International Marketing

How can a country with a per capita GNP of $100 be a potential market for consumer goods? What kinds of goods would probably be in demand? Discuss.

A country with a low GNP can have a large demand for consumer goods because of the need that exists for certain products and because there are no production facilities or very limited ones within the country. India, for example, has a per capita income of $58/year, yet its imports were about $2.4 billion in 1963. The type of goods that likely are in demand are the more basic type of consumer goods, such as clothing or basic housing needs.

Discuss the alternative objectives possible in setting prices for intracompany sales

Maximizing profits for the corporation as a whole. Facilitating parent-company control. Offering management at all levels, both in the product divisions and in the international divisions, an adequate basis for maintaining, developing, and receiving credit for their own profitability. The problem of pricing is complex and awareness of the variations in local conditions should be taken into account when determining a strategy. Maintaining market initiative of the international divisions is a prerequisite of the pricing strategy.

self-reference criterion (SRC)

an unconscious reference to one's own cultural values, experiences, and knowledge as a basis for decisions

What is the importance of "cultural empathy" to the marketer? How do you acquire it?

being culturally sensitive allows one to objectively see, evaluate, and appreciate another culture. A marketer can obtain cultural empathy by studying the culture and living with it. The latter is not always possible, and it may be expedient to hire natives who speak your tongue and their own. This procedure will often give you the intuition which is necessary for success.

What are intellectual property rights? Why should a company in international marketing take special steps to protect them?

exclusive or limited use of products, processes, designs, formulas, brand names, and trademarks which provide a company with advantages over competitors; i.e., patents, trademarks, and copyrights. The most important assets of a company because they symbolize quality, entice consumers, and have a psychological or intangible quality which is invaluable.

How can the knowledge of the diffusion of innovations help a product manager plan his investments?

knowledge provides the marketer with an estimate of the time it will take before his innovation would be accepted by a culture, and therefore help him decide whether or not to make the necessary investment. It can also give him insights into how to accelerate the rate of acceptance of his product and the steps that he as a marketer can take to eliminate some of the "newness" thereby gaining more rapid acceptance of his product. - Determine a product profile which could be useful as a model for planning product strategy.

international marketing (conceptual def)

satisfying the needs of customers/ clients facing competition in more than one market

international marketing (strategic def)

taking advantage of the opportunities based on the company's strengths and weaknesses while facing international competition

international marketing (descriptive def)

the performance of business activities including pricing, promotion, and distribution (place) of a company's products and services to consumers or users in more than one nation for a profit

Cultures are dynamic. How do they change? Are there cases where change is not resisted but actually preferred? Explain. What is the relevance to marketing?

Cultures change gradually with resistance to changes. The resistance varies inversely with the interest a society has in the change. Culture doesn't resist change if the product is a status-valued imported item, a fashion item, or is given the advantage of inferior feelings about local products. Marketers can expect resistance to their products, with greater resistance to those products with the greatest deviation from the cultural norm or status quo.

controllable elements

Firm Characteristics Price Product Promotion Channels of distribution Research

In many code law countries, ownership of intellectual property rights is established by registration rather than prior use. Comment..

Most countries of the world follow a code law principle concerning property rights. That is, rights are established by registration, and the first to register a product is its legal owner. In the United States, the common law principle is observed: prior use established ownership. Whoever can establish first use is considered the owner and has legal rights. Obviously, uniform laws would help since the international marketer must necessarily consider the world as his or her market and should have a means of obtaining worldwide intellectual property rights.

How will entry into a developed foreign market differ from entry into a relatively untapped market?

Some of these differences include: 1) channels of distribution which may or may not be developed. 2) Governmental attitudes toward business, foreigners, and industry may be very liberal in a growing economy, while an established market may be very restrictive. 3) Communication and transportation may be highly limited in untapped markets and highly developed in successful countries. 4) The amount of capital, banks, and exchange-rate systems will vary according to the market's development. 5) the degree and amount of competition will vary accordingly. To this list, endless factors could be added such as cost of entering the market, social customs, laws, etc.

Discuss the stages of the research process in relation to the problems encountered. Give examples.

