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Reaching the internationalconsumer

An assessment of the international directmarketing environment

Timothy J. WilkinsonCollege of Business, Montana State University – Billings, Billings,

Montana, USA

Anna McAlisterUQ Business School, The University of Queensland, St Lucia, Australia, and

Scott Widmier

Department of Marketing and Professional Sales, Michael J. Coles College of Business, Kennesaw, Georgia, USA

Abstract

Purpose – The purpose of this paper is to offer an assessment of the international direct marketingenvironment.

Design/methodology/approach – This paper uses political, economic, social, and technological(PEST) analysis to investigate the business environment of international direct marketing. Thisframework is commonly used as a way of assessing the context of international marketing.

Findings – Globalization, technological innovation, and the spread of free-market governance havecreated new and interesting opportunities for managers who decide to use direct marketing to sell theirproducts overseas.

Practical implications – For managers considering international direct marketing, a carefulassessment of market prospects and a thoughtful evaluation of the PEST environment shouldmaximize potential opportunities while minimizing the risks associated with foreign markets.

Originality/value – This paper provides an overview of the international direct marketingenvironment and can, therefore, be used by practioners in their efforts to shapes direct marketingstrategy.

Keywords International marketing, Direct marketing

Paper type General review

IntroductionDirect marketing is defined as the use of consumer-direct (CD) channels to reach anddeliver goods and services to customers without using marketing middlemen (Kotlerand Keller, 2006). It allows marketers a more direct response from consumers(generally an order), allows marketers to better target niche markets, and allowsmarketers to sell a product without the expensive and lengthy process of getting it intotraditional channels. Direct marketing also presents many benefits to consumers,including avoiding the hassles of traffic congestion, parking headaches, lack of time,shortage of retail help, and lines at checkout counters. Consumers can browse througha larger selection of products than retail outlets generally carry and price shop

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/1750-5933.htm

Reaching theinternational

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Direct Marketing: An International Journal

Vol. 1 No. 1, 2007pp. 17-37

q Emerald Group Publishing Limited1750-5933

DOI 10.1108/17505930710734116



by browsing through mail catalogs and online shopping while in the comfort of theirhome or office. These advantages, for both consumers and marketers, alike have leadto the growth of direct marketing in the USA into a multibillion dollar industry,with $2.3 trillion in US sales in 2004, including 5.2 billion in web-driven sales and

$143.3 billion in catalog sales (www.the-dma.org/ratecards/listrental.shtml).Direct marketing is not just an American phenomenon, but a worldwide industry

with sales in excess of $101 billion dollars. In 1983, Theodore Levitt(1983) argued thatglobalization was creating an environment in which one should “sell the same thing,the same way, everywhere”. While the veracity of these words has been tempered withtime, the general thrust of a geocentric approach to business is certainly applicable inthe area of direct marketing.

The level of direct marketing activities varies fairly significantly from country tocountry with the USA still dominating the industry in terms of dollar amount andnumber of people involved. These variances might be explained by differences in thepolitical, economic, social, and political technological (PEST) environment. Thesedifferences create a divergence in the methods and techniques used by direct marketerson a country by country basis and are important to understand because, as thisindustry internationalizes, variations in the PEST environment will present challengesto firms operating in multiple country markets.

This paper uses PEST analysis to investigate the business environment of international direct marketing and understand its effect on the international directmarketer. This organizing framework – PEST – is the most commonly used tool forenvironmental analysis (Beamish, 1996). Political factors consist of the laws,regulations and governmental policies that facilitate or hinder direct marketing. Theeconomic environment includes macro level economic indicators, such as GDP,purchasing power parity (PPP), and wealth distribution that can be used in marketselection and macro-segmentation. The social environment includes variables related

to consumer behavior and cross-cultural communications. Technology involves boththe level of technological and infrastructure development and the breadth of consumeruse of technology. Both can have great impact on the method direct marketers used toreach the consumers.

In this paper, the consequences of each element of the PEST environment aredescribed. After examining the PEST environment in general, several issues specific todirect marketing are explored. The implications of the PEST environment for directmarketing firms are also discussed.

Political environmentNational government regulations and laws are a product of the political systems inwhich they originate, the socio-cultural backdrop which precedes those systems, and

the historical circumstances that give rise to political organization. Not only mustbusinesses be able to negotiate their way through a wide variety of regulations andlaws, but they must also understand how those regulations and laws are administered(or not, as the case may be) in country specific situations.

Direct marketing is heavily tied to a free-market system and entrepreneurship – theability of individuals to start and maintain moneymaking enterprises. Directmarketing offers individuals a means to achieve financial independence andcareer self-determination with a fairly minimum investment and a great deal of

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personal effort. In a world where most natural resources are already spoken for, directmarketing gives people the equivalent of the Oklahoma land rush in the modern age,offering money-producing opportunities for those willing to stake their claim withdirect marketing. In many countries, this is a capitalistic opportunity unparalleled in

history.The growth of direct marketing salespeople in many countries has its parallels to

the growth of the middle class in Victorian England or in the USA with itsaccompanying changes in political focus and power. Just as the growth of the middleclass was resisted by the power establishment, the growth of direct marketing may beresisted by governments because of the political changes it might bring about. Onewould anticipate this resistance to most often occur in countries run by authoritarianregimes, where individual freedom may threaten the power of the regime.

The complex political economy of China is a case in point. Communism, with centralplanning at its core, and totalitarianism as its means, is naturally at odds with thecapitalistic opportunity presented by direct marketing. Yet, the Chinese Governmenthas embraced free-markets as a means of achieving economic growth and politicalstability. This is why many Westerners were taken off guard when the Chinesegovernment banned direct selling in 1998. Companies such as Avon and Amway, thathad spent the previous decade entering the Chinese market, suddenly found that theirkey sales and distribution strategy was undermined by the communist government’scontrol orientation and paranoia concerning perceived threats to its power. Thegovernment claimed that meetings of direct marketers created “weird cults, triads,superstitious groups, and hooliganism” (Cateora and Graham, 2007, p. 508).

