Core Concepts of Marketing by John Burnett - HTML preview

CHAPTER 6

MARKETING IN GLOBAL MARKETS

INTEGRATED MARKETING

•

HOOKING UP IN EUROPE

Everyone in Europe vacations in August, and ·business is

by Haij-Joannu). EasyJet.com bills itself as the "Web's favorite

booming at Internet Train, the perhaps inappropriately

airline" and markets itself as

discount airline with steep

named chain of Internet

in Florence, Italy. Just over the

incentives for buyers to transact

is

Ponte Vechio, the old bridge joining the Uffizi art gallery with

"the world's first

rent-a-car company," he adds.

Pallazo Pitti, there's a small storefront with 20 personal com-

He also plans to start easyMoney.com, offering discount mort-

puters. Inside, people from

the world peck away at

gages online.

their email, communicating with friends and acquaintances

Still, the challenges of European Internet marketing

from more than a hundred countries-for just 6,000 lira (about

are legion. Putting a B2C (business-to-consumer) or a B2B

$3) per half hour.

(business-to-business) site up in Europe is much more diffi-

Thousands of kilometers away in London, near Victoria

cult than in the United States. Among the many complexities

Station, the scene is much the same. Stelio's Haij-Joannu,

facing pan-European Web sites are the following:

Greek shipping tycoon and Internet entrepreneur, has created

• Developing a site for multiple languages

Easy EvelYthing, which he claims are the world's largest Inter-

• Developing a site for multiple currencies

net cafes. Haij-Joannu boasts nine Internet cafes ·with 3,900

• Providing multilingual customer service

PCs ready and available. "Easy Evel)'thing (easyeverything.

• Shipping across borders in Europe

com) is wonderful," reports Reade Fahs, CEO of London-

• Handling the value-added tax (VAT)

based First Tuesday, a global Internet networking organiza-

• Coping with sl1ict government regulatory issues

tion. "You call it an Internet

but it's much more. Most

• Recruiting and retaining people in markets that prohibit

Internet

are about the coffee with computers on the side.

or curtail stock options and other economic incentives

This is about 400 thin-screen computers in this very cool envi-

ronment with a little coffee on the side."

Sources: Henry Heilbrunn, "Interactive Marketing in Europe,"

Of course, the story in Europe goes far beyond email and

Direct Marketing, March 1998, pp.

Michael Krauss,

Internet cafes. They're just the top of the innovation revolu-

"Eurol?e Forges Ahead with Web Innovations," Marketing News,

tion sweeping Europe from the North to the South. Consider

August 14, 2000, p. 8; Michael Plogell and Felix Hofer, "No-nos

easyGroup, which owns

easyGroup includes

in Europe," Promo , April 2000, pp. 23-24.

easyJet.com and easyRentacar:com (all properties controlled

The Political/Legal Environment

The politicaVlegal environment abroad is quite different from that of the U.S . Most nations

desire to become self-reliant and to raise their status in the eyes of the rest of the world.

This is the essence of nationalism. The nationalistic spirit that exists in many nations has

led them to engage

practices that have been very damaging to other countries' market-

ing organizations. For example, foreign governments can inteivene in marketing programs

in the following ways:

• Contracts for the supply and delivery of goods and services

• The registration and enforcement of trademarks, brand names, and labeling

• Patents

• Marketing communications

• Pricing

• Product safety, acceptability, and environmenial issues

THE INTERNATIONAL MARKETING ENVIRONMENT

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Political Stability

Business activity tends to grow and thrive when a nation is politically stable. When a nation

is politically unstable, multinational firms can still conduct business profitably. Their strategies will be affected however. Most firms probably prefer to engage in the export business

rather than invest considerable sums of money

investments in foreign subsidiaries. Inven-

tories will be low and curre.1cy will be converted rapidly. The result is that consumers in

the foreign nation pay high prices, get less satisfactory products, and have fewer jobs.

M onetary Circumstances

The exchange rate of a particular nation 's currency represents the value of that currency in relation to that of another country. Governments set some exchange rates independently of

the forces of supply and demand. The forces of supply and demand set others. If a coun-

try's exchange rate is low compared to

that country's consumers must pay

higher prices on imported goods. While the concept of exchange rates appears relatively

simple, these rates fluctuate widely and often, thus creating high risks for exp0rters and

importers.

Trading Blocs and Agreements

companies make one-third of their revenues from products marketed abroad, in places

such as Asia and Latin

The North American Free Trade Agreement (NAFfA) fur-

ther boosts export sales by enabling companies to sell goods at lower prices because of reduced

tariffs.

Regional trading blocs represent a group of nations that join together and formally

agree to reduce trade barriers among themselves.

is such a bloc. Its members include

the U.S., Canada, and Mexico. No tariffs exist on goods sold between member nations of

However, a uniform tariff is assessed on products from countries not affiliated with

In addition , NAFTA seeks common

for labeling requirements, food addi-

tives, and package sizes.

One of the potentially interesting

of trade agreements like

is that many

products previously restricted

dumping laws, laws

to keep out foreign prod-

ucts, would be allowed to be marketed. The practice of dumping involves a company sell-

ing products in overseas markets at very low prices, one intention being to steal business

from local competitors. These laws were designed to prevent pricing practices that could

seriously harm local competition. The laws were designed to prevent large producers from

flooding markets with very low priced

gain a monopoly, and then raise orices to

very high levels. In 1993, about 40 nations, counting the European Community as one, had

anti-dumping legislation . Those in favor of agreements argue

antidumping laws penal-

ize those companies who are capable of competing in favor of those companies that are not

competitive.

Almost all the countries in the Western

have entered into one or more

regional trade agreements. Such agreements are designed to facilitate trade through the estab-

lishment of a free trade area customs union or customs market. Free trade areas and cus-

toms unions eliminate trade barriers between member countries while maintaining trade

barriers with nonmember countries. Customs Unions maintain common tariffs and rates for nonmember countries. A common market provides for harmonious fiscal and monetary poli-while free trade areas and customs unions do not. Trade agreements are becoming a

growing force for trade liberalization; the development of such agreements provides for

tremendous opportunities for U.S. companies doing

in Latin America and North

America.

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