CH-5 Developing a Global Vision – MKTG: Principles of Marketing : Book Guide

CHAPTER 5 Developing a Global Vision This chapter begins with the learning outcome summaries, followed by a set of lesson plans for you to use to deliver the content in Chapter 5. Lecture (for large sections) on page 3 Company Clips (video) on page 4 Group Work (for smaller sections) on page 6 Review and Assignments begin on page 7 • Review questions • Application questions • Application exercise • Ethics exercise • Video Assignment • Case Assignment – P&G, Unilever, Panasonic Great Ideas for Teaching Marketing from faculty around the country begin on page 18 We’ve also created integrated cases that cover the topics in Chapters 1 through 5. • Nestle on page 23 • Telekom Austria on page 27 LEARNING OUTCOMES 5-1 Discuss the importance of global marketing Businesspeople who adopt a global vision are better able to identify global marketing opportunities, understand the nature of global networks, create effective global marketing strategies, and compete against foreign competition in domestic markets. Large corporations have traditionally been the major global competitors, but more and more small businesses are entering the global marketplace. Despite fears of job losses to other countries with cheaper labor, there are many benefits to globalization, including the reduction of poverty and increased standards of living. 5-2 Discuss the impact of multinational firms on the world economy Multinational corporations are international traders that regularly operate across national borders. Because of their vast size and financial, technological, and material resources, multinational corporations have great influence on the world economy. They have the ability to overcome trade problems, save on labor costs, and tap new technology. There are critics and supporters of multinational corporations, and the critics question the actual benefits of bringing capital-intensive technology to impoverished nations. Many countries block foreign investment in factories, land, and companies to protect their economies. Some companies presume that markets throughout the world are more and more similar, so some global products can be standardized across global markets. 5-3 Describe the external environment facing global marketers Global marketers face the same environmental factors as they do domestically: culture, economic and technological development, the global economy, political structure and actions, demography, and natural resources. Cultural considerations include societal values, attitudes and beliefs, language, and customary business practices. A country’s economic and technological status depends on its stage of industrial development, which, in turn, affects average family incomes. A global marketer today must be fully aware of the intertwined nature of the global economy. The political structure is shaped by political ideology and such policies as tariffs, quotas, boycotts, exchange controls, trade agreements, and market groupings. Demographic variables include the size of a population and its age and geographic distribution. A shortage of natural resources also affects the external environment by dictating what is available and at what price. 5-4 Identify the various ways of entering the global marketplace Firms use the following strategies to enter global markets, in descending order of risk and profit: direct investment, joint venture, contract manufacturing, licensing and franchising, and exporting. 5-5 List the basic elements involved in developing a global marketing mix A firm’s major consideration is how much it will adjust the four Ps—product, promotion, place (distribution), and price—within each country. One strategy is to use one product and one promotion message worldwide. A second strategy is to create new products for global markets. A third strategy is to keep the product basically the same but alter the promotional message. A fourth strategy is to alter the product slightly to meet local conditions. 5-6 Discover how the Internet is affecting global marketing Simply opening an e-commerce site can open the door for international sales. International carriers, such as UPS, can help solve logistics problems. Language translation software can help an e-commerce business become multilingual. Yet cultural differences and old-line rules, regulations, and taxes hinder rapid development of e-commerce in many countries. Global marketers use social media not only for understanding consumers but also to build their brands as they expand internationally. TERMS buyer for export  exporting  joint venture  capital intensive  floating exchange rates  licensing  contract manufacturing  General Agreement on Tariffs and Trade (GATT)  Mercosur  countertrade  global marketing standardization  multidomestic strategy  direct foreign investment  global marketing  multinational corporation  Dominican Republic-Central America Free Trade Agreement (CAFTA-DR)  global vision  North American Free Trade Agreement (NAFTA)  dumping  gross domestic product (GDP)  outsourcing European Union (EU)  Group of Twenty (G-20)  Uruguay Round  exchange rate  in shoring World Bank  export agent  International Monetary Fund (IMF)  World Trade Organization (WTO)  export broker  LESSON PLAN FOR LECTURE Brief Outline and Suggested PowerPoint Slides: Learning Outcomes and Topics PowerPoint Slides LO1 Discuss the importance of global marketing 5-1 Rewards of Global Marketing 1: Developing a Global Vision 2: Learning Outcomes 3: Learning Outcomes 4: Rewards of Global Marketing and the Shifting Global Business Landscape 5: Rewards of Global Marketing 6: Importance of Global Marketing to the U.S. 7: Job Outsourcing and In shoring 8: Benefits of Globalization LO2 Discuss the impact of multinational firms on the world economy 5-2 Multinational Firms 9: Multinational Firms 10: Stages of Global Business Development 11: Are Multinationals Beneficial? 12: Global Marketing Standardization LO3 Describe the external environment facing global marketers 5-3 External Environment Facing Global Marketers 13: External Environment Facing Global Marketers 14: External Environment Facing Global Marketers 15: Culture 16: Culture 17: Economic Development 18: The Global Economy 19: Economic Development 20: Political Structure and Actions 21: Legal Considerations 22: Political and Legal Considerations 23: Doha Round 24: Political and Legal Considerations 25: Exhibit 5.1: Members of G-20 26: Demographic Makeup 27: Natural Resources LO4 Identify the various ways of entering the global marketplace 5-4 Global Marketing by the Individual Firm 28: Global Marketing by the Individual Firm 29: Why “Go Global”? 30: Exhibit 5.2: Risk Levels for Five Methods of Entering the Global Marketplace 31: Entering the Global Marketplace 32: Export Intermediaries LO5 List the basic elements involved in developing a global marketing mix 5-5 The Global Marketing Mix 33: The Global Marketing Mix 34: The Global Marketing Mix 35: Product and Promotion 36: Place (Distribution) 37: Pricing 38: Exchange Rates 39: Dumping 40: Dumping 41: Countertrade LO6 Discover how the Internet is affecting global marketing 6.1 The Impact of the Internet 42: The Impact of the Internet 43: The Impact of the Internet 44: Social Media 45: Chapter 5 Video 46: Part 1 Video Suggested Homework: • The end of this chapter contains an assignment on the Nederlander Organization video and the Nissan case. • This chapter’s online study tools include flashcards, visual summaries, practice quizzes, and other resources that can be assigned or used as the basis for longer investigations into marketing. LESSON PLAN FOR VIDEO Company Clips Segment Summary: The Nederlander Organization The Nederlander Organization is a theatre management company that manages a global network of Broadway style theatres. In this video clip, top management discusses how the Nederlander Organization grew from a small mid-west theatre management company into a global brand that helps successful producers move from Broadway to a global tour circuit. These teaching notes combine activities that you can assign students to prepare before class, that you can do in class before watching the video, that you can do in class while watching the video, and that you can assign students to complete on their own after watching the video. During the viewing portion of the teaching notes, stop the video periodically where appropriate to ask students the questions or perform the activities listed on the grid. You may even want to give the students the questions before starting the video and have them think about the answer while viewing the segment. That way, students will be engaged in active viewing rather than passive viewing. PRE-CLASS PREP FOR YOU: PRE-CLASS PREP FOR YOUR STUDENTS: • Preview the Company Clips video segment for Chapter 5. This exercise reviews concepts for LO1, LO3, and LO5. • Review your lesson plan. • Make sure you have all of the equipment needed to show the video to the class, including the DVD and a way to project the video. • You can also stream the video HERE • Have students familiarize themselves with the following terms and concepts: global marketing, global vision, and multinational corporation. • Have students explore the various parts of the Nederlander Organization’s Web site: http://www.nederlander.com/ VIDEO REVIEW EXERCISE ACTIVITY Warm Up Begin by asking your students the following questions: • Without looking, which of you knows (or is confident that you know) where your backpack was made? Where? • OK, who was right? Who was wrong? • “Who cares where their backpack was made?” [For students who raise their hands to the last question, push them to answer why.] In-class Preview • Segue into a lecture that centers around these questions: “What is global vision?” and “Why is global marketing imperative for businesses?” • Review the negatives and benefits of global trade and what it means to be a multinational company. • Illustrate the factors of the external environment • Review the Company Clips questions with students. They should be prepared to answer them after viewing the video. Viewing (Solutions below.) 1. Is the Nederlander Organization a multinational company? Explain. 2. Which environmental factor(s) facing all global marketers is the Nederlander Organization confronting as it begins to expand into foreign markets? 3. Outline the Nederlander Organization’s global marketing mix. Follow-up • Spark a debate in class by asking students to respond to the following statement: “Any company can benefit by going global.” • Have students use the Internet or Yellow Pages to identify a retail store with international partners or shipping policies. Students should then e-mail or call the company and ask the manager or sales personnel to describe a difficulty they have overcome in implementing their global marketing strategy. Ask students to be prepared to share their research at the next class meeting. Solutions for Viewing Activities: 1. Is the Nederlander Organization a multinational company? Explain. Answer: The Nederlander Organization has direct investment in the U.K., where it owns theatres and acts as a producer and landlord for plays and concerts. Nederlander must choose successful Broadway shows to produce and lease the theatres to, which depends on the company understanding what translates will into British culture. 2. Which environmental factor(s) facing all global marketers is the Nederlander Organization confronting as it begins to expand into foreign markets? Answer: The economic development, culture, and demography of some international markets make it less feasible to consider producing certain shows there. 