International Marketing Midterm PDF

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INTERNATIONAL MARKETING MIDTERMEXAM INFORMATION● The confirmed date & time for the midterm exam is: Wednesday, February 16, at 11:00 - 12:00.● The exam will be online, via Zoom. You can take theexam anywhere you prefer (home, library, ...) as long asyou'd be able to keep your video open during t...

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INTERNATIONAL MARKETING MIDTERM EXAM INFORMATION ● ● ●

The confirmed date & time for the midterm exam is: Wednesday, February 16, at 11:00 - 12:00. The exam will be online, via Zoom. You can take the exam anywhere you prefer (home, library, ...) as long as you'd be able to keep your video open during the test. The exam will cover the content from blocks 1 & 2. ○ Keegan Chapter 1, 2, 4 (9th edition), and 5 (9th edition). ○ Hollensen Chapter 1, 6, and 7.

READINGS FOR BLOCK 1: STEPPING STONES In this part of the course, we will discuss the fundamental concepts of International Marketing and the critical dimensions of International Marketing Strategy. MOTIVATING QUESTIONS What is "global marketing," and how does it differ from "domestic marketing"?

A fundamental difference between regular marketing and global marketing is the scope of activities. ● A company that engages in global marketing conducts important business activities outside the home-country market. ● A successful global marketer understands specific concepts and has a broad and deep understanding of the world's varied business environments (where

bribery and corruption occur, where "knockoffs" are common, etc.). The scope issue can be conceptualized in terms of the familiar product/market matrix of growth strategies.

How is the global marketing strategy different from that of single-country marketing?

Customer preferences, competitors, channels of distribution, and communication media may differ. An important managerial task in global marketing is learning to recognize the extent to which adaptation is required. The way a company addresses this task is a reflection of its global marketing strategy. In single-country marketing, strategy development addresses two fundamental issues: (1) choosing a target market and (2) developing a marketing matrix. The two same issues are at heart of a firm’s global marketing strategy, although they are viewed from a somewhat different perspective. ● ●

Global market participation is the extent to which a company has operations in major world markets. Standardization versus adaptation is the extent to which each marketing mix element is standardized (i.e., executed the same way) or adapted (i.e. executed in different ways) in various country markets.

GMS has three additional dimensions that pertain to marketing management. - First, concentration of marketing activities is the extent to which activities related to the marketing matrix (such as promotional campaigns or pricing decisions) are performed in one or a few country locations.’ - Coordination of marketing activities refers to the extent to which marketing activities related to the marketing mix are planned and executed independently around the globe. - Finally, integration of competitive moves is the extent to which a firm’s competitive marketing tactics in different parts of the world are interdependent. How can effective global marketing be successfully achieved?

A successful global marketer must have the ability to “think globally” and “act locally.”

What are the forces affecting local integration and global marketing?

The dynamic interplay of several driving and restraining forces shapes the importance of global marketing. Driving forces include market needs and wants, technology, transportation and communication improvements, product costs, quality, world economic trends, and a recognition of opportunities to develop leverage by operating globally. Restraining forces include market differences, management myopia, organizational culture, and national controls such as nontariff barriers. (NTBs).

READINGS FOR BLOCK 2: INTERNATIONAL MARKET ENVIRONMENT This part of the course will discuss the economic, political, and cultural factors that collectively shape the international market environment. We will learn about the principal elements and dimensions of the culture and primary economic factors that determine the global market potential and opportunity. We also discuss various political risks and a country's political environment impacting international marketing activities. · What are the marketing implications of different social and cultural environments around the globe? What are some of the elements that make up culture? How do these find expression in your native culture?

· What are the main criteria for describing a nation's economy? How should global marketers use this information to guide international market opportunities?

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LANGUAGE MANNERS & CUSTOMS TECHNOLOGY & MATERIAL CULTURE SOCIAL INSTITUTIONS

Main descriptive criteria: ● Type of economy ● Type of government ● The commanding heights (e.g. the transportation, communications and energy sectors) ● Services provided by the state ● Institutions ● Markets After identifying this criteria, global marketers are able to understand how to tailor their marketing mix to suit the country they wish to expand into.

