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International marketing 2

Week 8 lectureInternational e-marketing and

Social Responsibility and Ethical Issues in International Marketing

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Learning Objectives• Barriers to international e-marketing• Impact of e-marketing• Corporate Social Responsibility (CSR) and ethics • Code of ethics in businesses• Ethical issues in international marketing activities• ‘Green marketing’

The development of modern marketing

• A fundamental shift in business and consumer behaviour away from the mass manufacturing/marketing dominated by organisations.

• Personalised marketing now enabled by internet platforms:• web• email• cell phones

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• The internet has reshaped the global marketplace for international marketers both on the demand- and the supply-side

• Ultimate market place to buy and sell goods and services

• Opportunity for overseas expansion especially for SMEs

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Top 10 countries by internet usage (2014)

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Internet users by region as of July 2013

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Barriers to global e-marketing

• Several structural barriers that might slow down its expansion1. Language barriers2. Cultural barriers3. Infrastructure4. Knowledge barriers5. Access charges6. Government regulations

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Language barriers

• English language has dominated the web so far• 450 million users (English), 321 million users (Chinese),

122 million (Spanish)• Need to localize sites in clients language

• A study by Forrester research found that • business users on the web are three times more likely

to purchase when the website speaks their native language

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Cultural barriers

• Some culture (east Asian nations): business is routinely conducted on a personal basis

• Credit card culture• Lack of credit card culture• Online shoppers worried about credit card fraud

• Culture sensitivity• Amazon.com (shopping cart on US, shopping basket on the British website)• Male dominated Arab world, websites should avoid portraying women in roles of

authority

• Patriotism• In China, public fury by listing Taiwan and Hong Kong as countries instead of as

province

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Infrastructure

• Local IT infrastructure• Wi-Fi hotspots, broadband

penetration, security in internet connections and mobile phones in the country

• Citizens ability to utilize technology skilfully

• Transparency of country's business and legal environment

• The extent the government encourages the use of digital technologies

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Knowledge barrier

• Digital literacy of the host country• Ability to locate, understand and create information using digital

information• Digital literacy matter both in demand (customer) and supply (e-

business) side• Government should recognize the importance of having digital savvy

human resources to compete in the global market place

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Legal environment and government regulations• Regulations differs on issues such as

• data protection, customs, acceptance of the use of digital signatures and emailed contacts

• E-commerce is global but the law is mostly local• Either set up separate websites that comply with local laws or • one mega-site that copes with every conceivable local legal requirement

Impact of e-marketing

• Allows greater adaptation by firms• customisation of products and service

• Reduces costs:• transaction costs• cheaper than distribution/middlemen• cheaper than sales force

• Enhances reach• Allows consumers to buy when they like and where they like

(24/7)

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Impact of e-marketing

• Firms can provide unlimited information without human intervention

• Information easily accessed, understood and processed,• e.g. airline schedules, fares, seat allocation, ticketing

• Barriers due to size have been dismantled• Barriers due to geographical space and time zones are no longer

relevant• The information and the offer can be customised

• e.g. Dell computers built to individual specification

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Framework for classifying countries based on the “countries infrastructure development” and “countries marketing institutional

development.”

Country infrastructure

• Roads: for physical distribution• Tele-communications: availability and access to e-marketing tools

• PCs• Broadband access• Mobiles,

• Legislative bodies/open and free justice systems:• Prevention of fraud, redress etc.

• Usually associated with economic development

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Marketing institutional development

• Availability of • competitive, efficient and effective marketing institutions• Efficient and effective channel members as well as logistical support

Classification of countries

Developed infrastructure/Restrictive marketing institutionsE.g. Japan, Germany

Developed infrastructure/Competitive marketing institutionse.g. US, Hong Kong

Developing infrastructure/Restrictive marketing institutionse.g. Vietnam, Indonesia

Developing infrastructure/Competitive marketing institutionse.g. Mexico, Brazil

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20Institutional development HL

Expected penetration of e-marketing

Developed infrastructure/Restrictive marketing institutionsE.g. Japan, GermanyMed. e-mktg penetration

Developed infrastructure/Competitive marketing institutionse.g. US, Hong KongHigh e-mktg penetration

Developing infrastructure/Restrictive marketing institutionse.g. Vietnam, IndonesiaLow e-mktg penetration

Developing infrastructure/Competitive marketing institutionse.g. Mexico, BrazilMed. E-mktg penetration

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Marketing institutional developmentL H 21

Expected e-marketing costsDeveloped infrastructure/Restrictive marketing institutionsE.g. Japan, GermanyMed. e-mktg penetrationHigh. mktg cost

Developed infrastructure/Competitive marketing institutionse.g. US, Hong KongHigh e-mktg penetrationLow mktg cost

Developing infrastructure/Restrictive marketing institutionse.g. Vietnam, IndonesiaLow e-mktg penetrationHigh mktg cost

Developing infrastructure/Competitive marketing institutionse.g. Mexico, BrazilMed. E-mktg penetrationLow mktg cost

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Marketing institutional development

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Expected e-marketing demand

Developed infrastructure/Restrictive marketing institutionsE.g. Japan, GermanyMed. e-mktg penetrationHigh. mktg costHigh demand

Developed infrastructure/Competitive marketing institutionse.g. US, Hong KongHigh e-mktg penetrationLow mktg costHigh demand

Developing infrastructure/Restrictive marketing institutionse.g. Vietnam, IndonesiaLow e-mktg penetrationHigh mktg costLow demand

