EC2 MODULE 3.docx

Part 2 Assessing Global Market Opportunities Module 3: Finding Global Customers Learning Objectives At the end of the module, students will be able to: 1\. Assimilate drivers of the global consumer, recognize influences on the global consumer and comprehend country-of-origin effects. 2\. Understand the characteristics of the global consumer, the industrial buyer, the government buyer and undertake marketing to global consumers. 3\. Outline the process of strategic planning in the context of the global marketplace and examine both the external and internal factors that determine the conditions for development of strategy and resource allocation. 4\. Illustrate how best to utilize the environmental conditions within the competitive challenges and resources of the firm to develop effective programs. 5\. Suggest how to achieve a balance between local and regional or global priorities and concerns in the implementation of strategy. 6\. Develop an understanding of the importance and necessity of research and compare and contrast domestic and international research. 7\. Access information through primary sources and learn how to obtain research objectives through secondary information and know how firms continuously progress through a process of internationalization. 8\. Appreciate the effects, both the benefits and repercussions, of entering international markets and know the different means for entering international markets. 9\. Understand the responsibility of international intermediaries and learn about the opportunities and challenges of cooperative market development. 10\. Comprehend how firms overcome market barriers through various means. 11\. Describe alternative organizational structures for international operations and highlight the factors affecting decisions about its structure. 12\. Outline the need for and challenges of controls in international operations and recognize the roles for country organizations in the development of strategy and implementation of programs. Consumer, Industrial, and Government Markets Globalization and technological advances have coincided with the diffusion of world culture, rising living standards, and enhanced opportunities for companies to market their brands around the world. In this contemporary environment, companies target various types of customers. Globalization stimulates interest in and facilitates the ability to acquire products and services from the broadest range of companies worldwide. It seems that wherever people live today, they encounter global brands-Airbus, Coca- Cola, Madonna, McDonald\'s, Samsung, Siemens, Toyota, and countless others, improving technologies, and other trends have led to the emergence of the \"global consumer,\" who is relatively sophisticated, often more demanding, and comfortable with buying international brands. Recent trends have made possible the ability of companies to source needed inputs from the best suppliers worldwide. Governments count on source needed in to supply them with the prods, Growing consumerism and global sourcing in emerging market has opened opportunities for firms to target billions of buyers worldwide who, only a few decades ago, were relatively onaccessible. The Global Consumer Global consumers are individuals or organizational buyers that exhibit similar needs and tastes worldwide. Global market segments are groupings of consumers that exist in multiple countries and display similar characteristics regarding preferences and consumption of specific product or service categories. Globalization and global diffusion of media give rise to a desire by people everywhere to participate in an idealized and relatively universal consumer culture. Various product categories have become signs of global cosmopolitanism and modernity, such as air conditioners, automobiles, consumer electronics, and hamburgers. Multinational firms seek to capitalize on world culture by developing global products and positioning their brands in the global consumer culture. Drivers of The Global Consumer The emergence of the global consumer coincides with two important driving trends: globalization and advancing information and communications technologies. Globalization refers to the growing interconnectedness of nations, the organization of life on a global scale, and the consolidation of world society. Growing integration of world markets enables individuals, companies, and nations to reach around the world more deeply and efficiently than ever before. Globalization is characterized by a combination of falling trade barriers and the industrialization and modernization of nations worldwide. Today many trade barriers have declined almost to zero, particularly among the advanced economies and emerging markets. In this way, globalization reflects the spread of free- market capitalism, which both fosters and is fostered by massive growth in international trade and investment. Globalization is a revolution in progress, a historic transformation in world economies, living standards, and modes of existence. Globalization also implies that many nations are losing some autonomy as larger countries and corporations extend their political and economic power around the world. Globalization coincides with the emergence of \"world culture,\" which is marked by the growing interconnectedness of varied local cultures or the appearance of a relatively homogeneous, global culture. From Nairobi to Paris to Shanghai, for example, hip-hop music has gained a following that spans cultural, linguistic, and geographic boundaries. Hip-hop youth culture affects nearly every country. Hip-hop music, fashion, and accessories have flooded markets worldwide. Influences on The Global Consumer 1\. Economic Status. The ability to purchase goods and services is strongly influenced by income level. Comparisons can be based on the level of each nation\'s per capita gross domestic product (GDP). Only about one billion consumers worldwide are in the highest income category, earning an average annual income of F 1,000,000.00. An additional two billion consumers are in the middle-income category, earning about R 500,000.00 per year, also referred to as emerging markets and they are typified by countries such as China, Mexico, and Poland. At the lowest income level, people typically earn an average of P 250,000.00 per year. Many consumers in this group have incomes well below this level. Historically, international marketers targeted the low-hanging fruit-meaning developed markets and their high-income consumers. Increasingly, firms are also targeting the emerging markets. Most of these countries have rapidly rising incomes and represent promising market opportunities. Numerous companies are now also targeting the developing markets. Most countries in Africa, and some in Asia and Latin America, are in this category. Despite very low incomes, the countries at the bottom of the pyramid collectively represent huge potential markets and can be targeted with numerous goods and services. However, infrastructure is often very poor in developing markets. Consequently, firms usually must devise novel business strategies, which usually include offering low-cost products via innovative marketing communications and distribution approaches. 2\. Technology Level. Technology refers to knowledge and usage of tools, machines, techniques, or methods of organization applied to solving problems or performing particular functions. Technology varies across all areas of human endeavor and includes computers, factory equipment, communications systems, and accumulated knowledge about specific industries. Advanced technologies are characteristic of economically developed nations. In the absence of advanced technologies, a nation\'s productivity level and living standards are relatively limited. People in poor countries usually have little access to advanced technologies or knowledge of how to use such tools. Many are employed in subsistence farming or other low-value-adding activities. Their ability to work in most industrial fields, and resultant prospects for earning a good living, is limited. As consumers, their needs are relatively simple, often restricted to acquiring the basics of food, clothing, and shelter. Technology level is strongly influenced by the nature of education systems in individual countries. In the United States, Australia, Canada, and most European countries, education is compulsory through about age 16. In Africa, Latin America, and other less economically developed areas, school may end at age 14 or younger. This tendency affects literacy rates, the ability of citizens to deal with advanced technologies, and ultimately earnings potential. 3\. Personal Motives. A motive is an internal force that orients a person\'s activities toward satisfying a need or achieving a goal. Perhaps the most recognized explanation on the formation of motives is that of the psychologist Abraham Maslow\'s \"hierarchy of needs\" suggests that people are motivated to fulfill basic needs before moving on to other needs, all of which motivate ultimate behavior. Two points about the hierarchy of needs are especially relevant to international marketing. First, need levels vary worldwide as a function of economic status, technology level, and other factors. Most countries are characterized by substantial poverty, in which the focus is on satisfying physiological and safety needs. Second, worldwide, people do not consistently follow Maslow\'s hierarchy of needs. In developing economies, for example, people may forge Maslow\'s hierarchy of needs (such as eating three meals a day) safety needs (such leaving in a safe neighborhood) in order to purchase higher level products such as ca phones and automobiles. Emergent research suggests esteem and self-actualization needs tend to vary by country. For example, the need for esteem and self-actualization may be less important in collectivist countries such as China. 4\. Culture is the integrated system of learned behavior patterns that distinguish the members of a given society. It represents basic beliefs, values, and behavioral tendencies that are learned from family and other important institutions. As such, culture strongly influences consumption in each country. Culture is characterized by norms which are accepted behaviors within a society or group. They may be explicit or implicit and define the rules of behavior regarding interactions with others. Norms vary substantially from country to country. Product and service purchases deemed acceptable in one country may not be accepted in another. Within countries, norms also differ through time and across social classes and groups. Because they determine one\'s acceptance and popularity within particular groups, norms are especially important in cultures with a strong collectivist orientation, such as countries in Asia. In the luxury goods market in China, for example, young shoppers feel pressure to purchase internationally well-known brands. Due to increased emphasis on sustainability, many Europeans buy hybrid cars, superefficient heating systems, and other products that save energy and protect the natural environment. Other cultural norms that affect consumers and their purchase behaviors include conservatism, the tendency to prefer traditions and choices that have stood the test of time, and materialism, a belief about the importance of possessions in one\'s life. Conservative consumers tend to remain loyal to existing brands and product types. Thus, markets with numerous conservative consumers can be difficult to enter. Materialistic consumers are relatively anxious to purchase products that demonstrate their affluence, including many new and differentiated goods. As income levels improve, marketers perceive growing numbers of consumers wishing to acquire products typical of affluent consumers in the advanced economies, such as large home appliances, automobiles, and big-screen TVs. Countries are characterized by subcultures, groups of people with shared value systems based on common life experiences and situations. Subcultures may be distinguished by differences in nationality, religion, racial group, or geographic region. Many subcultures constitute important market segments Religion is a major dimension of culture known to affect consumer behavior. For instance, Islam places various limitations on what or when people should buy. In Islamic countries, consumers may go on shopping sprees to buy new clothes and specialty foods following the fasting phase in the holy month of Ramadan. Religion strongly influences the dietary choices of Orthodox Jews. A kosher diet implies one should avoid pork and follow dietary rules described in Jewish scripture. Both Buddhism and Hinduism are characterized by numerous tenets and holidays that affect consumption patterns. Among various influences, Christianity affects store opening hours and the tendency of Christians to shop for gifts during the Christmas season. 