3. Outline the Nederlander Organization’s global marketing mix. Answer: By expanding into the United Kingdom, Nederlander did not face a language barrier or much of a cultural barrier, so their product, place, and promotion mix are similar to that in the United States and, to be cost-effective to do business with the United Kingdom, price points must be acceptable to both parties. LESSON PLAN FOR GROUP WORK In most cases, group activities should be completed after some chapter content has been covered, probably in the second or third session of the chapter coverage. (See the “Lesson Plan for Lecture” above.) For “Class Activity – Reverse International Marketing,” divide the class into small groups of four or five people. Provide the information and the questions asked by the class activity. Class Activity – “Reverse” International Marketing The outcome of this exercise is to get students to understand first-hand the challenges of marketing internationally. Students won’t understand what they’re doing wrong if they take an American product and hypothetically market it to a foreign country. So, they will do “reverse” international marketing by taking a foreign product and marketing it in the United States. (As U.S. consumers themselves, they’ll understand what foreign firms have done wrong in marketing their products in the United States.) Before this class session, you should shop for some products made by foreign firms. You can either have friends in foreign countries send you these products or buy them yourself at a local grocery store that sells foreign products. Possibilities include ethnic grocery stores (such as Latino stores or Japanese food stores) or chains such as Cost Plus or Pier One that import inexpensive products from other countries. When selecting products, try to get ones that are amusing and have obviously been poorly marketed in terms of packaging, brand name, or general lack of appeal to U.S. consumers. Bring the items to class. Divide the class into groups of four or five students. Give each group one of the products and explain that they are the foreign marketers of these products and should put together a strategy for marketing the products in the United States. They have the opportunity to keep the product, package, and so forth, the way it is or to change it completely. They should consider the additional costs associated with changing them. The groups should create strategies in the following areas: 1. Target market: Who should be the target market in the United States? What variables will be used to select the target market? 2. Product: Will any adaptation be made to the product features? What about the packaging? The brand name? 3. Price: What is a good retail price for the product? 4. Promotion: How will the product be communicated to the target market? What promotional message will be used? What media will be used to reach the target market? 5. Distribution: Where will the product be sold? After each group is finished, have them share their ideas with the class. You’ll be surprised at how creative and entertaining this exercise is! REVIEW AND ASSIGNMENTS FOR CHAPTER 5 REVIEW QUESTIONS 1. What is meant by “having a global vision?” Why is it important? Answer: A global vision allows businesspeople to identify global marketing opportunities, understand the nature of global networks, and meet foreign competition head-on in domestic markets. Having a global vision could mean the difference between survival and failure for some firms. For U.S. companies exporting goods, it helps to reduce the trade deficit and the balance of payments problem. 2. Isolationists have suggested that the United States would be much better off economically and politically if we just “built a wall” around the country and didn’t deal with outsiders. Do you agree? Why or why not? Answer: Answers will obviously vary, but an interesting answer might include a historical perspective of what happened when we became isolationist in the 1930s, as economic and political trouble was brewing in Europe. Check to see if students tie political and social issues with trade issues in their answers. While isolationism might seem beneficial for protecting local industries and reducing foreign influence, it would likely harm the U.S. economically and politically. Global trade fuels economic growth, innovation, and job creation. Engaging with other countries fosters diplomacy, enhances security, and addresses global challenges like climate change and pandemics. A complete withdrawal could lead to isolation, reduced influence, and missed opportunities for collaboration and development. Balancing national interests with global engagement is crucial for long-term prosperity. 3. What are the major barriers to international trade? Explain how government policies may be used to either restrict or stimulate global marketing. Answer: Many firms do not have the financial resources for direct investment or are not willing to take the risk involved in committing those financial resources. In some cases, the firm does not have the necessary knowledge and experience to enter the global marketplace directly and really needs a partner or intermediary. Some countries have restrictions for foreign businesses, making it difficult to trade or manufacture product in those countries. In some developing countries the infrastructure to support a traditional channel of distribution does not exist. For example, a company like Procter & Gamble might have to act as its own wholesaler and even deliver the product in China. Other countries, such as Japan, have a very established and quite complex system of distribution that is difficult for newcomers to break into. In this case, a firm may have to look for very creative ways to penetrate a market. In these cases the government has the ability to make distribution by foreign companies very difficult. 4. Why is direct investment considered risky? Answer: Students’ answers should reflect an understanding that the risks of investment are high because direct investors have either a controlling interest or a large minority interest in their investment. Direct investment is considered risky because it involves committing significant capital to a foreign market, which can be affected by political instability, economic fluctuations, currency risks, and regulatory changes. Additionally, there's the potential for cultural misunderstandings and challenges in managing operations remotely. These factors can lead to unexpected losses or reduced returns on investment. 5. Explain how exchange rates can affect a firm’s global sales. Answer: The exchange rate is the price of one country’s currency in terms of another country’s currency. If a country’s currency appreciates, less of that country’s currency is needed to buy another country’s currency. If a country’s currency depreciates, more of that currency will be needed to buy another country’s currency. If, say, the U.S. dollar depreciates relative to the Japanese yen, U.S. residents have to pay more dollars to buy Japanese goods. As the dollar depreciates, the prices of Japanese goods rise for U.S. residents, so they buy fewer Japanese goods—thus, U.S. imports decline. Or seen in another way, sales of Japanese goods in the United States decline. At the same time the dollar depreciates relative to the yen, the yen appreciates relative to the dollar. This means prices of U.S. goods fall for the Japanese, so they buy more U.S. goods—and U.S. exports (i.e., sales in foreign markets) rise. APPLICATION QUESTIONS 1. Rubbermaid, the U.S. manufacturer of kitchen products and other household items, is considering moving to global marketing standardization. What are the pros and cons of this strategy? Answer: Although students’ answers will vary, they should address some of the following points. Promoting standardized products globally is a recent marketing trend that offers significant advantages including economies of scale in manufacturing and promotion. However, global marketing standardization appears to have significant limitations as well. Few, if any, products have been marketed successfully without at least minor modifications to the marketing mix. Furthermore, even multinational corporations that have adopted the global marketing standardization concept still market the majority of their products locally or regionally. Thus it seems that although world markets do seem to be becoming more alike, many substantial differences in culture, lifestyle, and taste still exist among nations. Pros of Global Marketing Standardization: 1. Cost Efficiency: Reduced costs through economies of scale in production and marketing. 2. Consistent Brand Image: A unified brand message can strengthen recognition and trust globally. 3. Simplified Operations: Streamlined processes and reduced complexity in managing multiple campaigns. Cons of Global Marketing Standardization: 1. Cultural Differences: Ignoring local preferences can lead to misalignment with consumer needs and reduced effectiveness. 2. Market Competition: Local competitors may better cater to specific market demands and preferences. 3. Regulatory Challenges: Different countries may have varying regulations that require adaptations to products or marketing strategies. 2. Do you believe that multinationals are beneficial or harmful to developing nations? Why? What could foreign governments do to make them more beneficial? Answer: Students’ opinions will vary, though most students in a business class such as marketing tend to support global trade. Regardless of their opinions, students should list the pros and cons of multinational involvement in foreign countries. Some of the benefits include: 1) creation of new jobs for foreign nationals, 2) improvement of the economy, 3) providing needed products or services to the local population, 4) increase in the overall standard of living, and 5) providing technology to the developing nation. Some harmful effects include: 1) potential exploitation of low-wage workers in developing countries, 2) potential economic “power” over the people (many developing nations were once colonies, and the people may feel that a foreign country is coming to take over), 3) change in cultural traditions with westernized ways, 4) increase in industrialization and increased stress, and 5) pollution that is inherent to industrialization. Foreign governments can impose strict policies on multinationals in order to make them adhere to local regulations and cultural norms, such as requiring partial local ownership of the firm or maintaining a minimum wage. Multinationals can be both beneficial and harmful to developing nations. Benefits: • Economic Growth: They create jobs and boost local economies. • Technology Transfer: They introduce advanced technologies and practices. • Infrastructure Development: Their presence often leads to improved local infrastructure. Harmful Aspects: • Exploitation: They may exploit labor and resources. • Market Disruption: Local businesses can struggle to compete. • Environmental Concerns: Operations may lead to environmental degradation. To enhance benefits, foreign governments could: • Implement stronger labor laws and environmental regulations. • Promote partnerships between multinationals and local businesses. • Ensure fair taxation to reinvest in local communities. 3. Many marketers now believe that teenagers in developed countries are becoming “global consumers.” That is, they all want and buy the same goods and services. Do you think this is true? If so, what has caused the phenomenon? Answer: Many of your students may argue this is true, largely because of the prevalence of American movies and television shows. Also most of the popular brands from the United States are exported to countries all over the world. Yes, many marketers believe teenagers in developed countries are becoming "global consumers." This trend can be attributed to several factors: 1. Digital Connectivity: The internet and social media have made it easy for teens to access global brands and trends, fostering a shared culture. 