· What are some of the sources of political risk? How do they restrict organizational activities?

SUMMARY OF KEY CONCEPTS FROM LECTURE Week 1: INTRODUCTIO N TO COURSE

INTERNATIONAL MARKETING involves marketing strategies outside your home country market. Must consider the cultural, political, economical, sociological, and contextual differences.

A MARKET is a place where buyers and sellers can meet to facilitate the exchange or transaction of goods and services. ● People are WILLING and ABLE to buy these products. ● Marketing forces sellers. to consider the 4 P’s (PRODUCT, PROMOTION, PLACE, AND PRICE). ● Products must be BENEFICIAL to customers. ● Products are given a PRICE, which is their monetary worth. Week 2: STEPPING STONES OF INTERNATION AL MARKETING

VALUE: A function of (difference between) benefits (performance quality and perceived quality) and price (monetary and non-monetary). ● Benefits: Product quality, brand association, channel of distribution (easy to access), etc. ● Price: MONETARY and NON MONETARY COSTS (time taken to find product, complexity to understand product, if you’re able to try before you buy, etc.) NEEDS: ● Consumers have needs for products and services. ● It’s important to consider Maslow’s Hierarchy of Needs here. ○ Maslow's hierarchy of needs is a theory of motivation which states that FIVE CATEGORIES of human needs dictate an individual's behavior. Those needs are: ■ PHYSIOLOGICAL NEEDS: Food, water, sleep, etc.), ■ SAFETY NEEDS: Physically safe, secured job, healthy etc. ■ LOVE AND BELONGING NEEDS: Sometimes referred to as social needs, involves friends and family, etc. ■ ESTEEM NEEDS: Confidence, achievements, etc. ■ SELF-ACTUALIZATION NEEDS: Desire to become the best you can be, involves creative activities, etc. HOW DO PRODUCERS CREATE PRODUCTS BASED OFF OF CONSUMERS’ NEEDS? ● They ask themselves a few questions: ○ Is a need present ○ Can I meet this need? ○ Can I do better than the competitors present? ■ Producers have a sustainable competitive advantage if this is true. -> THIS IS THE GOAL! PRODUCERS HAVE TWO DIFFERENT WAYS OF THINKING: Production Orientation - Sell what we make (SUPPLY < DEMAND). ● Competition is LOW. Marketing Orientation - Sell based on needs (SUPPLY > DEMAND). HOW DOES MARKETING WORK EXACTLY? 1. Identify an EXISTING NEED. a. Needs can be identified from market research (qualitative research and quantitative research). i. Two types of data for our needs: primary data (proactively design research and customize it yourself; pro: you can focus specifically on what you want to address) and secondary data (pro: cheaper). 2. Develop a product/service to MEET THAT NEED. 3. Set PRICE (pay attention to production costs, promotion costs, etc.). 4. DISTRIBUTE your product (make it available in stores, online, etc.) 5. COMMUNICATE your product (through advertising, etc.). Remember that International Marketing involves extending the scope of activities to foreign country markets. WHY DO FIRMS GO GLOBAL? 1. Growth a. A lot more potential for businesses outside the country; ECONOMIES OF SCALE (a proportionate saving in costs gained by an increased level of production).

2. Survival a. Can be dangerous to not go global (competitors will likely do it, meaning they will have more resources and such). Went over the MARKETING MATRIX. Firms can grow in the current market OR go enter a new one.

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MARKET PENETRATION: This focuses on increasing sales of an existing product to an existing market. PRODUCT DEVELOPMENT: Focuses on introducing new products to an existing market. MARKET DEVELOPMENT: This strategy focuses on entering a new market using existing products. DIVERSIFICATION: Focuses on entering a new market with the introduction of new products.

