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“The bottom of the pyramid markets are important even if they have been largely ignored by international marketers”. This is an idea expressed by C.K. Prahalad and referenced in your text book. Take a stand either agreeing with the statement or disagreeing. Give your rationale for your position (choose only one position, do not agree with both). Give relevant examples from international marketing to support your argument.No more than 230 words and use since word and good sentent
ch_9.ppt

ch_10.ppt

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International Marketing
15th edition
Philip R. Cateora, Mary C. Gilly, and John L. Graham
Objectives of
Developing Countries
9
• Industrialization is the fundamental objective of
most developing countries
• Economic growth is seen as the achievement of
social as well as economic goals




Better education
Better and more effective government
Elimination of many social inequities
Improvements in moral and ethical responsibilities
• Privatization is the norm and currently a major
economic phenomenon in industrialized as well as in
developing countries
Roy Philip
2
Marketing’s Contributions
9
• Marketing (or distribution) is not always
considered meaningful to those responsible for
planning
• Marketing is an economy’s arbitrator between
productive capacity and consumer demand
• The marketing process is the critical element in
effectively utilizing production resulting from
economic growth
• Marketing is instrumental in laying the
groundwork for effective distribution
Roy Philip
3
Marketing in a
9
Developing Country (1 of 3)
• Marketing efforts must be keyed to each
situation and custom tailored to each set of
circumstances
– A promotional program for a population that is
50% illiterate is vastly different from a program
for a population that is 95% literate
• In evaluating the potential in a developing
country, the marketer must look at two areas:
– Level of market development
– Demand in developing countries
Roy Philip
4
Marketing in a
9
Developing Country (2 of 3)
• Level of market development
– Marketer must evaluate existing level of market
development and receptiveness
– The more developed an economy, the greater the
variety of marketing functions demanded, and the
more sophisticated and specialized the institutions
become to perform marketing functions
– Part of the marketer’s task when studying an economy
is to determine what in the foreign environment will
be useful and how much adjustment will be necessary
to carry out stated objectives
Roy Philip
5
Marketing in a
9
Developing Country (3 of 3)
• Demand in developing countries – Three distinct
kinds of markets in each country
• Traditional rural/agricultural sector
• Modern urban/high-income sector
• Transitional sector usually represented by lowincome urban slums
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6
Big Emerging Markets (BEMs)
(1 of 2)
9
• The U.S. Department of Commerce estimates that over 75% of
the expected growth in world trade over the next two decades
will come from the more than 130 developing and newly
industrialized countries
• Big emerging markets share important traits