2. Cultural Exchange: Exposure to international media, such as movies, music, and fashion, influences preferences and creates a desire for similar products. 3. Brand Power: Global brands like Nike and Apple have established strong identities that resonate with youth, leading to widespread demand. 4. Peer Influence: Teenagers often seek validation from their peers, driving them to adopt popular products that are recognized worldwide. Overall, these factors contribute to a more homogenized consumer culture among teenagers across developed countries. 4. Renault and Peugeot dominate the French market but have no presence in the U.S. market. Why do you think that this is true? Answer: Students may argue that those car manufacturers have never modified their vehicles to appeal to the U.S. consumer. Others may say the French car companies have had no interest in entering such a crowded and tough market. It can also be argued that our safety and pollution laws are too restrictive for a foreign firm to enter easily. Renault and Peugeot's absence in the U.S. market can be attributed to several factors: 1. Market Competition: The U.S. automotive market is highly competitive, dominated by established American brands and foreign manufacturers like Toyota and Volkswagen. 2. Regulatory Challenges: Strict safety and emission standards in the U.S. can complicate entry for foreign automakers, requiring significant adjustments to their vehicles. 3. Brand Recognition: Both brands lack significant consumer awareness in the U.S., making it challenging to gain market share without substantial marketing investment. 4. Strategic Focus: Renault and Peugeot may prioritize their resources on European and emerging markets where they have a stronger foothold and brand loyalty. 5. Historical Context: Past attempts by European manufacturers to enter the U.S. market have faced difficulties, leading to a cautious approach regarding new entries. 5. Suppose your state senator has asked you to contribute a brief article to her constituents’ newsletter that answers the question “Will there ever be a ‘United States of Europe?’” Write a draft of your article, and include reasons why or why not. Answer: Students who make a case for the “United States of Europe” may argue that the Europeans will come to agreement because they see the necessity of a strong, united front to be competitive in world trade. At least in the arena of business trade, the European Union will behave as a “United States of Europe,” eliminating the barriers at the borders of the member countries. However, the case for the other side is very strong. With fifteen nations, nine different languages, and a dizzying array of cultures and customs, the European Union cannot hope to be as unified a marketplace for goods as the United States is today. The largest barrier to a marketer wanting to use global marketing standardization will be the diversity of cultures and their differing needs. Current events suggest you will receive few responses suggesting that there could be a U.S of Europe. Will There Ever Be a ‘United States of Europe’? As discussions about a potential "United States of Europe" continue, it's important to consider both the possibilities and challenges of such a union. Reasons for a United States of Europe: 1. Economic Integration: The European Union (EU) has already established significant economic cooperation, promoting trade and investment among member states. A more unified approach could enhance economic stability and growth. 2. Political Collaboration: Shared challenges, such as climate change and security threats, may encourage deeper political integration, fostering a collective response to global issues. 3. Cultural Unity: A growing sense of European identity among citizens could drive demand for greater cooperation and unity. Reasons Against a United States of Europe: 1. National Sovereignty: Many member states prioritize their sovereignty and are reluctant to cede power to a central authority, fearing loss of cultural identity and local governance. 2. Diverse Interests: Europe's diverse political, economic, and social landscapes make it challenging to reach consensus on key issues, which can hinder integration efforts. 3. Public Sentiment: Rising nationalism and skepticism towards the EU in several countries indicate that many citizens prefer to maintain independence rather than pursue a unified state. In conclusion, while a "United States of Europe" remains an intriguing concept, significant hurdles exist. Future developments will depend on the evolving political landscape, public opinion, and the willingness of member states to embrace deeper integration. As we watch these dynamics unfold, it’s clear that the idea of a united Europe is a complex and ongoing debate. 6. Divide into six teams. Each team will be responsible for one of the following industries: entertainment; pharmaceuticals; computers and software; financial, legal, or accounting services; agriculture; and textiles and apparel. Interview one or more executives in each of these industries to determine how the Uruguay Round and NAFTA have affected and will affect their organizations. If a local firm cannot be contacted in your industry, use the library and the Internet to prepare your report. Answer: Industry Reports on Uruguay Round and NAFTA Impact 1. Entertainment • Impact: Expanded access to global markets; increased competition from foreign media. • Action: Interview executives from film studios or streaming services. 2. Pharmaceuticals • Impact: Strengthened IP rights; increased market access, but higher drug prices. • Action: Speak with pharmaceutical company executives. 3. Computers and Software • Impact: Broader markets for sales; increased competition; enhanced cross-border collaboration. • Action: Engage with tech firm executives. 4. Financial, Legal, or Accounting Services • Impact: More cross-border service opportunities; regulatory compliance challenges. • Action: Interview executives from financial institutions. 5. Agriculture • Impact: Increased exports; competition and regulatory concerns for local farmers. • Action: Talk to agribusiness executives. 6. Textiles and Apparel • Impact: Shifted manufacturing; competitive pricing; increased North American exports. • Action: Interview industry executives about sourcing and trade impacts. Conclusion Gather insights from each industry and compile a report highlighting qualitative and quantitative findings on the effects of these trade agreements. 7. Candartel, an upscale manufacturer of lamps and lampshades in the United States, has decided to go global. Top management is having trouble deciding how to develop the market. What are some entry options for the firm? Answer: One way would be to establish relationships with international lighting wholesalers. Another would be to use export agents that call on retailers in other countries. Students should be able to think of several other practical options, such as licensing or even a joint venture. Candartel has several entry options for going global: 1. Exporting: Selling products directly to foreign markets, either through local distributors or online platforms. 2. Joint Ventures: Partnering with local firms to share resources, knowledge, and market access. 3. Franchising: Allowing local businesses to operate under the Candartel brand, which can reduce risk and investment. 4. Licensing: Granting rights to foreign manufacturers to produce and sell Candartel products, generating royalties without substantial investment. 5. Direct Investment: Establishing manufacturing or retail operations in foreign markets for greater control and market presence. Each option has its own benefits and risks, so careful consideration of market conditions and company goals is essential. 8. What are some of the advantages and potential disadvantages of entering a joint venture? Answer: Advantages of joint ventures over other forms of expansion are: 1) they can be relatively inexpensive, since you share costs with your partner; 2) you can gain expertise in the area you lack, such as knowledge of the local culture and access to distribution systems; and 3) both parties can gain valuable skills from each other. Disadvantages are: 1) they can be very risky, as they can be subject to a takeover by the partner or the government; 2) partners may not agree on strategies; 3) you don’t have total control over the venture; and 4) you share profits. 9. The sale of cigarettes in many developed counties either has peaked out or is declining. However, the developing markets represent major growth markets. Should U.S. tobacco companies capitalize on this opportunity? Answer: Students should argue the ethical implications of exporting cigarettes. Some will argue that it makes sense to move to those markets, since smoking is more acceptable and it is not illegal to import cigarettes. Others will argue that it is immoral to market cigarettes to countries where facts about the dangers of smoking are not clearly communicated. U.S. tobacco companies should carefully consider the ethical implications of capitalizing on developing markets. While these markets offer growth potential, promoting products linked to health risks can harm public health and attract negative scrutiny. Instead, companies could focus on developing less harmful alternatives, like e-cigarettes or reduced-risk products, while ensuring compliance with local regulations and promoting responsible use. Engaging in transparent practices and supporting public health initiatives can also enhance their reputation and long-term sustainability. 10. Give several examples of how culture may hinder “going global” via the Internet. Answer: Culture can present lots of challenges on the Internet. First, you may have to translate your Web site into several languages, depending on what areas of the world you want to target. Language translation can be fraught with problems if you don’t get a good translator. Second, the way your product is presented or promoted can be offensive to certain cultures. Third, the colors and graphics that you use on your Web site may have different meanings in different cultures, some of which could be frightening or represent bad luck, which would hurt your sales. Finally, communication with current or potential customers might be problematic if your staff doesn’t speak their language or if they don’t speak yours. APPLICATION EXERCISE To be effective as a marketer, it is important that you know geography. How will you be able to decide whether to expand into a new territory (domestic or foreign) if you don’t know where it is and something about its culture, currency, and economy? If you can’t place the European countries on a blank map, or if you can’t label the lower 48 states without a list to help you, you’re not alone. In one study, students incorrectly located over 50 percent of European countries and over 25 percent of the states in the Unites States. To help you brush up on your geography, we’ve compiled some tools that you may find useful. Activities 1. To review domestic geography, go to http://www.50states.com/tools/usamap.htm and print the blank map of the United States. Label the map. For a challenge, add the state capitals to the map. 2. Once you have successfully labeled the U.S. map, you may be ready to try labeling a world map. If so, go to http://www.clickandlearn.com and view the free, printable, blackline maps. Under the category of world maps, choose the blackline detail map. This shows country outlines, whereas the basic blackline outline map shows only the continents. You will notice that there are also blackline maps for each continent, so if taking on the entire world is too daunting, start with more manageable blocks. 