Solomon rprc11 PPT 02 PDF

Marketing: Real People, Real Choices
Eleventh Edition
Chapter 2
Global, Ethical, and
Sustainable Marketing
Copyright © 2022, 2020, 2018 Pearson Education, Inc. All Rights Reserved
Learning Objectives (1 of 2)
2.1 Understand the big picture of international marketing
and the decisions firms must make when they consider
globalization.
2.2 Explain how international organizations such as the
World Trade Organization (WTO), the World Bank, the
International Monetary Fund (IMF), economic communities,
and individual country regulations facilitate and limit a firm’s
opportunities for globalization.
2.3 Understand how factors in a firm’s external business
environment influence marketing strategies and outcomes
in both domestic and global markets.
Learning Objectives (2 of 2)
2.4 Explain some of the strategies and tactics that a firm
can use to enter global markets.
2.5 Understand the importance of ethical marketing
practices.
2.6 Explain the role of sustainability in marketing planning.
2.7 Recognize which industry and which work environment
(both domestic and international) is best for you.
Real People, Real Choices: A Decision
Maker at TerraCycle
Which option should be pursued?

Option 1: Introduce Loop at the Davos meeting
Option 2: Wait to announce the Loop model
Option 3: Don’t pursue the concept of a durable packaging
system at all
Take a Bow: Marketing on the Global
Stage
• Firms face uncertainty in the future of the global

marketplace
• Arguments for a single marketplace
– Greenhouse effect
– Global warming
– Arab Spring
– COVID-19
• You are part of a global community
World Trade
• World trade refers to the flow of goods and services
among different countries—the value of all the exports
and imports of the world’s nations
– Not all countries participate equally
– Requires flexibility in order to serve needs of remote
markets
– Countertrade
– Unsafe products
Figure 2.1 Steps in the Decision Process
to Enter Global Markets
Should We Go Global?
Consider:
• Both domestic and global market conditions and
opportunities
• Is there room to grow domestically
• Will your competitive advantage succeed against local
firms with a home-court advantage
• Will what made the company successful domestically
translate into a new foreign market?
Initiatives in International Cooperation
and Regulation
• Initiatives in international regulation and cooperation help

trade.
– General Agreement on Tariffs and Trade (GATT)
– World Trade Organization (WTO)
– World Bank
– International Monetary Fund (IMF)
• Protectionism restricts trade
– Quotas, Embargoes, Tariffs
• Economic communities help to promote trade
Table 2.1 Some Major Economic
Communities Around the World
Community Member Countries
Andean Community (/www.comunidadandina.org/) Bolivia, Colombia, Ecuador, Peru
Association of Southeast Asian Nations Brunei, Cambodia, Indonesia, Lao PDR, Malaysia,
(ASEAN) (/www.aseansec.org/) Myanmar, Philippines, Singapore, Thailand, Vietnam
Common Market for Eastern and Southern Africa (COMESA) Burundi, Comoros, Democratic Republic of Congo,
(/www.comesa.int/) Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya,
Madagascar, Malawi, Mauritius, Rwanda, Seychelles,
Sudan, Swaziland, Uganda, Zambia, Zimbabwe
European Union (EU) (/www.europa.eu.int/) Austria, Belgium, Bulgaria, Croatia, Cyprus, Czech
Republic, Denmark, Estonia, Finland, France,
Germany, Greece, Hungary, Ireland, Italy, Latvia,
Lithuania, Luxembourg, Malta, Netherlands, Poland,
Portugal, Romania, Slovakia, Slovenia, Spain, Sweden
(The United Kingdom was a member until it withdrew
from the EU in 2020.)
MERCOSUR (/www.mercosur.org/) Brazil, Paraguay, Uruguay, Argentina
U.S.-Mexico-Canada Agreement (USMCA) (a renegotiated Canada, Mexico, United States
agreement replacing NAFTA) (/www.trade.gov/usmca)
South Asian Association for Regional Cooperation (SAARC) Afghanistan, Bangladesh, Bhutan, India, Maldives,
(/www.saarc-sec.org/) Nepal, Pakistan, Sri Lanka
Analyze the External Marketing
Environment
• Understanding external environment is essential for