The research program should include the following steps: a. Define the research problem and establish research objectives. b. Determine the sources of information to fulfill the research objectives. c. Gather the relevant data from secondary and/or primary sources. d. Analyze, interpret, and present the results. The task of the research is to execute each of these steps with maximum objectivity and accuracy within the limits of cost and time. - The major difficulty in defining the problem and establishing research objectives is translating the business problem into a research problem. This first stage frequently goes astray because of improper problem definition. In domestic marketing research, much of these kinds of information are taken as "given" and thus is not included in the typical market research project. However, foreign marketing research must include more information than is ordinarily included in domestic research, and thus in defining the problem, the inexperienced researcher may fail to define the problem as broadly as it should be defined. - The second step in the research process is to determine the sources of information to fulfill the research objectives. The major problem here is being aware of the availability of secondary data and its reliability. The researcher is faced with the problem of making a decision between using secondary data, which may not be as reliable as he wishes, versus collecting primary data. Cost is a major factor in this decision; that is, the cost of collecting the data from primary sources versus using what may be poor or secondary data. - The third step concerns the problems of gathering the relevant data from either secondary and/or primary sources. For the data which is available, there are some problems with reliability. These problems: (1) the availability of detailed data on specific areas. (2) The reliability of the secondary data. This data may, in some cases, be too optimistic, either on purpose or as a result of not being collected properly. They may tend to understate conditions because of improper collection procedures. (3) Comparability and currency of the data which are available. Data may be many years out of date, they may have been collected on an infrequent and unpredictable schedule, there may be no historical series with which to compare the current information. The problems of gathering primary data is also important. The major problem gathering primary data is getting the unwilling respondent to provide current and truthful information. Cultural variations also hamper the foreign researcher in locating knowledgeable sources of information as well as influencing the general willingness to respond. In some cultures, to discuss personal or family matters is taboo. Private matters are just not discussed with strangers. - The last step is analyzing the problem and interpreting research information. Once the data has been collected, the final step is the analysis and interpretation of the findings in light of the stated marketing problem. The meaning of words, the consumer's attitude toward a product, the interviewer's attitude or the interview situation can all distort research findings. Just as culture and tradition can influence the willingness to give information, it can also influence the type of information given. In order to analyze, he must determine the customs, viewpoints, semantics, current attitudes, and business customs of a society, or a subsegment of a society. Second, the researcher must possess a creative talent in adapting research findings. Ingenuity and resourcefulness, patience and a sense of humor, and a willingness to be guided by original research finding even when they conflict with popular opinion or prior assumptions are all necessary aspects in the interpretation of foreign market research. Third, the researcher should be skeptical in handling both primary and secondary data.

What are the 3 major components of a product? Discuss their importance to product adaptation

(1) its core, the physical product and all its functional features (2) the packaging component that includes the physical package in which the product is presented, as well as the brand name, trademark, styling and design features, price and quality levels (3) the support services component includes repair and maintenance services, installation, delivery, warranty, spare parts, training and instructions, credit, and any other services related to the use and purchase of the product. The importance of each component, as well as the perceived component attributes are functions of culture. What may be desirable in one culture may be unimportant in another. A product is, in a large part, a cultural phenomenon; that is, culture determines the individual's perception of what a product is and what satisfaction that product provides. Therefore, in developing products for international markets, adaptation of that bundle of utilities or satisfaction received may be necessary to bring the product in line with the culture's needs.

Discuss the characteristics of an innovation which can account for differential diffusion rates.

(1) relative advantage: the degree to which an innovation is better than the products it replaces or with which it competes (2) compatibility: how consistent a product is with existing value and behavior patterns (3) complexity: how difficult it is to understand and use the new product (4) trialability: the degree to which a product may be tried, on a limited basis, without complete commitment to the product (5) observability: the ease with which the results of an innovation may be communicated to others

Differentiate between a global company and a multinational company.

- A global company assumes there are segments across countries which have the same needs and wants and designs a standardized, high quality, reasonably priced product for those segments and markets it as if there are no differences among the country markets. The global company which sees the entire world, or major regions of it, as a single entity requiring no specialized adjustments. - A multinational company operates in a number of countries and adjusts its products and marketing practices for each market. The multinational company has a specific marketing plan and adapts products for each country market. The philosophy for the multinational company is there are cultural differences among countries that require specific adaptations for those markets.