5\. Social Factors Family and social groups strongly influence consumer behavior, In many countries, the family is the center of social life. In Asia, family members may exert considerable influence on the consumption patterns of individuals. The family may serve as a buying unit as purchase decisions are made by two or more family members. In some European countries where the draft has been abolished, parents place their children into school earlier and the number of school years has been reduced, universities now have to prepare for first-year male students aged 17 rather than the traditional age of 21. The effect on housing, self-sufficiency, teaching, and learning approaches are significant. North America and Europe have seen elevated levels of divorce, late marriage, and lifestyles that diminish the historic role of the nuclear family. The growth of single-parent and single-occupant households, as well as dual-career couples, has coincided with the emergence of a mass market for convenience goods (such as frozen dinners and microwave ovens) and services that substitute for traditional family roles (such as child care centers). In addition to family members, consumer behavior is often determined by secondary groups, such as friends, neighbors and coworkers. In each society, people develop beliefs and attitudes based on the norms of their reference groups. These include religious groups, professional associations, and trade unions. In Latin America, for example, most people belong to the Catholic faith. Members of the church that one normally attends are an important reference group and influence purchases regarding food, clothing, and educational pursuits. A buyer may develop a purchase decision based on consulting a single individual, who would be considered a reference individual, The effect of reference groups is particularly strong for purchases that are \"public\" or conspicuous such as clothing and automobiles. 6 Situational Factors Situational factors are environmental or locational conditions that affect how consumers behave. Physical surroundings include geographical location and climate. The buying experience differs between Mexico and the United Kingdom simply due to differences in geography, landscape, and weather. The rainy season in Thailand affects tourism and consumers\' likelihood to shop. In Russia, consumers minimize automobile shopping during periods of severe cold and snow. Physical surroundings also vary at individual stores and include retail settings, store locations, and \"atmospherics\" inside stores, such as music and lighting. To save energy in Mexico, for example, grocery stores often use limited lighting in aisles, which can affect consumer decision making. In Australia, Canada, and the United States, store locations are influenced by the tendency of consumers to drive to shopping destinations, while in Europe and Japan stores are more often located at sites well served by public transportation. The institutional environment refers to the public organizations and constraints that societies create to give structure to human interactions. 43 Institutions include government and legal systems. Laws, regulations, and other formal institutions determine the structure and efficiency of marketing systems. Most developing economies are characterized by weak institutions, which deters many multinational enterprises (MNES) from entering such countries in nations with weak institutional guidelines, corruption is often a factor that affects the purchase behavior of organizational buyers. By contrast, extensive rules and regulations may constrain consumer behavior. In Greece, for example, the government regulates the opening hours of retail stores, which are usually required to close at 9:00 P.M. or earlier. In India, government outlays on physical education are very limited, which reduces selling prospects for sports-related equipment and apparel. Country-of-Origin Effects Buyer behavior is affected by the national origin of products and services. Many consumers are relatively indifferent to where a product is made. Other consumers favor goods produced in their home country. Country of origin (COO) refers to the nation where a product is produced or branded. Origin is usually indicated by means of a product label, such as \"Made in China.\" When consumers are aware of a product\'s COO, they may react positively or negatively. For example, many people favor cars produced in Japan but would be less upbeat about cars made in Russia. Most people feel confident about buying clothing made in Italy but would be less receptive to clothing from Mexico. Such attitudes arise because consumers hold particular images or conceptions about specific countries. Consumers assume that Japan produces high-quality cars and that Russia makes low- quality cars. While such beliefs are often rooted in reality, many are simplified opinions, false stereotypes, or effects of the slowness of learning about or accepting change. Consumer ethnocentrism is the tendency to view domestically produced goods as superior to those produced in other countries. Some people believe it inappropriate, and possibly even immoral, to buy products from other countries. In Japan and the United States, for example, buying foreign goods may be seen as unpatriotic or causing job losses. In India, activists tried to dissuade local consumers from buying Coca-Cola, believing it offends traditional and national Indian values. In contrast to consumer ethnocentrism, world mindedness refers to a consumer\'s interest in, and openness to, acquiring goods from other countries. World mindedness both arises from and contributes to the emergence of a global consumer culture. The more consumers are exposed to products, services, and ideas from abroad, the more likely they may to adopt world-minded tendencies. A cosmopolitan is someone who maintains a network of links and personal contacts with those outside the immediate community and is willing to venture into other cultures. Cosmopolitans are especially attractive targets for MNEs launching new products. Firms may develop advertising that incorporates foreign and global cultural positioning to appeal to world-minded consumers. For example, both Apple and BMW benefit enormously from consumer perceptions of these firms as offering global, worldly brands. The Industrial Buyer also known as organizational buyers or businesses; industrial buyers differ substantially from retail consumers. Industrial buyers purchase raw materials, parts, components, and supplies in order to produce other products or run a business. Some industrial buyers\' function as wholesalers or retailers who purchase unfinished or finished goods to sell and distribute to other industrial buyers or to retail consumers. Industrial buyers may have substantial face-to-face contact with vendors. specifications are often develop long-term relationships. Purchase contact with based on specifications and technical data, with buyers applying relatively scientific and rational approaches to the buying process. Buying is performed by professional purchasing managers who may buy enormous quantities of goods. Industrial buyers often employ competitive bidding and negotiations during the buying process. Industrial buyers are strongly influenced by globalization. Segmenting markets on a global scale is generally more feasible for industrial products than for retail goods. For example, industrial goods such as bulk metals, semiconductors, and pressure valves require less differentiation to meet industrial buyer needs. Industrial buyers prefer using standardized inputs whenever possible to minimize costs. For example, while Swedish appliance manufacturer Electrolux might sell dozens of distinctive refrigerator models to retail consumers, the firm prefers to source only a limited variety of thermostats, compressors, and other parts to make refrigerators. Their approach helps minimize the costs of purchasing, inventory, manufacturing, and quality control. Chrysler, Honda, and other automakers emphasize modular architecture, where suppliers manufacture single component modules, which are then bolted into a car or truck body rolling down assembly lines. The modular approach minimizes the total cost of vehicle manufacturing. Industrial buying is associated with two important concepts: derived demand and cost-performance. Derived demand refers to demand for raw materials, parts, and other inputs that depends on demand for some other good. For example, demand for antennas used in building Airbus A320 commercial jetliners depends on demand for the jetliners themselves-the more A320s that Airbus sells, the more antennas it buys from vendors. Cost-performance refers to the expected performance of a product relative to the cost to buy and use it. Cost-performance is emphasized because organizations aim to maximize profitability. Profits hinge on ensuring the firm obtains maximal performance from input goods for a given level of cost. Firms from developing economies usually have limited resources and give greater weight to the cost-performance relationship when buying industrial goods. Influences on the Global Industrial Buyer Decision making on industrial buying varies around the world. For large-scale purchases, firms usually undertake buying as managerial teams, consisting of experts on issues such as engineering and manufacturing. Purchasing managers are empowered to choose suppliers and arrange the terms of purchase but ultimately answer to others in the firm, who, based on their expertise, strongly influence what goods are bought. Many people in the firm may become involved in the buying process. As with retail consumers, industrial buyers are influenced by various factors, especially culture, stage of economic development, and national situational factors. Culture Cultural influences occur at the level of the nation, the industry, and the firm. Most companies have a distinctive set of norms, values, and modes of behavior. Marketing goods to such buyers necessitates skills in dealing with organizational and national cultural factors Uncertainty avoidance refers to the capacity of people in different countries to tolerate risk. High uncertainty avoidance countries are risk averse and favor rules, regulations, and control mechanisms to minimize risk taking. In such countries, marketers often must work harder to convince purchasing managers to accept proposals from new vendors. Purchase decisions may be driven by consensus, and projects are carefully planned. By contrast, low uncertainty avoidance cultures are usually more innovative and open to new approaches. In such countries, industrial buyers are more willing to try new offerings or goods from new market entrants. The industrial buying process typically tends to be systematic and stepwise as purchasing professional buying process typically choose among alternative brands and suppliers. The buying task is a process is guided structure and size of the firm, structure the organization, and technology available and relevant to purchasing When management recognizes a need, undertakes a process of specifying the features of the desired good. The firm will search for suppliers and solicit proposals from suitable vendors. Purchasing will select the most appropriate supplier, place an order, and, eventually, review the performance of the supplier and its goods or service. The nature of these steps varies from country to country Rules and practices may be somewhat unpredictable and dictated by government regulation. Stage of Economic Development Countries pass through various stages of economic development. The level of development determines, to a large extent, the nature and quantity of demand for industrial product. The typical developmental stages are as follows. 