Smaller In The U.S. Inter Market Segmentation example essay topic

... the price of the yen, in dollars, will increase, so you will get fewer yen for a dollar. 'Fixed'-currencies may be 'pegged' to another currency (e. g., the Argentinian currency is guaranteed in terms of a dollar value), to a composite of currencies (i. e., to avoid making the currency dependent entirely on the U.S. dollar, the value might be 0.25 U.S. dollar+4 Mexican peso+50 Japanese yen+0.2 German mark+0.1 British pound), or to some other valuable such as gold. Note that it is very difficult to maintain these fixed exchange rates-governments must buy or sell currency on the open market when currencies go outside the accepted ranges. Fixed exchange rates, although they produce stability and predictability, tend to get in the way of market forces-if a currency is kept artificially low, a country will tend to export too much and import too little.

Trade balances and exchange rates: When exchange rates are allowed to fluctuate, the currency of a country that tends to run a trade deficit will tend to decline over time, since there will be less demand for that currency. This reduced exchange rate will then tend to make exports more attractive in other countries, and imports less attractive at home. Measuring country wealth. There are two ways to measure the wealth of a country. The nominal per capita gross domestic product (GDP) refers to the value of goods and services produced per person in a country if this value in local currency were to be exchanged into dollars. Suppose, for example, that the per capita GDP of Japan is 3,500,000 yen and the dollar exchanges for 100 yen, so that the per capita GDP is (3,500,000/100) = $35,000.

However, that $35,000 will not buy as much in Japan-food and housing are much more expensive there. Therefore, we introduce the idea of purchase parity adjusted per capita GDP, which reflects what this money can buy in the country. This is typically based on the relative costs of a weighted 'basket' of goods in a country (e. g., 35% of the cost of housing, 40% the cost of food, 10% the cost of clothing, and 15% cost of other items). If it turns out that this measure of cost of living is 30% higher in Japan, the purchase parity adjusted GPD in Japan would then be ($35,000/ (130%) = $26,923. In general, the nominal per capita GPD is more useful for determining local consumers' ability to buy imported goods, the cost of which are determined in large measure by the costs in the home market, while the purchase parity adjusted measure is more useful when products are produced, at local costs, in the country of purchase. For example, the ability of Argentinians to purchase micro computer chips, which are produced mostly in the U.S. and Japan, is better predicted by nominal income, while the ability to purchase toothpaste made by a U.S. firm in a factory in Argentina is better predicted by purchase parity adjusted income.

It should be noted that, in some countries, income is quite unevenly distributed so that these average measures may not be very meaningful. In Brazil, for example, there is a very large underclass making significantly less than the national average, and thus, the national figure is not a good indicator of the purchase power of the mass market. Similarly, great regional differences exist within some countries-income is much higher in northern Germany than it is in the former East Germany, and income in southern Italy is much lower than in northern Italy. Economic trends. Certain countries have high levels of inflation; this figure, for example, has run at several hundred percent at various times in Brazil. In that case, then, it becomes important to adjust figures for inflation.

Suppose that, as an illustration, that the Brazilian economy grew from 1997 to 1998 from 200 trillion cruzeiros to 410 trillion while there was an inflation of 100%. The economy, then, did not really double. (You will not have to do such calculations on the exam, but you should understand the principle of real [inflation adjusted] vs. nominal growth.) Please note that even in countries that have inflation rates as moderate as 1-5%, adjustment for inflation is still essential. When one looks at an entire country, note that overall GDP may increase as population increases while its per capita GDP increases less or even decreases. Suppose, for example, that the GDP of India from 1997 to 1998 increases from $1 trillion to $1.02 trillion and that there is no inflation but the population increases by 3%. The population adjusted economic growth would be ( (1.02-1.00) /1.03) -100% = 98.5%-100% = -1.5%.

Again, you will not be asked to make actual calculations on the exam. Some countries run trade deficits over long periods of time, and when this happens, their currency is expected to weaken over time. In principle, this weakening ought to increase exports and decrease exports, but since countries may be able to borrow from foreign lenders, this may not always happen in practice. The U.S., for example, has been able to finance deficit spending by foreign borrowing.

While the U.S. dollar declined sharply against the yen in the 1980's and early 1990's, it has remained much more stable in recent years at 100-130 yen per dollar. Culture Dealing with culture. Culture is a problematic issue for many marketers since it is inherently nebulous and often difficult to understand. One may violate the cultural norms of another country without being informed of this, and people from different cultures may feel uncomfortable in each other's presence without knowing exactly why (for example, two speakers may unconsciously continue to attempt to adjust to reach an incompatible preferred interpersonal distance).