What are some particularly troublesome problems caused by language in foreign marketing?

- Differences in tongues - idiomatic interpretations mean something different than what the marketer had intended. Examples of this are "Body by Fisher" which translates to "Corpse by Fisher" and "Let Hertz Put You in the Drivers Seat" which translates to "Let Hertz Make You a Chauffeur."

Differentiate among the three international marketing concepts.

- Domestic Market Extension Concept: The domestic company that seeks sales extension of its domestic products into foreign markets. It views its international operations as secondary to/an extension of its domestic operations. The primary motive is to dispose of excess domestic production. Domestic business is its priority and foreign sales are seen as a profitable extension of domestic operations. While foreign markets may be vigorously pursued, the orientation remains basically domestic. Its attitude toward international sales is typified by the belief that if it sells in Peoria it will sell anywhere else in the world. Minimal, if any, efforts are made to adapt the marketing mix to foreign markets. The firm's orientation is to market to foreign customers in the same manner the company markets to domestic customers. It seeks markets where demand is similar to the home market and its domestic product will be acceptable. - Multi-Domestic Market Concept: Once a company recognizes the importance of differences in overseas markets and the importance of offshore business to their organization, its orientation toward international business may shift to a Multi-Domestic Market Strategy. A company guided by this concept has a strong sense that country markets are vastly different (and they may be, depending on the product) and that market success requires an almost independent program for each country. Firms with this orientation market on a country-by-country basis with separate marketing strategies for each country. Subsidiaries operate independently of one another in establishing marketing objectives and plans. The domestic market and each of the country markets have separate marketing mixes with little interaction among them. Products are adapted for each market with minimum coordination with other country markets, advertising campaigns are localized as are the pricing and distribution decisions. A company with this concept does not look for similarity among elements of the marketing mix that might respond to standardization. Rather, it aims for adaptation to local country markets. - Global Marketing Concept: its marketing activity is global marketing, and its market coverage is the world. A company employing a Global Marketing Strategy strives for efficiencies of scale by developing a standardized product, of dependable quality, to be sold at a reasonable price to a global market (that is, the same country market set throughout the world). Important to the Global Marketing Concept is the premise that world markets are being "driven toward a converging commonalty" that seek much the same ways to satisfy their needs and desires and thus, constitute significant market segments with similar demands for the same product the world over. With this orientation a company attempts to standardize as much of the company effort as is practical on a world-wide basis. Some decisions are viewed as applicable worldwide, while others require consideration of local influences. The world as a whole is viewed as the market and the firm develops a global marketing strategy.

Define and discuss the idea of global orientation

- Global orientation means operating as if all the markets in a company's scope of operations (including domestic market) are approachable as a single global market and to standardize the marketing mix where culturally feasible and cost effective or to adapt the marketing mix where culturally required and cost effective. - A global orientation does not mean to follow a single strategy of standardization without regard for cultural differences nor does it imply that the marketing effort must be adapted to every cultural difference. Instead, it means looking for market segments with similar demands that can be satisfied with the same product, standardizing the components of the marketing mix that can be standardized, and, where there are significant cultural differences that require parts of the marketing mix to be culturally adapted, adapting.

Discuss how the shift from making "market entry" decisions to "continuous operations" decisions creates a need for different type of information and data.

- Market entry decisions require information that may be, for all practical purposes, important only in the original decision to enter or not to enter a market. Those kinds of information help the marketer make a decision on short-term as well as long-term demand for his product or the profitability of his product after entry are the types necessary to decide market entry. Once a decision to enter a market has been made and a beachhead established, then the marketer needs the constant monitoring of his relative position in the new market, as well as his market share, to continue his operations within that country. This kind of information requires a constant or continuous monitoring of one's market position. Thus, some continuous system designed to generate, store, catalog, and analyze information from sources within the firm and external to the firm are necessary for decision making. MMIS is designed specifically to provide this kind of continuous flow of information.

What special media problems confront the international advertiser?

- Special problems in media—availability, cost, and coverage—confront the international advertiser. - Availability of media varies from country to country due to government restrictions. Countries have either too many or too few media to adequately cover the majority of the population. - price: the US ad man must be prepared to haggle greatly over costs. Most media costs are subject to negotiation. Agency discounts are often split with the client to bring costs down.