The current regime had reason to feel threatened by the growth of this tool foreconomic freedom. At the time of the ban, an estimated 30 million people participatedin direct selling in China (Wang, 2001). In response, 200,000 people took to the streets – many of them Avon ladies – and engaged in anti-government rioting. In 2005, China

lifted the ban on direct sales in China, thereby re-creating an environment which couldhold much promise for firms engaged in direct market. Nu Skin Enterprises, forexample, has set up 150 stand-alone stores across China. In 2004, the firm had sales of $106 million in China. Sales of $150 million were expected for 2006 as a result of thepolicy shift (Lowther, 2005). The paradox of Chinese governance necessarily leads tofits and starts in terms of economic and political development.

In contrast to totalitarian regimes, we could anticipate that governments thatsupport capitalism would embrace the opportunities that direct marketing presents toits economic growth and prosperity of its citizens. However, even in these countriesdirect marketing may run into political difficulties. One problem is brought on by therapid growth of direct marketing in a capitalistic environment. Politicians in the USA,urged on by a public overwhelmed by telemarketing calls, passed legislation creating

the DNC in March of 2003, thereby limiting direct marketers.Individual laws may also have an impact on direct marketers as they move from

country to country. Laws effecting information availability and access to consumersare of concern.

Information availabilityOne needed element for direct marketing is information on consumers within themarket. At the simplest level, this can be names, phone numbers, or addresses.


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However, additional information such as demographics, lifestyle, shopping habits, andfinancial data can help the direct marketer further refine the list of targeted consumers,thereby, increasing the closing rate of the direct marketing efforts (and thus reducingcosts). Privacy laws, rules, and conventions can affect the ability of the direct marketer

to asses this vital information.Different views on the issue of privacy, as exemplified by the USA and the Europe,

have led to widely divergent policy approaches to establishing and enforcing privacyrights. The US approach to privacy is largely one of self regulation, with sectorallegislation and limited privacy rights granted to the consumer. Because of historicalcircumstance, the US privacy laws are based on efforts to prevent harm from takingplace. The Fair Credit Reporting Act (FCRA) of 1992 was an effort to preventinaccurate information from being used to evaluate individuals who were applying forcredit. This was followed by many other privacy laws, culminating in theGramm-Leach Bliley Act in 1999, which provides limited protection against the saleof private financial information.

In contrast, the European approach begins with the assumption that individualsshould control the information that is associated with their identities. Different lawswere put in place, first by the Council of Europe Convention for the Protection of Individuals with regard to Automatic Processing of Personal Data in 1981, followedby the Data Protection directive ratified by the EU in 1995. This perceptive has led toa “consumer focused, top-down regulatory model” (www.netcaucus.org/books/privacy2000/Part5.pdf). For example, personal data are to be collected for purposeswhich are explicit, specified, and legitimate and may not be further processed in away that is incompatible with the purposes for which it was originally gathered.Moreover, personal data can be processed only if unambiguous consent is given,must be accurate and up to date, and can be kept “no longer than is necessary for thepurposes for which the data were collected” (www.cdt.org/privacy/eudirective/EU_Directive_.html).

The European Union has enacted the Data Protection initiative designed to protectthe privacy of its citizens by limiting the transmission of information outside of theEuropean Union solely to those countries that meet very specific data protectionrequirements. The EU Data Protection Directive has had an impact on the privacy lawsof numerous countries around the world. It has contributed to a global regulatoryenvironment because EU members are permitted to transfer data to other countriesonly if those countries have adequate levels of protection for personal data. By limitingthe transaction of data to countries which meet their requirements, the EU is extendingits regulatory mandates to the home countries of its trading partners. For example,responding to the EU directive, Canada passed national privacy legislation in 2001

(Cain, 2002).A number of Asian countries have also followed the European approach, including

India, Thailand, Philippines and Japan (Worlton, 2003). The Japanese Diet ratifiedlegislation in 2003, which required direct marketers who wished to trade or rent data toprovide consumers with an easy way to opt-out of such data sharing arrangements.The DMA considers this to be an improvement over the previous situation in Japanbecause in that country “something that is not validated by law is generally consideredsuspect at best, if not flat out illegal” (Meyers, 2003).

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Access to consumersLaws can limit the access of telemarketers to all or parts of the market within acountry. One controversial example of this is the US “Do-not-Call-List” (DNC)established by the Federal Trade Commission (FTC) in March of 2003. According to

this law, consumers can register their names on a national DNC and telemarketers arenot permitted to call anyone on this list. While this afforded many Americans adinnertime free of telemarketing calls, it had some profound positive and negativeeffects on the direct marketing industry making the DNC rather controversial. On thepositive, the DNC rule did force many unethical firms to close their doors while morelegitimate firms had to find new methods of contacting consumers.

On the negative, many firms moved their operations overseas or to Puerto Ricowhere the DNC did not apply causing a loss of thousands of jobs in the USA. Thisnegative impact was magnified by the fact that most telemarketing firms in the USAlocated in small towns provided, in many cases, the only decent employment. For firmsoverseas, the DNC list provides a goldmine of verified consumer phone numbers to usein telemarketing efforts. The negative impact of the DNC rule highlights the problemscreated by not recognizing direct marketing as a worldwide industry. European directmarketers have viewed the American DNC rule mostly in negative terms. Respondingto the US DNC registry, the Federation of European Direct Marketing (FEDMA) tookaction to prevent similar regulations from being adopted in Europe (Arnold, 2004).

Despite this move, Telephone Preference Service laws still exist in Europe that aresimilar to the US DNC rule. Luxembourg, where direct selling is viewed as an intrusion,has taken privacy regulations to such extremes that several direct marketers choosenot to do business there. In the UK, there is a legislation against door-to-door sellingand cold calling. Most field sales representatives there must rely upon referrals andpersonal relationships in order to gain access to consumers (Ponder, 2005a, b).

Many countries have also enacted laws that allow a “cooling off period” where a

consumer is given several days, seven for most of Europe, in which to withdraw theirpurchases with no monetary penalties. In Japan, the Door-to-Door Sales Law allows foran eight-day “cooling off” period for products valued at more than ¥3,000 (about $25US) during which a sales contract may be cancelled without penalty. Exemptionsinclude consumable goods if the product has been used, as well as automobiles(Ponder, 2006b).

Ability to recruit and expandMuch of the rapid expansion of direct marketing is fueled by the ability to recruitpart-time salespeople who are seeking to add to their income. One method of quicklyexpanding a network is multilevel marketing. This technique is used by companiessuch as Avon, Amway, Tupperware, and Nu Skin. Salespeople, in these companies, can

make money either through commissions from selling product or from sellingdistributorships to other individuals. Each person in the chain receives a cut of thecommissions obtain from their recruits, on down the line.

