1111 2 International Marketing 3 4 5 6 7 8 9 10111 1 2 3 411 Marketing is a universal activity, regardless of the political, social, or economic systems of a particular country. 5 However, this doesn’t mean that consumers in different parts of the world should be satisfied in the same way. 6 This fourth edition of International Marketing has been written to enable managers and scholars to meet the 7 international challenges they face every day, and it provides the solid foundation required to understand the com- 8 plexities of marketing on a global scale. 9 The book has been fully updated with topical case studies, examples of contemporary marketing campaigns, 20111 the most relevant discussion topics as well as the most up-to-date theories, references, and research findings. It 1 is this combination of theory and practice that makes this textbook truly unique, presenting a fully rounded view 2 of the topic rather than an anecdotal or descriptive one alone. 3 The book includes chapters on: 4 I trade distortions and marketing barriers 5 I culture 6 I consumer behavior 7 I marketing research 8 I foreign market entry strategies 9 I product and branding strategies 30 I promotion and pricing strategies 1 I currencies and foreign exchange 2 3 Accessibly written and designed, this is the most international book on marketing available which can be used by 4 undergraduates and postgraduates the world over. As one of the most successful textbooks in its field, the book 5 has been adopted in the USA, Europe, Asia, Australia, and elsewhere, at the undergraduate, MBA, and Ph.D. 6 levels. A companion website provides additional material for lecturers and students alike. 7 8 Sak Onkvisit is Professor of Marketing at San José State University, USA. 9 John Shaw is Professor of Marketing at Providence College, USA. 40 41 42 43 44 45111 International 11 11 Marketing 2 3 4 Analysis and strategy 5 6 7 Fourth edition 8 9 10 11 1 Sak Onkvisit and John J. Shaw 1 2 3 41 5 6 7 8 9 20 11 1 1 2 3 4 5 6 7 8 9 30 1 2 3 4 First edition published by Charles Merrill in 1989 Second edition published by Macmillan in 1993 Third edition published by Prentice-Hall in 1997 Fourth edition 2004 Simultaneously published in the UK, USA and Canada by Routledge 29 West 35th Street, New York, NY 10001 and by Routledge 11 New Fetter Lane, London EC4P 4EE This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” Routledge is an imprint of the Taylor & Francis Group © 2004 Sak Onkvisit and John J. Shaw All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Onkvisit, Sak. International marketing : analysis and strategy / by Sak Onkvisit and John J. Shaw. – 4th ed. p. cm. Includes bibliographical references and indexes. 1. Export marketing. 2. Export marketing – Management. I. Shaw, John J. II. Title. HF1416.O55 2004 658.8′4 – dc22 2003023746 ISBN 0-203-93006-1 Master e-book ISBN ISBN 0–415–31132–2 (hbk) ISBN 0–415–31133–0 (pbk) 1111 2 3 4 5 6 7 8 9 10111 1 2 3 To my family and the memory of my grandparents 411 5 and Lawrence X. Tarpey, Sr. 6 7 and 8 9 Ann and Jonathan and the memory of Rebecca 20111 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 6 7 8 9 40 41 42 43 44 45111 1111 2 3 4 Contents 5 6 7 8 9 10111 1 2 3 4111 List of illustrations xiii 5 Preface xviii 6 7 1 NATURE OF INTERNATIONAL MARKETING: CHALLENGES AND OPPORTUNITIES 1 8 Process of international marketing 3 9 International dimensions of marketing 4 20111 Domestic marketing vs. international marketing 5 1 The applicability of marketing 6 Multinational corporations (MNCs) 7 2 The process of internationalization 15 3 Benefits of international marketing 15 4 Conclusion 18 5 Case 1.1 Sony: the sound of entertainment 19 6 7 2 TRADE THEORIES AND ECONOMIC DEVELOPMENT 22 8 Basis for international trade 23 9 Exchange ratios, trade, and gain 26 30 Factor endowment theory 27 The competitive advantage of nations 32 1 A critical evaluation of trade theories 33 2 Economic cooperation 39 3 Conclusion 46 4 Case 2.1 The United States of America vs. the United States of Europe 47 5 6 3 TRADE DISTORTIONS AND MARKETING BARRIERS 52 7 Protection of local industries 55 8 Government: a contribution to protectionism 57 9 Marketing barriers: tariffs 59 Marketing barriers: nontariff barriers 62 40 Private barriers 73 41 World Trade Organization (WTO) 74 42 Preferential systems 76 43 Some remarks on protectionism 77 44 Conclusion 78 45111 Case 3.1 Global war on drugs or tuna? 80 vii CONTENTS 4 POLITICAL ENVIRONMENT 84 Multiplicity of political