What are some problems created by language and the ability to comprehend the questions in collecting primary data?. How can a foreign market researcher overcome these difficulties?

- The ability of the individual to understand or the ability of the researcher to translate accurately a question into the language of the respondent. - Dictionary translation is seldom adequate. The key is the ability to translate the question into the proper idiom of the respondent. - A questionnaire is difficult to construct even in one's own tongue. - The most important one, is being certain that the question being asked is the same when translated. These problems can be overcome by the researcher by the use on nationals.

What is the "objective theory of jurisdiction?" How does it apply to a firm doing business within a foreign country?

- The question of U.S. sovereignty over its citizens abroad has been dealt with by the "objective theory of jurisdiction" which states that "even if an act is committed abroad, that is outside the territorial jurisdiction of the courts, those courts can nevertheless have jurisdiction over it if this act produces consequences or effects within the United States." - This means that an American is always a citizen of the United States and is subject to its laws as interpreted by the U.S. courts. - Since an American working, traveling, or living in a foreign country is subject to the laws of that country and must obey them, he will not be punished by an American court if he is at the same time violating a domestic U.S. law. It is obvious that a firm (U.S.) in a foreign country must consider at least two sets of laws, and perhaps more. This is especially important in antitrust cases, or with laws governing loyalty and U.S. citizenship (i.e., trading with enemy, political office in foreign countries, offices in political parties, etc.).

What is the task of the international marketing research? How is it complicated by the foreign environment?

- answer questions with current, valid information that a marketer can use to design and implement successful marketing programs. - This task is complicated by the foreign environment in the case of secondary data by a lack of collected data or data which have been poorly collected and the reliability of the secondary data available. In many countries, national pride comes before statistical accuracy, and frequently secondary data are opinions rather than fact. Another difficulty involves the comparability and currency of available data.

Differentiate between conciliation and arbitration

- conciliation: neither side is bound to a conciliation settlement - arbitration: bound to do what the arbitrator decides - Conciliation can be either formal or informal. Informal conciliation can be established by both sides agreeing on a third party to mediate. In China, formal conciliation is conducted under the auspices of the Beijing Conciliation Center that assigns one or two conciliators to mediate. If agreement is reached, a conciliation statement based on the signed agreement is recorded. Although conciliation may be the friendly route to resolving disputes in China, it is not legally binding so an arbitration clause should be included in all conciliation agreements. Experience has shown that having an arbitration clause in the conciliation agreement makes it easier to move to arbitration if necessary. For companies doing business in China, settlement of disputes should follow four steps; first informal negotiation; if this does not work, conciliate, arbitrate; and finally, litigate.

Outline some of the major problems confronting an international advertiser

- cultural differences among country markets. Consumers reflect their culture, its style, feelings, value systems, attitudes, beliefs, and perceptions. Since advertising's function is to "interpret or translate the need/want satisfying qualities of product and services in terms of consumer needs, wants, desires, and aspirations," the emotional appeals, symbols, persuasive approaches and other characteristics of an advertisement must coincide with cultural norms to be effective. - Reconciling international advertising and sales promotion effort with cultural uniqueness of markets is the challenge. The global advertiser is confronted with legal and tax considerations, language limitations, media limitation and production and cost limitations. These limitations must all be dealt if a company is to have an effective advertisement.

Discuss the conditions that have led to the development of global markets.

- technology & travel As a result of this awareness, there are segments in each market who have had similar experiences and thus have common needs. These common needs are described as a demand for high quality, reasonably priced, standardized products. - Within each country's market there is a growing segment that has been exposed to ideas from around the world and thus have had their tastes and perceived needs affected. - World markets are being driven toward a converging commonality of taste and needs leading toward global markets.

What is material culture? What are its implications for marketing? Give examples

- technology and economics. - Technology is the techniques used to make material goods; it is the "know-how" possessed by the people of a society. - Economics is the manner in which people employ their capabilities and the resulting benefits, including the production of goods and services, distribution, consumption, means of exchange, and the income derived from the creation of utilities. - Examples of material culture are the availability and cost of gasoline in regulating demand for and size of automobiles. The availability of electricity can regulate demand for any electrical product.