Many countries have enacted laws either directly aimed at discouraging this form of direct marketing or have employment laws making multi-level marketing problematic.Italy, China, France and Spain laws exist which define what is a full and/or part timeemployee along with rules and regulations applying to each (Ponder, 2005a, b, 2006a).France and Spain requires part time direct marketers to pay social security on


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their earnings. Even more problematic for some direct marketers are regulations incountries which are aimed directly at limiting multilevel marketing. In China,legislation against “upline and downline relations” was put in place in December of 2005 and is being fought by direct marketers (Ponder, 2005a, b). Germany has had

strong regulations in place to avoid “snowball” distribution.The implications of differences in the regulation of privacy and other issues related

to direct marketing suggest that despite the “flattening” of the world, political and legalchallenges will continue to impede direct marketing efforts into the foreseeable future.The challenge for international direct marketing is to appropriately select countries forentry where impediments are comparatively low vis-a -vis potential market outcomes,and to learn how to work within the constraints of different regulatory regimes.Ironically, not all laws and regulations are bad for the direct marketing industry. InIndia, the growth of direct marketing has been stunted by early scam companies. Inresponse, the India Direct Selling Association has petitioned the Indian Government toincrease regulation of the direct selling industry (Ponder, 2006c).

Economic environmentThe global economy has been portrayed as both “flat” (Friedman, 2005) and “spiky.”The former characterization, made in Tom Friedman’s bestselling book, The World is Flat suggests that that “ten flatteners” have leveled the playing field in globalcommerce so that, for example, software engineers in Bangalore can write code as wellas Americans in Silicon Valley. These “flatteners” include large historical changes,such as the end of communism and the creation of the internet, as well as developmentsof lesser importance, like “open source” software and supply-chain management. Incontrast, using some striking visual imagery in the October 2005 issue of The Atlantic Monthly, Richard Florida asserts that geography still makes a difference ineconomic development and innovation. He points out, using quantifiable indicators

such as number of patents, light emissions, and scientific citations, that substantialeconomic activity is concentrated in a comparatively small number of locations aroundthe globe.

It may be that both the authors are largely correct, but are simply handling differentparts of the elephant. In our opinion, globalization should be understood as economicintegration. Direct marketing plays a role as both a facilitator of integration and as abeneficiary of a more interdependent global economy. The reason for this, isstraightforward. Traditional channels, particularly retail channels, attribute success tothree factors; location, location, and location. The best location is close and convenientto consumers with the financial ability and desire to purchase the products carried bythe channel. In contrast, direct marketing has no physical location since, by definition,it is a consumer direct channel. Its location is, wherever a consumer looks at a catalog

or the internet, talks with a field sales representative, or listens to a telemarketing call.As a result, direct marketing is able to go into areas where traditional channels cannotreach. What follows is a discussion of the impact the economic environment may haveon direct marketing in developed and developing economies.

Developed economiesDeveloped economies have the highest per-capita expenditures in the world makingthem very attractive to vendors. As a result, developed countries also have the largest

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numbers of marketers offering a dizzying array of products. This can make it veryhard for a marketer to be seen or selected by consumers, thereby requiring fairlysignificant expenditures of advertising dollars and a sophisticated approach to theconsumer. In addition, developed economies are well serviced by a rather high density

of retail establishments offering consumers the ability to see, feel, touch, and take homethe product all in one-trip. This is instant gratification that direct marketing justcannot match.

Despite these challenges, direct marketing has a strong presence in developedeconomies. Though direct marketing may not have a great share of consumers’expenditures, the level of disposable income available in developed countries makesthis small share respectable in dollar amounts. In addition, higher disposable incomesallows consumers to pursue hobbies creating niche markets that direct marketing isuniquely positioned to take advantage of.

The top two direct marketing countries in total sales are developed economies, withthe USA at $29.6 billion and Japan at $27 billion. Other developed countries in the top

ten of direct marketing sales include the UK ($3 billion), Italy ($3 billion), Germany($2.9 billion), and France ($1.7 billion). Developed and the prosperous parts of developing nations account for less than 15 percent of the world’s population (WorldFederation of Direct Selling Association (www.wfdsa.org/)).

Developing economiesPeople in developing economies represent over 85 percent of the world’s population.However, they have much less individual wealth to spend on products making themless attractive to marketers on a per-person basis. However, as stated previously, directmarketing by nature is not limited to a location so can make a large population of acountry like China or India profitable through large quantities of small transactions. In

addition, the lower per capita GDP makes developing countries less attractive totraditional marketers reducing the level of competition in these countries.

The growth of direct marketing in developing countries is aided by high levels of unemployment as people seek ways to earn additional money or gain added incomesecurity. In Russia, despite the many challenges including a still-developing bankingindustry, over 2 million people have become direct sellers and run their owndistributorships (Ponder, 2006a). When Argentina’s monetary crash hit in 1999 andunemployment climbed into double digits in 2001 and 2002, direct selling grew aspeople sought other ways to make a living (Ponder, 2005a, b).

Developing economies lack the retail infrastructure present in developed economies.As a result, direct marketing has great opportunities to distribute a much wider arrayof products. “Latin America doesn’t have a strong retail infrastructure,” said JaneGarrard, Vice President of Investor and Media Relations for Tupperware.

Tupperware functions as a channel there, selling many products through the same channel.On the other hand in the US, Tupperware is a brand market and sells primarily onlyhousewares.” (Ponder, 2005a, b, p. 70).

Many items that traditionally are sold only through retail channels in developedcountries can successfully be distributed through direct marketing in developingeconomies.


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Developing economies that are experiencing rapid growth are known as “emergingmarkets.” The most important recent economic development in emerging markets isthe transition of China from a stultified, Marxist regime relying on central planning, toa free-market authoritarian regime, testing the limits of capitalism under political

repression. China has pursued a gradualist approach to its development. Beginning inthe 1970s, it liberalized prices, developed a stock market, ended collectivizedagriculture and opened up to foreign direct investment. The driving force behindChina’s embrace of capitalism is the need to sustain employment growth for millions of workers that have previously been employed by state owned enterprises. Today, Chinais the second largest economy in the world as measured on the basis of PPP. Despitethis, great disparities exist between regions, with 150 million Chinese living in poverty(CIA, 2005).