marketing in your home country or on a global stage.
• When entering foreign markets, knowledge of local
conditions is critical.
– Helps you to figure out where to go and what
strategies are likely to be most effective
What are some countries you think offer markets
similar to yours? Different from yours? What
advantages and challenges would you face
entering these markets?
Figure 2.2 Elements of the External
Environment
The Economic Environment
• Marketers need to understand the state of the economy
from different perspectives
– Overall economic health (e.g., GDP, Forex Rate)
– Level of economic development
– Current stage of the business cycle
– The Big Mac Index uses the prices of the Big Mac to
compare purchasing power in different countries.
Do you think the Big Mac is a good product to

compare countries purchasing power? Why do
you feel it is or is not a good product to use in the
comparison?
Overall Economic Health and Standard of
Living
• Indicators of economic health

– Gross Domestic Product (GDP)
– Foreign Exchange Rates (Forex)
– Economic Infrastructure
• Standard of living
– An indicator of the average quality and quantity of
goods and services consumed in a country.
Levels of Economic Development
• Least Developed Country (LDC)
– Economic base is often agricultural
– Includes bottom of the pyramid (BOP) countries
• Developing countries
– Economy shifts emphasis from agriculture to industry
– Includes BRICS countries
• Developed countries
– Offer wide range of opportunities for international
marketers
– Includes Group of Seven (G7)
Bottom of Pyramid Markets
• Bottom of the Pyramid (BOP) markets present big
opportunities and challenges.
– 4 billion+ consumers, living on less than $2 daily
– $5 billion+ in collective spending power
BRICS and G7 Countries
• BRICS: Brazil, Russia, India, China, and South Africa
– 42 percent of world’s population
– 22 percent of world’s GDP
• Group of 7 (G7) countries
– France, Germany, Italy, Japan, United Kingdom,
Canada, and the United States
– Russia was a member until 2014 when it was
removed because of involvement in Crimean crisis
The Business Cycle
• The business cycle describes the overall pattern of
changes or fluctuations in an economy.
– Prosperity
– Recession
– Recovery
– Depression: a serious recession
• Inflation
The Competitive Environment
• Competitive Intelligence
– The process of gathering and analyzing publicly
available information about rivals.
– Competition in the micro and macro environments
Competition in the Microenvironment
• Competition in the Microenvironment involves

consumer decision making at three levels.
– Discretionary income
– Product competition
– Brand competition
Competition in the Macroenvironment
• Marketers also need to understand the big picture—the

