Chapter 3:

International Marketing
Environment ( Cultural,
Economic, and Technological )

The key difference between domestic
marketing and marketing on an international
scale is the multidimensionality and
complexity of the many foreign country
markets a company may operate in.
An international manager needs a knowledge
and awareness of these complexities and the
implications they have for international
marketing management.
Definitions and
Origins of Culture
Traditional definition of culture
Culture is the sum of the values, rituals, symbols,
beliefs, and thought processes that are learned,
shared by a group of people, and transmitted
from generation to generation.
Individuals learn culture in three ways
Socialization (growing up)
Acculturation (adjusting to a new culture)
Application (decisions about consumption and
production)
3
Origins, Elements,
and Consequences of Culture
Roy Philip 4
Exhibit 4.4
Elements of Culture
Rituals patterns of behavior and interaction that are
learned and repeated
Marriages , funerals, baptisms, graduations
Symbols
Language
Linguistic distance relationship between
language and international marketing
Aesthetics as symbols
Insensitivity to aesthetic values can offend, create a
negative impression, and, in general, render
marketing efforts ineffective or even damaging
5
Elements of Culture
Beliefs
Superstitions play a large role in a societys belief
system and therefore, to make light of superstitions in
other cultures can be an expensive mistake
The number 13 in the western hemisphere is
considered unlucky, where as the number 8 in China
connotes prosperity
The practice of Feng Shui
Thought processes
Difference in perception between the East and the
West
Focus vs. big-picture
6 Roy Philip
Similarities An Illusion
A common language does not guarantee a
similar interpretation of word or phrases
Difference between British and American English
http://www.woodlands-
junior.kent.sch.uk/customs/questions/americanb
ritish/index.html
Just because something sells in one country
doesnt mean it will sell in another
Cultural differences among member of
European Union a product of centuries of
history

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Language
According to www.ethnologue.com:
A total of 7,413 known living languages exist
in the world
311 being spoken in the U.S.; 297 in Mexico,
13 in Finland, and 241 in China
EU has 20 official languages
India alone has 452 known languages!
Back
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Social Institutions
School the most important social institution
Direct link between a nations literacy rate and its
economic development

