Chapter 6: Understanding and Researching Global Consumers and Market

Protectionism practice of shielding one or more industries within a countrys

economy from foreign competition through the use of tariffs or quotas.
Tariff a govt tax on goods or services entering a country, primarily serving to raise
prices on imports
Quota a restriction placed on the amount of a product allowed to enter or leave a
country
World Trade Organization Institution that sets rules governing trade between its
members through a panel of trade experts
European Union (EU)- 27 members eliminated most barriers to free flow of goods,
services, capital, and labor across their boarders
North American Free Trade Agreement (NAFTA) Canada, Mexico, North America
Global competition exists when firms originate produce, and market their products
and services worldwide
Ex. Cars, medicine, clothing, electronics
International firms trade and marketing in different countries as an extension of
the marketing strategy in its home country. Ex. Avon
Multinational firm view world as consisting of unique parts and market to each
part differently. Ex. Mr. clean
Transnational firm view world as one market and emphasizes cultural similarities
across countries or universal needs and wants more than differences.

Global marketing strategy prac of standardizing marketing activities when

there are cultural similarities and adapting them when cultures differ.
Market brand a brand marketed under the same name in multiple countries
with similar and centrally coordinated marketing programs. Can also be
tailored to specific countries
Global consumers consumer group living around the world who have similar
needs or seek similar benefits from products or service

Cross cultural analysis study of similarities and differences among consumers in

two or more nations or societies. Understanding of value, beliefs, languages
Values represent personally or socially preferable modes of conduct or states of
existence that tend to persist over time

Customs norms and expectations about the way people do things in a specific
country
Foreign Corrupt Practices Act (1977) a law that makes it a crime for US corps to
bribe an official of a foreign government or political party to obtain or retain
business

Amended by international anti dumping and fair competition act 1998

Cultural symbols things that represent ideas and concepts

Back translation retranslating a word or phrase back into original language using a
different interpreter to catch errors
Economic Consideration
1. Economic infrastructure country communication, transportation, financial,
and distribution systems
2. Consumer income and purchasing power country income distribution =
country purchasing power
Microfinance prac of offering small, collateral free loans to individuals
who otherwise would not have access to the capital necessary to begin
small businesses or other income generating activities
3. Currency rate exchange price of ones country currency expressed in terms
of another countrys currency
Political stability favorable or not for financial investment in country
Trade regulation trade barriers
1. Exporting producing goods in one country and selling them in another
country
Indirect exporting sells domestically produced goods in a foreign
country through an intermediary [distributor] little commitment
Direct exporting sells domestically produced goods in a foreign
country without intermediaries
2. Licensing company offers the right to a trademark, patent, trade secret for
a fee.
Low risk and capital free entry into a foreign country
Reduced potential gain
Create own competition if company steals idea
Franchising
3. Joint venture foreign country and a local firm invest together to create a
local business, sharing ownership, control, and the profits
Adv less financially, govt encourage foreign country to enter market
Dis companies disagree on policies

4. Direct investment entail a domestic firm actually owning and investing in a

foreign division
Biggest commitment
Adv cost saving, better understanding of local market conditions,
fewer local restrictions
A product may be sold in global market in 3 ways:
1. Product extension selling the same product in other countries consumers
share same desire, needs, and use for the product
2. Product adaptation changing product in some way to make it more
appropriate for country climate and consumer preference
3. Product invention invent totally new product designed to satisfy common
needs across country
Communication adaption strategy modifying promotion message to fit country
culture
Dual adaptation strategy modifying both product and promotion message
Distribution strategy
1. Involves seller: headquarter responsible for successful distribution to the
ultimate consumer
2. Channel between two nations moving the product from one country to
another
Pricing strategy

Price too low dumping firm sells a product in foreign country below
domestic price or below actual cost
Price too high gray market/parallel importing products are sold through
unauthorized channel of distribution. Legal in US but not in EU