Targeting economiesFor direct marketing firms that wish to expand into international markets, basic

demographic data is key to properly selecting country markets and accuratelysegmenting consumers. Table I provides information on population, GDP and PPP.Fundamental to market selection and segmentation is the identification of groups of consumers that possess disposable income. Macroeconomic indicators are a startingplace in the effort to identify these consumers. Gross domestic income is an aggregatemeasure of products and services produced by a nation over a period of time. Eventhough it is a blunt measure of wealth, it is available for almost all countries in theworld and can be used for simple comparative purposes. PPP is used to take intoaccount difference is prices by measuring a “bundle” of goods and services asdenominated in local currencies. With a GDP of $2,228,862, China is a less attractivemarket than either Japan or Germany. However, on a PPP basis, China moves to secondplace. Using PPP per capita a different picture emerges. The countries where

consumers have the greatest purchasing power on a per capita basis include in order,Luxembourg, Bermuda, USA, Norway and Liechtenstein.

Deregulation, economic liberalization and global interdependence bode well for thefuture international direct marketing. For direct marketers, the challenge is to identifyhigh-growth economies that are politically stable and are not overrun with competitors.Emerging markets may provide the greatest opportunities for international directmarketing. According to an A.T. Kearney Inc. report, “If things go right, in less than 40years the BRIC economies together could be larger than the G6 [Britain, Farnce,Germany, Italy, Japan, and the United States] in US dollar terms.” The report statesthat consumer spending hits a “sweet spot” when per capita income exceeds $3,000 peryear. Russia is already there and China and Brazil, followed by India, may reach thislevel in little over a decade (A.T. Kearney Inc., 2006a).

In addition to the emergence of attractive consumers in emerging markets,developing countries remain attractive as resource-seeking foreign direct investmentlocations. Wage inflation and the entry of newer, low-cost countries into the inventoryof possible outsourcing locations, is increasing the flexibility of direct marketers thatmay wish to move contact centers, back-office processing or other operations, overseas.Table II lists the top ten locations for services outsourcing based on financial structure,skills availability and business environment. The combination of low wages and highskill levels make India, by far, the leading services location. Even so, the persistence of

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P o p u l a t i o n ( M i l l i o n s )

G r o s s d o m e s t i c i n c o m e

( m i l l i o n s o f U S d o l l a r s )

P u r c h a s i n g p o w e r p a r i t y G N I

( m i l l i o n s o f i n t e r n a t i o n a l

d o l l a r s )

G r o s s d o m e s t i c i n c o m e

p e r c a p i t a ( U S d o l l a r s )

P u r c h a s i n g p o w e r

p a r i t y p

e r c a p i t a

1 C h i n a

1 , 3 0 4 , 5 0 0 U S A

1 2 , 4 5 5 , 0 6 8 U S A

1 2 , 4 0 9 , 4 6 5 L u x e m b o u r g

6 5 , 6 3 0 L u x e m b o u r

g

6 5 , 3 4 0

2 I n d i a

1 , 0 9 4 , 5 8 3 J a p a n

4 , 5 0 5 , 9 1 2 C h i n a

8 , 5 7 2 , 6 6 6 N o r w a y

5 9 , 5 9 0 B e r m u d a

a

3 U S A

2 9 6 , 4 9 7 G e r m a n y

2 , 7 8 1 , 9 0 0 J a p a n

3 , 9 4 3 , 7 5 4 S w i t z e r l a n d

5 4 , 9 3 0 U S A

4 1 , 9 5 0

4 I n d o n e s i a

2 2 0 , 5 5 8 C h i n a

2 , 2 2 8 , 8 6 2 I n d i a

3 , 8 1 5 , 5 5 3 B e r m u d a

a

N o r w a y

4 0 , 4 2 0

5 B r a z i l

1 8 8 , 4 0 5 U n i t e d K i n g d o m

2 , 1 9 2 , 5 5 3 G e r m a n y

2 , 4 1 7 , 5 3 7 D e n m a r k

4 7 , 3 9 0 L i e c h t e n s t e i n

a

6 P a k i s t a n

1 5 5 , 7 7 2 F r a n c e

2 , 1 1 0 , 1 8 5 U n i t e d K i n g d o m

1 , 9 2 6 , 8 0 9 I c e l a n d

4 6 , 3 2 0 S w i t z e r l a n d

3 7 , 0 8 0

7 R u s s i a n F e d e r a t i o n

1 4 3 , 1 5 1 I t a l y

1 , 7 2 3 , 0 4 4 F r a n c e

1 , 8 2 9 , 5 5 9 U S A

4 3 , 7 4 0 C h a n n e l I s l a n d s

a

8 B a n g l a d e s h

1 4 1 , 8 2 2 S p a i n

1 , 1 2 3 , 6 9 1 I t a l y

1 , 6 6 7 , 7 5 3 L i e c h t e n s e i n

a

I c e l a n d

3 4 , 7 6 0

9 N i g e r i a

1 3 1 , 5 3 0 C a n a d a

1 , 1 1 5 , 1 9 2 B r a z i l

1 , 6 2 7 , 2 6 2 S w e d e n

4 1 , 0 6 0 I r e l a n d

3 4 , 7 2 0

1 0 J a p a n

1 2 7 , 9 5 6 B r a z i l

7 9 4 , 0 9 8 R u s s i a n F e d e r a t i o n

1 , 5 5 9 , 9 3 4 I r e l a n d

4 0 , 1 5 0 H o n g K o n g

3 4 , 6 7 0

1 1 M e x i c o

1 0 3 , 0 8 9 S o u t h K o r e a

7 8 7 , 6 2 4 S p a i n

1 , 1 3 3 , 5 3 9 J a p a n

3 8 , 9 8 0 D e n m a r k

3 3 , 5 7 0

1 2 P h i l i p p i n e s

8 3 , 0 5 4 I n d i a

7 8 5 , 4 6 8 C a n a d a

1 , 0 6 1 , 2 3 6 U n i t e d K i n g d o m

3 7 , 6 0 0 A u s t r i a

3 3 , 1 4 0

N o t e s : W o r l d D e v e l o p m e n t I n d i c a t o r s d a t a b a s e , W o r l d B a n k ,

J u l y 1 2 0 0 6 ; a d a t a n o t a v a i l a b l e f o r 2 0 0 5

Table I.Population, GNP,

purchasing power parity


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burdensome regulation and poor infrastructure are holding the nation back.Nonetheless, good language and IT skills make India the most attractive location foroutsourcing direct marketing activities (A.T. Kearney Inc., 2006b). As a result, directselling in India has experienced a 15-20 percent annual growth for the past five years(Ponder, 2006c).