WHAT IS GLOBALIZATION? ● Globalization is the adjustments of different products or resources to meet the demands of multiple cultures. In other words, it is a strategic approach of making your products or services acceptable to all parts of the world. ● Has to do with integration of national economies into a "global" economy. Let’s take a step back and look at the two possible strategies. We have two strategies, with forces pushing us both ways. Standardization Customization (Globalization) (Localization)

Globalization: Globalization is the adjustments of different products or resources to meet the demands of multiple cultures. It involves a process of standardization. ● BENEFITS: Economies of scale, lower coordination complexity, removal of trade barriers, global customers, global suppliers. Localization: Localization is the process of adapting content, products, and services to specific local markets. ● Involves cultural differences, regional protectionism, economic differences, political & legal differences.

Great international marketers know how to find balance between these two extremes. ● We call this GLocal - Thinking global but act local. ● Nivea Case Study examines an excellent example of glocalization. HOW DO YOU KNOW IF GLOCALIZATION IS FOR YOUR COMPANY? ● It’s important to consider (1) does the nature of your business allow you to serve other countries or not and (2) your company’s preparedness- do you have the resources needed?

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Week 3: INTERNATION AL MARKETING ENVIRONMEN T

Must weigh the incentives/benefits (growth, economies of scale, etc.) and barriers/costs (monetary costs, political risks, etc.)

WHAT HAPPENS IF YOU OVER-INTERNATIONALIZE? While there are numerous reasons for various types of de-internationalization, it is indicated that, as might be expected, companies do not readily entertain withdrawal, particularly as they become more committed to, and dependent on, international operations. Let’s consider de-internalization from the perspectives of a number of fields that have contributed to an understanding of the circumstances and driving forces which are likely to lead to its development. 1. ECONOMICS a. Perspective de-internationalization could be regarded as a rational response to altered market or competitive conditions. The focus is on operative movies (low profits). b. Action that will be taken whenever achieved (or expected) profits n< t*, where ;r* de- notes the minimum acceptable profit level (over a period). i. Deterioration of relative cost conditions due inter alia to price inflation in the host country, altered ex- change rates, or the introduction of new, more efficient production technology elsewhere. ii. Falling prices due inter alia to increased competition, the introduc- ion of new product offers (substitutes), and weakened local currency which may affect the value of repatriated profits. iii. Reduced demand c. Note: The decision to exit is not only based on the incentives to exit but also on the impediments to exit (low profits, unprofitability, decrease in demand, new competitors, …). i. The existence of specific assets prevents firms from ceiling. Also sometimes fixed costs are an impediment to exit. Specific assets can be tangible or intangible. High fixed tangible suppose a great exit barrier. Same goes for intangible. Another exit barrier is interrelatedness between units (joint prodm). The study suggests that divestment may depend on diversification. 2. STRATEGIC MANAGEMENT a. Using a product life cycle approach, divestment is seen as an action to be taken for a declining industry (and a way to hold valuable and profitable assets in a portfolio). i. If low intercorrelation with core companies, it’s easier to divest; Firms are better off staying close to their close competencies.

3. INTERNATIONALIZATION-MANAGEMENT PERSPECTIVE a. Sometimes the decision is purely biased by the management team. Even when a company is already established in international operations, external forces are often the key forces in causing management to examine the nature and extent of the company's international development. Week 4: INTERNATION AL MARKETING ENVIRONMEN T

Next, we’re talking about ELEMENTS OF CULTURE. Let’s look at the CULTURAL ICEBERG. ● CULTURAL ICEBERG: Icebergs peak over the water, revealing just a small portion of their total mass. Culture is similar in that people at first just see a small portion of a person's culture based on things such as clothing, appearance, speech, grooming, greeting rituals, music, arts, or dances. However, these observations comprise just a fraction of a person's culture. Just like with a physical iceberg, a cultural iceberg contains essential characteristics beneath the surface.