overall structure of their industry.
– Monopoly
– Oligopoly
– Monopolistic competition
– Perfect competition
Technological Environment
• Technology:
– Provides firms with important competitive advantages
– Profoundly affects marketing activities
– Can transform industries—Example: self-driving
(autonomous) vehicles including 18 wheeler trucks
• Patent:
– Legal document giving inventors exclusive rights to
produce/sell a particular invention in that country
Political and Legal Environment
• Refers to local, state, national, and global laws and
regulations that affect business
• American laws generally have two purposes
– Fair competition
– Consumer protection from unfair practices
Table 2.3 Significant American Legislation
Relevant to Marketers (1 of 3)
Law Purpose
Sherman Antitrust Act (1890) Developed to eliminate monopolies and to
guarantee free competition. Prohibits exclusive
territories (if they restrict competition), price fixing,
and predatory pricing.
Food and Drug Act (1906) Prohibits harmful practices in the production of
food and drugs.
Federal Trade Commission Act (FTC) (1914) Created the Federal Trade Commission to monitor
unfair practices.
Robinson-Patman Act (1936) Prohibits price discrimination (offering different
prices to competing wholesalers or retailers)
unless cost is justified.
Wheeler-Lea Amendment to the FTC Act (1938) Revised the FTC Act. Makes deceptive and
misleading advertising illegal.
Lanham Trademark Act (1946) Protects and regulates brand names and
trademarks.
Consumer Credit Protection Act (1968) Protects consumers by requiring full disclosure of
credit and loan terms and rates.
Child Protection and Toy Safety Act (1969) Sets standards for child-resistant packaging.
Law Purpose
National Do Not Call Registry Established by the Federal Trade Commission to allow consumers
(2003) to limit number of telemarketing calls they receive.
Credit Card Accountability, Bans unfair rate increases, prevents unfair fee traps, requires
Responsibility, and Disclosure disclosures be in plain language, and protects students and young
Act of 2009 people.
The Affordable Care Act of Mandates health care coverage for Americans who do not receive
2013 benefits through an employer. Revises insurance regulations by
eliminating denial of coverage for preexisting conditions, ending
lifetime limits on coverage, and so on.
Digital Accountability and Gives consumers access to files of personal information a data
Transparency Act of 2014 broker compiles, the ability to correct inaccuracies, and the chance
(DATA Act) to opt out of the sale of those data to other companies.
USA Freedom Act of 2015 A result of Edward Snowden’s revelations about the National
Security Agency’s (NSA) practices regarding collecting and
monitoring of phone conversations. Requires that phone metadata
be stored by phone companies, not the U.S. government.
Law Purpose
The Tax Cuts and Jobs A sweeping update to the U.S. tax code designed to lower taxes on
Act of 2017 businesses and individuals and create higher wages, more jobs, and a
larger, dynamic economy. The bill makes large reductions in the corporate
tax rate.
Telephone Robocall This bill implements a forfeiture penalty for violations of the prohibition on
Abuse Criminal certain robocalls and requires voice service providers to develop call
Enforcement and authentication technologies.
Deterrence Act of 2019
(TRACED Act)
Data Privacy Laws At present there are no federal laws relating to data protection, only laws
with specific targets, e.g., financial institutions, telecommunications
companies, educational organizations, personal health information, credit
report information, telemarketing, and direct marketing. The 50 states,
however, have literally hundreds of privacy and data security laws. A
number of states are also in various stages of enacting new laws that will
address data privacy across sectors.
Source: DLA Piper, “Data Protection Laws of the World—United States,” last modified January 27, 2020,
www.dlapiperdataprotec-tion.com/index.html?t=law&c=US (accessed May 11, 2020).
Table 2.4 U.S. Regulatory Agencies and
Responsibilities
Regulatory Agency Responsibilities
Consumer Financial Protection Bureau (CFPB) Responsible for consumer protection in the financial sector. The CFP
B develops and enforces rules for bank and nonbank financial
institutions, including credit unions, securities firms, payday lenders,
mortgage-servicing operations, foreclosure relief services, debt
collectors, and other financial companies operating in the United
States.
Consumer Product Safety Commission (CPSC) Protects the public from potentially hazardous products. Through
regulation and testing programs, the CPSC helps firms make sure
their products won’t harm customers.
Environmental Protection Agency (EPA) Develops and enforces regulations aimed at protecting the
environment. Such regulations have a major impact on the materials
and processes that manufacturers use in their products and thus on
the ability of companies to develop products.
Federal Communications Commission (FCC) Regulates telephone, radio, TV and more recently the use of the
Internet. FCC regulations directly affect the marketing activities of
companies in the communications industries, and have indirect
effects on all firms that use these media.
Federal Trade Commission (FTC) Enforces laws, primarily through fines, against deceptive advertising
and product labelling regulations.
Food and Drug Administration (FDA) Enforces laws and regulations on foods, drugs, cosmetics, and
veterinary products. FDA approval is required before marketers can
introduce many products to the market.
Political Constraints on Trade
• Political actions of a government may constrain business
– Economic Sanctions
– Nationalization
– Expropriation
Regulatory Constraints on Trade
• Regulatory constraints on trade restrict the marketing
– Local content rules
• Human rights issues may limit foreign countries’ business
opportunities.
– Employ children or prisoners for slave wages
– Subject workers to unsafe working conditions
– Human slavery—the biggest human rights problem in
the world today
• The U.S. Generalized System of Preferences (GSP)
Sociocultural Environment
• Refers to characteristics of a society, its people, and its
cultural values and beliefs
– Demographics
– Cultural Values
– Social norms
– Language
– Consumer Xenocentrism
– Consumer Ethnocentrism
Disruption in the Global Marketplace
Sources of disruption
• Distribution of wealth
• Access to education
• Infrastructure
• Governments
• Public health
• Demographics
• Changes in the natural environment
• Media and telecommunications
What three of these do you feel are the biggest challenges to