Social environmentThe importance of social considerations is tremendous for marketers intending to usedirect marketing in an international context. Iyer and Hill (1996) argue that factorssuch as efficient overnight international delivery and improved electronic paymentsystems have created a marketplace environment that facilitates international trade,by extension, international direct marketing. Evidently, international direct marketing

is crossing social boundaries. Here, we examine an aspect of society, namely culture,and how cross-cultural considerations must be accounted for in international directmarketing. Cultural concerns in the delivery of direct marketing messages may includethe appropriateness of language used, greetings and salutations, appearance andpresentation of marketing materials, and the appropriateness of various differentforms of direct marketing.

Whether it is presented in printed form or verbally, language is arguably a primaryconcern for all direct marketers. When attempting cross-cultural marketing, the use of local language may assist marketers in gaining credibility and building rapport in aforeign environment. However, this is a complicated task and miscommunication oftenhas devastating consequences. It is dangerous to assume that, following a simple directtranslation, a message generated for one audience will be appropriate for use in acountry whose primary language differs. Two common errors occur here. First, thedirect translation may not make sense. Second, despite an accurate translation themessage may be culturally insensitive or inappropriate for the cross-cultural audience;it may need additional “tweaking.”

Many classic examples of poorly translated marketing messages exist. For example,one Romanian firm produced a beautiful, four color, 12 page pamphlet for use at tradeshows. The first sentence reads, “ELSID S.A. was set up in 1984 through brings intooperation the production capacity of calcinated petroleum coke and beginning on 1985

Rank Country Total Score

1 India 6.872 China 6.14

3 Malaysia 6.074 Philippines 5.785 Singapore 5.736 Thailand 5.727 Czech Republic 5.588 Chile 5.589 Canada 5.52

10 Brazil 5.50

Source: A.T. Kearney Inc. (2005)Table II.Services location index

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the production capacity of graphite electrodes, which [sic] is using in arc furnaces frommetallurgy.” You can imagine that this brochure did not improve sales!

Sometimes issues with language are not due to translation problems, but maysimply be attributed to the fact that a perfectly acceptable company name or slogan in

one country reads differently in another. For example, the Italian maker of batterychargers, Powergen, developed a web site to facilitate international marketing of itsproducts. Italians may be used to a company name followed by “Italia” to indicate thecompany’s Italian origin. However, the company’s web site URL, www.powergenitalia.com, caused English-speaking users to be concerned that the web site may, in fact,have been an adults-only site. Powergen has since changed its URL.

There are, however, positive examples where international direct marketing hassuccessfully crossed a cultural divide. In Australia, in 2006, the US owned Domino’s hitthe spot with a successful marketing campaign for their new roast beef and baconflavored pizza. Flyers in letterboxes around the country read, “Unleash the blokewithin . . . Domino’s Roast Beef Special.” This slogan successfully conveyed themessage that the new pizza flavor is manly, since it contains a larger serve of meatthan other pizza flavors. The term “bloke” is a uniquely Australian way of referring toa man. It is used with affection down under, but would be relatively meaninglessthroughout the rest of the world. Here, we see that an international corporation, withoutlets in more than 50 countries worldwide, has very successfully reached the heartsof its Australian segment via the use of culturally suitable language.

Appropriate greetings and salutations have also been identified as language issuesto be considered when engaging in international direct marketing. Despite twodifferent countries having the same primary language, and perhaps even beinggeographically close, cultural differences such as socio-economic class structure andmethod of governance may result in a tendency for the audience of potential consumersto prefer to be addressed in a particular manner. Graves (1997) illustrates this point via

an analysis comparing American and Canadian direct marketing letters. Graves statesthat culturally sensitive marketing can be complex and requires more than, forexample, “replacing the White Sox with the Blue Jays in references.” He argues thatcultural considerations such as the relatively small power distance between socialclasses in the US manifest in direct marketing being worded in such a way as to reducethe power distance between the consumer and the company. As such, direct marketingletters (e.g. invitations to join a credit card company) in the USA typically begin with“Dear Friend” and are worded to assert that “the receiver is virtuous, similar to thesender, or deserving of some reward” (Graves, 1997, 243). In contrast, direct marketingletters targeting a Canadian audience are more likely to acknowledge the powerdistance that exists in Canada: “The tone is less informal and less likely to attempt toestablish a relationship between sender and receiver based on anything other than the

business being transacted” (Graves, 1997, 244).Graves’ (1997) comparison of American and Canadian direct marketing letters also

revealed interesting differences in the presentation of marketing materials – differences that were tied to cultural differences between the countries. Political lettersdirected to Americans were presented on what appeared to be personal writing paperand were typewritten using a less formal font. Canadians, however, received politicalletters printed on letterhead with features suggestive of bureaucracy and formality.Graves argues that these differences were underpinned by the relatively strong


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segregation of marketer from consumer in Canada compared to the US Anecdotalevidence suggests that Australian direct marketing letters tend to align with the USmanner of address and presentation, however, research evidence is not currentlyavailable to support this contention.

Differences in presentation of marketing materials across different cultural contextsmay also have to do with the actual method of direct marketing used. For example, theUS direct marketers are more likely to reach their audience via the internet, comparedto European direct marketers. In 1996, use of the internet in Europe was three to fourtimes smaller than in the USA, however, that gap is rapidly closing (Eder, 1996).Despite the fact that direct marketing has been used in Western Europe longer than inthe USA (Iyer and Hill, 1996), the USA also uses more frequent database marketingthan Europe (Eder, 1996). According to Eder (1996), international direct marketingwithin the European Union is complicated by different countries having various localrules, languages and laws. Sweden, France, and Germany are most restrictive withrespect to data protection laws. However, these three countries, along with the UK,Austria, and Switzerland, are considered to robustly employ direct marketing methods.Eder argues that the highly developed mail delivery service in these countriesfacilitates direct marketing for mail order businesses.

