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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

Chapter 01

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Exporting and Importing marketing and International Marketing

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 MKT 4134 International Marketing

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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 MKT 4134 International Marketing

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Elements of The Environment 4’C’ Factors • • • •

Corporation Countries Currency Competitors MKT 4134 International Marketing

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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 MKT 4134 International Marketing

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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.

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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. MKT 4134 International Marketing

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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) MKT 4134 International Marketing

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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. MKT 4134 International Marketing

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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 MKT 4134 International Marketing

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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 MKT 4134 and International extraction Marketing of minerals. 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. MKT 4134 International Marketing

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Source: Developed by Kay (1990) and Barnhill and Lawson (1980)

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 4134 International Marketing – to protect special interests

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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 MKT 4134 International Marketing

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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) MKT 4134 International Marketing

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Free Trade Area

Economic Integration and Free Trade

Customs Union

Common Market MKT 4134 International Marketing

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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. MKT 4134 International Marketing

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Tariff barriers • • • • • • •

Ad valorem Specific duty Alternative duty Component or mixed duties Temporary import surcharges Compensatory import taxes Anti-dumping MKT 4134 International Marketing

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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 MKT 4134 International 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. MKT 4134 International Marketing

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The Technological Dimensions (T) The company looks at international markets Information

Analysis

Objectives

Resources of the Company?

Setting commercial targets MKT 4134 International Marketing

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The Technological Environment consists…. Suitable Technology

Social Conditions

Economic 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. MKT 4134 International Marketing

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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 MKT 4134 International Marketing

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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 MKT 4134 International Marketing

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International market segmentation 3 Possibilities Market Segmentation

Identify and describe market segments

Market Targeting

Evaluate segments and decide which to go after

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Market Positioning

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 32

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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