Are all geographically large
Have significant populations
Represent sizable markets for a wide range of products
Have strong rates of growth or the potential for significant growth
Have undertaken significant programs of economic reform
Are of major political importance within their regions
Are regional economic drivers
Will engender further expansions in neighboring markets as the
grow
Roy Philip
7
Big Emerging Markets (BEMs)
(2 of 2)
9
• Prominent BEMs include India, China, Brazil,
Mexico, Poland, Turkey, and South Africa
• Different from developing countries in that they
import more than smaller markets and more than
economies of similar size
• Because many BEMs lack modern infrastructure,
much
of the expected growth will be in industrial sectors
such as, information technology, environmental
technology, transportation, energy technology,
healthcare technology, and financial services
Roy Philip
8
The Americas – NAFTA
9
• North American Free Trade Agreement (NAFTA –
Canada, Mexico, and the United States)
– A single market of 360 million people with a $6 trillion GNP
– Ratified and became effective in 1994
– Requires the removal of all tariffs and barriers to trade over
15 years
– All tariff barriers dropped in 2008
– Improves all aspects of doing business within North America
– Creates one of the largest and richest markets in the world
– Job losses have not been as drastic as once feared, in part
because companies have established maquiladora plants in
anticipation of the benefits from NAFTA
Roy Philip
9
The Americas – DR-CAFTA
9
• United States – Central American Free Trade
Agreement-Dominican Republic Free Trade
Agreement (DR-CAFTA – Costa Rica,
Dominican Republic, El Salvador,
Guatemala, Honduras, Nicaragua, and
the United States)
• Aimed at increasing trade and employment
between the seven countries by reducing tariffs
Roy Philip
10
The Americas – MERCOSUR
9
• Southern Cone Free Trade Area (MERCOSUR
– Argentina, Bolivia, Brazil, Chile,
Paraguay, and Uruguay)
• The Treaty of Asuncion, which provided the
legal basis for MERCOSUR, was signed in 1991
and formally inaugurated in 1995
• Second-largest common-market agreement in
the Americas after NAFTA
• Market of 22o million with a combined GDP of
$1 trillion
Roy Philip
11
The Americas – Latin
American Progress
9
• Most of the countries in Latin America have moved
from military dictatorships to democratically
elected governments in the last three decades
• Protectionism has given way to privatization and
other economic, monetary, and trade policy
reforms
• Because of its size (population of 600 million is
nearly twice that of the United States and 100
million more than the European Community) and
resource base, the Latin American market has
always been considered to have great economic
and market possibilities
Roy Philip
12
The Americas – Latin American
Economic Cooperation
9
• Latin American Integration Association (LAIA)
• Its long term goal is a gradual and progressive
establishment of a Latin American common market
• It allows members to establish bilateral trade
agreements among member countries
• Caribbean Community and Common Market
(CARICOM)
• Aim is to achieve true regional integration even
having a common currency for all members
• It continues to seek stronger ties with other groups
in Latin America and has singed a trade agreement
with Cuba
Roy Philip
13
Strategic Implications for
Marketing (1 of 2)
9
• A vast population of the emerging market are viable
customers with expanding income
• As a country develops
– Incomes change
– Population concentrations shift
– Expectations for a better life adjust to higher
standards
– New infrastructures evolve
– Social capital investments made
• When incomes rise, new demand is generated at all
income levels for everything from soap to cars
Roy Philip
14
Strategic Implications for
Marketing (2 of 2)
9
• The “$10,000 Club” is group of consumers with
homogenous demands who share a common
knowledge of products and brands
• If a company fails to appreciate the strategic
implications of the $10,000 Club, it will miss the
opportunity to participate in the world’s fastestgrowing global consumer segment
• Markets are changing rapidly, and identifiable
market segments with similar consumption patterns
are found across many countries
Roy Philip
15
International Marketing
15th edition
Philip R. Cateora, Mary C. Gilly, and John L. Graham
Geographic and Temporal Proximity
and Cultural Factors
10
• Geographic and temporal proximity
– Recent research demonstrates that differences across
time zones are more important than physical distances
– Trade tends to travel more easily in north-south
directions then it did in ancient times
– Countries that are widely separated geographically have
major barriers to overcome in attempting economic
fusion
• Cultural factors
– The more similar the culture, the more likely a market is
to succeed because members understand the outlook
and viewpoints of their colleagues
Roy Philip
2
Patterns of
Multinational Cooperation (1 of 3)
10
• Regional cooperation groups
– Governments agree to participate jointly to
develop basic industries beneficial to each
economy
• Free trade area
– An agreement between two or more countries
• To reduce or eliminate customs duties and
nontariff trade barriers among partner
countries
• Members maintain individual tariff schedules
for external countries
Roy Philip
3
Patterns of
Multinational Cooperation (2 of 3)
10
• Customs union
– Enjoys free trade area’s reduced or eliminated
internal tariffs
– Adds a common external tariff on products
imported from countries outside the union