3. To be a global marketer, it is not enough to know where countries are located. You will need to know about the culture, the main exports, the currency, and even the main imports. Select a half-dozen or so countries with which you are unfamiliar and research basic geographic information about them. Purpose: To be effective marketers, it is important that students know geography. How will students be able to decide whether to expand into a new territory (domestic or foreign) if they don’t know where it is and something about its culture, currency, and economy? This exercise is designed to reveal any weakness students might have in geography and inspire them to fill their gaps of knowledge. Setting It Up: Follow the links at www.clickandlearn.com to find blackline maps. Blackline maps are geographical outlines with space for labeling. Click and Learn offers blackline maps in great variety. You can begin the exercise by requiring students to locate countries (or even states) on the maps. One possibility is to move into a longer assignment, as featured below. This application exercise was inspired by the following Great Ideas in Teaching Marketing: Gregory J. Baleja Alma College INTERNATIONAL MARKETING: A MAP QUIZ When discussing international marketing, it is always interesting to investigate the amount of knowledge that American college students have about any country outside of the United States. In most cases, I find that my students have very little knowledge of foreign countries or cultures. To reinforce this assumption, I give my students a map quiz. The map quiz is usually based on the countries of Europe (both Eastern and Western Europe). Europe is usually selected because it is the region of the world that until recently has undergone the least amount of name and/or boundary changes. To make the students’ task easier, I provide them with a list of all the European countries involved (aided recall). To make sure they legitimately try to fill in all of the correct countries, I state that the quiz will be graded. Later, I inform the students that the quiz was, in fact, graded, but that the scores were not recorded. Over the last few years, the average number of countries missed has totaled approximately 14.38 out of 27 possible European countries listed (an error rate of 53.25%). The number of countries missed has ranged from 0 to 26 (to date no student has missed all 27 countries). A number of students comment when seeing their actual scores that they would have performed much better if they were quizzed on something more familiar, like the United States. Thus, to accommodate their request, during the next class period I distribute a quiz on the lower 48 states. For this map quiz the students are not provide with a list of states (unaided recall). The average number of states wrong has averaged 13.76 out of 48 (an error rate of 28.6%) during the last few years. Familiarity seems to help improve the scores, but not totally. Some unique answers to both quizzes are listed below. Students have told me, for example: • West Germany was located east of East Germany; • New states such as East and West Delaware, Syracuse, and St. Louis exist; • Ireland is located where Bulgaria is; • Norway is located where Romania is; • Great Britain is located where Spain is; • North and South Carolina are located where North and South Dakota are; • Arkansas is located where Utah is; and • Alabama is located where Oklahoma is. The purpose of these quizzes is to reinforce exactly how little American students know about the world in general. I ask the students how they can make a conscious business decision about locational alternatives when they don’t even know where Czechoslovakia is, or for that matter, the state of Kansas. In my most recent Basic Marketing class of 46 students, 43% of them were unable to place Kansas in its correct geographical position. In addition, 35% missed placing Colorado correctly and 46% missed Arizona. The students are not only unable to show where a particular country or state is located, but they are also unable to identify the countries or states that surround it. How, then, can these students intelligently discuss the implications of entering the Czechoslovakian market (caused by recent developments in Eastern Europe) with the thought of possible expansion into the rest of Eastern Europe when they don’t even have the most basic knowledge of where it is located? By the way, the same argument holds for locating a distribution center in Kansas or Colorado or Arizona. Our students need to have a better understanding of geography if they are going to compete successfully in a global marketplace. William C. Moncrief Texas Christian University USING GEOGRAPHY IN THE INTERNATIONAL MARKETING CLASS My strong belief is that students should have some sense of geography when studying international marketing. The first day of class I put a world map on the overhead and ask them to identify 25 countries. The results, as might be expected, are abysmal. Most students indicate that they have never studied geography or that they did so when they were too young to be interested. My goal is to give them some geographical knowledge and to make it fun. Several years ago, I was given a board game called Where in the World. The game has a card for every country in the world and gives information such as capital, chief export, chief import, religion, language, and currency. I have put all of this information on a handout along with maps of Europe, Asia, Africa, and North and South America. Groups of five are formed for a geography competition. On an announced day we have the geography bowl with six to eight groups competing. Typically, the students have divided up the world so that two students within the group are “experts” on a particular continent. I shuffle the approximately 200 cards and I randomly pick a card for a Group 1. Each group has a map in front of them with each country numbered but not named. I ask, “Group 1, where is Argentina?” If they are correct they receive a point, and then I ask, “What is the capital of Argentina?” If they are correct again they have a chance at a third question. I have created a spinner with export, import, currency, and language divided equally on the spinner. I spin the spinner and it might indicate “export.” If the group can name the chief export, they receive a third point. If the group misses the country or capital, I roll a die and the corresponding numbered competitive group has a chance to “steal” the question and receive bonus points for the correct answers. After the question has been answered by group 1 or stolen by some other group, I then move to Group 2 and draw a country. This process continues until all groups have been asked a country. Round 2 ensues. The game will continue throughout the class period, usually lasting somewhere from 10 to 20 rounds (depending on the length of the class). The game becomes very competitive and the amount of information learned is phenomenal. It is rare that a group misidentifies a country and usually they can name the capital. In about half the cases, they even can come up with exports, imports, currency, and language. At midterm I give an exam with a map in which the students must identify 20 “significant” countries and capitals that are active in the international markets. The results are impressive. In my last two classes, exactly 50% of the class did not miss a single country. Of those who misidentified a country and capital, the average score was 3.4 out of 4.0 possible answers. The geography game is fun. The students love it and want to play it again. More importantly, they learn some geography and as we talk about world markets, most of the students now know where the countries are located and something about them. ETHICS EXERCISE Moore Electronics sells automated lighting for airport runways. The government of an eastern European country has offered Moore a contract to provide equipment for the 15 major airports in the country. The official in charge of awarding the contract, however, is demanding a 5 percent kickback. He told Moore to build this into the contract price so that there would be no cost to Moore. Without the kickback, Moore loses the contract. Such kickbacks are considered a normal way of doing business in this country. Questions 1. What should Moore do? Answer: Although this is acceptable practice in the country, Moore should not incorporate in his contract bid a 5 percent kickback for the government official in charge of awarding the contract. Culturally acceptable practices are not always universally ethical practices. 2. Does the AMA Code of Ethics address this issue? Go to http://www.marketingpower.com and review the code. Then write a brief paragraph on what the AMA Code of Ethics contains that relates to Moore’s dilemma. Answer: The AMA Code of Ethics does address this issue when it states that the marketer’s responsibility is to abstain from using coercion in the marketing channel. Additionally, by incorporating the kickback into his bid, Moore would be violating the rule of “being honest in serving consumers, clients, employees, suppliers, distributors, and the public” (emphasis added). VIDEO ASSIGNMENT: The Nederlander Organization The Nederlander Organization is a theatre management company that manages a global network of Broadway style theatres. In this video clip, top management discusses how the Nederlander Organization grew from a small mid-west theatre management company into a global brand that helps successful producers move from Broadway to a global tour circuit. 1. When Jimmy Nederlander purchased three theatres in the United Kingdom, what method of entering the Global Marketplace was he using? A. Franchising B. Contract Manufacturing C. Joint Venture D. Direct investment Answer: D Jimmy Nederlander directly purchased the theatres in the U.K., making this a direct investment. 2. What type of product decisions does the Nederlander Organization support for its global theatres? A. Product Invention B. Global Marketing Standardization C. Product Adaptation D. Product contraction Answer: B The Nederlander Organization supports touring Broadway shows, which are as close to the original Broadway productions as possible, both nationally and internationally. 3. Not all shows that have huge success on Broadway go on to tour successfully overseas. What is the major contributing factor to the success of a touring play? A. The Cast. Touring actors are not as strong as the original cast members. B. The Music. Touring musicals rely on local musicians, which is risky. C. Boycotts. Touring musicals are just as likely to raise protests as more overtly political events. D. The culture. Some plays that are successful in the United States don’t strike the same chord in different countries. Answer: D The major factor in the success of a touring Broadway musical is whether or not the culture in the touring city and country allows jokes and other aspects of U.S. culture to translate for different cultures. 4. Discussing the expansion of the global network of theatres that can house Broadway type shows and its benefit to touring plays falls under which category of the global marketing mix? A. Product B. Promotion C. Place D. Price Answer: C Without theatres to house plays, global touring cannot occur, making this a distribution (place) decision. 