-CAFTA) (DR CAFTA) Southern Cone Free Trade Area (MERCOSUR) Latin American Progress Latin American Economic Cooperation FTAA or SAFTA?
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Big Emerging Markets (BEMs) (1 of 2)

The U.S. Department of Commerce estimates that 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 geographically large Have significant populations Represent sizable markets for a wide range of products Have strong rates of growth or the potential for significant growth Have undertaken significant programs of economic reform A of Are f major j political liti l i importance t within ithi th their i regions i Are regional economic drivers Will engender further expansions in neighboring markets as the grow
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Big Emerging Markets (BEMs) (2 of 2)

Prominent BEMs include India, China, Brazil, M i Mexico, P Poland, l d T Turkey, k and dS South th Af Africa i Different from developing countries in that they import more than smaller markets and more than economies of similar size Because many y BEMs lack modern infrastructure, , much of the expected growth will be in industrial sectors such h as, i information f ti technology, t h l environmental i t l technology, transportation, energy technology, healthcare technology, gy, and financial services
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The Americas - NAFTA

North American Free Trade Agreement (NAFTA Canada Mexico, Canada, Mexico and the United States)

A single market of 360 million people with a $6 trillion GNP Ratified and became effective in 1994 994 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
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Key Provisions of NAFTA

Exhibit 9.6

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The Americas DR-CAFTA

United States Central American Free Trade A Agreement-Dominican D i i Republic R bli Free F T Trade d Agreement (DR-CAFTA Costa Rica, Dominican Republic, Republic El Salvador, Salvador Guatemala, Honduras, Nicaragua, and the United States) Aimed at increasing trade and employment between the seven countries by y reducing g tariffs

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The Americas MERCOSUR

Southern Cone Free Trade Area (MERCOSUR Argentina, A i B Bolivia, li i Brazil, B il Chile, Chil Paraguay, and Uruguay) The Th Treaty T t of fA Asuncion, i which hi h provided id d th the legal basis for MERCOSUR, was signed in 1991 and formally inaugurated in 1995 Second-largest common-market agreement in the Americas after NAFTA Market of 22o million with a combined GDP of $1 trillion $
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The Americas Latin American Progress

Most of the countries in Latin America have moved from military dictatorships to democratically elected governments in the last three decades Protectionism has g given way y to p privatization and other economic, monetary, and trade policy reforms Because of its size (population of 600 million is nearly twice that of the United States and 100 million more than the European Community) and resource base, the Latin American market has always been considered to have great economic and market possibilities
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American Market Regions

Exhibit 9.7

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The Americas Latin American Economic Cooperation

Latin American Integration Association (LAIA)
Its long term goal is a gradual and progressive progressi e establishment of a Latin American common market It allows members to establish bilateral trade agreements among member countries

Caribbean Community and Common Market (CARICOM)

Aim is to achieve true regional integration even having a common currency for all members It continues to seek stronger ties with other groups in Latin America and has singed a trade agreement with Cuba
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The Americas FTAA or SAFTA

Initially NAFTA was envisioned as the blueprint for a free trade area extending from Alaska to Argentina Free Trade of the Americas (FTAA) essentially would stretch from the Bering strait (Canada) all the way y south to Cape p Horn ( (Chile) ) South American Free Trade Association (SAFTA) ( ) led by y Brazil and the other member states of MERCOSUR

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Strategic Implications for Marketing (1 of 2)

A vast population of the emerging market are viable customers with expanding income As a country develops Incomes change
Population concentrations shift Expectations p for a better life adjust j to higher g 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
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Strategic Implications for Marketing (2 of 2)

The $10,000 Club is group of consumers with h homogenous d demands d who h share h a common knowledge of products and brands 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 Markets are changing rapidly, and identifiable market k t segments t with ith similar i il consumption ti patterns tt are found across many countries

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Summary (1 of 2)
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, political social and economic trends will continue to be felt throughout the world IT will speed p up p the economic g growth in every y country
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Summary (2 of 2)

Marketers must focus on devising plans d i designed d to respond df fully ll to each hl level l of f economic development Big Bi emerging i markets k t may present t special i l problems however, 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
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