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Discussed CULTURAL ORIENTATION: Divided between HIGH-CONTEXT AND LOW-CONTEXT. ○ The general terms “high context” and “low context” are used to describe broad-brush cultural differences between societies. ■ HIGH CONTEXT: Refers to societies or groups where people have connections over a long period of time. Many aspects of cultural behavior are not made explicit because most members know what to do and what to think from years of interaction with each other. Your family is probably an example of a high context environment. ● Examples of HIGH CONTEXT CULTURES: Japanese, Latin, etc. ■ LOW CONTEXT: Refers to societies where people tend to have many connections but of shorter duration or for some specific reason. In these societies, cultural behaviors and beliefs may need to be spelled out explicitly so that those coming into the cultural environment know how to behave. ● Examples of LOW CONTEXT CULTURES: Swiss, US, etc. ○ Communication ■ Explicit/Direct vs. Implicit ○ Food ■ Eating is a necessity vs. eating is a social event. ○ Time ■ Time is money vs. time is building a relationship ○ Family and Friends ■ Self-oriented vs. Others-oriented ○ Business Work Habits ■ Detail-oriented vs. relationship oriented ○ Egalitarian vs. Hierarchical

We also discussed HOFTEDE’S MODEL. ● A framework used to understand the differences in culture across countries and to discern the ways that business is done across different cultures.

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POWER DISTANCE INDEX ○ HIGH: Culture accepts power differences; shows high respect for rank and authority. ■ Example: Japan ○ LOW: Culture encourages organizational structures that are flat. ■ Example: Denmark, Austria, etc. COLLECTIVISM VS. INDIVIDUALISM ○ COLLECTIVISM: Greater importance placed on the goals and well-being of a group. ■ Example: Japan, Arab, Latin countries ○ INDIVIDUALISM: Indicates that there is greater importance placed on attaining personal goals. ■ Example: US, UK UNCERTAINTY AVOIDANCE INDEX ○ HIGH: Low tolerance for uncertainty, ambiguity, etc. ■ Example: Japan, Portugal, etc. ○ LOW: High tolerance for uncertainty; involves lax rules. ■ Example: Canada, UK FEMINITY VS. MASCULINITY ○ MASCULINITY: Involves distinct gender roles, assertive, concentrated on material achievements and wealth building. ■ Example: US, Italy, Japan ○ FEMININITY: Involves fluid gender roles, nurturing, more concerned with quality of life. ■ Example: Denmark, Sweden SHORT-TERM VS. LONG-TERM ORIENTATION ○ SHORT-TERM ORIENTATION: Focus on the near future, involves delivering short-term success or gratification. ○ LONG-TERM ORIENTATION: Focus on the future; involves delaying short-term success or gratification in order to achieve long-term success. RESTRAINT VS. INDULGENCE ○ RESTRAINT: Indicates that a society suppresses gratification of needs. ○ INDULGENCE: Indicates that a society allows relatively free gratification related to enjoying life and having fun.

CASES Nivea

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Nivea launched a new skin cream, and it gained a lot of popularity becoming #1 seller of parent company, Beirsedorf and makes up 70% of its sales Which degree of market responsiveness and global integration does Nivea represent? a. Glocal company - high degree of both,

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De-Internationalization

successfully b. Global integration: there is a universal demand for beauty products which also allows Nivea to centralize their marketing (brand consistent usage) for ad agencies to use Is Nivea Vital able to cross borders without adaptation? a. They already use a standardized marketing mix, but they should adapt some elements if they cross borders with the same key message What problems does Nivea anticipate when entering the US market? a. Lower brand awareness b. Need for new products more frequently, because of the intensive competition

De-internationalization refers to any voluntary or forced actions that reduce a company’s engagement in or exposure to current cross-border activities. In extreme cases, a company can decide to withdraw entirely from international operations, but it usually occurs only in a partial way. For example: - reduction of operations, in whatever form, in each market or withdrawal from that market. - switching to operation modes that entail a lower level of commitment. - sell-off or closure of foreign sales, service, or manufacturing subsidiaries. - reduction of ownership stake in a foreign venture. - seizure by local authorities of assets owned by a foreign company Harrigan (1980) argues that divestment can be one of the options for a “declining” industry. Divestment from a market may be particularly appropriate where there is high volatility and uncertainty regarding returns....