5. The Nederlander Organization has used the Internet A. to change ticket prices for certain markets, particularly Evita. B. to expand the brand and sell tickets online for shows anywhere there is a Nederlander theatre. C. to decide what shows are hits in New York and therefore get to tour. D. to post clips from shows that are in its theatres so people will be more willing to buy tickets. Answer: B One of the ways that this clip explains how the Nederlander Organization uses the internet is to make tickets available for shows in any of its theatres, something that was not always available. CASE ASSIGNMENT: Nissan Prolonged success for auto manufacturers is likely to come from their ability to sell cars in rapidly developing countries like Russia, Brazil, India, and Indonesia. However, selling cars in these emerging markets can be complicated, especially for foreign companies. Nissan is one company that has struggled to expand into emerging markets: its overall share of auto sales is 6 percent, but its share in Brazil is just 1.2 percent. With the goal of increasing its global reach, Nissan announced that it would revive the Datsun brand name and develop six new vehicles specifically designed for emerging markets’ growing middle classes. The company aimed to produce modern, stylish cars that appealed to consumers visually, and more importantly, fit into their budgets. In bringing back the Datsun brand, Nissan in effect created a distinctive identity for the unique set of cars that comprised its new global venture. The emerging middle class wants cars, but it can’t afford to spend $15,000 to $20,000 on a family sedan. Thus, automobile companies like Nissan need to create small, extremely affordable cars; to do so, they must often take a bare bones approach. That means no air conditioning, no passenger air bags, and no power windows. While Datsun will provide entry into the market, the Nissan brand will continue to be sold as upscale, feature-rich cars. According to Ammar Master, an analyst at LMC Automotive in Bangkok, “Datsun could bring in volumes at the lower end of the market…While the Nissan brand will continue to move upmarket.” Caroline Winter, “Behind the Birth, Death, and Rebirth of Datsun,” Bloomberg Businessweek, March 21, 2012, www.businessweek.com/articles/2012-03-21/behind-the-birth-death-and-re-birth-of-datsun (Accessed March 25, 2013); Chester Dawson, “For Datsun Revival, Nissan Gambles on $3000 Model,” Wall Street Journal. October 1, 2012, http://online.wsj.com/article/SB10000872396390443890304578009284279919750.html (Accessed March 25, 2013); Siddharth Philip, Anna Mukai, and Yuki Hagiwara, “Nissan Revives Datsun After Three Decades to Boost Sales,” Bloomberg, March 21, 2012, www.bloomberg.com/news/2012-03-20/nissan-to-revive-datsun-brand-after-three-decades-to-boost-sales.html (Accessed March 25, 2013). TRUE/FALSE 1. Nissan’s decision to reintroduce the Datsun brand to fit the needs of emerging markets reflects the company’s global vision. Answer: True 2. Because it can move resources, products, employees, and skills across national boundaries without regard to its Japanese headquarters, Nissan is a multinational corporation. Answer: True 3. Brazil’s gross national income is an important cultural factor that Nissan must consider when analyzing the external environment. Answer: False Gross national income is an economic factor 4. China and India have rapidly growing middle classes, making them prime markets for Nissan’s Datsun brand. Answer: True 5. Because social networking sites like Facebook and Twitter are not as popular in emerging markets, Nissan should avoid using social media marketing to advertise its new Datsun offerings. Answer: False Because Facebook, YouTube, and other social media are popular around the world, firms both large and small have embraced social media marketing. MULTIPLE CHOICE 1. Nissan uses its Datsun brand to take part in this, or to target markets throughout the world: A. Global marketing. B. Global advertisement. C. Global promotion. D. Global selling. E. Global campaigning. Answer: A Global marketing—marketing that targets markets throughout the world—has become an imperative for business. 2. Which of the following external environment factors must Nissan consider as it enters into rapidly developing countries like Russia, Brazil, India, and Indonesia? A. Nissan’s market share is lower in emerging markets than it is elsewhere. B. Customers want modern, stylish cars. C. The emerging middle class can’t afford to spend $15,000 to $20,000 on a family sedan. D. The Datsun brand creates a distinctive identity that is already recognized by many throughout the world. E. All of these. Answer: E Many of the same environmental factors that operate in the domestic market also exist internationally. These factors include culture, economic and technological development, political structure and actions, demographic makeup, and natural resources. 3. Assuming that Nissan manufactures all of its car models in Japan and ships them overseas to be sold, which strategy does it use to penetrate global markets? A. Exporting. B. Licensing. C. Contract Manufacturing. D. Joint venture. E. Direct investment. Answer: A Exporting is selling domestically produced products to buyers in other countries. A company can sell directly to foreign importers or buyers. 4. Which product decision did Nissan utilize when it developed six new Datsun models for emerging markets’ growing middle classes? A. One product, one message. B. Product invention. C. Gross domestic product. D. Product adaptation. E. None of these. Answer: B Product invention can be taken to mean either creating a new product for a market or drastically changing an existing product. 5. Suppose that, instead of developing its Datsun line for emerging markets, Nissan simply sold its existing models in those markets for half their original price. His would be an example of: A. Licensing. B. Countertrade. C. Job outsourcing. D. Dumping. E. Global marketing. Answer: D Dumping is the sale of an exported product at a price lower than that charged for the same or a like product in the “home” market of the exporter. GREAT IDEAS FOR TEACHING CHAPTER 5 James S. Cleveland, Sage College of Albany DISCUSSION BOARD TOPICS TO ENCOURAGE PARTICIPATION Discussion board questions provided to students to encourage them to engage in thinking and writing about the content of the Principles of Marketing course usually take the form of a provocative statement to which students are asked to respond. An example of this would be “All PR is good PR.” Discussion topics such as this one are abstract and often require that the instructor provide an initial reply to show students what is expected of them in their own replies. For students with limited work experience, this approach may be quite appropriate. For adult students with extensive experience as employees and consumers, however, the abstract nature of such topics can be frustrating. I have developed, therefore, a series of discussion board questions to use with experienced, adult students. These questions are designed to encourage them to use their experiences as employees and consumers as doorways to better understand the course material, and to make their own responses more interesting to themselves and to the other students in the class who will read and comment on them. Each question has three parts: 1. First, there is a sentence or two from the students’ textbook introducing the topic. By using the text author’s own words, students are enabled to locate relevant material in the text more easily, the text content is reinforced, and confusion resulting from use of variant terms or expressions is minimized. 2. Second, there is a reference to text pages the student should review before proceeding. Since the goal of the exercise is for students to apply the course content to their own experiences, reviewing the content first is important. 3. Third, there is a request for the student to think about or remember some specific situation in their experience to which they can apply the text material, and a question or questions for them to address in their reply. Here are additional such discussion board questions developed for Chapter 5 of MKTG10. Each is written to fit the same text cited above but could easily be rewritten and revised to fit another text. Series A 1. No longer just an option, global marketing—marketing that targets markets throughout the world—has become an imperative for business. 2. Review the information on the rewards of global marketing in section 5-1 of your text. 3. Then describe how your employer (current or past) participates in the global marketplace by buying foreign-made goods and services or selling its goods and services abroad. Series B 1. A company that is heavily engaged in international trade, beyond exporting and importing, is called a multinational corporation. 2. Review the information about multinational corporations in section 5-2 of your text. 3. Describe the products you buy that are manufactured by multinational corporations. How many of them are not made in this country? (Check labels or packaging to see where they were made.) Do you think this is a good situation? Why or why not? John L. Beisel, Pittsburg State University FORCING INTERNATIONAL COMMUNICATION Students from other countries who are studying in the United States bring with them a rich cultural heritage and perspective that most American students seldom bother to learn about. In fact, many American students rarely even take the opportunity to talk to an international student during their college years, even though they have sat in class with them time after time. I have had international students tell me upon graduation that they regret the fact that they never became friends with an American student. I decided to force communication between the two groups at every opportunity in my classes. In my International Marketing course, the students are divided up into teams consisting of four students, and each team is assigned a country. Their task is to develop a plan for marketing a specific consumer product to their assigned country, in 25 pages or less. In a recent class, I appointed 11 teams of four students each. Each team was assigned a different country. Those 11 countries that were most represented by students in our university were the 11 countries assigned. They were India, Indonesia, Japan, Malaysia, Nigeria, Pakistan, Paraguay, Singapore, South Korea, Taiwan, and Thailand. The teams were expected to personally interview a minimum of four students from the country that they were assigned. The interviews consisted of learning about the customs, product preferences, buying habits, prices, competitors, types of retail outlet shops, and so forth, in the home country of the students interviewed, especially relating to the product assigned. The final report for each team included, among other things, a country analysis with a brief description of the market (demographics, primary marketing areas, etc.), an economic profile of the country, business customs, consumer behavior, general U.S. relationships with the country, export prospects to the country, and the country’s restrictions on imports. Also, customs regulations had to be cited regarding documentation, packing, labeling, marking, import quotas and restrictions, tariffs, trademark protection, taxes, import licensing, shipping documents, health and sanitary requirements, and so forth. Much of this information could be found in Overseas Business Reports. Each team also created a brand name and a package design. A pricing policy was decided on, as well as a promotional strategy. Common distribution channel alternatives were named, and entry alternatives (i.e., licensing, trading companies, franchising, agents, joint venture, wholesalers, etc.) were chosen. The students were quite positive about the project as a learning experience, especially regarding the face-to-face contact with international students. During the interviews the students found new friends, and in some instances were even invited to the interviewees’ living quarters for