1\. Traditional society. At the most basic level, many countries are characterized by subsistence activity in which output is consumed by producers rather than traded. The stage is most associated with subsistence farming, the most common economic activity in the world\'s poorest countries. Example regions include South Asia and sub-Saharan Africa. 2\. Transitional stage. Countries evolve beyond dependence on agriculture e and begin to engage in simple manufacturing of value-added goods The stage coincides with development of infrastructure in transportation, communications, and other areas. Entrepreneurs emerge who launch small firms that require basic inputs and trade in natural resources and other prima y products. Many late-stages developing economies- for example, Honduras. Vietnam, and Zimbabwe-are in the transitional phase 3\. Take-off Here workers progress from agriculture to manufacturing Producers specialize and begin to mass produce goods that can be exchanged with trading partners worldwide. Most emerging market countries such as Brazil, China, and Russia-have attained this stage. Rising incomes stimulate investment and development of a thriving consumer economy 4\. Drive to maturity. In this stage, countries emphasize the production of high-technology products and development of a strong services sector Late-stage emerging markets such as Po and Saudi Arabia, and South Korea are examples. 5\. Mass consumption. Most countries have not reached this stage, which is character zed by a thriving consumer and industrial economy with a substantial services sector Numerous advanced economies are in this category. Today most countries have advanced beyond stage 1 and consequently there are vast opportunities worldwide for various industrial goods. The firm must investigate each nation\'s specific circumstances to determine what type of products must investors are in most demand. Growing global consumerism is staining resources and pressuring natural environments. Numerous national situational factors influence industrial buying Initially, countries have differing levels of technological development. A firm may be reluctant to embrace an innovation or advanced technological product if the offering exceeds the firm\'s level of relevant experience or knowledge. Acceptance of technological innovations depends on the level of economic or social development in a firm or a nation. In terms of economic variables, most countries use a currency that is different from the currency of the selling firm. Fluctuating exchange rates affect the attractiveness of foreign goods, either making them relatively costly or inexpensive from the industrial buyer\'s perspective. Inflation may cause prices to rise over time. Inflation complicates the international buying process by distorting exchange rates and the cost of capital and by producing uncertainty in international transactions. Inflation is especially burdensome for industrial goods, which are often sold under long-term contracts. The Government Buyer Governments are important targets for sales of goods and services. Governments at both federal or national and local levels purchase nearly every kind of good, from aircraft to thumbtacks, from construction services to training services. Many seemingly private companies are actually government-owned enterprises. Some of the largest firms in China, for example, are state owned. Most are energy utilities, oil companies, railways, and others in industries considered vital to China\'s national security or serving China\'s huge market with essential products and services. State-owned enterprises are found in all countries but are the norm in developing economies. These countries tend to also be among the best government customers for international marketers. China and Brazil are both notable as emerging markets. The governments of these countries spend huge sums every year and, at the same time, have substantial infrastructure development needs. Thus, China and Brazil would make excellent target markets for companies in the construction energy, and telecommunications industries. Most governments have a system, often required by international agreements or treaties, for opening government purchases that exceed a certain dollar value to international bids. The aim of competitive bidding is to ensure the government pays a competitive price, receives quality goods, and avoids the corruption that may accompany choosing suppliers based on personal relationships. Procurement opportunities are huge, with governments spending up to 15 percent of national GDP on purchasing in the advanced economies and up to 20 percent of GDP in the developing economies. The nature of government procurement varies worldwide. Compared to industrial sales, selling to government can be highly bureaucratic. Negotiating with foreign governments is often arduous and requires much skill and experience. Many governments have regulations that limit purchases to domestic producers. In many procurement situations, nations discriminate against nonnative suppliers. The EU countries require open, competitive bidding but usually discriminate against bids with less than 50 percent EU content. The content requirement applies to foreign suppliers of goods and services related to water, energy, urban transport, and postal services. In Brazil, foreign firms face obsternment favors home-country suppliers for supplying goods deemed vital to national security. In addition, the United States and other countries often prohibit their own citizens from selling certain product categories abroad, especially those related to national security. Most advanced economies and a few emerging markets are party to the Agreement on Government Procurement (GPA) of the World Trade Organization (WTO). The GPA\'s main goal is to open government procurement to international competition. It also aims to ensure procurement laws, regulations, and procedures are transparent and do not protect domestic products or suppliers nor discriminate against foreign products or suppliers. However, in many industries, developing economies lack a substantial supplier base and, consequently, are relatively open to receiving bids from foreign vendors. In fact, very few countries can supply all the inputs needed to develop large-scale public projects, such as building computer systems, railway lines, and power plants. Globalization and technological advances are associated with the rise of the global consumer, individuals or organizations that exhibit similar needs and tastes worldwide. Demand for some product categories remains relatively specialized, requiring adaptation. However, products in most categories have become increasingly standardized. Accordingly, firms can employ global marketing, which emphasizes uniformity of branding, packaging, marketing communications, and distribution channels. The global consumer is influenced by numerous factors, including economic status, technology level, personal motives, and culture as well as social and situational factors. Country of origin refers to the nation where a product is produced or branded. Consumer ethnocentrism is the tendency to view domestically produced goods as superior to those made in other countries. By contrast, many consumers exhibit world mindedness, a strong openness to acquiring goods from other countries. Industrial buyers are businesses that purchase raw materials, parts, components, and supplies in order to produce other products or run a business. Some industrial buyers are wholesalers or retailers purchasing unfinished or finished goods to sell and distribute to other industrial buyers or to retail consumers. Industrial buyers are influenced by various factors, especially culture, stage of economic development, and national situational factors. Governments constitute important consumers and purchase nearly every kind of good or service. Many ostensibly private companies are actually government-owned enterprises. Multinational firms today target global consumers using relatively uniform marketing. A global market segment is a group of customers who share common characteristics across numerous national markets. Many companies now use global account management to coordinate servicing industrial buyers on a global scale. Firms employ various approaches to overcome consumer ethnocentrism and the COO phenomenon. These include offering superior products, charging lower prices, concealing the product\'s national origin, partnering with well- known companies abroad or producing the good in a country that enjoys a superior image. Firms that emphasize relationship marketing build long-term relationships with key customers, Relationship marketing emphasizes consistent customer satisfaction and is important not only for key customers but also for the firm\'s partners in its worldwide value chains Government procurement, or public tendering, is the purchasing of goods and services on behalf of a government agency or other public entity. Selling to governments requires the firm to submit bids and vie to be the lowest bidder. Successful government suppliers develop key resources and relationships and engage in skillful planning. Strategic Planning Global marketing is marketing on a worldwide scale reconciling or taking commercial advantage of global operational differences, similarities and opportunities in order to meet global objectives. Even the biggest companies in the biggest home markets cannot survive on domestic sales alone if they are in global industries such as banking, cars, consumer electronics, entertainment, home appliances, mobile devices, pharmaceuticals, publishing, or travel services. They have to be in all major markets to survive the shakeouts expected to leave three to five players per industry at the beginning of the twenty-first century. Globalization reflects a business orientation based on the belief that the world is becoming more homogeneous and that distinctions between national markets are not only fading but, for some products, will eventually disappear. As a result, companies need to globalize their international strategies by formulating them across markets to take advantage of underlying market, cost, environmental, and competitive factors. Having a global presence ensures viability against other players, both local and global, in the home market as well. Global marketing can be seen as the culmination of a process of international market entry and expansion. Before globalization, marketers utilized a country-by-country multidomestic strategy to a great extent, with each country organization operated as a profit center. Each national entity marketed a range of different products and services targeted to different customer segments, utilizing different marketing strategies with little or no coordination of operations between countries. However, as national markets become increasingly similar and scale economies become increasingly important, the inefficiencies of duplicating product development and manufacture in each country become more apparent and the pressure to leverage resources and coordinate activities across borders gains urgency. Similarly, the increasing number of customers operating globally, as well as the demands of facing the same or similar competitors throughout the major markets, adds to the need for strategy integration. It should be noted that global leverage means balancing three interests: global, regional, and local. In many cases, the exploitation of commonalities is best executed on a regional basis, given that some differences remain between groups of markets. The same strategic principles apply to developing and implementing global and regional strategy. Naturally, the more a marketer can include the local dimension in efforts in each individual market, the more effective the strategy tends to be. Consumers may prefer a global brand that has been adapted to local usage conditions. Coke, for instance, uses cane sugar as a sweetener in some countries and corn syrup in others. While the approach is localized, the global resources of a marketer provide the brand with a winning edge (e.g., in terms of quality or quality perceptions). The Strategic Planning Process For globally committed marketers, formal strategic planning contributes to both financial performance and nonfinancial objectives. These benefits include raising the