Developing infrastructure/Competitive marketing institutionse.g. Mexico, BrazilMed. E-mktg penetrationLow mktg costLow demand

Marketing institutional development

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Expected e-marketing profitabilityDeveloped infrastructure/Restrictive Marketing institutionsE.g. Japan, GermanyMed. e-mktg penetrationHigh. mktg costHigh demandHigh profitability

Developed infrastructure/Competitive marketing institutionse.g. US, Hong KongHigh e-mktg penetrationLow mktg costHigh demandMod. Profitability (competitive)

Developing infrastructure/Restrictive marketing institutionse.g. Vietnam, IndonesiaMod. e-mktg penetrationHigh mktg costLow demandLow profitability

Developing infrastructure/Competitive marketing institutionse.g. Mexico, Brazil Med. E-mktg penetrationLow mktg costLow demand/Low profitability

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Marketing institutional developmentL H

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Corporate Social Responsibility (CSR)

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Corporate Social Responsibility (CSR)

• CSR refers to an – obligation to pursue goals and practices that are in the best interest of

society• CSR focuses on

– the impact that business activity has on society

• while ethics is concerned with – the conduct of people within organisations

• Many companies create a formal Code of Ethics that summarize – core ideologies, corporate values, and expectations

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Issues in CSR

• environmental protection• workplace diversity• job safety• employee wellness

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Issues in CSR• How do CEOs decide what is in society’s best interest?

– Bangladeshi children lost garment industry jobs after the U.S. threatened trade sanctions and the children were worse off

– Nike has been criticized for alleged poor working conditions in its factories– Wal-Mart has been under fire for a number of reasons including labor

practices, resulting in social repercussions in communities it serves

Business Ethics

• Ethics are principles of morality or rules of conduct.

• Business Ethics are rules about how businesses and their employees should behave. Ethical behavior involves conforming to these rules.

• Code of Ethics (or code of conduct) is a set of rules for guiding the actions of employees or members of an organization.

• Codes of ethics address topics such as confidentiality of business information.• The code should be a guide of values for all employees within that company.

Ethics

• Not just a feeling• Not same as religion• Not just following the law• Not following what everyone does

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Ethical decision making

Most ethicalSpirit of moralityHigh commitment to

ethical questions

Practical standardAdherence to law

plus common sense

Least ethical

Just adherence to law

Low commitment to ethical decisions

Not ethical Not even following law

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Ethical issues in international marketing activities

1. Positioning

• Positioning a low-quality product as a high-quality product

• Product positioned to perform a function that is not true.

• e.g. cholesterol - reducing food, anti-aging cosmetics

• Blackmailing customers that if they do not use the product they will be harmed/ disadvantaged in someway

2. Product

• Products that can cause harm to customers/users, e.g. children's toys

• Products that pose a safety risk for users, • e.g. electric goods

• Products that can cause health problems, • e.g. side-effects of medicines

• Failure to inform about product content, • e.g. in food articles, nuts, sugar/salt

level• Use of environment-friendly packaging

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Ethical issues in international marketing activities (cont.)

3. Price

• Price cartels, where 2 or more competitors fix a price that is higher than competitive pricing

• Charging discriminatory prices without any extra value provided

• Transfer pricing: over/under pricing internal invoices for taxation purposes

• Charging high monopolistic prices, e.g. medicines for epidemic diseases, such as AIDS in Africa

• Pay bribery/illegal payments or gifts to acquire sales

4. Promotion

• Claiming inaccurate product benefits through advertising

• Not informing the customer fully through different communication

• Using inappropriate language/images in advertising

• Using discriminatory or degrading slogans• Advertising directed towards younger children

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Idealisation: depicting ideal types- young, thin models,

unrealistic scenarios or unattainable goals.

Photographic techniques used: digitisation, cropping and image manipulation

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Exoticisation: process of making someone seem exotic, strange, or different in ways that call attention to certain identity characteristics, such as skin colour, dress or appearance

e.g. a white-looking Western “tourist” imitates exotic looking “natives”

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Ethical issues in international marketing activities (cont.)

5. Place/distribution

• Discriminatory distribution, e.g. • forcing wholesalers and retailers to discriminate among customers (to whom

the product can be sold)

• Demanding unfair benefits/kickbacks/advances from retailers or suppliers

Importance of ethics on business

• Attract customers to firms product• Boosting sales and profit

• Employee retention• reduced turnover and increased productivity

• More people want to work for company: • Reduced recruitment cost and get more talented employee

• Attract investor• Company’s share price high thereby protecting the business takeover

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• Green marketing term refers to the – integration of business

practices and products that are friendly to the environment

– while also meeting the needs of the consumers.

– Using environmentally friendly recyclable products

• Eco-labelling – a label or logo to show that a

company is socially responsible – or the product adheres to green

marketing.

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Value-adding logistics and the environmental interface

Source: adapted from Wu and Dunn, 1995, p. 23 with permission from International Journal of Physical Distribution and Logistics Management, Emerald Group Publishing Ltd.

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Types of environmental strategic options: depend on how an organization wants to create value for its green customers and how change oriented its approach is.

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Benefits of strategic alliances with environmental groups

(eg. Greenpeace) • Increased consumer confidence in green products

and claims• Access to environmental information• Marketer access to new markets• Positive publicity and reduction of criticism• Education for consumers about key environmental

issues