a meal with an international flavor. David J. Brennan, Webster University – St. Louis, Missouri IT’S NOT FUNNY MONEY! In teaching International Marketing, it is important for American students to develop a knowledge of foreign currencies. For marketing students, this need not be a detailed financial knowledge but simply an awareness of a few key international currencies and their names, symbols, and relative values. Given a list of several relatively familiar countries, students are asked to name the currency of that country and to indicate the symbol used to designate that currency. Some typical countries, currencies, and symbols (with the United States as an example) could include [answers in brackets]: Country Currency Symbol Example: USA Dollar/cent $ US Australia [Dollar/Cent] [$AUS] Belgium (or other EU member) [Euro] [€] Canada [Dollar/Cent] [$CD] Russia [Ruble] [RUB] Great Britain [Pound/Pence] [£] Hong Kong [Dollar] [$HK] Ireland [Punt] [Pt] Japan [Yen/Sen] [¥] Poland [Zloty] [Z] Switzerland [Franc] [Sf] Mexico [Peso] [$MXN] Aregentina [Peso] [$ARS] China [Yuan] [元] These, as well as other countries and their respective currencies, can be found in the foreign exchange listings in the Financial Section of the Wall Street Journal. This listing provides the country, its major currency and foreign exchange values for the previous two business days in terms of foreign currency value in $US, and $US in terms of value in the foreign currency. If possible, it is also useful to go to a local bank and get (buy a few foreign currency bills (£, DM, Ff, $CD) for class. Several aspects of foreign currencies, as they may apply to marketing students, can be raised during class discussion. These could include: • Some currencies have similar names (e.g., the dollar in the United States, Canada, and Hong Kong and the peso in Mexico, Argentina, Chile, Colombia, and Uruguay) but all have very different values. • It is important for marketing students to be aware of the relative values of the currencies of key major trading partners (Canada, Germany, Great Britain, China, and Japan). It illustrates how one can use those foreign currencies with values less than, approximately equal to, and greater than the U.S. dollar. For example, in fall 2012: • The Canadian ($CD) dollar is close to the value of the U.S. dollar ($US): 1 $CD = 0.97 $US or 1 $US = 1.03 $CD • The Euro (€) is worth more than the U.S. dollar ($US): 1 € = 0.76 $US or 1 $US = 1.31€ • The Japanese Yen (¥) is worth much less than the U.S. dollar ($US): 1 ¥ = 0.013 $US (1¢ US) or 1 $US = 79 ¥ • The British pound (£) is worth more than the U.S. dollar ($US): 1 £ = 1.62 $US or 1 $US = 0.62 £ (62 pence) • Changes in foreign currency values in terms of the U.S. dollar can impact international business. A good example of that is of the Japanese yen (¥). In 1987, 1 $US was worth (bought) approximately 250 ¥, while in 1992 the U.S. dollar weakened (and the Japanese yen strengthened) and 1 $US was only worth (bought) approximately 128 ¥ and in 1996 it hovered in the 80–100¥ to the 1 $US range. A useful point of discussion is the change in foreign or U.S. consumer buying power due to such a change of currency values. This exercise can educate American marketing students who are typically used to operating only in the U.S. dollar. Although the U.S. dollar is still a key global currency, other currencies, such as the Euro, are important to understand. It can illustrate to our students that foreign currencies are not “funny money” and need to be taken seriously in international marketing. Jacqueline J. Kacen, University of Michigan – Dearborn CROSS-CULTURAL MARKETING: TAKING THE BRAND LOCAL? What must international and cross-cultural marketers think about when introducing products into foreign markets? Instead of focusing on familiar U.S. products being introduced into a new foreign market, this exercise has students introduce a foreign product into the United States. This exercise works well as an in-class exercise, a group project, or an individual homework assignment. The product I use for this exercise is Vegemite, a Kraft product manufactured and sold in Australia and New Zealand. However, any foreign product that is not currently marketed in the United States can be used in class. As an introduction to the exercise, I provide students with a one-page summary of the product—its history, ingredients, uses, target market, and position—in its home market. Alternatively, depending on time and resources, students can be required to research the product on their own. Information about Vegemite, for example, is available through various Web sites. This exercise can provide an opportunity for students to access Internet resources. I also bring the product in to class so students can see it in its “original” form. By using a food product such as Vegemite, students can also actually taste the product and thus better understand and appreciate its composition. (Note: Most American students hate the taste of Vegemite, so I also provide soft drinks and pieces of candy to students so they can “cleanse their palates.”) The background information on the product and the taste experience provide students with enough information to create their own marketing strategy for the product. Individually, in groups, or as a class, students are instructed to develop a marketing plan for Vegemite’s introduction into the United States. The plan should include the target market, the product’s positioning statement, packaging and size considerations, price (or pricing strategy), distribution strategy, and promotional strategy. A discussion of the marketing plan(s) follows. The differences and similarities between consumers in the United States and in the home country of the product should be highlighted during the class discussion. Andrew Banasiewicz, Louisiana State University GLOBALIZING THE THINKING OF BUSINESS STUDENTS During the last decade, we have seen a strong emphasis being placed on providing business students with a more global orientation. To accommodate this, we need to make the students realize that being raised in a particular culture results in their “business perceptions,” as employed in a particular context, being not only a function of the actual attributes, but their respective cultural background as well. I have devised a simple exercise aimed at forcing students to think of other cultures not in terms of the potential differences, but rather in terms of strengths, weaknesses, opportunities, and threats that these diverse environments may provide. On a first day of class, I ask students to write on an index card their name, major, classification, and then two groups of countries. The students are instructed to, for Group 1, create a list of foreign countries, which they perceive as being most culturally similar to their own. Conversely, Group 2 is to be composed of five countries that they perceive as being culturally most dissimilar to their own country. Lastly, the students are asked to consider a generic industrial product (such as a bearing), and use a scale of 1–10 to rate the perceived quality of that product that is being manufactured in their own country of origin, the country they judged as most culturally similar, and lastly the country they judged most culturally dissimilar. Due to the fact that the product under consideration is rather hard to compare on its functional attributes, the students are forced to base their ratings on their culturally based attitudes. Having collected all that information, I then group the lists of the most culturally similar and dissimilar countries. Then I divide students into groups has and assign a specific country or region to each group. The groups are usually composed of about four students who are paired and matched in such a way that two of the students have listed their group’s country as one that they believe to be most similar to their own country, while the other two listed it as being culturally most dissimilar to their own country. Following that, I announce that each of the groups is to choose a product or service and attempt to market it in the country assigned to them. The groups are to view themselves as consulting teams responsible for creating the marketing mix comprised of product, price, promotion, and distribution. The groups are given most of the semester to work on the project, which is culminated by formal presentations. Following the presentations, the students are asked to once again rate the perceived quality of a generic industrial product being manufactured in their own country, the country most culturally similar, and the country most culturally dissimilar to theirs. Following that, the ratings are compared against those recorded in the beginning of the semester and a presentation is made regarding the differences. Lastly, the culturally motivated perceptual bias is discussed and the opinions are solicited regarding the learning process that took place while working on the project. PART 1 – Integrated Case Assignments MARKETING MISCUES Concerns over Sustainability Result in Social Media Disaster for Nestlé In March of 2010, Greenpeace began coordinating environmental activists in a protest over Nestlé’s alleged purchase of palm oil from an Indonesian company that Greenpeace International claimed was destroying the rain forest in the building of palm plantations. The palm oil was used to make Kit Kat candy bars. Although Nestlé claimed to have already made the decision to no longer do business with the supplier, while also asserting that the purchase had comprised only 1.25 percent of the company’s total palm oil consumption in 2009, the company was a vulnerable target for environmental activists because of its history of questionable practices with respect to child labor and infant formula. The coordinated efforts of the activists were composed of two major components. Greenpeace staged a protest outside Nestlé’s headquarters in Switzerland and a mock Kit Kat commercial was posted on YouTube. Protesters at the company headquarters wore cutouts of the candy bar but instead of the bar saying “Kit Kat,” it said “Killer.” The Kit Kat commercial parody portrayed an office worker opening the candy bar and munching on a bloody orangutan finger. As YouTube videos go, the Nestlé parody was shared far and wide via social media platforms such as Facebook and Twitter. Like many companies, Nestlé has a fan page on Facebook to interact with its consumers. The Facebook fan page is a location that enables dialogue about the company’s brands. Once the commercial parody hit the social media airwaves, protesters began posting negative comments about the company on Nestlé’s Facebook fan page. Nestlé responded with two actions. One, it asked Google’s YouTube to remove the commercial parody from the site due to copyright infringement, and YouTube adhered to the request. However, the video had been downloaded, and it still spread across the Internet. Two, Nestlé also told Facebook users that the company would delete their comments from the fan page if the “Killer” logo was used. Apparently, angry protesters had begun to replace their profile pictures with the “Killer” logo. Interestingly, it was Nestlé’s response to actions within the social media ecosystem and not the palm oil issue itself that erupted in war for the company. Nestlé’s threat to delete comments that included the altered Kit Kat logo (“Killer”) incited the users of the company’s fan page. The fan base on Nestlé’s Facebook page soared to over 95,000 fans. Unfortunately, the vast majority of this 95,000 were protesters, and Nestlé went on the defensive. The Nestlé online moderator manning the fan page began to respond to individual postings in a derogatory and condescending tone. For example, the moderator is purported