The media it has replaced family time
TV and the Internet
American educational system produces a lower
percentage of college graduates than 12 other
countries including Russia, Japan, and France
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Social Institutions
Government - influences the thinking and
behaviors of adult citizens
Propaganda through media
Passage, promulgation, promotion, and
enforcement of laws
Corporations - most innovations are introduced
to societies by companies
Spread through media
Change agents
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Economic environment
It is important that the international marketer
has an understanding of economic
developments and how they impinge on the
marketing strategy.
This understanding is important at a world
level in terms of the world trading
infrastructure such as world institutions and
trade agreements
Firms need to be aware of the economic
policies of countries and the direction in
which a particular market is developing
economically in order to make an assessment
as to whether they can profitably satisfy
market demand and compete with firms
already in the market.
One of the key challenge facing companies is:
- the question as to how they can develop an
integrated strategy across a number of
international markets when there are
divergent levels of economic development.
Such disparities often make it difficult to have
a cohesive strategy, especially in pricing.
The developed economies
The developed economies of the North
American Free Trade Area (NAFTA), European
Union (EU) and Japan account for 80 per cent
of world trade.
For many firms this constitutes much of what
is termed the global market.
Even though many companies call themselves
global, most of their revenues and profits will
be earned from these markets.
It is from these developed economies that the
global consumer with similar lifestyles, needs
and desires emanates.
However, emerging markets are now coming
more economically powerful and moving up
the ranks, especially such countries as Brazil,
Russia, India and China.
The emerging economies
Brazil, Russia, India and China, (the BRIC
economies) are having:
A huge and growing demand for everything
from automobiles to cellular phones
Viewed as key growth markets where there is
an evolving pattern of government-directed
economic reforms, lowering of restrictions on
foreign investment and increasing
privatization of state-owned monopolies.
Such markets often have what is termed as a
dual economy.
Usually there tends to be a wealthy urban
professional class alongside a poorer rural
population.
Income distribution tends to be much more
skewed between the haves and the
have nots than in developed countries.
China now has a middle class of 100 million
which is forecast to grow to 500 million in the
next century.
Brazil and Indonesia have middle classes of 25
million each.
Less developed countries
This group includes underdeveloped countries and less
developing countries.
The main features are:
- a low GDP per capita
- a limited amount of manufacturing activity; and
- a very poor and fragmented infrastructure
Typical infrastructure weaknesses are in transport,
communications, education and healthcare.
In addition, the public sector is often slow-moving and
bureaucratic.
It is common to find that less developed countries (LDCs)
are heavily reliant on one product and often on one trading
partner.
In many LDCs this product is the main export earner.
- In Angola, for instance, the sole export is oil
- Sudan oil accounts for 99 per cent of their exports.
- In addition, three-quarters of LDCs depend on their main
trading partner for more than one-quarter of their
export revenue
The risks posed to the LDC by changing patterns of supply
and demand are great
Currency risks
International marketing transactions invariably
take place between currency movements are an
important aspect of the international economic
environment.
Foreign exchange parities are likely to change on
a regular if unpredictable basis.
World currency movements, stimulated by
worldwide trading and foreign exchange dealing,
are an additional complication in the
international environment.
Businesses that need to swap currencies to
pay for imported goods, or
Because they have received foreign currency
for products they have exported, can find
themselves squeezed to the point where they
watch their profits disappear.
Technological environment
Technology is a major driving force both in
international marketing and in the move towards a
more global marketplace.
The impact of technological advances can be seen in all
aspects of the marketing process.
The ability to:
gather data on markets,
management control capabilities, and,
the practicalities of carrying out the business function
internationally have been revolutionized in recent
years with the advances in electronic communications.
In emerging economies consumers are jumping from
no telephone to the latest in global communications
technology.
Wireless application protocol (WAP) technology allows
online services to be available to mobile phone users
on the move, wherever they happen to be in the
world.
The use of Global System for Mobile Communications
(GSM) technology enables mobile phone operators to
determine the location of a customer globally to send
them relevant and timely advertising messages.
THE INTERNET AND THE WORLD WIDE
WEB (WWW)
The Internet and the access gained to the
World Wide Web has revolutionized
international marketing practices.
Firms ranging from a few employees to large
multinationals have realized the potential of
marketing globally online and so have
developed the facility to buy and sell their
products and services online to the world.
The Internet has meant huge opportunities for
small and medium-sized enterprises (SMEs) and
rapid internationalization for many.
It has enabled them to :
substantially reduce the costs of reaching international
customers,
reduce global advertising costs, and
made it much easier for small niche products to find a
critical mass of customers
For all companies, the implications of being able to
market goods and services online have been far
reaching.
The Internet has led to an explosion of information
to consumers, giving them the potential to source
products from the cheapest supplier in the world.
This has led to the increasing standardization of prices
across borders or, at least, to the narrowing of price
differentials as consumers become more aware of
prices in different countries and buy a whole range of
products via the net.
The Internet, by connecting end-users and
producers directly, has:
reduced the importance of traditional
intermediaries in international marketing (i.e.
agents and distributors)
The critical resource possessed by this new
breed of cybermediary is information rather
than inventory.
The Internet has also become a powerful tool
for supporting networks both internal and
external to the firm.

It has become the efficient new medium for
conducting worldwide market research and
gaining feedback from customers.
Thus the Internet produces a fundamentally
different environment for international
marketing and requires a radically different
strategic approach affecting all aspects of the
marketing process.

~ end of part 2~
Group Activity
Please go back to your group and answer the
following:
Analyze the Cultural, Economic and
Technological characteristics surrounding your
chosen company/product based on its
country of origin.
Present your findings in the class