the global marketplace?
What three are less likely to disrupt?
How Global Should a “Global” Marketing
Strategy Be?
• Hong Kong Disneyland

– Bigger is better
– Cinderella who?
Table 2.5 Market-Entry Strategies (1 of 2)
Exporting Contractual Strategic Direct
Strategy Blank
Strategy Agreements Alliances Investment

Level of risk Low Medium Blank
Medium High
Level of control Low Medium Blank
Medium High
Options Sell on its own Licensing Franchising Joint venture, Complete
Rely on export License a local A local firm adopts where firm and ownership, often
merchants firm to produce your entire local partner pool buying a local
the product business model their resources company
Table 2.5 Market-Entry Strategies (2 of 2)
Exporting Contractual Strategic Direct
Strategy Blank
Strategy Agreements Alliances Investment

Low investment,
so presents the
lowest risk of Local franchisee Easy access to
Avoid barriers to Maximum
financial loss Can avoids barriers to new markets
entry freedom and
control quality of entry Preferential
Advantages Limit financial control
product Avoid Limit financial treatment by
investment and Avoid import
difficulties of investment and governments and
thus risk restrictions
producing some risk other entities
products in other
countries
Lose control over
how product is
produced and
Highest level of
marketed, which
Franchisee may commitment and
could tarnish
May limit growth not use the same- financial risk
company and
opportunities quality ingredients High level of Potential for
Disadvantages brand image
Perceived as a or procedures, financial risk nationalization or
Potential
“foreign” product thus damaging expropriation if
unauthorized use
brand image government is
of formulas,
unstable
designs, or other
intellectual
property
Exporting
• Should the company sell products on its own or rely on
local business partners?
• Export merchants are intermediaries a firm uses to
represent it in other countries.
– Understand local market, know prospective buyers,
and may be better able to negotiate terms
Contractual Agreements
• In a licensing agreement, one firm (the licensor) gives
another (the licensee) the right to produce and market its
product in a specific country.
• Franchising is a form of licensing in which the franchisee
obtains the right to adopt an entire way of doing business.
– McDonald’s in India
Strategic Alliances and Direct Investment
• Strategic alliances allow companies to pool resources

for common goals.
– Joint ventures often allow easier access to new
markets.
• Direct investment is when a firm expands internationally
through ownership.
• Often when it buys a business in the host country outright
Marketing Mix Strategies: Localization
versus Standardization
1. To what extent will company need to adapt marketing

communications to local market?
2. Will the same product appeal to people there?
3. Will it have to be priced differently?
4. How will the company get the product into people’s
hands?
Marketing Mix Strategies: To “P” or Not
to “P?”
• Product decisions
– Straight extension
– Product adaptation
– Product invention
– Backward invention
Tweaking the Global Marketing Mix:
Price, Promotion, Place Strategies
• Promotion decisions
• Price decisions
– Free trade zones
– Gray markets
– Dumping
• Place/Distribution decisions
Ethics Is Job One in Marketing Planning
• Marketing action cannot establish long-term relationships