to have said something like, “...it’s our page, we set the rules...” This just served to fuel the online media firestorm even more, as the exchange quickly hit the Twitter circuit and even more people began to visit the company’s Facebook fan page. Many of these visitors likely had no idea about the palm oil issue—they were going to the fan page to see for themselves how Nestlé was engaging with its customers. Ultimately, Nestlé’s rules of engagement for social media became a trending topic on Twitter, which resulted in calls for a boycott of all of Nestlé’s products. The trending occurred because such a large number of people were commenting on the same thing about Nestlé. As such, the issue appeared on the trend bar on Twitter’s home page. This generated even more negative publicity for the company. Soon, the electronic word of mouth began to spread to the offline world. This rapid spread of negativity led to panic among Nestlé shareholders and share prices began to drop dramatically. Nestlé had a social media disaster on its hands. Interestingly, that disaster was due to the way Nestlé engaged in interactions on Facebook—not because of the fact that it had purchased palm oil from a non-sustainable company. The negative social media engagement, however, brought the palm oil issue to the forefront of people’s minds who might not have otherwise even thought about sustainability concerns related to candy bars. Thus, while the sustainability concern might have lost its luster in a few days and activists would have moved on to the next cause, the social media engagement snowballed and affected the company financially. Sources: Raj Dash, “The Facebook Nestlé Mess: When Social Media Goes Anti-Social,” All Facebook, March 22, 2010, www.allfacebook.com/the-facebook -nestle-mess-when-social-media-goes-anti-social-2010-03; Rick Broida, “Nestlé’s Facebook Page: How a Company Can Really Screw up Social Media,” BNET, March 19, 2010, www.bnet.com/blog/businesstips/nestles-facebook -page-how-a-company-can-really-screw-up-social-media/6786; “Nestlé and Black Friday,” March 23, 2010, www.rgc-media.com/nestle-and-black-friday; Emily Steel, “Nestlé Takes a Beating on Social-Media Sites,” Wall Street Journal, March 29 2010, http://online.wsj.com/article/SB1000142405270230443440457 5149883850508158.html. Open-ended questions 1. How could Nestlé have handled the situation differently? Should the company have simply shut down its Facebook page? Answer: Most students will agree that the employee in charge of Nestlé’s Facebook fan page really instigated the negative social media interaction. Thus, the online moderator should not have written in the patronizing, condescending, and derogatory tone that was portrayed in the online engagements. To have handled the situation differently, Nestlé should have made sure the online moderator understood the rules of engagement in social media. Students will be mixed on whether or not Nestlé should have shut down its Facebook page. While shutting down the page would have stopped the negative interactions between Nestlé and the external marketplace specifically (the back-and-forth interactions), the external marketplace might have just taken their discussion to other online interactions (simply creating their own anti-Nestlé Facebook page, blogs, etc.). Shutting down the Nestlé page would probably not have been well-received by the already enraged public. It would probably have been interpreted as Nestlé sending the message of “say it our way, or we won’t let you say it at all.” Nestlé could have handled the situation by proactively engaging with the criticism on social media, addressing concerns transparently, and demonstrating commitment to ethical practices. Instead of shutting down its Facebook page, it should have used the platform to communicate positive actions, encourage dialogue, and rebuild trust with consumers. This approach could have turned a negative situation into an opportunity for improvement and connection. 2. Although the Kit Kat candy bar was at the original heart of the issue, what other products/companies are owned by Nestlé? Could these products be affected by the Kit Kat social media fiasco? Answer: Students should be directed to www.nestle.com to identify the product mix at Nestlé—any of which could have been affected. Product categories and brands include: • Baby foods (Cerelac, Gerber, NaturNes, Nestum) • Bottled water (Nestlé Pure Life, Perrier, Poland Spring, S. Pellegrino) • Cereals (Chocapic, Cini Minis, Cookie Crisp, Estrelitas, Fitness, Nesquik) • Chocolates & Confectionery (Aero, Butterfinger, Cailler, Crunch, Orion, Smarties, Wonka) • Coffee (Nescafé, Nespresso) • Culinary, chilled, & frozen food (Buitoni, Herta, Hot Pockets, Lean Cuisine, Maggi, Stouffer’s, Thomy) • Dairy (Carnation, Coffee-Mate, La Laitière, Nido) • Drinks (Juicy Juice, Milo, Nesquik, Nestea) • Food Service (Chef, Chef-Mate, Lean Cuisine, Maggi, Milo, Minor’s, Nescafé, Nestea, Sjora, Stouffer’s) • Healthcare nutrition (Boost, Nutren Junior, Peptamen, Resource) • Ice Cream (Dreyer’s, Extrême, Häagen-Dazs, Mövenpick, Nestle Ice Cream) • Pet Care (Alpo, Bakers Complete, Beneful, Cat Chow, Chef Michael’s Canine Creations, Dog Chow, Fancy Feast, Felix, Friskies, Gourmet, Purina) • Sports nutrition (Power Bar) • Weight management (Jenny Craig) Nestlé owns a wide range of products beyond Kit Kat, including brands like Nescafé, Purina, Gerber, and Nestea. The Kit Kat social media fiasco could negatively impact these products as well, as consumer sentiment towards the parent company could lead to broader distrust and reduced sales across its entire portfolio. Negative publicity often affects brand perception, making it essential for Nestlé to manage its overall reputation. Close-ended questions True and False 1. Until it was accused by Green Peace of deforestation, Nestlé had no prior controversies surrounding its corporate ethical behavior. True False Answer: False Nestlé was a vulnerable target for environmental activists because of its history of questionable practices with respect to child labor and infant formula. 2. Once accused by Greenpeace, Nestlé chose not to exercise any ethical responsibility. True False Answer: False Nestlé claimed to have already made the decision to no longer do business with the palm oil supplier. 3. If Nestlé’s supply-chain and/or marketing managers had performed a SWOT analysis of its supply sources for palm oil, it could have foreseen that Greenpeace might have taken the action it did. True False Answer: True A classic SWOT analysis would deem environmental organizations an external threat. 4. Even if the Twix commercial parody infringed on its copyright, Nestlé should have allowed it to remain because that would be doing the “right thing”—that is, it would show corporate social responsibility. True False Answer: False Nestlé acted appropriately in the face of a marketing threat and it had at least tried to address the issues that Greenpeace had raised against it. Multiple Choice 5. How could Nestlé have better anticipated its mistake with social media in triggering a more widespread boycott? A. By not responding to boycott proponents on Facebook and the like. B. By better training its Facebook monitor. C. Users of social media tend to be opinionated and so a proper response can be anticipated. D. By censoring its social media presence. E. all of the above Answer: C Gen Yers have been encouraged by their parents, teachers, and other authority figures to share their opinions. As a result, this group feels that their opinions are needed. This is also true of the next generation. 6. Which of the following might have helped Nestlé’s Facebook monitor prevent a public relations disaster and a damaging boycott? A. seeing Facebook posters, even those against Nestlé, as stakeholders and customers B. a code of ethics to help the moderator in better interacting with Facebook posters C. a company that supports sustainable resources D. to have a prepared statement from the chief ethics officer E. all of the above Answer: B Ethics consists of those unwritten rules we have developed for our interactions with one another. 7. The Nestlé managers who oversee the content and interaction that takes place on its Facebook, Twitter, and the like should now perform routine __________ to ensure that social media no longer poses an external threat. A. marketing analysis B. removal of controversial postings C. environmental scanning D. performance reviews of its monitors E. surveys of users Answer: C Environmental scanning provides information about forces, threats, events, and relationships in the external environment that may affect the future of the organization or the implementation of a marketing plan. 8. The Natural Marketing Institute has identified a number of trends that are now becoming American consumer values. Since Twix’s main market is the U.S., which trend(s) should Nestlé consider in both the marketing and production of its candy bars. A. Eco TechMed B. meaningful green C. getting off the grid D. component lifestyle> E. all of the above Answer: B The Natural Marketing Institute has identified this trend, which reveals that Nestlé’s American market is going green and would perceive Greenpeace in a positive light and be receptive to its message. 9. In purchasing palm oil for its candy bars from a nonsustainable supplier, which level in the pyramid of corporate responsibility did Nestlé neglect? A. economic responsibility B. social responsibility C. ethical responsibility D. philanthropic responsibility E. legal responsibility Answer: C By buying from a nonsustainable supplier, Nestlé could be seen as not being ethical, doing what is right, just, and fair, and lastly, avoiding harm to the environment. 10. From a marketing standpoint organizational focus, what did Nestlé do right in doing the wrong thing—by letting the social media disaster do more damage to its reputation than selling Twix candy bars? A. Nestlé sought to earn the trust of Twix consumers by changing suppliers. B. Nestlé gave buyers the facts. C. Nestlé protected the market share of its Twix brand. D. Nestlé focused on customer value in regard to keeping Twix’s material costs low. E. all of the above Answer: E Nestlé behaved in a way that exhibits a market orientation as well as a market-oriented strategy. CRITICAL THINKING CASE Telekom Austria Group: Sustainability to Increase Value Telekom Austria Group is the largest telecommunications provider in Austria, where it has over two million fixed net lines. The company has close to 20 million mobile subscribers in its eight geographic markets, and each market is served by a separately identified subsidiary within the Telekom Austria Group: • A1 Telekom Austria • Mobiltel in Bulgaria • velcom in Belarus • Vipnet in Croatia • Si.mobil in Slovenia • Vip mobile in Republic of Serbia • Vip operator in Republic of Macedonia • mobilkom liechtenstein The overarching goal of the company is to be the most innovative and efficient telecommunications provider in the central and eastern European marketplace. Driving the attainment of this goal are four corporate values: innovation, diversity, responsibility, and quality. Through these values, the company aspires to be profitable while satisfying a wide range of stakeholders. These stakeholders include customers, employees, employee union, shareholders/investors, suppliers, municipalities, neighbors, NGOs, public policy makers, and special interest groups. The company prides itself on its group-wide corporate social responsibility (CSR) efforts that seek to provide benefit to all stakeholders. Sustainability Both Internally and Externally As an information and communications technologies (ICT) company, Telekom Austria Group seeks to expand and further develop environmentally friendly