Define the country-of-origin effect (COE) and give examples.

-Any influence that country-of-manufacturer has on a consumer's positive or negative perception of a product. -Today a company competing in global markets will manufacture products worldwide and, when the customer is aware of the country of origin, there is the possibility that the place of manufacture will affect product/brand image. -Some examples are French wines, German beer, Swiss watches, Cuban cigars

Discuss the three cultural change strategies a foreign marketer can pursue.

1) Congruent strategy: involves marketing products similar to ones already on the market in a manner as congruent as possible with existing cultural norms, thereby minimizing resistance 2) Unplanned change: introducing an innovation and then waiting for an eventful cultural change that will permit the culture to accept the innovation. The essence of unplanned change lies in the fact that the marketer does nothing to accelerate or help to bring about the necessary change where the marketer deliberately sets about to overcome resistance and to cause change that will accelerate the rate of adoption of his product or innovation. 3) Planned change: deliberately setting out to change those aspects of a culture most likely to offer resistance to predetermined marketing goals.

Discuss the four phases of international marketing involvement.

1) Firms which have no foreign business activity except sales made to foreign customers who come directly to the firm 2) Domestic firms which infrequently sell goods abroad. Sales are made on an availability basis with no intention for continuing market representation. 3) Domestic firms that have perminant/regular productive capacity abroad which are sold on a regular basis in foreign markets. 4) Includes the international company that produces a product for the world market.

Explain the popularity of joint ventures.

1) To gain access to markets. Nearly all developing countries require some degree of local participation for operating in their country. Companies which already have well-established local distribution may provide rapid market access and distribution to foreign companies entering a country. 2) Companies join forces in order to broaden the line of merchandise that they have available, thereby gaining marketing efficiency and better public image. 3) Local firms possess market information and the marketing know-how which would take years for a foreign company to acquire. Such participation minimizes the risk of market failure and speeds the marketing effort. 4) Joint ventures may also arise for financial and manpower reasons. 5) It may also give access to a higher quality and more capable managerial manpower.

Discuss the three factors necessary to achieve global awareness.

1) objectivity: objective in assessing opportunities, evaluating potential, and responding to problems. Too often mistakes are made because companies are swept away with generalities and make investments only later to find out that their commitment or abilities were not sufficient to succeed 2) tolerance: understanding cultural differences and accepting/working with others whose behavior may be different from yours 3) knowledge: knowledgeable about cultures, history, world market potentials, and global economy and social trends is critical for a person to be culturally aware. To be successfully in international business and globally aware, a person needs to understand changes occurring throughout the world. The knowledgeable marketer will identify those opportunities long before it becomes evident to others.

Innovations are described as being either functional or dysfunctional. Explain.

A dysfunctional innovation is one where the effects within the social system are undesirable. In most instances, the marketer's concern is with perceived functional consequences, i.e., the positive benefits of product use. For many products, such as the cake mix, there would be no dysfunctional consequences. However, it cannot always be assumed that an innovative product's consequences will be functional. An example was the introduction of condensed milk to the diet of babies in underdeveloped countries where protein deficiency is a health problem. On the surface it would appear that the consequences of the addition of condensed milk to the diet would result in better nutrition and health, stronger and faster growth, etc. However, evidence tends to indicate that in at least one situation there were dysfunctional consequences of the innovation. Instead of health benefits, a substantial increase in dysentery, diarrhea, and a high infant mortality rate resulted.

Outline the elements of culture as seen by an anthropologist. How can a marketer use this "cultural scheme?"

A)Material Culture: Technology & Economics B)Social Institutions: Social organizations, Education, Political structures C)Man and the Universe: Belief systems D)Aesthetics: Graphic and plastic arts, Folklore, Music, drama, and the dance E)Language The foreign marketer may use the above outline of cultural elements (1) to provide a meaningful framework to use in evaluating a marketing plan or in studying the potential of a foreign market, (2) to point out those things which must be learned about the culture of the people since most of these elements are reacted to automatically in a cultural system, (3) as factors with which the market interacts and which are basic in the understanding of the character of the marketing system of any society.