Warning about stereotyping. When observing a culture, one must be careful not to over-generalize about traits that one sees. Research in social psychology has suggested a strong tendency for people to perceive an 'out group' as more homogeneous than an 'ingroup,' even when they knew what members had been assigned to each group purely by chance. When there is often a 'grain of truth' to some of the perceived differences, the temptation to over-generalize is often strong. Note that there are often significant individual differences within cultures.

Definition. The text defines culture as 'A learned, shared, compelling, interrelated set of orientations for members of society. ' While memorizing definitions is not essential, note the following parts of the definition: Learned. Culture is not genetically based-if that were the case cultures across the World would have been much more similar to each other. We learn what is considered appropriate in our culture through trial and error. If a child engages in competitive behavior, this might be rewarded in the United States with the expression of parental approval, while in Japan it might result in subtle shows of disapproval, such as lack of attention.

Shared. The beliefs, interpretations, and behaviors are shared by all or most of the people within the culture, so that it becomes a truly society-wide phenomenon. Compelling: Culture must have implications (such as social disapproval if contradicted) in order to be considered important. Interrelated. Although there may be conflicts between elements of culture (e. g., respect for seniority may come into conflict with a growing value of achievement in Singapore), for the most part, elements of culture constitute a coherent and relatively consistent whole. For example, the tendency for Japanese business people to bow when meeting each other and the tendency of lower level Japanese employees to show great deference to their superiors are both manifestations of a strong emphasis on respect.

Cultural lessons. We considered several cultural lessons in class; the important thing here is the big picture. For example, within the Muslim tradition, the dog is considered a 'dirty' animal, so portraying it as 'man's best friend' in an advertisement is counter-productive. Packaging, seen as a reflection of the quality of the 'real' product, is considerably more important in Asia than in the U.S., where there is a tendency to focus on the contents which 'really count. ' Many cultures observe significantly greater levels of formality than that typical in the U.S., and Japanese negotiator tend to observe long silent pauses as a speaker's point is considered. Elements of culture.

The text considers several elements of culture, such as the material culture, education, and religion. Another way to look at cultural contents involves the areas of: Beliefs. While Americans may attribute success to hard work or skill, it may be attributed to luck or connections in other cultures. Attitudes. Beliefs, feelings, and behavioral intentions may differ. While the American may appreciate getting a bargain in a sale, this may conjure up images of not being able to afford the full price in other cultures.

Goals. While 'progress' (having new and improved products, for example) is considered a good thing in the U.S., many Japanese parents are concerned that the 'wa-pro' leaves their children unable to write the traditional Japanese pictographs. Values. In the U.S., individual uniqueness is generally considered a good thing while in some cultures fitting in with the group is a higher priority.

Thus, for example, an American may enjoy wearing relatively innovative clothing, which may be frowned upon in a more collectivistic society. Cultural characteristics as a continuum. There is a tendency to stereotype cultures as being one way or another (e. g., individualistic rather than collectivistic). Note, however, countries fall on a continuum of cultural traits. Hofstede's research demonstrates a wide range between the most individualistic and collectivistic countries, for example-some fall in the middle.

Hofstede's Dimensions. Gert Hofstede, a Dutch researcher, was able to interview a large number of IBM executives in various countries, and found that cultural differences tended to center around four key dimensions: Individualism vs. collectivism: To what extent do people believe in individual responsibility and reward rather than having these measures aimed at the larger group? Contrary to the stereotype, Japan actually ranks in the middle of this dimension, while Indonesia and West Africa rank toward the collectivistic side. The U.S., Britain, and the Netherlands rate toward individualism.

Power distance: To what extent is there a strong separation of individuals based on rank? Power distance tends to be particularly high in Arab countries and some Latin American ones, while it is more modest in Northern Europe and the U.S. Masculinity vs. femininity involves a somewhat more nebulous concept. 'Masculine' values involve competition and 'conquering' nature by means such as large construction projects, while 'feminine' values involve harmony and environmental protection. Japan is one of the more masculine countries, while the Netherlands rank relatively low. The U.S. is close to the middle, slightly toward the masculine side. Uncertainty avoidance involves the extent to which a 'structured's ituation with clear rules is preferred to a more ambiguous one; in general, countries with lower uncertainty avoidance tend to be more tolerant of risk.