environments 86 Types of government: political systems 89 Types of government: economic systems 92 Political risks 100 Privatization 102 Indicators of political instability 102 Analysis of political risk or country risk 104 Management of political risk 106 Measures to minimize political risk 107 Political insurance 112 Conclusion 114 Case 4.1 Hoa Ni Shoe Company 115 5 LEGAL ENVIRONMENT 121 Multiplicity of legal environments 122 Legal systems 124 Jurisdiction and extraterritoriality 125 Legal form of organization 128 Branch vs. subsidiary 129 Litigation vs. arbitration 131 Bribery 132 Intellectual property 139 Counterfeiting 146 Conclusion 148 Case 5.1 International auto safety and patents 149 Case 5.2 Bribery: a matter of national perspective 150 6 CULTURE 153 Culture and its characteristics 155 Influence of culture on consumption 156 Influence of culture on thinking processes 157 Influence of culture on communication processes 158 Cultural universals 159 Cultural similarities: an illusion 160 Communication through verbal language 160 Communication through nonverbal language 167 Subculture 178 Conclusion 181 Case 6.1 Cross-cultural marketing: a classroom simulation 182 7 CONSUMER BEHAVIOR IN THE INTERNATIONAL CONTEXT: PSYCHOLOGICAL AND SOCIAL DIMENSIONS 187 Perspectives on consumer behavior 190 Motivation 190 Learning 192 Personality 193 Psychographics 197 Perception 198 Attitude 202 Social class 203 viii CONTENTS 1111 Group 204 2 Family 205 3 Opinion leadership 206 4 Diffusion process of innovations 206 Conclusion 207 5 Case 7.1 Beneath Hijab: marketing to the veiled women of Iran 208 6 7 8 MARKETING RESEARCH AND INFORMATION SYSTEM 213 8 Nature of marketing research 214 9 Marketing information sources 216 10111 Secondary research 216 1 Primary research 218 Sampling 220 2 Basic methods of data collection 222 3 Measurement 224 4 Marketing information system 232 5 Conclusion 237 6 Case 8.1 B&R Bank: developing a new market 238 7 8 9 FOREIGN MARKET ENTRY STRATEGIES 243 Foreign direct investment (FDI) 245 9 Exporting 246 20111 Licensing 248 1 Management contract 252 2 Joint venture 252 3 Manufacturing 254 4 Assembly operations 257 5 Turnkey operations 260 6 Acquisition 260 7 Strategic alliances 262 Analysis of entry strategies 263 8 Foreign trade zones (FTZs) 265 9 Conclusion 267 30 Case 9.1 How to export houses 267 1 2 10 PRODUCT STRATEGIES: BASIC DECISIONS AND PRODUCT PLANNING 272 3 What is a product? 275 4 New product development 275 Market segmentation 277 5 Product adoption 278 6 Theory of international product life cycle (IPLC) 279 7 Product standardization vs. product adaptation 285 8 A move toward world product: international or national product? 297 9 Marketing of services 298 40 Conclusion 302 41 Case 10.1 McDonaldization 304 42 11 PRODUCT STRATEGIES: BRANDING AND PACKAGING DECISIONS 308 43 Branding decisions 310 44 Branding levels and alternatives 313 45111 Brand consolidation 323 ix CONTENTS Brand origin and selection 324 Brand characteristics 326 Brand protection 330 Packaging: functions and criteria 336 Mandatory package modification 336 Optional package modification 337 Conclusion 338 Case 11.1 Planet Ralph: the global marketing strategy of Polo Ralph Lauren 339 Case 11.2 Majorica S.A. vs. R. H. Macy 341 12 CHANNELS OF DISTRIBUTION 344 Direct and indirect selling channels 346 Types of intermediaries: direct channel 349 Types of intermediaries: indirect channel 351 Channel development 359 Channel adaptation 361 Channel decisions 361 Determinants of channel types 363 Distribution in Japan 367 Selection of channel members 368 Representation agreement and termination 369 Black market 371 Gray market 371 Distribution of services 378 Conclusion 380 Case 12.1 The international record industry 380 Case 12.2 Schwarzkopf, Inc. distribution network 382 13 PHYSICAL DISTRIBUTION AND DOCUMENTATION 386 Modes of transportation 388 Cargo or transportation insurance 394 Packing 394 Freight forwarder and customs broker 398 Documentation 399 Conclusion 410 14 PROMOTION STRATEGIES: PERSONAL SELLING, PUBLICITY, AND SALES PROMOTION 413 Promotion and communication 414 Promotion mix 416 Personal selling 416 Publicity 422 Sale promotion 426 Overseas product exhibitions 429 Conclusion 433 Case 14.1 Selling in the EU 434 Case 14.2 AllWorld Corporation 435 15 PROMOTION STRATEGIES: ADVERTISING 440 The role of advertising 441 Patterns of advertising expenditures 442 Advertising and regulations 442 x CONTENTS 1111 Advertising media 443 2 Standardized international