if it is shown to be unethical.
– Consequences of low ethical standards can be
damaging to firms and managers.
– Stockholders may lose investment.
– Jobs may be lost.
– Confidence in the economy suffers.
Ethics in Global Business
• Business ethics are basic values that guide a firm’s
behavior.
– What constitutes ethical behavior is often different for
different people.
– Ethical philosophies guide how people make such
decisions.
• Ethical relativism
– What is ethical in one culture is not necessarily the same
in another culture
• A code of ethics is a written standard to which everyone in
the organization must subscribe.
Table 2.6 Some Common Ethical
Philosophies
Ethical Philosophy Description of the Ethical Decision Questions for Decision Making
The decision that provides the most good or
Which option will produce the most
Utilitarian approach the least harm (i.e., the best balance of good
good and do the least harm?
and harm).
The decision that does the best job of
protecting the moral rights of all affected.
These include the following:
• The rights to decide what kind of life to Which option best respects the rights
Rights approach
lead of all who have a stake?
• The right to be told the truth
• The right not to be injured
• The right to privacy
The decision that treat all human beings
Fairness or justice approach equally—or, if unequally, then fairly based on Which option treats people equally?
some standard that is defensible.
Which option best serves the
The decision that contributes to the good of all
Common good approach community as a whole, not just some
in the community.
members?
The decision is in agreement with certain ideal
virtues. Honesty, courage, compassion,
Which option leads me to act as the
Virtue approach generosity, tolerance, love, fidelity, integrity,
sort of person I want to be?
fairness, self-control, and prudence are all
examples of virtues.
Table 2.7 Highlights of the AMA
Statement of Ethics
Ethical Norms Ethical Values
• Do no harm • Honesty
• Foster trust in the marketing system • Responsibility
• Embrace ethical values • Fairness
• Respect
• Transparency
• Citizenship
Is Marketing Unethical?
• Marketing serves the rich and exploits the poor.
• Products are not safe
• Poor quality products
• Planned obsolescence
• Easy consumer credit makes people buy things they
don’t need or can’t afford.
When Is a Bribe Not a Bribe? Ethical
Issues for Global Business
• Vast differences in what people around the world

consider ethical business behavior
– In many LDCs and developing countries, payment in
exchange for “favors” is a way of life.
– U.S. federal law bans payment to influence decisions
by foreign officials to award business contracts.
• Bribery occurs when someone voluntarily offers payment
to get an illegal advantage.
• Extortion occurs when someone in authority extracts
payment under duress.
Sustainability: Marketers Do Well by
Doing Good
• Many believe
sustainability is no longer
an option.
– Firms must focus on
the triple bottom line.
– Sustainability is often
sensible business.
American consumers’ values are changing as

many more of us are prioritizing “natural” food
products that don’t contain extra additives.
Developing a Sustainable Marketing Mix
• Target marketing strategies

– Green customers
• Product strategies
– Fair trade suppliers
• Price strategies
• Place/Distribution strategies
– Locavorism
• Promotion strategies
Sustainable Customer Behavior
• A sustainability approach doesn’t end with an improvement
in the manufacturing process.
• Marketers need to motivate customers.
• Customers can be a part of sustainable marketing practices.
Brand You: Finding the Right Fit
• Organizational Culture
– The location of the business.
– The personality of key players.
– The management philosophy and style.
– Risk-taking.
– Ethics.
– Social responsibility
• Differences among Industries
– Recognize each industry has a different culture.
• Landing a Job Overseas
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Marketing: Real People, Real Choices

Which option should be pursued?

• Firms face uncertainty in the future of the global

• Initiatives in international regulation and cooperation help

• Understanding external environment is essential for

Do you think the Big Mac is a good product to

• Indicators of economic health

• Competition in the Microenvironment involves

• Marketers also need to understand the big picture—the

What three of these do you feel are the biggest challenges to

• Hong Kong Disneyland

Strategy Agreements Alliances Investment

Level of control Low Medium Blank

Strategy Agreements Alliances Investment

• Strategic alliances allow companies to pool resources

1. To what extent will company need to adapt marketing

• Marketing action cannot establish long-term relationships

• Vast differences in what people around the world

American consumers’ values are changing as

• Target marketing strategies

This work is protected by United States copyright laws and is

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