technologies. One area that the company has a keen interest in is the virtualization of products and services. In the words of the company, think “data traffic instead of road traffic.” Examples of such virtualization due to ICT are: music and film downloads instead of the purchase of CDs and DVDs; online tax filing instead of using paper to file via the mail service; video conferencing instead of traveling for meetings; and tele-working instead of making the daily commute to the physical office. Sustainability efforts for ICT at Telekom Austria include: reducing CO2 emissions, energy efficiency at computer centers, intelligent use of resources by managing capacity according to volume usage, converting to green electricity, using employees as environmental ambassadors, and conserving resources with its motto of “reduce – reuse – recycle.” The company’s resource conservation efforts flow directly to customers via online billing, a green signature for e-mails so as to encourage reduction of unnecessary printing, mobile phone recycling, toner collection tied to charitable giving (one euro is donated for each toner cartridge collected), and the production of environmentally friendly phones. ICT Integration into Customers’ Lives ICT is an indispensable aspect of everyday life in the 21st century. At the business-to-consumer (B2C) level, its use appears in everything from social media communications (e.g., Facebook, Twitter, and YouTube) to shopping to online banking to online education. From a business-to-business (B2B) perspective, ICT enables everything from product routing via radio frequency identification (RFID) tags to data security. RFID tags emit radio waves that are decoded by a reading device for the purposes of identification of inventory and tracking. Given the importance of ICT in the lives of all customers, Telekom Austria considers customer service to be a critical success factor for the company. The company’s A1 Service Center was the first Austrian service center in the mobile communications industry to be certified according to the new European standard for customer care centers. In 2009, the company launched a new customer service program called “Kundiologie.” With the motto of “Meet the Customer,” the company attempts to engage its employees in real-time interactions with customers and then channels these insights into the areas of product management and customer service. Thus, the company ties customer satisfaction to its employees in an active manner. As such, employees, particularly those working in customer service departments, receive regular training in customer relationship management and customer service. Respondents in a 2009 customer satisfaction survey gave employees in the Technical Customer Service department at Telekom Austria scores of “excellent” for their expertise, friendliness, and solutions-oriented attitudes. Additionally, respondents were also highly satisfied with issues related to product installation and waiting times. The importance of customer satisfaction is driven home internally by the fact that a customer satisfaction measure has been incorporated into performance contracts of employees in one division of the company. Sustainability Audit The Telekom Austria Group documents its sustainability performance and provides an annual sustainability report to its stakeholders and the general public. The performance measures follow guidelines offered by the Global Reporting Initiative, thus enabling comparisons to generally accepted indicators of international sustainability reporting. To advance sustainability efforts and management, the company recently implemented a group-wide CSR management system. The goal is to integrate all international subsidiaries into the existing sustainability management and reporting system. Sources: “Our Understanding of Sustainability,” Telekom/Austria Group, www.telekomaustria.com/verantwortung/understanding_sustainability.php; “The Most Important Figures of Sustainability from our Markets,” Telekom Austria Group, 2009/2010, http://sr2009-10.telekomaustria.com. Open-ended questions 1. How will Telekom Austria’s commitment to the triple bottom line (planet, people, profit) provide value to the company’s bottom line? Answer: When it comes to sustainability, the bottom line is comprised of two components: corporate social performance and corporate financial performance. However, the financial world and shareholders tend to assess performance on the corporate financial performance metric. Thus, it is imperative that Telekom Austria be able to show the link between sustainability and market outcomes, since performance in the marketplace is a critical precursor to financial performance. Studies have shown that market outcomes and corporate reputation are both linked to firm financial performance. Examples of companies that have tied social performance metrics to financial performance are General Electric, CUTCO Cutlery, and Home Depot. General Electric had clearly stated objectives/ strategies and metrics in the launch of Ecomagination. It said it was going to more than double its research investment in cleaner technologies, from $700 million in 2004 to $1.5 billion in 2010, and introduce more clean-tech products annually, doubling its current $10 billion in annual revenues from Ecomagination products and services to at least $20 billion by 2010, with more aggressive targets thereafter. CUTCO Cutlery was able to estimate yearly cost savings related to energy consumption of almost $50,000 via computer and lighting power management. Home Depot, the world’s largest seller of certified wood products, supports sustainable forestry by guaranteeing that harvested trees will be replenished. Home Depot’s benefits from this sustainability commitment may be hard to measure, yet the company strives to educate consumers on the implications of their purchase behavior by letting customers know that an average home consumes 64 trees (not including framing) and that the average American consumes enough wood and paper products annually to produce a 100 foot tall tree that is 16 inches in diameter. As consumers transition to more sustainable behaviors, these three companies are positioned easily as candidates for consumer loyalty and acceptance. Thus, sustainability efforts are measurable in the long-term via the impact on marketplace performance. Initially, however, most sustainability efforts only appear as “costs” to the company, rather than revenue generators. 2. Much is discussed about customer service within the context of sustainability at Telekom Austria. Why is customer satisfaction included in the topic of sustainability? Answer: In the 21st century, corporate social responsibility in innovative companies improves customer satisfaction in companies which then leads to improved financial performance. Thus, many companies include topics of customer satisfaction in their discussions and efforts related to sustainability initiatives. Importantly, however, the link between happy employees and their relations with customers is critical. Customers feel good when company employees treat them well. Likewise, employees can more easily engage positively with customers when they are pleased with their employer. Thus, the “people” component of the triple bottom line means that companies focus on employees and, by doing that, the impact on market performance via customer satisfaction. Close-ended questions True and False 1. ICT stands for information and customer technologies, which states Telekom’s market orientation. True False Answer: False ICT stands for information and communications technologies. 2. As part of its customer service, Telekom is a full-service green company so that customers can effortlessly participate without changing their own personal behaviors. True False Answer: False The company’s resource conservation efforts flow directly to customers who are encouraged to use online billing that requires no printing and the like. 3. A sustainable behavior that Telekom encourages in its customers might mean paying more for an environmentally friendly phone that has its recycle fee built into its cost. True False Answer: True Environmentally aware consumers tend to earn more and are willing to pay more for green products. 4. Telekom’s commitment to sustainability can be translated into bottom line performance. True False Answer: True Studies have shown that market outcomes and corporate reputation are both linked to firm financial performance. On the business side, a separate survey of 270 corporate communications professionals found that 43 percent expect to increase their marketing of their sustainability programs. Multiple Choice 5. Which of the following would you expect to read in Telekom’s mission statement? A. Telekom is above all a green company. B. Telekom means sustainability. C. Telekom seeks to integrate all its resources into the welfare of his customers. D. Telekom desires to be the most innovative and efficient telecommunications provider in its market. E. Telekom is an environmentally friendly company that serves its investors. Answer: D The overarching goal of the company is to be the most innovative and efficient telecommunications provider in the central and eastern European marketplace. 6. Telekom, in finding ways to benefit its stakeholders, exercises __________ as a guiding principle. A. resource conservation B. ethical decision making C. corporate social responsibility D. ethical culture e. all of the above Answer: C The company prides itself on its group-wide corporate social responsibility (CSR) efforts that seek to provide benefit to all stakeholders. 7. Telekom’s Kundiologie (literally, “customerology”) program is intended to improve __________ as well as customer service. A. its cellular phones B. its employees’ ability to interact with clients C. its automated answering system D. 611 online support E. none of the above Answer: E Telekom attempts to engage its employees in real-time interactions with customers and then channels these insights into the areas of product management. 8. What does Telekom mean by achieving “data traffic instead of road traffic”? A. using wireless technologies to help customers leave less of a “carbon footprint” B. using fuel efficient service vehicles C. facilitating smartphone purchases D. achieving a complete reliance on m-commerce for all its transactions E. none of the above Answer: A Telekom seeks to expand environmentally friendly information communication technologies to facilitate online purchases that use less energy that driving to a store. 9. In setting a corporate goal for itself in order to satisfy its broad constituency of stakeholders, which of the following is not explicitly stated? A. sustainability B. innovation C. quality D. responsibility E. diversity Answer: A Driving the attainment of this goal are four corporate values: innovation, diversity, responsibility, and quality. 10. Why does Telekom follow guidelines issued by the Global Reporting Initiative (the GRI is an NGO based in Amsterdam) in auditing its sustainability performance? A. The GRI is a European Union agency and it is the law. B. Telekom desires to cooperate with a nonprofit organization for their mutual benefit. C. Such audits also reveal Telekom’s financial performance, which is really its primary goal. D. Telekom seeks to compare its initiatives to generally accepted indicators of sustainability. E. Telekom has international subsidiaries that must legally have uniform sustainability goals. Answer: D Telekom’s seeks to meet what are generally accepted indicators of sustainability being reported by other organizations to the GRI. Solution Manual for MKTG: Principles of Marketing Charles W. Lamb, Joe F. Hair, Carl McDaniel 9781305631823, 9781285860145, 9781337116800