efficacy of new-product launches, enhancing cost reduction efforts, and improving product quality and market share performance. Internally, these efforts increase different units\' points of view. The have to keep three broad dimensions in mind: 1\. the potential benefits for the company in the short versus the long term; 2\. the costs in terms of management time and process realignment; and 3\. the presence of the necessary management resources to undertake the endeavor. Imbedded in this planning has to be the selection of the types of power the company wants to exercise in the global marketplace. In business, hard power refers to the use of scale, financial might, or the use of a low-cost position to win market access and share. Increasingly, marketers will also have to incorporate soft power into their tool kits. Soft power refers to the capability of attracting and influencing all stakeholders, whether through energetic brands, heroic missions, distinctive talent development, or an inspirational corporate culture. Understanding and Adjusting the Core Strategy The planning process has to start with a clear definition of the business for which strategy is to be developed. Generally, the strategic business unit (SBU) is the unit around which decisions are based. In practice, SBUs represent groupings organized around market similarities based on: 1\. needs or wants to be met, 2\. end user customers to be targeted, or 3\. the product or service used to meet the needs of specific customers. This phase of the planning process requires the participation of executives from different functions, especially marketing, production, finance, distribution, and procurement. Geographic representation should be from the major markets or regions as well as from the smaller, emerging markets. With appropriate members, the committee can focus on product and markets as well as competitors whom they face in different markets, whether global, regional, or purely local. Heading this effort should be an executive with highest-level experience in regional or global markets; for example, one global firm called on the president of its European operations to come back to headquarters to head the global planning effort. This effort calls for commitment by the company itself, both in calling on the best talent to participate in the planning effort and later in implementing the proposals. It should be noted that an assessment of global operations against environmental realities may mean a dramatic change in direction and approach. Market and Competitive Analysis. The starting point for global strategic planning is to understand that the underlying forces that determine business success are common countries that the firm competes in. Planning processes that focus simultaneously the different countries that of marketers with tools to competitive economies of scale, and profitability help balance risks, resource requirements,to gain stronger long-term positions. On the demand side this requires an understanding of the common features of customer requirements and choice factors. In terms of competition, the key is to understand the structure of the global industry in order to identify the forces that will drive competition and determine profitability. An understanding of scale economies, the state of technology, and the other factors that determine cost efficiency is likely to be critically important. Internal Analysis Organizational resources have to be used as a reality check for any strategic choice because they determine a company\'s capacity for establishing and sustaining competitive advantage within global markets. Industrial giants with deep pockets may be able to establish a presence in any market they wish, while more thinly capitalized companies may have to move cautiously. Human resources may also present a challenge for market expansion. A survey of multinational corporations revealed that good marketing managers, skilled technicians, and production managers were especially difficult to find. This difficulty is further compounded when the search is for people with cross-cultural experience to run future regional operations.\" At this stage, it is imperative that the company assess its own readiness for the necessary moves. This means a rigorous assessment of organizational commitment to global or regional expansion as well as an assessment of the product\'s readiness to face the competitive environment. In many cases this has meant painful decisions to focus on certain industries and leave others. Formulating Global Marketing Strategy. The first step in the formulation of global strategy is the choice of competitive strategy to be employed, followed by the choice of country markets to be entered or penetrated further. Choice of Competitive Strategy. In dealing with the global markets, the marketing manager has three general choices of strategy: 1\. cost leadership, 2\. differentiation, or 3\. focus A focus strategy is defined by its emphasis on a single industry segment, within which the orientation may be toward either low cost or differentiation. Any one of these strategies can be pursued on a global or regional basis, or the marketer may decide to mix and match strategies as a function of market or product dimensions. In pursuing cost leadership, the global marketer offers an identical product or service at a lower cost than the competition. This often means investment in scale economies and strict control of costs, such as overhead, research and development, and logistics. Differentiation, whether it is industry-wide or focused on a single segment, takes advantage of the marketer\'s real or perceived uniqueness in elements such as design or after-sales service. It should be noted, however, that a low-price, low-cost strategy does not imply a commodity situation. 45 Although Japanese, U.S., and European technical standards differ, mobile manufacturers like Motorola, Nokia, and Samsung design their phones to be as similar as possible to hold down manufacturing costs. As a result, they can all be made on the same production line, allowing the manufacturers to shift rapidly from one model to another to meet changes in demand and customer requirements. Similarly, marketers who opt for high differentiation cannot forget the monitoring of costs. One common denominator of consumers around the world is their quest for value for their money. With the availability of information increasing and levels of education improving, customers are poised to demand even more of their suppliers. Most global marketers combine high differentiation with cost containment to enter markets and to expand their market shares. Flexible manufacturing systems using mostly standard components and total quality management measures that reduce the occurrence of defects are allowing marketers to customize an increasing amount of their production while saving on costs. Global activities will in themselves permit the exploitation of scale economies not only in production but also in marketing activities, such as advertising. Country-Market Choice A global strategy does not imply that a company should serve the entire globe. Critical choices relate to the allocation of a company\'s resources among different countries and segments. The usual approach is first to start with regions and further split the analysis by country. Many marketers use multiple levels of regional groupings to follow the organizational structure of the company, for instance, splitting Europe into northern, central, and southern regions that display similarities in demographic and behavioral traits. An important consideration is that data may be more readily available if existing structures and frameworks are used. Various portfolio models have been proposed as tools for this analysis. They typically involve two measures- internal strength and external attractiveness. As indicators of internal strength, the following variables have been used: relative market share, product fit, contribution margin, and market presence, which incorporates the level of support by constituents as well as resources allocated by the company itself. Country attractiveness has been measured using market size, market growth rate, number and type of competitors, and governmental regulation, as well as economic and political stability. In choosing country markets, a company must make decisions beyond those relating to market attractiveness and company position. A market expansion policy will determine the allocation of resources among various markets. The basic alternatives are concentration on a small number of markets and diversification, which is characterized by growth in a relatively large number of markets. Facing high, stable growth rates only in certain markets, the firm will likely opt for a concentration strategy, which is often the case for innovative products early in their life cycle. If demand is strong worldwide, as the case may be for consumer goods, diversification may be attractive. If markets respond to marketing efforts at increasing rates, concentration will occur; however, when the cost of market share points in any one market becomes too high, marketers tend to begin looking for diversification opportunities. The uniqueness of the product offering with respect to competition is also a factor in expansion strategy. If lead time over competition is considerable, the decision to diversify may not seem urgent. Very few products, however, afford such a luxury. In many product categories, marketers will be affected by spillover effects. For example, the impact of satellite channels on advertising in Europe or in Asia, where ads for a product now reach most of the market. The greater the degree to which marketing-mix elements can be standardized, the more diversification is probable. The objectives and policies of the company itself will guide the decision-making regarding expansion. If extensive interaction with intermediaries and clients is called for, efforts are most likely to be concentrated because of resource constraints. The conventional wisdom of globalization requires a presence in all of the major markets of the world. In some cases, markets may not be attractive in their own right but may have some other significance, such as being the home market of the most demanding customers (thereby aiding in product development), or being the home market of a significant competitor (a preemptive rationale). Effective use of segmentation, that is, the recognition that groups within markets differ sufficiently enough to warrant individual marketing mixes, allows global marketers to take advantage of the benefits of standardization (such as economies of scale and consistency in positioning) while addressing the unique needs and expectations of a specific target group. This approach means looking at markets on a global or regional basis, thereby ignoring the political boundaries that otherwise define markets in many cases. The identification and cultivation of such intermarket segments is necessary for any standardization of marketing programs to work. Global marketers have successfully targeted the teenage segment, which is converging as a result of common tastes in sports and music fueled by teenagers\' computer literacy, travels abroad, and, in many countries, financial independence. Furthermore, a media revolution is creating a common fabric of attitudes and tastes among teenagers. Brands that engage and involve teens are likely to become a part of both their digital personas as well as their real-life identities. Similarly, two other distinct segments have been identified as ready for a pan-regional approach, one includes trendsetters, who are wealthier and better educated than average and tend to value independence, refuse consumer stereotypes, and appreciate exclusive products. The second segment includes businesspeople who are well-to-do, regularly travel abroad, and have a taste for luxury goods. Despite convergence, global marketers still have to make adjustments in some of the marketing mix elements for maximum impact. The value- oriented segment accounts for 32 percent of the grocery sales in Germany but for only 9 percent in the United Kingdom and 8 percent in France. Marketers have traditionally used environmental bases for segmentation. However, using geographic proximity, political system characteristics, economic standing, or