International Marketing: Adapting to Global Markets

• International marketing involves planning, pricing, promoting, and distributing products across multiple countries while adapting to economic, cultural, political, and technological factors.
• Domestic marketing deals with one environment, whereas international marketing manages multiple different environments simultaneously.

The Marketing Mix (Controllable Factors - 4Ps)

• Companies can adjust these factors when entering a new market
• Product adjustment: McDonald's in India offers vegetarian burgers
• Price Adjustment: Netflix charges $15.49 in the U.S. but only $3 in India to match income levels
• Place (Distribution): Nike sells mostly online in China due to high e-commerce usage.
• Promotion: Pepsi's slogan in China was misinterpreted.

Uncontrollable Factors in International Marketing

• Factors that cannot be controlled and require companies to adapt.
• Domestic Environment (Home Country Factors)
  • Competition: Rivals expanding abroad
  • Political & Legal: U.S. laws prohibit bribery, even if it's common elsewhere
  • Economic Climate: Recessions at home impact global expansion
• Foreign Environment (Target Country Factors)
  • Local Competition: Competing with native businesses
  • Government Policies: Trade barriers, import/export restrictions
  • Economic Conditions: High inflation or unstable currency affects pricing
  • Culture: Different languages, consumer habits, and traditions
  • Infrastructure: Poor roads and weak internet

Cultural Mistakes in International Marketing

• Self-Reference Criterion (SRC) is unconscious cultural bias, assuming what works in one's own country will work everywhere.
  • Gerber used its baby logo in Africa, but locals thought it meant the product contained babies
• Ethnocentrism is thinking one's culture is superior. Ex: Walmart failed in Germany because German customers don't like chatty cashiers and prefer bagging their own groceries.
• Solution: Hire local marketing experts and conduct market research before launching a product.

Famous Branding Fails Due to SRC & Ethnocentrism

• Coca-Cola in China translated to "Bite the Wax Tadpole" due to poor translation of brand name
• KFC in China translated to "Eat Your Fingers Off" due to literal translation of "Finger-Lickin' Good"
• Pepsi in China translated to "Brings Ancestors Back from the Grave" due to spooky misinterpretation
• Ford Pinto in Brazil translated to "Small Male Genitals"

Avoiding Mistakes in International Marketing

• Define the business problem in home-country terms and analyze it in the foreign-country's context
• Remove SRC bias and redefine strategy based on the local market.

Hofstede's 5 Dimensions of Culture

• This helps marketers understand cultural differences.
• Power Distance: Bosses are unquestioned in China and Mexico, but employees challenge authority in the USA and Denmark.
• Individualism vs. Collectivism: Individual success matters in the USA and UK, but group loyalty is key in Japan and China.
• Masculinity vs. Femininity: Competitive, success-driven cultures exist in the USA and Japan, while work-life balance and cooperation are valued in Sweden and Norway.
• Uncertainty Avoidance: Strict rules and low tolerance for change in Japan and France, while open to risk and flexibility in the USA and UK.
• Long-Term vs. Short-Term Orientation: Focus on future goals in China and Germany, but prefer quick results in the USA and Canada.

Being a Global-Aware Marketer

• Respect cultural differences, adapt marketing strategies using local preferences and languages, and understand political and economic climates.

Stages of International Marketing Involvement

• No international efforts, but foreign buyers may still purchase.
• Exports only when there's extra production: A U.S. farmer selling surplus crops to Canada
• Consistent exports, using distributors: Nike selling in Europe through local retailers
• Actively investing in foreign markets, manufacturing abroad: McDonald's setting up restaurants worldwide
• World is seen as a single market: Apple, Coca-Cola, Google operate everywhere
• Companies move from passive international sales to actively creating products for global markets.

Cultural Imperatives, Electives, and Exclusives

• Cultural Imperatives (Must-Follow): Essential for business success in a country
  • In Japan, building trust before doing business is a must
• Cultural Electives (Optional, But Helpful): You can choose to participate in them
  • In France, drinking wine with business partners is common, but foreigners aren't required to
• Cultural Exclusives (Locals Only) - Foreigners should avoid them
  • Taking part in local religious ceremonies if you're not a follower

How American Culture Impacts Business Management

• American business culture values merit-based promotions
• American business culture focuses on direct communication, and competition over cooperation
• The U.S. is individualistic (work for personal success), while Asia/Latin America is collectivist (team success > personal goals)
• A U.S. manager may openly criticize an employee, but in Japan, public criticism can cause "loss of face" and is avoided

Decision-Making Across Cultures

• Who makes business decisions depends on culture
• Top-Level (Hierarchy): Decisions come from the boss China, Middle East
• Decentralized (Managers Have Power): Middle managers make decisions, USA, Germany
• Group Consensus: Group discussions are key Japan, Sweden

Communication Styles: High vs. Low Context

• Low-Context (Direct, Say Exactly What You Mean)
  • Common in the U.S., Germany, UK and "No" means no, no hidden messages
• High-Context (Indirect, Meaning is Hidden in Gestures & Tone)
  • Common in Japan, China, Middle East and "Maybe" or silence might actually mean no
  • A Japanese client might say "That is difficult", which actually means "No, we won't do it."

