1. Thriving in the Marketing Environment:
The World is Flat

2. Chapter Objectives
Understand business ethics and explain how marketers practice ethical business behavior
Explain how firms practice social responsibility
Understand the big picture of international marketing, including world trade flows and the decision criteria firms use in their decisions to go global
Explain the WTO, economic communities, and how countries protect local industries by establishing roadblocks to foreign companies
Understand how factors in the external business environment influence marketing strategies and outcomes
Explain the strategies that a firm can use to enter global markets
Understand the arguments for standardization versus localization of marketing strategies in global markets

3. Real People, Real Choices: Decision Time at Tupperware
Tupperware Brands Corporation (Rick Goings)
How to refresh brand perception?
Option 1: increase advertising in new markets
Option 2: utilize public relations
Option 3: build demand using word-of-mouth
TUPPERWARE.COM

4. Welcome to the New Era of Marketing
Adopt a global focus
Managers emphasis social profit: net benefit for a firm and society from the firm’s ethical practices and socially responsible behavior
INTERFACEINC.COM

5. Figure 3.1: Linking Ethics to Profits

6. Doing Good: Ethical Behavior in the Marketplace
Business ethics: basic values that guide a firm’s behavior
Codes of ethics: written standards of behavior to which everyone in the organization must subscribe

7. Consumerism: People Fighting Back
The social movement directed toward protecting consumers from harmful business practices
Consumer Bill of Rights: the right to be safe, be informed, be heard, and choose freely
PHILLIP MORRIS

8. Discussion
In 2006, the National Institutes of Health released the results of a study showing that young people tend to drink more in areas with more alcohol advertising compared to areas with less advertising
Do alcohol companies have an ethical obligation to curtail their advertising in order to decrease drinking rates among young people?

9. Ethics in the Marketing Mix
Making the product safe
Pricing the product fairly
Promoting the product ethically
Making the product available ethically

10. Discussion Some people criticize advertising as being deceptive
Do you agree or disagree?
What would be the advantages and disadvantages to firms when they deceive consumers?

11. Doing It Right: Promoting Social Responsibility
Social responsibility: organizations engaging in activities that have a positive effect on society and promote public good
CORPORATE
RESPONSIBILITY
AT INTEL
NFL Video

12. Doing It Right: Promoting Social Responsibility (cont’d)
Serving the Environment
Serving Society: Cause Marketing
Serving the Community: Promoting Cultural Diversity

13. Individual Activity
Write down some thoughts about how products/services have the potential to harm you individually
In your opinion, do any products “cross the line” when it comes to your level of comfort?

14. Global Marketing
World Trade: the flow of goods/services among different countries – the value of all exports/imports of the world’s nations
Countertrade: trading products between countries or supplying goods in return for tax breaks from local government (accounts for 25% of all world trade)

15. Figure 3.3: North America Trade Flows (in $billions)

16. Figure 3.4: Decision Model for Entering Foreign Markets

17. Making the Decision to Go Global
“Go” or “no go”: is it in the best interest of the firm to remain in home market or to go where opportunities exist?
Which global markets are most attractive?
Key to the decisions: market conditions and creating a competitive advantage

18. At the Borders Protectionism: quotas, embargoes, and tariffs
World Trade Organization (WTO): to “help trade flow smoothly, freely, fairly, and predictably”
Economic communities promoting trade

19. Discussion
Do you think the WTO will succeed in eliminating world trade barriers?
What do you think are the positive and negative aspects of a totally free marketplace?
What countries will win and which will lose in such a world?

20. The Global Marketing Environment
A company going global must understand local conditions in the targeted country
Understanding the external environment: economic, competitive, technological, political, and cultural factors affect marketers’ global strategies

21. The Economic Environment: Indicators of Economic Health
Economic health = market potential for firm
Gross domestic product (GDP): total dollar value of goods/services a country produces within its borders in a year
Per capita GDP: total GDP/number of citizens

22. Indicators of Economic Health (cont’d)
Gross national product (GNP): the value of all goods/services produced by a country whether in its borders or not
Economic infrastructure: quality of country’s distribution, financial, and communications systems