Contextual differences between various countries in Europe also play a role indetermining the European countries to which the US international direct marketing istargeted. For example, before the introduction of the Euro, the US direct marketerstended to be concerned about the ease of converting European currencies into the USdollar amounts. As a result, the US companies were more likely to target directmarketing to those European countries where credit cards were more frequently used(Iyer and Hill, 1996). Prevalence of credit card use appears to have, in the past, been adeterminant of direct marketing within the domestic the US market also. Researchershave suggested that the US direct marketing traditionally paid little attention to the

Hispanic population which was previously perceived as “lacking in credit instruments”(Korgaonkar et al., 2000).

The meaning of friendship in different cultures also plays a pivotal role indetermining the cultural appropriateness of various methods of direct marketingacross different countries. What is considered acceptable in one country may beoffensive and brash in another. The US-based cosmetics company, Avon, has venturedbeyond the domestic market and found success in certain foreign countries. InAustralia and Mexico, Avon’s success may be attributed to the fact that locals welcomethe home calls of sales representatives as an opportunity to socialize. In Japan, acosmetics sales representative can be very successful selling directly to friends,relatives, and neighbors (Laidler, 1996). In contrast, the pyramid selling schemes andhome visits are considered intrusive and insincere in Europe, where selling to friends

for the purpose of generating profit is offensive. Moreover, as previously described,China in the late 1990s, banned Avon, Amway, and Mary Kay from direct sellingbecause “the Chinese public was insufficiently mature to detect fake products orscams” (Living with your landlord, 1998).

Although the selection of appropriate media is one of the most important decisionsto be made when planning international direct marketing (Dillon, 1976; Iyer and Hill,1996), significant differences are rarely seen in terms of the popularity of various printmedia. For example, catalogs, magazines, and brochures are the top three printed

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forms of direct marketing in both the US and the Europe, while flyers and newspapershave lesser popularity in both regions (Iyer and Hill, 1996). Direct mail-outs are alsogaining popularity in China, where production costs such as labor and materials arerelatively low, compared to traditional forms of advertising which are expensive in

Asia. The popularity of direct mail advertisements in China may also be attributed tothe country’s cheap and efficient postal system.

Similarities and differencesPerhaps, an obvious question is whether to assimilate or diversify when planning adirect marketing campaign that will cross cultural boundaries. Some researchers arguethat the very nature of international direct marketing promotes standardization inorder to benefit from the similarities across consumers from different nations (Levitt,1983; Ohmae, 1985), while others literally say “No way!” (Eder, 1996, p. 48). Possiblythe key to resolving this debate is to acknowledge that the direct marketing of certainproduct categories is differentially affected by culture. For example, it seems that

Coca-Cola is accepted worldwide. The Coca-Cola Company exemplifies the geocentric,or standardized, approach to marketing because it makes only minor adjustments to itsmarketing mix to suit local regions. In contrast, when the Mattel Company marketstheir famous Barbie doll worldwide, they are forced to adapt to local markets. Nowselling in at least 140 countries worldwide, the Barbie product as well and itsassociated marketing have been altered to represent “more than thirty nationalitieswith at least forty different career personas” (MacDougall, 2003, p. 257). In Japan,Barbie has brown eyes, darker hair, and a less sexual body than the original Barbiedesigned for the American market. In India, the original Barbie is marketed, but theKen doll does not sell because open courtship is frowned upon in Indian culture.

The marketing of soft drinks and fast food by Coca-Cola and McDonald’s,respectively, may be successfully standardized because these product categories are

more or less universally accepted; drinks and food satisfy basic human needs and arerelatively unobjectionable (Maslow, 1970). Barbie dolls, on the other hand, carryvarious cultural meanings. For example, they are often considered to represent themost coveted body shape and features in a particular culture. Barbie and Ken dollsmay also provide children with symbols of the accepted conception of a romanticrelationship within a culture (MacDougall, 2003). Compared to soft drinks and fastfood, Barbie and Ken dolls may, therefore be considered as objects that are “loaded”with cultural connotations. The key to successful cross-cultural marketing is tostandardize the design of international direct marketing only when the productcategory is relatively universal in its meaning. Standardization of internationalmarketing in that context may be beneficial in terms of reducing production time andassociated costs. However, the success of international direct marketing of “culturally

loaded” products may rely on carefully tailoring the marketing message to suitindividual local markets and thereby avoiding offence to consumers.

Technological environmentDirect marketing is defined as the use of CD channels to reach and deliver goods andservices to customers without using marketing middlemen (Kotler and Keller, 2006).The variety of channels used for direct marketing in the USA, continues to grow inresponse to competitive, customer, and regulatory pressures encompassing the


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technologically dependent channels such as interactive TV, the internet, and mobiledevices. Overseas, however, available technology can impact direct marketing in twoways:

(1) availability of channel; and

(2) consumer expectations.

Availability of channelsThe level of technology of a country or region can have a great impact on what directmarketing channels are available for use. The least technologically dependant methodof direct marketing is the field sales call. Avon, a leader in the field of door-to-doorsales, has had a great success in moving into international markets moving into manytechnologically undeveloped portions of the globe with its sales force in 26 developingcountries ( Wall Street Journal , 2003).

Amway corporation, operating in 42 countries, has also experienced great successwith the door-to-door method of direct marketing (Foster, 2003) profitably expanding

into Latin America and Asia (Chang, 2003). In Eastern Europe, where many people arelooking for ways to become entrepreneurial, Amway’s door-to-door sales methods haveproven to be very successful. In the Czech Republic, Amway Corporation signed up25,000 Czechs as distributors and sold 40,000 starter kits at $83 each in its first twoweeks of business (Foster, 2003).

Utilizing direct mail and catalogs for direct marketing requires an efficient postalsystem and effective system for shipping products. For full efficiency, access to amailing address list and an inbound telemarketing operation is needed. Some catalogcompanies have found unique solutions to distributing catalogs. For example, ShopAmerica who teamed up with Seven-Eleven Japan to distribute catalogs in its 4,000stores (Cateora and Graham, 2005). In short, direct mail is a viable medium in anincreasing number of countries.

Telemarketing requires a reliable telephone infrastructure, large numbers of subscribers, and easily obtained directories. Until the advent of the DNC in the USA in2004, telemarketing was a good method for direct marketing with 672 out of 1,000people having telephone lines (Table III) giving coverage of 67 percent. Other countriespose challenges due to a relatively poor landline infrastructure. India has only 45 linesper 1,000 people, Indonesia has 57 lines per 1,000, and South Africa has 99 lines per1,000 (Table III). This means that direct marketers can contact only 4.5 percent of thepopulation in India, 5.7 percent in Indonesia, and 9.9 percent in South Africa.