Japan ranks very high. Few countries are very low in any absolute sense, but relatively speaking, Britain and Hong Kong are lower, and the U.S. is in the lower range of the distribution. Although Hofstede's original work did not address this, a fifth dimension of long term vs. short term orientation has been proposed. In the U.S., managers like to see quick results, while Japanese managers are known for take a long term view, often accepting long periods before profitability is obtained. High vs. low context cultures: In some cultures, 'what you see is what you get'-the speaker is expected to make his or her points clear and limit ambiguity. This is the case in the U.S. -if you have something on your mind, you are expected to say it directly, subject to some reasonable standards of diplomacy.

In Japan, in contrast, facial expressions and what is not said may be an important clue to understanding a speaker's meaning. Thus, it may be very difficult for Japanese speakers to understand another's written communication. The nature of languages may exacerbate this phenomenon-while the German language is very precise, Chinese lacks many grammatical features, and the meaning of words may be somewhat less precise. English ranks somewhere in the middle of this continuum. Ethnocentrism and the self-reference criterion. The self-reference criterion refers to the tendency of individuals, often unconsciously, to use the standards of one's own culture to evaluate others.

For example, Americans may perceive more traditional societies to be 'backward' and 'unmotivated' because they fail to adopt new technologies or social customs, seeking instead to preserve traditional values. In the 1960's, a supposedly well read American psychology professor referred to India's culture of 'sick' because, despite severe food shortages, the Hindu religion did not allow the eating of cows. The psychologist expressed disgust that the cows were allowed to roam free in villages, although it turns out that they provided valuable functions by offering milk and fertilizing fields. Ethnocentrism is the tendency to view one's culture to be superior to others.

The important thing here is to consider how these biases may come in the way in dealing with members of other cultures. Political and Legal Influences The political situation. The political relations between a firm's country of headquarters (or other significant operations) and another one may, through no fault of the firm's, become a major issue. For example, oil companies which invested in Iraq or Libya became victims of these countries' misconduct that led to bans on trade. Similarly, American firms may be disliked in parts of Latin America or Iran where the U.S. either had a colonial history or supported unpopular leaders such as the former shah.

Certain issues in the political environment are particularly significant. Some countries, such as Russia, have relatively unstable governments, whose policies may change dramatically if new leaders come to power by democratic or other means. Some countries have little tradition of democracy, and thus it may be difficult to implement. For example, even though Russia is supposed to become a democratic country, the history of dictatorships by the communists and the czars has left country of corruption and strong influence of criminal elements. Laws across borders. When laws of two countries differ, it may be possible in a contract to specify in advance which laws will apply, although this agreement may not be consistently enforceable.

Alternatively, jurisdiction may be settled by treaties, and some governments, such as that of the U.S., often apply their laws to actions, such as anti-competitive behavior, perpetrated outside their borders (extra-territorial application). By the doctrine known as compulsion, a firm that violates U.S. law abroad may be able to claim as a defense that it was forced to do so by the local government; such violations must, however, be compelled-that they are merely legal or accepted in the host country is not sufficient. The reality of legal systems. Some legal systems, such as that of the U.S., are relatively 'transparent'-that is, the law tends to be what its plain meaning would suggest. In some countries, however, there are laws on the books which are not enforced (e. g., although Japan has antitrust laws similar to those of the U.S., collusion is openly tolerated). Further, the amount of discretion left to government officials tends to vary.

In Japan, through the doctrine of administrative guidance, great latitude is left to government officials, who effectively make up the laws. One serious problem in some countries is a limited access to the legal systems as a means to redress grievances against other parties. While the U.S. may rely excessively on lawsuits, the inability to effectively hold contractual partners to their agreement tends to inhibit business deals. In many jurisdictions, pre-trial discovery is limited, making it difficult to make a case against a firm whose internal documents would reveal guilt. This is one reason why personal relationships in some cultures are considered more significant than in the U.S. -since enforcing contracts may be difficult, you must be sure in advance that you can trust the other party. Legal systems of the World.

There are four main approaches to law across the World, with some differences within each: Common law, the system in effect in the U.S., is based on a legal tradition of precedent. Each case that raises new issues is considered on its own merits, and then becomes a precedent for future decisions on that same issue. Although the legislature can override judicial decisions by changing the law or passing specific standards through legislation, reasonable court decisions tend to stand by default. Code law, which is common in Europe, gives considerably shorter leeway to judges, who are charged with 'matching's pacific laws to situations-they cannot come up with innovative solutions when new issues such as patentability of biotechnology come up. There are also certain differences in standards. For example, in the U.S. a supplier whose factory is hit with a strike is expected to deliver on provisions of a contract, while in code law this responsibility may be nullified by such an 'act of God.