23. Level of Economic Development
Less developed country (LDC)
Economic base is often agricultural
Attractive markets for staples and inexpensive items
Developing countries
Economy shifts emphasis from agriculture to industry
Developed countries
Offer wide range of opportunities for international marketers

24. The Business Cycle
Prosperity
Recession
Recovery
Depression
Inflation

25. The Competitive Environment
Competitive intelligence: gathering and analyzing publicly available information about rivals to develop superior marketing strategies
Collected from news media, the Internet, and publicly available government documents

26. The Competitive Environment (cont’d)
Competition in the microenvironment
Competition for consumer’s discretionary income
Competition among products to satisfy the same consumer’s needs/wants
Competition among brands offering similar goods/services on the basis of brand reputation or perceived benefits

27. The Competitive Environment (cont’d)
Competition in the macroenvironment (overall structure of industry)
Monopoly
Oligopoly
Monopolistic competition
Perfect competition

28. The Technological Environment
Technology provides firms with important competitive advantages
Patent: legal document giving inventors exclusive rights to produce/sell a particular invention in that country

29. The Political and Legal Environment
Local, state, national, and global laws and regulations affect businesses
The law in the United States
To make sure businesses compete fairly with each other
To make sure that businesses don’t take advantage of consumers

30. The Political and Legal Environment (cont’d)
Political Constraints on Trade
Economic sanctions
Nationalization
Expropriation
Regulatory constraints on trade
Local content rules: a proportion of a product must consist of components supplied by industries in the host country or economic community
Human rights issues

31. The Sociocultural Environment
Demographics
Cultural values
Collectivist versus individualistic cultures
Norms, customs, mores, and conventions
Language
Ethnocentrism: the tendency to prefer products from one’s own culture

32. Discussion
Some countries have criticized U.S. business for exporting American culture
What about American culture might be objectionable?
Can you think of some products that U.S. marketers export that can be objectionable to some foreign markets?

33. Group Activity
What global external environment factors would you consider to be critically relevant for the following products (form a small group and pick one of the products listed below):
Coffee
Cars
Video games
Sporting events
Computers
Soda

34. How “Global” Should a Global Marketing Strategy Be?
Market-entry strategy: the level of commitment to operate in another country
Figure 3.4

35. How “Global” Should a Global Marketing Strategy Be? (cont’d)
Exporting
Contractual agreements
Licensing
Franchising
Strategic alliances
Joint venture
Direct investment
Born-global firms
LOGITECH

36. Global Marketing: Choosing a Marketing Mix Strategy
Standardization vs. localization
Standardization: offer the same products in all markets
Localization: offer a customized marketing mix for each country

37. Global Marketing: Choosing a Marketing Mix Strategy (cont’d)
Product decisions
Straight extension strategy
Product adaptation strategy
Product invention strategy
Backward invention
Promotion decisions: whether or not to modify promotions

38. Global Marketing: Choosing a Marketing Mix Strategy (cont’d)
Price decisions
Free trade zones
Gray market goods
Dumping
Distribution decisions

39. Group Activity
Form a small group and formulate either a brief standardized or local strategy in a foreign country (of your choice) for one of the following products:
Tide laundry detergent
Verizon cellular phone service
Direct TV service
Hollister clothing
Weber gas barbecue grills

40. Real People, Real Choices
Tupperware Brands Corporation (Rick Goings)
Rick chose option 2: Utilize public relations
Since the campaign launched in April 2005, Tupperware has seen a significant increase in the number of media exposures it has gotten

41. Discussion
The World Trade Organization seeks to eventually remove all barriers to world trade.
Do you think this will ever be a reality?
What do you think are the positive and negative aspects of a totally free marketplace?
Which countries will win and which will lose in such a world?

42. Marketing in Action Case: You Make the Call
What is the decision facing New Balance?
What factors are important in understanding this decision situation?
What are the alternatives?
What decision(s) do you recommend?
What are some ways to implement your recommendation?

43. Keeping it Real: Fast Forward to Next Class Decision Time at Plan-it Marketing
Meet Cindy Tungate, president Plan-it Marketing, a marketing research firm
Plan-it’s client Priceline needs help in planning its business
The decision: What marketing research strategy will maximize results for Priceline?