Many developing countries are leapfrogging telephone technology and goingdirectly into cell-phone technology. In 1999, Hong Kong and Korea were the first tohave more wireless subscribers than landlines. Malaysia, New Zealand, Singapore andTaiwan achieved that in 2000 (Table III). In the Asian region, the wireless market

surpassed the landline market in 2002 and widened the gap in 2003-2004. The numberof wireless subscribers increased 21.5 percent to 632.6 million in 2004, while thelandline market increased 11.8 percent to 515.1 million (Wallace, 2005).

The primary reason that wireless outnumbering landlines are that wireless requiresa less expensive and easier to build infrastructure of towers as opposed to the expenseand effort that goes into traditional land-lines. This leapfrog process presents problemsfor direct marketers wanting to use outbound telemarketing since wireless phoneproviders may charge customers both for outgoing and incoming calls. The direct

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P C ’ s

C a r s

P h o n e s

T V

P C h o u s e h

o l d s

( n u m b e r p e r

0

0 0 0

p e o p l e )

I n t e r n e t u s e r s

( n u m b e r p e r

0

0 0 0 p e o p l e )

P a s s e n g e r c

a r s i n

u s e ( n u m b e r p e r

0

0 0 0 p e o p l e )

P r o p o r t i o n o f p a v e d

r o a d s ( p e r c e n t a g e o f

t o t a l r o a d n e t w o r k )

T e l e

p h l i n e s

( n u m

b e r p e r

0

0 0 0

p e o p l e )

M o b i l e t e l e p h o n e s

( n u m b e r p e r

0

0 0 0

p e o p l e )

C o l o r T V

h o

u s e h o l d s

( n u m b e r p e r

0

0 0 0

p e o p l e )

A r g e n t i n a

1 0 4

1 7 8

1 2 7

3 0

2 3 3

5 8 6

2 5 5

A u s t r a l i a

6 2 1

6 9 7

5 3 9

4 7

5 6 7

9 1 2

3 4 3

B e l g i u m

2 4 9

4 1 9

4 6 6

7 9

4 6 1

9 0 8

4 2 4

B r a z i l

1 2 2

1 5 4

1 0 3

1 0

2 3 4

4 7 5

2 5 5

C a n a d a

4 9 5

6 5 9

4 7 2

5 6 7

5 1 5

3 6 9

C h i l e

1 5 2

2 8 9

8 5

2 1

2 1 3

6 5 5

1 7 3

C o l o m b i a

6 3

1 1 7

3 8

1 5

1 7 2

4 8 2

2 3 1

C z e c h

R e p u b l i c

2 1 9

6 0 2

3 8 4

1 0 0

3 1 6

1 1 5 5

3 3 9

E c u a d o r

4 5

6 2

4 1

1 9

1 2 8

4 7 0

1 4 3

E s t o n i a

5 3 4

3 6 7

2 7

3 2 9

1 0 7 5

3 6 9

F i n l a n d

4 7 0

6 4 2

4 5 7

6 4

4 0 6

1 0 0 2

4 5 7

F r a n c e

3 9 7

4 7 2

5 0 2

1 0 0

5 9 2

7 9 7

3 9 9

G e r m a n y

4 9 6

4 5 5

5 5 7

1 0 0

6 6 6

9 5 8

4 6 3

G u a t e m a l a

2 5

8 1

8

3 8

8 8

2 5 6

H o n g K o n g

4 8 7

5 3 6

5 8

1 0 0

5 3 9

1 2 2 7

3 0 9

H u n g a r y

1 3 9

3 2 1

2 8 7

4 4

3 3 3

9 2 5

3 3 9

I n d i a

1 5

4 7

9

3 9

4 5

7 0

6 9

I n d o n e s i a

1 7

1 0 1

1 7

4 7

5 7

2 0 9

1 4 0

I t a l y

2 7 7

5 5 7

2 5

1 0 0

4 2 9

1 2 2 6

3 8 2

J a p a n

4 3 0

5 1 6

4 4 5

8 0

4 6 0

7 4 1

3 7 8

K o r e a

5 8 8

7 0 1

2 4 6

8 0

5 0 2

8 1 0

3 4 3

L i t h u a n i a

1 6 5

3 5 8

4 0 0

8 9

2 3 5

1 2 7 8

3 0 5

M a l a y s i a

2 4 0

4 1 4

2 3 2

8 1

1 6 7

7 4 9

1 9 3

M e x i c o

1 3 7

1 6 0

1 3 9

3 6

1 8 5

4 4 9

2 1 2

N e t h e r l a n d s

5 3 1

6 6 2

4 4 8

9 0

4 6 5

9 6 8

4 2 9 ( c o n t i n u e d )

Table III.Use of technology by

country


consumer

31



P C ’ s

C a r s

P h o n e s

T V

P C h o u s e h

o l d s

( n u m b e r p e r

0

0 0 0

p e o p l e )

I n t e r n e t u s e r s

( n u m b e r p e r

0

0 0 0 p e o p l e )

P a s s e n g e r c

a r s i n

u s e ( n u m b e

r p e r

0

0 0 0 p e o p

l e )

P r o p o r t i o n o f p a v e d

r o a d s ( p e r c e n t a g e o f

t o t a l r o a d n e t w o r k )

T e l e

p h l i n e s

( n u m

b e r p e r

0

0 0 0

p e o p l e )

M o b i l e t e l e p h o n e s

( n u m b e r p e r

0

0 0 0

p e o p l e )

C o l o r T V

h o u s e h o l d s

( n u m b e r p e r

0

0 0 0

p e o p l e )

