MKT 4134 International Marketing

Fourth Year First Semester

Unit 01. Internationalization
• Exporting and Importing marketing and International Marketing • Environmental Market scanning “SLEPT” • Improving exports, trading operations • Strategic considerations of direct and indirect involvement

Exporting and Importing marketing and International Marketing

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Chapter 01

Environmental Market scanning “SLEPT”

Contents
1. SLEPT and 4’C’s
– – – – – Social Environment Legal Environment Economic Environment Political Environment Technological Environment

• International Market segmentation • Primary and Secondary sources of information
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Marketing Environment Scanning
SUPRANATIONAL Social, Legal, Economic, Political, Technological Environment
NATIONAL Political, Economic, Cultural, and Legal Environment

THE FIRM

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Elements of The Environment SLEPT
Social and Cultural Legal Economic Political Technological
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Elements of The Environment 4’C’ Factors
• • • • Corporation Countries Currency Competitors
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The Social Environment (S)
The social environment shapes the collective attitude of the buying public to foreign companies, their product line and management orientation. A strong home country approach may produce and extreme reaction, positive or negative.

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The Social Environment (S)….
A highly conspicuous foreign presence may become a conduit for negative as well as positive feelings towards the home country in question. This has happened on occasion to US multinationals such as Coca-Cola and American Express and to a lesser extent to British Airways
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The Social Environment (S)….
The product or service has to be acceptable to the society in the foreign market for which it is intended, there are three levels, as Terpstra and Sarathy (1994) have pointed out, at which marketing mix operates as a possible agent of change within society: • Folkways or conventions, where a social behaviour is learned and accepted, and followed habitually and does not require rationalizing. To succeed, though, an innovation such as an ATM requires acceptance both by bankers and by their customers. MKT 4134 International Marketing 10

The Social Environment (S)….
• Morals are the more strongly held and less
easily assailable custom of a nation or subculture within the nation as a it may be composed of many nations, many peoples, many languages.

Laws are the embodiment of the mores or the
social norms of a country, but laws are constantly under review and pressure can be brought to bear by lobbying the legislature to make them aware of a given situation and to try to motivate them towards changing it.
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The Social Environment (S) Cultural dimension...
• Culture: “That complex whole which includes knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man as a member of society.” • Culture, “the acquainting ourselves with the best that has been known and said in the world, and thus with the history of the human spirit.” (source: Mathew Arnold, Literature and Dogma, 1991)
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The Social Environment (S) Cultural dimension...
•Culture sensitivity is vitally important in international business. It is essential for the manger to be aware of the similarities as the dissimilarities between the foreign market and his own.

For example: When Nike learned that this stylized “Air” logo resembled “Allah” in Arabic script, it apologized and pulled the shoes from distribution.
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The Social Environment (S) Cultural dimension...
Diet Coke is named Light Coke in Japan-dieting was not well regarded Red circle trademark was unpopular in Asia due to its resemblance of Japanese flag Packaging of products is more important in some countries Advertisement featuring man and dog failed in Africa--dogs were not seem as man’s best friend
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The Social Environment (S) Cultural dimension... Hall’s Map of Culture
• Interaction, i.e. interaction with the environment through language or any of the five human sense. • Association, i.e. grouping and structuring of society. • Subsistence, i.e. feeding, working, making a living. • Bisexuality, i.e. differentiation of roles along the lines of sex. • Territoriality, i.e. possession, use and defense of space and territory. • Temporality, i.e. use, allocation, and division of time. • Learning, i.e. adoptive process of learning and instruction. • Play, i.e. relaxation, leisure • Defense, i.e. protection to include medicine, welfare, and law • Exploitation, i.e. turning the environment to man’s use through technology, construction and extraction of minerals. MKT 4134 International Marketing 15
Source: Hall, Map of Culture, (1960)

The Social Environment (S) Assessing Cultural environment...
Modern marketing characteristics 2. Markets are purposive 3. Markets are allocative 4. Markets are active 5. Markets involve operative activities or functions 6. Markets tend to function in the form of exchange flows 7. Markets are dynamic 8. Markets are concentrated or inhibited.
Source: Developed by Kay (1990) and Barnhill and Lawson (1980)
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The international Legal Environment (L)
• • • • International Laws Host Country Laws Home Country Laws Legal Systems
– Common law – Code law – Islamic law