cultural traits as a stand-alone basis may not provide relevant data for decision making. Using a combination of them, however, may produce more meaningful results. One of the segments pursued by global marketers around the world is the middle-class family. Additionally, income distinctions do not reflect education or values-two increasingly important barometers of middle-class status. It has also been proposed that markets that reflect a high degree of homogeneity with respect to marketing mix variables could be grouped into segments and thereby targeted with a largely standardized marketing strategy. Whether bases related to product, promotion, pricing, or distribution are used, their influence should be related to environmentally based variables. Developing the Global Marketing Program Decisions need to be made regarding how best to utilize the conditions set by globalization drivers within the framework of competitive challenges and the resources of the firm. Marketing-related decisions will have to be made in four areas: 1\. the degree of standardization in the product offering, 2\. the marketing program beyond the product variable, 3\. the location and extent of value-adding activities, and 4\. competitive moves to be made. Product Offering Globalization is not the same as standardization except in the case of the core product or the technology used to produce the product. The need to localize varies product. Fashion or fashion products, depend for their appeal on sameness. Information technology products are susceptible to power requirements. keyboard configurations (e.g., Europe alone may require 20 different keyboards, instruction-manual language, and warning labels compliant with local regulations Product standardization may result in significant cost savings upstream. Product standardization refers to the process of maintaining uniformity of products and services sold in different markets or in other words setting identical characteristics for a particular good or a service. Marketing approach, nowhere is the need for the local touch as critical as in the execution of the marketing program. Uniformity is sought, especially in elements that are strategic in nature (e.g., positioning), whereas care is taken to localize necessary tactical elements (e.g., distribution). This approach has been called glocalization. Location of Value-Adding Activities Globalization strives to reduce costs by pooling production or other activities or exploiting factor costs or capabilities within a system. Rather than duplicating activities in multiple, or even all, country organizations, a firm concentrates its activities. Many global marketers have established R&D centers next to key production facilities so that concurrent engineering can take place every day on the factory floor. To enhance the global exchange of ideas, the centers have joint projects and are in real-time contact with each other. The quest for cost savings and improved transportation and transfer methods has allowed some marketers to concentrate customer service activities rather than having them present in all country markets. To show commitment to a given market, both economically and politically, centers may be established in these markets. Competitive Moves A company with a regional or global presence will not have to respond to competitive moves only in the market where it is being attacked. A competitor may be attacked in its profit sanctuary to drain its resources, or its position in its home market may be challenged. Cross-subsidization, or the use of resources accumulated in one part of the world to fight a competitive battle in another, may be the competitive advantage needed for the long term. One major market lost may mean losses in others, resulting in a domino effect. Jockeying for overall global leadership may result in competitive action in any part of the world. This has manifested itself in the form of \"wars\" between major global players in industries such as appliances, automotive tires, computers, mobile technology, and soft drinks. Given their multiple bases of operation, global marketers may defend against a competitive attack in one country by countering in another country or, if the competitors operate in multiple businesses, countering in a different product category altogether. Implementing Global Marketing The successful global marketers of the future will be those who can achieve a balance between local and regional or global concerns. Marketers who have tried the global concept have often run into problems with local differences. Especially early on, global marketing was seen as a standardized marketing effort dictated to the country organizations by headquarters. Challenges of Global Marketing Pitfalls that handicap global marketing programs and contribute to their sub-optimal performance include market-related concerns, such as insufficient research and a tendency to over-standardize, as well as internal problems, such as inflexibility in planning and implementation. If a product is to be launched on a broader scale without formal research as to regional or local differences, the result may be failure. Globalization by design requires a balance between sensitivity to local needs and deployment of technologies and concepts globally. This means that neither headquarters nor independent country managers alone can call the shots. If country organizations are not part of the planning process, or if adoption is forced on them by headquarters, local resistance in the form of the not-invented-here (NIH) syndrome may lead to the demise of the global program or, worse still, to an overall decline in morale. Subsidiary resistance may stem from resistance to any idea originating from the outside or from valid concerns about the applicability of a concept to that particular market. Without local commitment, no global program will survive. Localizing Global Marketing Successful global marketers achieve a balance between country managers and global product managers at headquarters. This balance may be achieved by a series of actions to improve a company\'s ability to develop and implement global strategy. These actions relate to management processes, organization structures, and overall corporate culture, all of which should ensure cross-fertilization within the firm. Management Processes In the multidomestic approach, country organizations had very little need to exchange ideas. Globalization, however, requires transfer of information not only between headquarters and country organizations but also among the country organizations themselves. By facilitating the flow of information, ideas are exchanged and organizational values strengthened. Information exchange can be achieved through periodic meetings of marketing managers or through worldwide conferences to allow employees to discuss their issues and local approaches to solving them. Part of the preparation for becoming global has to be personnel interchange. Many companies encourage (or even require) midlevel managers to gain experience abroad during the early or middle stages of their careers. The more experience people have in working with others from different nationalities- getting to know other markets and surroundings-the better a company\'s global philosophy, strategy, and actions will be integrated locally. The role of headquarters staff should be that of coordination and leveraging the resources of the corporation. Globalization calls for the centralization of decision-making authority far beyond that of the multidomestic approach. Once a strategy has been jointly developed headquarters may want to permit local managers to develop their own programs within specified parameters and subject to approval rather than forcing them to adhere strictly specified formulated strategy. With a properly managed approval process, effective control can be exerted without unduly dampening a country manager\'s creativity. Overall, the best approach against the emergence of the NIH syndrome is utilizing various motivational policies, such as 1\. ensuring that local managers participate in the development of marketing strategies and programs for global brands, 2\. encouraging local managers to generate ideas for possible regional or global use, 3\. maintaining a product portfolio that includes local as well as regional and global brands, and 4\. allowing local managers control over their marketing budgets so that they can respond to local customer needs and counter global competition (rather than depleting budgets by forcing them to participate only in uniform campaigns). Acknowledging this local potential, global marketers can pick up successful brands in one country and make them cross-border stars. When global marketers get their hands on an innovation or a product with global potential, rolling it out in other regions or worldwide is important. Organization Structures Various organization structures have emerged to support the globalization effort. Some companies have established global or regional product managers and their support groups at headquarters. Their tasks are to develop long-term strategies for product categories on a worldwide basis and to act as the support system for the country organizations. This matrix structure focused on customers, which has replaced the traditional country-by-country approach, is considered more effective in today\'s global marketplace according to companies that have adopted it. To deal with the globalization of customers, marketers are extending national account management programs across countries, typically for the most important customers. Executing global account management programs not only builds relationships with important customers but also allows for the development of internal systems and interaction. However, it requires a new organizational overlay and demands new ways of working for anyone involved in marketing to global customers. One of the main challenges is in evaluating and rewarding sales efforts. Corporate culture affects and is affected by two dimensions: the overall way in which the company holds its operations together and makes them a single entity, and the commitment to the global marketplace. For example, Panasonic (formerly Matsushita) has a corporate vision of being a \"possibility-searching company\" with four specific objectives: 1\. business that creates new lifestyles based on creativity and convenience; 2\. technology based on artificial intelligence, fuzzy logic, and networking technology; 3\. a culture based on heterogeneity; and 4\. A Structure to Enable Both Localization and Global Synergy Overall, this would mean a company in which individuals with rich and diversified knowledge share similar ideals and values. An example of a manifestation of global commitment is a global identity that favors no specific country (especially the \"home country\" of the company). The management features several nationalities, and whenever teams are assembled, people from various country organizations get represented. The management development system has to be transparent, allowing non-national executives an equal chance for the fast track to top management. Companies that exploit the efficiencies from these similarities will outperform others in terms of market share, cost, quality, productivity, innovation, and return to shareholders. In truly global companies, very little decision-making occurs that does not support the goal of treating the world as a single market. Planning for and executing programs take place on a worldwide basis. The pressure to be global and local at the same time has to be addressed through developing talent. Leading companies systematically identify global talent sources while building name recognition in the labor market to assist in wooing potential recruits. They also develop global training programs and manage careers carefully over many years (including expatriate assignments). Finally, the companies have to implement appropriate compensation and mobili8ty policies to ensure that the best talent is always available regardless of a job\'s location. For marketers from emerging markets, achieving cultural integration to facilitate market penetration on a global scale can be a daunting task. The Local Company in the Global Environment The global marketplace presents significant challenges but also opportunities for local