Explain how and why distribution channels are affected as they are when the stage of development of an economy improves

As an economy advances, the distribution system begins to take the form of distribution in the U.S. The apparent reason for this change in structure is due to the decentralization of the total marketing function. As an economy becomes more sophisticated it places increasingly complicated and sophisticated demands upon the marketing function. This results in modification of the existing system to be able to meet the increased demand placed upon it by the emerging economy. Consumer segments become much larger and diversified and each in turn places new demands on the distribution system which causes modification in order to administer to the requirements of that segment.

Discuss the distinguishing features of the Japanese distribution system

Distribution in Japan has long been considered the most effective non-tariff barrier to the Japanese market. The Japanese system has four distinguishing features: 1) a structure dominated by many small wholesalers dealing with many small retailers; 2) channel control by manufacturers; 3) a business philosophy shaped by a unique culture; and 4) laws that protect the foundation of the system, the small retailer. - High Density of Middlemen. There is a density of middlemen, retailers and wholesalers in the Japanese market unparalleled in any Western industrialized country. The traditional structure serves consumers who make small, frequent purchases, at small conveniently located stores. The high density of small stores with small inventories is supported by an equal density of wholesalers. It is not unusual for consumer goods to go through three or four intermediaries before reaching the consumer—producer to primary, secondary, regional, and local wholesaler, and finally to retailer to consumer. - Channel Control. Manufacturers depend on wholesalers for a multitude of services to other members of the distribution network. Financing, physical distribution, warehousing, inventory, promotion and payment collection are provided to other channel members by wholesalers. The system works because wholesalers and all other middlemen downstream are tied to manufacturers by a set of practices and incentives designed to ensure strong marketing support for their products and to exclude rival competitors from the channel. - Business Philosophy. Coupled with the close economic ties and dependency created by trade customs and the long structure of Japanese distribution channels is a unique business philosophy that emphasizes loyalty, harmony, and friendship. The value system supports long-term dealer/supplier relationships that are difficult to change as long as each party perceives economic advantage. The traditional partner, the insider, generally has the advantage. - Large-Scale Retail Store Law. Competition from large retail stores has been almost totally controlled by Daitenho: the Large-Scale Retail Store Law. Designed to protect small retailers from large intruders into their markets, the law requires that any store larger than 5,382 square feet must have approval from the prefectural government to be "built, expanded, stay open later in the evening, or change the days of the month they must remain closed." All proposals for new "large" stores are first judged by MITI (Ministry of International Trade and Industry). Then, if local retailers unanimously agree to the plan, it is approved. However, without approval at the prefecture level (all small retailers in the area must agree), the plan is returned for clarification and modification for approval. Besides the large-scale retail store law, there are myriad licensing rules. One investigation revealed 39 different licenses, each with a separate law, needed to open a full-service store.

Formulate a general rule for deciding where international business decisions should be made.

International business decisions should reflect the culture of the country in which they will be implemented. Thus the decision should be as close to the country where it is to be implemented as possible

How does the international marketer determine what legal system will have jurisdiction when legal disputes arise?

Look at the laws of his own country and the laws of the country in which he is conducting business. In general, a U.S. citizen is subject to the laws of the United States as well as to those of any foreign country in which he lives or works. In the case of a conflict, and unless the government of the citizen takes up the citizen's case in an international court, jurisdiction is generally determined (1) jurisdictional clauses included in the contract (2) where a contract was entered into (3) where the provisions of the contract were performed. The jurisdictional clause is the most clear-cut and is usually honored. If there is no such clause or if it is ineffective, either of the other two methods is used.

Why do companies change their organizations when they go from being an international to a global company?