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The Legal Environment (L) ……
• The interpretation of national laws has a great bearing on the activities of the international marketers. • Lobbying by
– business groups (e.g., honey lobby) – consumer/political groups (e.g., labor unions) – foreign interests

• Laws and Regulations
– for safety – for consumer protection MKT interests – to protect special 4134 International Marketing

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Home Country Legislation
• Antitrust Laws
– Prevent anticompetitive activities such as the creation of monopolies and cartels

• Corruption Laws
– Prevent multinational corporations from using unethical means to obtain competitive advantage in a particular market – Foreign Corrupt Practices Act makes it illegal to bribe politicians
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The Economic Environment (E)

Economic System

Exchange Rates

Economic Development

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Examples of Economic Integration
European Union (EU) Association of Southeast Asian Nations Asia Pacific Economic Cooperation (APEC) North American Free Trade Agreement (NAFTA)
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Free Trade Area

Economic Integration and Free Trade

Customs Union

Common Market
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Economic Forces
• Consumer Income
– Nominal vs. inflation adjusted – Impact of inflation – Disposable vs. pre-tax income – Discretionary income – Regional influences “Teach a parrot to say ‘supply” and ‘demand” and you have a – Economic cycles
learned economist!”

-Paul Samuelson.
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Tariff barriers
• • • • • • • Ad valorem Specific duty Alternative duty Component or mixed duties Temporary import surcharges Compensatory import taxes Anti-dumping
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Non-tariff barriers
1. Specific limitations including quotas and import restrictions 2. Discriminatory governmental and private procurement policies 3. Restrictive customs procedures on validation, classification, documentation, health and safety and hygiene. 4. Selective monetary controls and discriminatory exchange rate, controls. 5. Restrictive administrative and technical regulation including standards for products, packaging, labelling and marketing
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The Political Environment (P)
It is a common enough phenomenon to find companies pursuing an implicit or explicit “buy national” policy. Governments do likewise as they have to consider the employment effects of sourcing. They also have to consider the national interest in the placing of any orders for defense equipment or for products resulting from a research programme that has been heavily funded by government finance.
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The Technological Dimensions (T)
The company looks at international markets
Information
Resources of the Company?

Analysis

Objectives

Setting commercial targets
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The Technological Environment consists….
Suitable Technology Economic Conditions Social Conditions Willingness and Ability
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International risk perception
The areas in which a marketer cannot hope to be fully appraised prior to market entry without actually visiting the country itself include: Political risk Economic risk Commercial risk Takes and legislation relating to company incorporation.
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Undertaking a foreign market study: Information requirements
1. 2. 3. 4. 5. 6. 7. 8. Background information Analysis of supply Demand and end use analysis Demand forecasts Information of prices Access to the market Trading practices Sales promotion
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Target market-selection decisions
Market selection means choosing the markets to which to devote your resources. Concentration would be brought to: less administration Better market knowledge More opportunity to compete on non-price factors Less distraction Higher market share
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International market segmentation
3 Possibilities
Market Segmentation Market Targeting Market Positioning

Identify and describe market segments

Evaluate segments and decide which to go after

Design a product or service to meet a segment’s needs and develop a marketing mix that will create a competitive advantage in the minds of the selected target market
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Segmentation Criteria
Measurability Size Accessibility Responsiveness

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Selecting segmentation strategy
• • • • • Company resources Product homogeneity Product age (plc) Market homogeneity Competition

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Primary and secondary sources of information
Primary sources of information Internal examination of The company; The suppliers; Channels of distribution; and Industry in the target market Secondary sources of information Secondary sources, i.e., of published sources of information are good inexpensive place in start. Examples: reports published by Export trade associations. Trade unions Employers confederations Consultancies
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Data interpretation problems
Degree of concentration of population The extent of ownership Level of individual prosperity Infrastructural level to be considered Level of female emancipation Labour supply

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Thank You.

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Any questions ?

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