firms. If selling out or becoming a part of a bigger global entity is not an acceptable option, the local marketer will have to build on an existing competitive advantage or adopt a creative growth strategy globally. To counter the significant resources of global marketers (such as powerful brands and sizable promotional budgets), the local company can compete successfully in the local market by emphasizing the perceived advantages of its product and marketing. More proactively, the local company can pursue its own globalization strategy through segments that have similar features to the local marketer\'s home market or segments that global marketers have not catered to. Strategies available to the local company depend on both external and internal realities. The degree and strength of globalization in an industry will determine the pressure that the local marketer will be under. Internally, the extent to which the company\'s assets are transferable (as opposed to having only local relevance) will determine the opportunity dimension. In markets where a local company has enjoyed government protection, the liberalization of markets as a result of economic integration or WTO membership may mean hardship for the local company. A dodger may have to rethink its entire strategy. Some local marketers have been seasoned in competing against global players and subsequently extended their market presence to new markets abroad. Jollibee Foods Corporation challenged McDonald\'s in its home market of the Philippines, with its products and services customized to local tastes, and has subsequently expanded its presence to other markets with sizable Filipino communities, such as Hong Kong, Qatar, and California. Jollibee now has 600 restaurants operating in six countries and continues to grow. Multiple strategies are available to the local marketers when global markets and marketers challenge them. The key is to innovate rather than imitate and to exploit inherent competitive advantages over global players. A six-part strategy for success has been proposed. First, given that local companies have an inherent familiarity with their own marketplace, they should create customized products and services. Second, the local marketer can develop approaches that overcome key obstacles. Third, local companies can utilize the latest technologies for advantage. Fourth, local companies scale up swiftly, not only locally but also regionally and even globally. Fifth, local companies can often exploit low-cost labor. Finally, local companies need to invest in talent to sustain their growth and expansion. The successful players promise and deliver accelerated careers, a chance to contribute meaningfully, and a meritocratic corporate culture. Globalization Continues to Be One of the Most Important Strategy Issues for Managers Many forces, both external and internal, are driving companies to further globalize their markets and operations. As companies look to expand and coordinate their participation in foreign markets, they must consider various factors such as where they will find markets for accelerated growth or opportunities to realize scale efficiencies. Standardization, although attractive to managers for its cost benefits, is not the answer. Managers may indeed occasionally be able to take identical concepts and approaches around the world, but most often they must be customized to local tastes. Internally, companies must make sure that country organizations around the world are ready to launch global products and programs as if they had been developed only for their markets. Firms that are able to exploit commonalities across borders and to do so with competent marketing managers in country organizations are able to see the benefits in their overall performance. Managers need to engage in strategic planning to better adjust to the realities of the new marketplace. Understanding the firm\'s core strategy (i.e., what business it is really in) starts the process, and this assessment may lead to adjustments in what business the company may want to be in. In formulating a global strategy for the chosen business, the decision makers have to assess and make choices about markets and competitive strategies to be used in penetrating them. This may result in the choice of one particular segment across markets or the targeting of multiple segments in which the company has a competitive advantage. Managers must decide how to allocate resources across the most desirable countries and segments. Once that focus is achieved, the old adage \"think globally, act locally\" becomes a critical guiding principle both as far as customers are concerned and in terms of country organization motivation. Global Markets and Marketing Research Even though most managers recognize the need for domestic marketing research, the single most important cause for failure in the international marketplace is insufficient preparation and information. Major mistakes often occur because the firm and its managers do not have an adequate understanding of the business environment. Hindsight, however, does not lead to an automatic increase in international marketing research. Many firms either do not believe that international market research is worthwhile or face manpower and resource bottlenecks that impede such research. The increase in international marketing practice is also not reflected in the orientation of the articles published in key research journals. Yet building a good knowledge base is a key condition for subsequent marketing success. To do so, one needs to accumulate data and information through research. As the opening vignette shows, data can then be used to perform better. Knowledge is power. Two basic forms of research are available to the firm: primary research, where data are collected for specific research purposes; it answers more in-depth questions for the firm and includes a developed decision-support system, and secondary research, where data that have already been collected are used. Secondary research issues focus primarily on ways to obtain basic information quickly, ensuring that the information is reasonably accurate, and doing so with limited corporate resources. Information is the key component in developing successful marketing strategies, avoiding major marketing blunders, and promoting efficient exchange systems. Information needs range from the general data required to assess market opportunities to specific market information for decisions about product, promotion, distribution, and price. Sometimes the information can be bought from trusted research vendors or supplied by internal marketing research staff. But sometimes even the highest-level executives have to \"get their shoes dirty\" by putting in the miles, talking to key customers, and directly observing the marketplace in action. Both international and local interpersonal networks are crucial resources for executive decision-making. As an enterprise broadens its scope of operations to include international markets, the need for current, accurate information is magnified. Indeed, some researchers maintain that entry into a fast-developing, new-to-the-firm foreign market is one of the most daunting and ambiguous strategic decisions an executive can face. A marketer must find the most accurate and reliable data possible within the limits imposed by time, cost, and the present state of the art. Marketing Research Is Traditionally Defined as the Systematic Gathering, Recording, and Analyzing of Data to Provide Information Useful to Marketing Decision-Making Although the research processes and methods are basically the same, whether applied in Columbus, Ohio, or Colombo, Sri Lanka, international marketing research involves two additional complications. First, information must be communicated across cultural boundaries. Fortunately, there are often internal staff and research agencies that are quite experienced in these kinds of cross-cultural communication tasks. Second, the environments within which the research tools are applied are often different in foreign markets. Rather than acquire new and exotic methods of research, the international marketing researcher must develop the capability for imaginative and deft applications of tried and tested techniques in sometimes totally strange milieus. The mechanical problems of implementing foreign marketing research often vary from country to country. Within a foreign environment, the frequently differing emphases on the kinds of information needed, the often-limited variety of appropriate tools and techniques available, and the difficulty of implementing the research process constitute challenges facing most international marketing researchers. The most frequent objective of international market research is that of foreign market opportunity analysis. When a firm launches its international activities, basic information is needed to identify and compare key alternatives. The aim is not to conduct a painstaking and detailed analysis of the world on a market-by-market basis but instead to utilize a broad-brush approach. Accomplished quickly at low cost, this can narrow down the possibilities for international marketing activities. International and Domestic Research The tools and techniques of international marketing research are said by some to be exactly the same as those of domestic marketing research, and only the environment differs. However, the environment is precisely what determines how well the tools, techniques, and concepts apply to the international market. Although the objectives of marketing research may be the same, the execution of international research may differ substantially from the process of domestic research. As a result, entirely new tools and techniques may need to be developed. The four primary differences are new parameters, new environments, an increase in the number of factors involved, and a broader definition of competition. New Parameters In crossing national borders, a firm encounters parameters not found in domestic marketing. Examples include duties, foreign currencies and changes in their value, different modes of transportation, international documentation, and port facilities.A firm that has done business only domestically will have had little or no prior experience with these requirements and conditions. Information about each of them must be obtained in order for management to make appropriate business decisions. New parameters also emerge because of differing forms of international operations. For example, a firm can export, it can license its products, it can engage in a joint venture, or it can carry out foreign direct investment. New Environments When deciding to go international in its marketing activities, a firm exposes itself to an unfamiliar environment. Many of the assumptions on which the firm was founded and on which its domestic activities were based may not hold true internationally. Firms need to learn about the culture of the host country and its demographics, understand its political system, determine its stability, and appreciate differences in societal structures and language.In addition, they must fully comprehend pertinent legal issues in the host country to avoid operating contrary to local legislation. They should also incorporate the technological level of the society in the marketing plan and understand the economic environment. In short, all the assumptions formulated over the years in the domestic market must be reevaluated. This crucial point has often been neglected because most managers were born into the environment of their domestic operations and have subconsciously learned to understand the constraints and opportunities of their business activities. The process is analogous to learning one\'s native language. Growing up with a language makes speaking it seem easy. Only in attempting to learn a foreign language do we begin to appreciate the complex structure of languages, the need for rules, and the existence of different patterns. Number of Factors Involved Going international often means entering into more than one market. As a result, the number of changing dimensions increases geometrically. Even if every dimension is understood, management must also appreciate the interaction between them. Because of the sheer number of factors, coordination of the interaction becomes increasingly difficult. The