Many ambitious multinational plans debt succeed because of confused lines of authority, poor communications, and lack of cooperation between headquarters and subsidiary organizations. Companies are usually structured around one of three alternatives: global product divisions responsible for product sales throughout the world; geographical divisions responsible for all products and functions within a given geographical area Market-oriented firms are finding greater competitiveness in world markets making it essential to assume a global perspective in planning and organizational structure. Global competition also requires quality products designed to meet ever-changing customer needs in the face of rapidly growing competition from every corner of the world. Cost containment, escalating technology, customer satisfaction and a greater number of players mean that every opportunity to refine international business practices must be examined in light of company goals. - Strategic international alliances (SIA), strategic planning and alternative market entry strategies are important avenues to global marketing that must be implemented in the planning and organization of global marketing management.

domestic uncontrollables

Political/legal forces Economic Climate Competitive structure

foreign uncontrollables

Political/legal forces Economic forces Cultural Forces Geography and infrastructure Structure of distribution Level of Technology Competitive forces

Explain the concept of "price escalation" and tell why it can mislead an international marketer

Price increases due to added costs produced by such things as tariffs, taxes, longer lines of distribution, etc. It can mislead many international marketers into thinking that exorbitant prices that are charged in foreign countries for goods that are relatively reasonable in the domestic market can increase profits in the foreign market. This is just the opposite of the real case in many situations where the effects for price escalation, not added profit, account for the high prices.

Changing currency values have an impact on export strategies. Discuss

Risks result from changing values of a country's currency relative to other currencies. A strong dollar produces price resistance since it takes a large quantity of local currency to buy a U.S. dollar. Conversely, when the U.S. dollar is weak, demand for U.S. goods increases since fewer units of foreign currency are needed to buy a U.S. dollar. Each additional market in which a company operates adds to the problem. Currency-exchange rate swings are considered by many global companies to be a major trade barrier. For a company whose long range plans call for continued operation in foreign markets and who wants to remain price competitive, price strategies need to reflect variations in currency values. When the value of the dollar is weak relative to the buyer's currency (i.e., it takes fewer units of the foreign currency to buy a dollar), companies generally employ cost plus pricing. To remain price competitive when the dollar is strong (i.e., when it takes more units of the foreign currency to buy a dollar), companies must find ways to offset the higher price caused by currency values.

Explain specific tariffs, ad valorem tariffs, and combination tariffs

Specific tariffs are fees charged at a flat rate per physical unit imported. Ad valorem tariffs are taxes based on the value of the item Combination tariffs include both of the above.

Define strategic planning. How is strategic planning different for international marketing than domestic marketing?

Strategic planning is a systemized way of relating to the future. It is an attempt to manage the effects of external uncontrollable factors on the firm's strengths, weaknesses, objectives, and goals to attain a desired end. Further, it is a commitment of resources to a country market to achieve specific goals. The intricacies of the operating environments of the MNC (host country, home, and corporate environments), its organizational structure, and the task of controlling a multicountry operation create differences in the complexity and processes of international planning. Strategic planning on an international level allows for rapid growth of the international function, changing markets, increasing competition, and the ever-varying challenges of different national markets. The plan blends the changing parameters of external country environments with corporate objectives and capabilities to develop a sound, workable marketing program.

Review the key variables that affect the marketer's choice of distribution channels

The four main variables which affect the marketer's choice of distribution channels are (1) the availability of middlemen, (2) the cost of their services, (3) the functions performed (and the effectiveness with which each is performed) and (4) the extent of control which the manufacturers can exert over the middlemen's activities. - ALSO the 6 C's (Cost, capital, control, coverage, character, continuity)

In what circumstances is the use of a EMC logical?

The export management company is the logical choice of middlemen for firms with relatively small international volume or for those that do not want to involve their own personnel in the international function.

To what extent, do the functions of domestic middlemen differ from their foreign counterparts?

The functions of the domestic and foreign middlemen are quite similar in many areas, but there are certain differences. First, the domestic agent usually takes possession of the goods, whereas the foreign agent does not. In the area of setting prices, the domestic agent has the authority to do so, while his foreign counterpart does not. Both types of domestic middlemen arrange for the shipping of goods, but the foreign middlemen do not. Two other differences exist between foreign and domestic agents. The domestic agent does some promotion and selling, and occasionally extends credit. On the other hand, foreign agents usually do not participate in these activities.

Why has dumping become such an issue in recent years?

The growing importance of world trade to individual companies has combined with saturated domestic markets, overproduction and increased competition to encourage dumping in many product areas. Procedures are looking to the marginal revenue contribution which can be gained when products are sold above direct cost into markets not normally sold. In recent years the number of dumping complaints in the United States has exploded and interest in antidumping enforcement and legislation has grown apace.

Discuss the reasons purchasers impose countertrade obligations on buyers.