Time Orientation (How Different Cultures Treat Time)

• M-Time (Monochronic) – Time is Structured
  • One thing at a time, strict schedules. Example: U.S., Germany
• P-Time (Polychronic) – Time is Flexible
  • Many tasks at once, relationships over schedules. Example: Mexico, Middle East

Gender Issues in International Business

• Women are underrepresented in global business
• Some cultures rarely have women in top management
• Companies encourage mentoring programs to increase female leadership
• In Japan, women make up only 13% of senior business roles, compared to 41% in the U.S.

Business Ethics: Bribery & Corruption

• Bribery = Paying voluntarily to gain an unfair advantage
• Extortion = Being forced to pay to avoid a problem
• Lubrication = Small, legal payments to speed up processes
• Subornation = Large, illegal bribes to influence decisions
• Bribery is illegal in the U.S. & UK, but common in some countries
• Solution: Companies follow ethical business frameworks like Utilitarian Ethics, Rights of Parties and Justice/Fairness

What is Sovereignty?

• Sovereignty is a country's power to control its own laws and businesses
• Countries can limit foreign companies by passing laws & trade restrictions
• China restricts Google, Facebook, and Twitter to protect local tech companies

Different Forms of Government & Business Impact

• Monarchy/Dictatorship: One leader and unstable for foreign companies
• Oligarchy: Small group of elites and a moderate risk for businesses
• Democracy: Elected leaders and stable for international business
• North Korea is high-risk for businesses, while Germany is low-risk

Political Risks for International Business

• Confiscation – Gov't takes foreign business assets without payment
  • Cuba seized U.S. businesses after its revolution
• Expropriation – Gov't takes assets but pays compensation
  • Venezuela nationalized foreign oil companies
• Domestication – Gov't forces foreign businesses to become locally controlled
  • India requires foreign companies to partner with local firms
• Nationalism – Countries favor local businesses over foreign ones
  • "Make in India" policy encourages domestic production
• Political Sanctions – A country bans trade with another
  • U.S. sanctions on Iran & North Korea

Reducing Political Risks

• Joint Ventures – Partner with a local company
• Licensing - Let locals produce your product
• Political Bargaining – Negotiate directly with gov't officials
• McDonald's partnered with local companies in China

Trade Restrictions & Market Entry Barriers

• Exchange Controls – Limits on converting local money into foreign currency
• Local-Content Laws – Forces foreign companies to use local products
  • U.S. car manufacturers must use American-made steel
• Import Restrictions – Foreign companies must buy local supplies
  • India forces foreign food chains to buy from Indian farmers
• Tax & Price Controls – Gov't controls prices to prevent inflation
  • Some countries set max prices on medicine & food
• Labor Problems – Worker strikes & strong unions can disrupt business
  • France has frequent labor strikes that affect transportation & supply chains

Legal Systems

• Common Law: Based on past court decisions, ownership by use, not registration.
• Code Law: Divided into commercial, civil, and criminal codes; ownership by registration; more rigid.
• Islamic Law: Based on the Koran, no interest payment, emphasizes ethics and fairness. Marxist-Socialist Tenets: Based on socialist ideas, used in former Soviet bloc countries, China, Vietnam

Legal Disputes

• Types: Between governments (World Court), companies and governments, or companies
• Jurisdiction: Determined by contracts and where the contract was signed or executed

International Dispute Resolution

• Informal Resolution: First step, avoids costs and reputation damage.
• Conciliation (Mediation): Non-binding, private, maintains relationships.
• Arbitration: Binding decision, faster than litigation, private.
• Litigation: Expensive, time-consuming, public exposure.

Intellectual Property

• Protection Issues include piracy and counterfeiting. Companies must protect IP through registration.
• Prior Use vs. Registration: Ownership by first use or first to register

Economic Development Stages

• More-Developed Countries: Advanced economies, high GDP, strong infrastructure.
• Less-Developed Countries: Developing economies, growing markets.
• Least Developed Countries: Minimal infrastructure, basic markets.
• Newly Industrialized Countries (NICs): Fast-growing economies like Singapore and South Korea.

Marketing in Developing Countries

• Types of Demand: Traditional (agriculture), Modern (urban/high-income), Transitional (slums).
• Big Emerging Markets (BEMs): Include India, China, Brazil; driven by digitalization, fintech, and AI.

Trade Agreements

• USMCA in North America, DR-CAFTA in Central America, MERCOSUR in South America and LAIA & CARICOM efforts in Latin America and the Caribbean
• Strategic implications: the $10,000 Club for digital inclusion

Trade Agreements and Integration

• Free Trade Area: Reduces tariffs among countries.
• Customs Union: No internal tariffs, common external tariffs.
• Common Market: Free flow of goods, capital, and labor, common external tariffs.
• Political Union: Full political and economic integration (e.g., EU).
• EMU includes a common currency (Euro) and a central bank and the EU has 27 member countries
• APEC formed in 1989 to promote trade

Trade in Asia

• Hong Kong became a SAR of China in 1997
• The Four Dragons include Hong Kong, Singapore, South Korea, and Taiwan
• ASEAN promotes free trade within Southeast Asia
• Market opportunities exist in Asia-Pacific despite cultural/political differences