international marketing research process can help management with this undertaking. By entering the international market, the firm exposes itself to a much greater variety of competition than existed in the domestic market. For example, when expanding the analysis of an island\'s food production from a local to an international level, fishery products compete not only with other fishery products but also with meat or even vegetarian substitutes. Similarly, firms that offer labor-saving devices in the domestic marketplace may suddenly face competition from cheap manual labor abroad. Therefore, the firm must, on an ongoing basis, determine the breadth of the competition, track the competitive activities, and, finally, evaluate the actual and potential impact on its own operations. Breadth and Scope of International Marketing Research Foreign market research needs a broader scope, necessitated by higher levels of uncertainty. Research can be divided into three types on the basis of information needs: 1\. General information about the country, area, and/or market; 2\. Information necessary to forecast future marketing requirements by anticipating social, economic, consumer, and industry trends within specific markets or countries; and 3\. Specific market information used to make product, promotion, distribution, and price decisions and to develop marketing plans. In domestic operations, most emphasis is placed on the third type, gathering specific market information, because the other data are often available from secondary sources. A country\'s political stability, cultural attributes, and geographical characteristics are some of the kinds of information not ordinarily gathered by domestic marketing research departments, but they are required for a sound assessment of a foreign market. This broader scope of international marketing research is reflected in Unisys Corporation\'s planning steps, which call for collecting and assessing the following types of information: 1\. Economic and demographic. General data on growth in the economy, inflation, business cycle trends, and the like; profitability analysis for the division\'s products; specific industry economic studies; analysis of overseas economies; and key economic indicators for the United States and major foreign countries, as well as population trends, such as migration, immigration, and aging. 2\. Cultural, sociological, and political climate. A general noneconomic review of conditions affecting the division\'s business. In addition to the more obvious subjects, it covers ecology, safety, and leisure time and their potential impacts on the division\'s business. 3\. Overview of market conditions. A detailed analysis of market conditions that the division faces, by market segment, including international. 4\. Summary of the technological environment. A summary of the state-of-the-art technology as it relates to the division\'s business, carefully broken down by product segments. 5\. Competitive situation. A review of competitors\' sales revenues, methods of market segmentation, products, and apparent strategies on an international scope. Such in-depth information is necessary for sound marketing decisions. For the domestic marketer, most such information has been acquired after years of experience with a single market, but in foreign countries, this information must be gathered for each new market. There is a basic difference between information ideally needed and that which is collectible and/or used. Many firms engaged in foreign marketing do not make decisions with the benefit of the information listed. Cost, time, and human elements are critical variables. Some firms have neither the appreciation for information nor adequate time or money for the implementation of research. As a firm becomes more committed to foreign marketing and the cost of possible failure increases, greater emphasis is placed on research. The Research Process A marketing research study is always a compromise dictated by the limits of time, cost, and the present state of the art. A key to successful research is a systematic and orderly approach to the collection and analysis of data. Whether a research program is conducted in New York or New Delhi, the research process should follow these steps: 1\. Define the research problem and establish research objectives. 2\. Determine the sources of information to fulfill the research objectives. 3\. Consider the costs and benefits of the research effort. 4\. Gather the relevant data from secondary or primary sources, or both. 5\. Analyze, interpret, and summarize the results. 6\. Effectively communicate the results to decision makers. Although the steps in a research program are similar for all countries, variations and problems in implementation occur because of differences in cultural and economic development. Whereas the problems of research in England or Canada may be similar to those in the United States, research in Germany, South Africa, or Mexico may offer a multitude of difficult distinctions. These distinctions become apparent with the first step in the research process: formulation of the problem. The subsequent text sections illustrate some frequently encountered difficulties facing the international marketing researcher. Defining the Problem and Establishing Research Objectives After examining internal sources of data, the research process should begin with a definition of the research problem and the establishment of specific research objectives. The major difficulty here is converting a series of often ambiguous business problems into tightly drawn and achievable research objectives. In this initial stage, researchers often embark on the research process with only a vague grasp of the total problem. Problems of Availability and Use of Secondary Data The U.S. government provides comprehensive statistics for the United States; periodic censuses of U.S. population, housing, business, and agriculture are conducted and, in some cases, have been taken for over 100 years. Commercial sources, trade associations, management groups, and state and local governments provide the researcher with additional sources of detailed U.S. market information. Some describe the problem for American marketing researchers as sorting through too much data! Still others argue you can never have enough data. Another problem relating to the availability of data is researchers\' language skills. For example, though data are often copious regarding the Japanese market, being able to read Japanese is a requisite for accessing them, either online or in text. This problem may seem rather innocuous, but only those who have tried to maneuver through foreign data can appreciate the value of having a native speaker of the appropriate language on the research team. A practical reality, while tax structures and fear of the tax collector often adversely affect data. Although not unique to them, less developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. Production statistics are frequently inaccurate because these countries collect taxes on domestic sales. Thus, some companies shave their production statistics a bit to match the sales reported to tax authorities. Conversely, foreign trade statistics may be blown up slightly because each country in the European Union grants some form of export subsidy. Knowledge of such \"adjusted reporting\" is critical for a marketer who relies on secondary data for forecasting or estimating market demand. Reliability of Data Available data may not have the level of reliability necessary for confident decision making for many reasons. Official statistics are sometimes too optimistic, reflecting national pride rather than practical reality, while tax structures and fear of the tax collector often adversely affect data. Although not unique to them, less developed countries are particularly prone to being both overly optimistic and unreliable in reporting relevant economic data about their countries. Comparability of available data is the third shortcoming faced by foreign marketers. In the United States, current sources of reliable and valid estimates of socioeconomic factors and business indicators are readily available. In other countries, especially those less developed, data can be many years out of date as well as having been collected on an infrequent and unpredictable schedule. Naturally, the rapid change in socioeconomic features being experienced in many of these countries makes the problem of currency a vital one. Furthermore, even though many countries are now gathering reliable data, there are generally no historical series with which to compare the current information. Comparability of data can even be a problem when the best commercial research firms collect data across countries, and managers are well advised to query their vendors about this problem. A related problem is the manner in which data are collected and reported. Too frequently, data are reported in different categories or in categories much too broad to be of specific value. Validating Secondary Data The shortcomings discussed here should be considered when using any source of information. Many countries have similarly high standards for the collection and preparation of data as those generally found in the United States, but secondary data from any source, including the United States, must be checked and interpreted carefully. As a practical matter, the following questions should be asked to effectively judge the reliability of secondary data sources: 1\. Who collected the data? Would there be any reason for purposely misrepresenting the facts? 2\. For what purposes were the data collected? 3\. How (by what methodology) were the data collected? 4\. Are the data internally consistent and logical in light of known data sources or market factors? Checking the consistency of one set of secondary data with other data of known validity is an effective and often-used way of judging validity. In general, the availability and accuracy of recorded secondary data increase as the level of economic development increases. Fortunately, interest in collecting high-quality statistical data rises as countries realize the value of extensive and accurate national statistics for orderly economic growth. This interest in improving the quality of national statistics has resulted in remarkable improvement in the availability of data over the last three decades. However, when no data are available or the secondary data sources are inadequate, it is necessary to begin the collection of primary data. Gathering Primary Data: Quantitative and Qualitative Research If, after seeking all reasonable secondary data sources, research questions are still not adequately answered, the market researcher must collect primary data---that is, data collected specifically for the particular research project at hand. The researcher may question the firm\'s sales representatives, distributors, middlemen, and/or customers to get appropriate market information. Marketing research methods can be grouped into two basic types: quantitative and qualitative research. In both methods, the marketer is interested in gaining knowledge about the market. In quantitative research, usually a large number of respondents are asked to reply either verbally or in writing to structured questions using a specific response format (such as yes/no) or to select a response from a set of choices. Questions are designed to obtain specific responses regarding aspects of the respondents\' behavior, intentions, attitudes, motives, and demographic characteristics. Quantitative research provides the marketer with responses that can be presented with precise estimations. The structured responses received in a survey can be summarized in percentages, averages, or other statistics. Survey research is generally associated with quantitative research, and the typical instrument used is a questionnaire administered by personal interview, mail, telephone, and, most recently, over the Internet. Scientific studies, including tightly designed experiments, often are conducted by engineers and chemists in product-testing laboratories around the world. There, product designs and formulas are developed and tested in consumer usage situations. Often those results are integrated with consumer opinions gathered in concurrent survey studies. In qualitative research, if questions are asked, they arealmost always open-ended or in-depth, and unstructured responses, including storytelling, that reflect the person\'s thoughts and feelings on the subject are sought. Consumers\' first impressions about products may be useful. Direct observation of consumers in choice or product usage situations is another important qualitative approach to marketing research. Research on the Internet To keep up with the worldwide growth in Internet use is literally impossible. For many companies, the Internet provides a new and increasingly important medium for conducting a variety of international marketing research. Indeed, a survey of marketing research professionals suggests that the most important influences on the industry are the Internet and globalization. New product concepts and advertising copy can be tested over the Internet for immediate feedback. Worldwide consumer panels have been created to help test marketing programs across international samples. It has been suggested that there are at least eight different uses for the Internet in international research: 1\. Online surveys and buyer panels. These can include incentives for participation, and they have better \"branching\" capabilities (asking different questions based on previous answers) than more expensive mail and phone surveys. 