' Islamic law is based on the teachings of the Koran, which puts forward mandates such as a prohibition of usury, or excessive interest rates. This has led some Islamic countries to ban interest entirely; in others, it may be tolerated within reason. Islamic law is ultimately based on the need to please God, so 'getting around' the law is generally not acceptable. Attorneys may be consulted about what might please God rather than what is an explicit requirements of the government. Socialist law is based on the premise that 'the government is always right' and typically has not developed a sophisticated framework of contracts (you do what the governments tells you to do) or intellectual property protection (royalties are unwarranted since the government ultimately owns everything). Former communist countries such as those of Eastern Europe and Russia are trying to advance their legal systems to accommodate issues in a free market. U.S. laws of particular interest to firms doing business abroad.

Anti-trust. U.S. antitrust laws are generally enforced in U.S. courts even if the alleged transgression occurred outside U.S. jurisdiction. For example, if two Japanese firms collude to limit the World supply of VCRs, they may be sued by the U.S. government (or injured third parties) in U.S. courts, and may have their U.S. assets seized. The Foreign Corrupt Influences Act came about as Congress was upset with U.S. firms' bribery of foreign officials. Although most if not all countries ban the payment of bribes, such laws are widely flaunted in many countries, and it is often useful to pay a bribe to get foreign government officials to act favorably. Firms engaging in this behavior, even if it takes place entirely outside the U.S., can be prosecuted in U.S. courts, and many executives have served long prison sentences for giving in to temptation.

In contrast, in the past some European firms could actually deduct the cost of foreign bribes from their taxes! There are some gray areas here-it may be legal to pay certain 'tips' -known as 'facilitating payments'-to low level government workers in some countries who rely on such payments as part of their salary so long as these payments are intended only to speed up actions that would be taken anyway. For example, it may be acceptable to give a reasonable (not large) facilitating payment to get customs workers to process a shipment faster, but it would not be legal to pay these individuals to change the classification of a product into one that carries a lower tariff. Anti-boycott laws.

Many Arab countries maintain a boycott of Israel, and foreigners that want to do business with them may be asked to join in this boycott by stopping any deals they do with Israel and certifying that they do not trade with that country. It is illegal for U.S. firms to make this certification even if they have not dropped any actual deals with Israel to get a deal with boy cotters. Trading With the Enemy. It is illegal for U.S. firms to trade with certain countries that are viewed to be hostile to the U.S. -e. g., Libya and Iraq. Segmentation, Targeting, and Positioning The importance of STP. Segmentation is the cornerstone of marketing-almost all marketing efforts in some way relate to decisions on who to serve or how to implement positioning through the different parts of the marketing mix.

For example, one's distribution strategy should consider where one's target market is most likely to buy the product, and a promotional strategy should consider the target's media habits and which kinds of messages will be most persuasive. Although it is often tempting, when observing large markets, to try to be 'all things to all people,' this is a dangerous strategy because the firm may lose its distinctive appeal to its chosen segments. In terms of the 'big picture,' members of a segment should generally be as similar as possible to each other on a relevant dimension (e. g., preference for quality vs. low price) and as different as possible from members of other segments. That is, members should respond in similar ways to various treatments (such as discounts or high service) so that common campaigns can be aimed at segment members, but in order to justify a different treatment of other segments, their members should have their own unique response behavior. Approaches to global segmentation. There are two main approaches to global segmentation.

At the macro level, countries are seen as segments, given that country aggregate characteristics and statistics tend to differ significantly. For example, there will only be a large market for expensive pharmaceuticals in countries with certain income levels, and entry opportunities into infant clothing will be significantly greater in countries with large and growing birthrates (in countries with smaller birthrates or stable to declining birthrates, entrenched competitors will fight hard to keep the market share). There are, however, significant differences within countries. For example, although it was thought that the Italian market would demand 'no frills' inexpensive washing machines while German consumers would insist on high quality, very reliable ones, it was found that more units of the inexpensive kind were sold in Germany than in Italy-although many German consumers fit the predicted profile, there were large segment differences within that country. At the micro level, where one looks at segments within countries. Two approaches exist, and their use often parallels the firm's stage of international involvement.

Intra market segmentation involves segmenting each country's markets from scratch-i. e., an American firm going into the Brazilian market would do research to segment Brazilian consumers without incorporating knowledge of U.S. buyers. In contrast, inter market segmentation involves the detection of segments that exist across borders. Note that not all segments that exist in one country will exist in another and that the sizes of the segments may differ significantly. For example, there is a huge small car segment in Europe, while it is considerably smaller in the U.S. Inter market segmentation entails several benefits. The fact that products and promotional campaigns may be used across markets introduces economies of scale, and learning that has been acquired in one market may be used in another-e. g., a firm that has been serving a segment of premium quality cellular phone buyers in one country can put its experience to use in another country that features that same segment. (Even though segments may be similar across the cultures, it should be noted that it is still necessary to learn about the local market.