• Common market
– Eliminates all tariffs and other restrictions on
internal trade,
– Adopts a set of common external tariffs
– Removes all restrictions on the free flow of capital
and labor among member nations
Roy Philip
4
Patterns of
Multinational Cooperation (3 of 3)
10
• Political union
– Involves complete political and economic
integration, either voluntary or enforced
– Commonwealth – a voluntary organization that
provides for the loosest possible relationship
classified as economic integration
– Two new political unions came into existence in
the 1990s
• The Commonwealth of Independent States
(CIS)
• The European Union (EU)
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5
European Union
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10
6
Economic and
Monetary Union (EMU)
10
• It established the parameters of the creating of a
common currency for the EU, the “Euro” and
established a timetable for its implementation
• In 2002, a central bank was established, conversion
rates were fixed, circulation of Euro bank notes and
coins was completed and the legal tender status of
participating members’ bank notes and coins was
cancelled
• Beginning January 1, 2001, Austria, Belgium,
Finland, France, Germany, Greece, Ireland, Italy,
Luxemburg, the Netherlands, Portugal, and Spain
employed the Euro
Roy Philip
7
Expansion of the
European Union
10
• http://europa.eu/abc/european_countries/eu_me
mbers/index_en.htm – shows the member states of
the European Union
• Ten new countries were added in 2004 and as of
today the EU boasts 27 nations with 4 more awaiting
membership
• In 2007, the EU celebrated its golden anniversary
and most would agree that it has been a tremendous
success, delivering peace and prosperity to hundreds
of millions of people that previously had lived with
frequent wars and accompanying economic and
social hardships
Back
Roy Philip
8
Eastern Europe
and the Baltic States
10
• Eastern Europe and the Baltic states, satellite nations
of the former Soviet Union, have moved steadily
toward establishing postcommunist market reforms
• New business opportunities are emerging almost daily,
and the region is described as anywhere from chaotic
with big risks to an exciting place with untold
opportunities
• Countries in both these regions continue to adjust to
the political, social, and economic realities of changing
from the restrictions of a Marxist-socialist system to
some version of free markets and capitalism
Roy Philip
9
Eastern Europe
10
• It is dangerous to generalize about eastern Europe
because each of the countries has its own economic
problems and is at a different stage in its evolution from
a socialist to a market-driven economy
• Most eastern European countries are privatizing stateowned enterprises, establishing free market pricing
systems, relaxing import controls and wrestling with
inflation
• The Czech Republic has fared better than other eastern
European countries; Yugoslavia has been plagued with
ethnic violence; some countries have become members
of the Organization for Economic Cooperation and
Development (OECD)
Roy Philip
10
The Baltic States
10
• Estonia, Latvia, and Lithuania are prime examples of the
difference that right policies can make. All three
countries started off with roughly the same legacy of
inefficient industry and Soviet-style command
economies
• Since 1991, Estonia’ s economic reform policy has led to a
liberalized, nearly tariff-free, open-market economy
• The most significant hurdle for U.S. trade and
investment has been government bureaucracy,
corruption, and organize crime, found in Latvia and
Lithuania
• All three countries are members of WTO and, as of 2004,
EU members
Back
Roy Philip
11
The Commonwealth
10
of Independent States (CIS)
• Formed after aborted coup against Gorbachev and
dissolution of USSR
– Included the remaining 12 republics after the
formation of the Baltic States
• The CIS is a loose economic and political alliance
with open borders but no central government
• The 12 members of the CIS share a common history
of central planning
– Their close cooperation could make the change to a
market economy less painful
– Differences over economic policy, currency reform,
and control of the military may break them apart
Roy Philip
12
Regional Groups – Africa
10
• Economic Community of West African States
(ECOWAS) – 15-nation group
– Plagued with financial problems, conflict within
the group, and inactivity
• Southern African Development Community
(SADC)

Most advanced and viable of Africa’s regional
organizations
• East African Community (EAC)
Roy Philip
13
Opportunities
10
• Large markets are particularly important to
businesses accustomed to mass production and
mass distribution because of the economies of
scale and marketing efficiencies that can be
achieved
• Most multinational groups have coordinated
programs to foster economic growth as part of
their cooperative efforts so as to take advantage
of increasing purchasing power, improving
regional infrastructure, and fostering economic
development
Roy Philip
14
Marketing Mix Implications
10
• In the past, companies often charged different
prices in different European markets such as
Colgate Palmolive
• As long as products from lower-priced markets
could not move to higher-priced markets,
differential price schemes worked as in the case
of Badedas Shower Gel
• Companies initiating uniform pricing policies
are reducing the number of brands to focus on
advertising and promotion efforts as with Nestle
and Unilever
Roy Philip
15

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