2\. Online focus groups. Bulletin boards can be used for this purpose. 3\. Web visitor tracking. Servers automatically track and time visitors\' travel through websites. 4\. Advertising measurement. Servers track links to other sites, and their usefulness can therefore be assessed. 5\. Customer identification systems. Many companies are installing registration procedures that allow them to track visits and purchases over time, creating a \"virtual panel.\" 6\. E-mail marketing lists. Customers can be asked to sign up on e-mail lists to receive future direct marketing efforts via the Internet. 7\. Embedded research. The Internet continues to automate traditional economic roles of customers, such as searching for information about products and services, comparison shopping among alternatives, interacting with service providers, and maintaining the customer-brand relationship. More and more of these Internet processes look and feel like research processes themselves. The methods are often embedded directly into the actual purchase and use situations and therefore are more closely tied to actual economic behavior than traditional research methods. Some firms even provide the option of custom designing products online---the ultimate in applying research for product development purposes. 8\. Observational research also referred to as netnography. Chat rooms, blogs, and personal websites can all be systematically monitored to assess consumers\' opinions about products and services. Problems in Analyzing and Interpreting Research Information Once data have been collected, the final steps in the research process are the analysis and interpretation of findings in light of the stated marketing problem. Both secondary and primary data collected by the market researcher are subject to the many limitations just discussed. In any final analysis, the researcher must take into consideration these factors and, despite their limitations, produce meaningful guides for management decisions. Accepting information at face value in foreign markets is imprudent. The meanings of words, the consumer\'s attitude toward a product, the interviewer\'s attitude, or the interview situation can distort research findings. Just as culture and tradition influence the willingness to give information, so they influence the information given. Newspaper circulation figures, readership and listenership studies, retail outlet figures, and sales volume can all be distorted through local business practices. To cope with such disparities, the foreign market researcher must possess three talents to generate meaningful marketing information. 1\. Cultural Understanding. The researcher must possess a high degree of cultural understanding of the market in which research is being conducted. To analyze research findings, the social customs, semantics, current attitudes, and business customs of a society or a subsegment of a society must be clearly understood. At some level, it will be absolutely necessary to have a native of the target country involved in the interpretation of the results of any research conducted in a foreign market. 2\. Adaptability in Research Methods. A creative talent for adapting research methods is necessary. A researcher in foreign markets often is called on to produce results under the most difficult circumstances and short deadlines. Ingenuity and resourcefulness, willingness to use \"catch as catch can\" methods to get facts, patience (even a sense of humor about the work), and a willingness to be guided by original research findings even when they conflict with popular opinion or prior assumptions are all considered prime assets in foreign marketing research. 3\. Skeptical Attitude. A skeptical attitude in handling both primary and secondary data is helpful. For example, it might be necessary to check a newspaper press run over a period of time to get accurate circulation figures or to deflate or inflate reported consumer income in some areas by 25 to 50 percent on the basis of observable socioeconomic characteristics. Indeed, where data are suspect, such triangulation through the use of multiple research methods will be crucial. These essential traits suggest that a foreign marketing researcher should be a foreign national or should be advised by a foreign national who can accurately appraise the data collected in light of the local environment, thus validating secondary as well as primary data. Moreover, regardless of the sophistication of a research technique or analysis, there is no substitute for decision makers themselves getting into the field for personal observation. The basic objective of the market research function is providing management with information for more accurate decision making. This objective is the same for domestic and international marketing. In foreign marketing research, however, achieving that objective presents some problems not encountered on the domestic front. Customer attitudes about providing information to a researcher are culturally conditioned. Foreign market information surveys must be carefully designed to elicit the desired data and at the same time not offend the respondent\'s sense of privacy. Besides the cultural and managerial constraints involved in gathering information for primary data, many foreign markets have inadequate or unreliable bases of secondary information. Such challenges suggest three keys to successful international marketing research: 1\. The inclusion of natives of the foreign culture on research teams; 2\. The use of multiple methods and triangulation; and 3\. The inclusion of decision makers, even top executives, who must on occasion talk directly to or directly observe customers in foreign markets. Constraints of time, resources, and expertise are the major inhibitors of international marketing research. Nevertheless, firms need to carry out planned and organized research in order to explore global market alternatives successfully. Such research needs to be closely linked to the decision-making process. International market research differs from domestic research in that the environment, which determines how well tools, techniques, and concepts apply, is different abroad. In addition, the manager needs to deal with new parameters, such as duties, exchange rates, and international documentation; a greater number of interacting factors; and a much broader definition of the concept of competition. Given the scarcity of resources, companies beginning their international effort often need to use data that have already been collected---that is, secondary data. Such data are available from governments, international organizations, directories, trade associations, or online databases. To respond to specific information requirements, firms frequently need primary research. The researcher needs to select an appropriate research technique to collect the information needed. Sensitivity to different international environments and cultures will guide the researcher in deciding whether to use interviews, focus groups, observation, surveys, or experimentation as data-collection techniques. In addition to traditional data-gathering tools, web-based surveys can be faster at bringing better quality results. The same sensitivity applies to the design of the research instrument, where issues such as question format, content, and wording are decided. Also, the sampling plan needs to be appropriate for the local environment in order to ensure representative and useful responses. Once the data have been collected, care must be taken to use analytical tools appropriate for the quality of data collected so that management is not misled about the sophistication of the research. Finally, the research results must be presented in a concise and useful form so that management can benefit in its decision making, and implementation of the research needs to be tracked. To provide ongoing information to management, an international information support system is useful. Such a system will provide for the systematic and continuous gathering, analysis, and reporting of data for decision-making purposes. It uses a firm\'s internal information and gathers data via environmental scanning, Delphi studies, or scenario building, thus enabling management to prepare for the future and hone its decision-making skills. Market Entry and Expansion Doing business internationally provides opportunities for companies to bring innovations to the world. International expansion may turn out to be the key to prosperity for corporations and employees. Firms that export grow faster, are more productive, and have employees who tend to earn more. Even though some firms go international from the start, most of them do so gradually. New activities in an unfamiliar environment increase a firm\'s risk. Therefore, companies must prepare their activities and adjust to the needs and opportunities of international markets in order to become long-term participants. Stimuli to Internationalize A mixture of factors results in firms taking steps in a given direction. This is true of internationalization; there are a variety of stimuli both pushing and pulling firms along the international path. Proactive motivations represent stimuli to attempt strategic change. Reactive motivations influence firms that respond to environmental shifts by changing their activities over time. In other words, proactive firms go international because they want to, while reactive ones go international because they have to. Proactive stimuli such as profits provide the strongest incentive to become involved in international marketing. Management may perceive international sales as a potential source of higher profit margins or of additional profits. Of course, the perceived profitability from going international may not match actual profitability because of such factors as high start-up costs, sudden shifts in exchange rates, or insufficient market research. A second major stimulus results either from unique products or a technological advantage. A firm\'s goods or services may not be widely available from international competitors or may offer technological advances in a specialized field. Uniqueness can provide a competitive edge and result in major business success abroad. Again, real and perceived advantages should be differentiated. Many firms believe that theirs are unique products or services, even though on a global level this may not be the case. The intensity of marketing\'s interaction with the research and development function, as well as the level of investment into R&D, has been shown to have a major effect on the success of exported products. One issue to consider is how long such a technological or product advantage will continue. Historically, a firm with a competitive edge could count on being the sole supplier to international markets for years to come. This type of advantage, however, has shrunk dramatically because of competing technologies and imitation due to insufficient protection of intellectual propert

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