The most important reason is a shortage of hard currencies. - This is the most prevalent, however, when a country produces a product in large quantities where there is a low market demand, the country may offer products in counterpurchases as a means of getting rid of excess supply. - goods are offered for countertrade when there is a low or minimal market for the goods. - Another reason is because the country does not have an established IM in which to dispose of the goods. There may be a world market for the goods but the country does not have the ability or access to the market and thus may force products in countertrade.

Why is it so difficult to control consumer prices when selling overseas?

There are many variables which must be considered. Among these are: tariffs on imports, "dumping" tariffs, sales taxes, distributive channel costs, added middlemen costs, and shipping costs. It is very difficult to control consumer prices. Price escalation is one of the main reasons, as prices escalate differently. Some profiteering is also found in some countries, thus upsetting any consumer price control. Dumping, being defined differently, is treated differently under various laws making for more varied prices. Firms operating overseas have less ways to protect themselves from price variations and fluctuating exchange rates also tend to increase price fluctuations. In addition, many retailers overseas don't like price competition and avoid it if possible by raising or lowering their prices.

Discuss how the globalization of markets, especially Europe 1992, will affect retail distribution

There is greater commonalty than disparity among middlemen in different countries. U.S. based Southland Corporation's 7-Eleven Stores are replacing many of the traditional "Mom and Pop" stores that have dominated a significant part of Japan's retail food distribution. In Spain, 7-Eleven and Campsa, the Spanish gasoline monopoly, opened 200 7-Eleven minimarkets at Campsa service stations. - Hypermarkets, a retailing innovation developed in France, have expanded beyond French borders to other European countries and to the United States. Discount, home repair, self-service, and supermarkets are all mass merchandising concepts gradually spreading all over the world. In anticipation of Europe 1992, national and international retailing networks are developing throughout the world. European integration, global brands, globalized media communications, consumers that expect rational and predictable product assortments, and global companies anxious for their products to be distributed in the most efficient manner

How can advertisers overcome the problems of low literacy in their market?

They can overcome low literacy by making use of ads that are self-explanatory, and extensive use of radio which doesn't have written words.

Discuss the effect of shorter product life cycles on a company's planning process.

Time is a precious commodity for business, and expanding technology is shortening product life cycles and creating greater opportunities for innovative products. A company can no longer introduce a new product with the expectation of dominating the market for years while the idea spreads slowly through world markets. Shorter product life cycles mean that a company must maximize sales rapidly to recover development costs and generate a profit by offering its products globally. Enhanced market expectation for innovative products at competitive prices. Today, strategic planning must include emphasis on quality, technology, and cost containment.

Global Awareness

Tolerance of cultural differences, Knowledge of cultures, history, world market potential, and global economic, social, and political trends

Defend either side of the proposition that advertising can be standardized for all countries

Yes, the basic theme, objectives, and philosophy of international advertising can be standardized; but the vast mechanical problems most certainly cannot be solved through international standardization. The ad man can adapt his basic skills to all countries. If buying motives and company objectives are the same for various countries, then the advertising approach may be the same. If they vary, then customizing your approach to each country is a must.

Discuss the problems of gathering secondary data in foreign markets.

a. The availability of detailed data on specific market areas. There is a lack of detailed data on items such as numbers of wholesalers, retailers, manufacturers, and facilitating services. Surprisingly, enough data on population and income are often unavailable as well. b. Reliability of the secondary data which are available. When there is an abundance of data, it must be screened carefully. The data can be overstated, understated, or riddled with holes. c. Comparability and currency of available data. In many countries, especially the lesser developed, data can be many years out of date as well as having been collected on an infrequent and unpredictable schedule. Furthermore, there are often very little historical data available with which to compare the current information.

Review the basic areas of advertising regulation. Are such regulations purely foreign phenomena?

a. The basic areas of advertising regulation are (1) the legal type such as Germany's Comparative Terminology and Direct Comparison Laws, and (2) taxation on advertising, prevalent in Britain, France, and Austria. b. No, these regulations are not purely foreign. Here in the United States there are certain advertising codes and standards that one must follow. These are generally enforced by the advertising industry itself—but the FCC also imposes strict standards of "truth in advert."