For example, although a segment common across two countries may seek the same benefits, the cultures of each country may cause people to respond differently to the 'hard sell' advertising that has been successful in one). The international product life cycle suggests that product adoption and spread in some markets may lag significantly behind those of others. Often, then, a segment that has existed for some time in an 'early adopter' country such as the U.S. or Japan will emerge after several years (or even decades) in a 'late adopter' country such as Britain or most developing countries. (We will discuss this issue in more detail when we cover the product mix in the second half of the term). Positioning across markets. Firms often have to make a trade off between adapting their products to the unique demands of a country market or gaining benefits of standardization such as cost savings and the maintenance of a consistent global brand image.

There are no easy answers here. On the one hand, McDonald's has spent a great deal of resources to promote its global image; on the other hand, significant accommodations are made to local tastes and preferences-for example, while serving alcohol in U.S. restaurants would go against the family image of the restaurant carefully nurtured over several decades, McDonald's has accommodated this demand of European patrons. Entry Strategies Methods of entry. With rare exceptions, products just don't emerge in foreign markets overnight-a firm has to build up a market over time.

Several strategies, which differ in aggressiveness, risk, and the amount of control that the firm is able to maintain, are available: Exporting is a relatively low risk strategy in which few investments are made in the new country. A drawback is that, because the firm makes few if any marketing investments in the new country, market share may be below potential. Further, the firm, by not operating in the country, learns less about the market (What do consumers really want? Which kinds of advertising campaigns are most successful? What are the most effective methods of distribution?) If an importer is willing to do a good job of marketing, this arrangement may represent a 'win-win's ituation, but it may be more difficult for the firm to enter on its own later if it decides that larger profits can be made within the country. Licensing and franchising are also low exposure methods of entry-you allow someone else to use your trademarks and accumulated expertise.

Your partner puts up the money and assumes the risk. Problems here involve the fact that you are training a potential competitor and that you have little control over how the business is operated. For example, American fast food restaurants have found that foreign franchisers often fail to maintain American standards of cleanliness. Similarly, a foreign manufacturer may use lower quality ingredients in manufacturing a brand based on premium contents in the home country.

Contract manufacturing involves having someone else manufacture products while you take on some of the marketing efforts yourself. This saves investment, but again you may be training a competitor. Direct entry strategies, where the firm either acquires a firm or builds operations 'from scratch' involve the highest exposure, but also the greatest opportunities for profits. The firm gains more knowledge about the local market and maintains greater control, but now has a huge investment. In some countries, the government may expropriate assets without compensation, so direct investment entails an additional risk. A variation involves a joint venture, where a local firm puts up some of the money and knowledge about the local market.

1935 Theme: Marketing and Society BRIBERY IN INTERNATIONALMARKETINGDr Chad Perry Address for all correspondence: Dr Chad Perry Department of Marketing Faculty of Business University of Southern Queensland Toowoomba 4350 Australia Phone: 61 76 311 535 Fax: 61 76 312 811 Email: 1936 BRIBERY IN INTERNATIONALMARKETINGAbstractBribery in international markets is a fact of life that can lead to astonishment, bewilderment and misunderstanding for expatriates, at both organizational and personal levels. This article examines bribery from two viewpoints and tries to develop procedures to bridge them. The first viewpoint is relativist, accepting that different cultures have different ethical values and not imposing an expatriate's values onto another culture. The second viewpoint is universalist, averring that ethics apply anywhere in the world, and is based on psychological and economic grounds.

To resolve these two approaches, it is suggested that trying to understand the cultural forces that determine home and overseas' attitudes to the many forms of bribery, is a first step to adjustment. The next step is the development of a global or regional code of conduct that allows flexibility within a 'gray' zone. The result could be an evolving code that adapts to the many dimensions of bribery for each country's situation, in a manner that is a negotiation between the cultural, psychological and economic values of an expatriate's organisation and of local officials. Introduction International marketing is complex because foreign environments are different from home environments; for example, they differ on physical, cultural, legal political, economic, competitive and distributive dimensions (Ball and McCulloch 1996). Because of these environments, marketers can adapt parts of the marketing mix for each overseas country or region (Hoang 1997), for example, a company.