N e w Z e a l a n d

4 6 1

8 3 0

6 6 9

6 6

4 4 8

8 7 7

3 7 1

N o r w a y

5 7 4

4 1 7

4 4 0

7 9

4 6 2

1 0 3 2

4 1 5

P a n a m a

4 6

1 0 9

7 6

4 1

1 3 7

2 7 5

P o l a n d

1 6 3

2 6 5

3 2 5

7 1

3 2 3

7 5 9

3 0 9

P o r t u g a l

1 6 3

3 0 4

4 0 6

8 6

4 0 4

1 0 9 1

3 6 1

R u s s i a

1 5 5

1 6 6

1 7 4

6 9

2 8 3

8 4 7

2 8 5

S i n g a p o r e

8 4 1

7 2 0

1 2 3

1 0 0

5 2 4

1 2 4 5

2 8 7

S l o v e n i a

3 6 0

5 1 6

4 6 2

1 0 0

4 0 8

8 8 0

3 2 4

S o u t h

A f r i c a

9 4

8 2

8 3

2 1

9 9

6 3 8

1 7 1

S p a i n

2 5 3

3 9 9

4 9 2

9 9

4 4 8

1 0 1 1

3 6 8

S w e d e n

6 8 0

7 8 9

4 6 1

8 0

7 1 6

1 1 3 6

4 5 5

S w i t z e r l a n d

7 7 5

5 0 0

5 2 9

6 9 8

9 3 3

4 3 6

T a i w a n

4 6 5

5 5 8

2 4 5

9 6

5 9 9

9 7 5

3 1 3

T h a i l a n d

6 1

1 3 0

8 2

1

1 1 4

2 6 1

2 3 6

T u r k e y

6 0

1 8 6

6 8

6 7

2 6 1

5 9 9

1 4 4

U k r a i n e

2 8

1 2 6

1 2 0

9 7

2 5 9

3 6 7

3 3 8

U n i t e d

K i n g d o m

4 4 9

6 8 7

5 1 2

4 2

5 6 4

1 0 6 1

4 1 8

U S A

7 2 8

6 1 9

4 7 9

5 9

6 7 2

7 0 4

3 8 7

U r u g u a y

1 6 4

2 3 0

1 5 5

9 0

2 9 0

2 8 4

S o u r c e : T h e W o r l d B a n k , ( 2 0 0 6 )

Table III.

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marketer risks alienating customers by costing them money for the telemarketing calls(Kirby, 2004).

Wireless, specifically cell-phone technology, also presents wonderful opportunitiesfor direct marketing. Cell-phones not only handle voice calls but they also have the

ability to receive text messages all the way up to full multimedia presentations. InPoland, for instance, messages from local retailers scan across cell-phone screensenticing them into the stores (Wood, 2005). This ability makes cell-phones an ideal andrich one-to-one marketing tool. However, lawmakers are exploring laws to protectconsumers from a deluge of marketing on intended for cell-phones (Kirby, 2004).

Direct marketing by television includes advertisements run during regularprogramming that provide an inbound telemarketing number for the benefit of interested viewers. It also includes dedicated shopping channels such as the homeshopping network (HSN) which operates in the USA. These channels provide anunending series of products for sale displayed by a star or salesperson. A sense of urgency is created by the limited quantity available as shown by a countdown timer. Inaddition, viewers who call to purchase an item may be interviewed live on television.These channels require widespread ownership of televisions along some sort of broadcast infrastructure, as well as access to telephones for in-bound telemarketing.

In countries where penetration of television is not extensive or a direct marketerwants to reach an alternative market, radio may offer a non-visual alternative. In somecountries, the USA, South Africa ( Africa News, 2006) and Ireland (Oliver, 2006) thepercentage of radio listeners is relatively high but experiencing maturity if not somesigns of decline. New technology such as Ipods, podcasts, and other MP3 technology iscutting into radio’s share of the at home and commuter listeners. However, in Asiaradio is quickly coming out of the shadow of television and other media. The rise of automobile ownership and the increase of mobile phones that can receive radio havelead to this increase in listeners (Bowman, 2004).

Usage of the world wide web for direct marketing has blossomed in the USA due toits richness and speed as well as the number of people who use the internet. The web ison and able to take orders 24 hours 7 days a week from any location worldwide,making it a relatively inexpensive alternative for direct marketers wanting to goabroad. web pages can be set up to customize themselves based upon the shopper’sinput, while at the same time providing the direct marketer a wealth of data. The reachof the internet is very good in a number of countries including the USA, Australia,Canada, Czech Republic, Finland, Korea, Singapore, Sweden, and the UK (Table III). InNew Zealand, 830 out of 1,000 people use the internet (83 percent of the population)!Reach is rather poor in several developing countries such as Ecuador, Guatemala,Indonesia, Panama, and South Africa. In India, only 47 out of 1,000 people (4.7 percent)of the population are internet-users making the internet less attractive to direct

marketers.

Consumer expectationsThe level of technology within a country can influence the expectations customershave of direct marketing, which in turn can directly affect media chosen, products sold,and message used. There are two categories of customer expectations; interactivity andimmediacy.


consumer

33



The first category is the level of interactivity of the direct marketing channel, whichincludes the ability to experience or sample the product and the customizability of theshopping experience. Field sales calls have the highest level of interactivity of any of the direct marketing channels. Avon salespeople customize the makeup products

offered to direct observation of the prospect’s skin type and complexion. The customercan sample the product and see how the product satisfies his or her needs beforepurchasing. This interactivity continues to be a driver for the success of field salescompanies such as Avon and Amway (Foster, 2003).

The internet also interacts with customers. Direct marketers can customize thecontent seen by prospects through the use of profiles, clicking behavior, and othersimilar data. Customers can interact with the computer to see products in threedimensions, change color choice on the product, and watch film clips of the product alldepending on their needs and choice. As use of the internet goes up, the use andpreference for non-interactive forms of direct marketing, such as catalogs, may decline.

The second category is the immediacy of the direct marketing experience, includingthe speed by which the purchase is made and the product received. In some countries,such as the USA, if people want products today they can simply climb into their carand drive to a variety of retail establishments and have the product the same day. Carsare used by 479 out of 1,000 people and over 50 percent of the roads are paved in theUSA (Table III). Thus, direct marketers must offer easy shopping with fast delivery inorder to compete with retail establishments. In other countries, such as India wherenine out of 1,000 people (less than 1 percent) use a car, direct marketing is a speediermethod to purchase products. Consumers in these markets may find their range of retail options is limited by where public transportation or their feet can take them.

ConclusionIn this paper, we used the PEST framework to analyze the international direct

marketing environment. We described some of the major legal and regulatory issuesfacing direct marketers, as wells as matters related to cross-cultural communicationand technology. Firms that engage in international direct marketing should make useof the PEST framework for the purpose of market selection as well as for strategicdecision making while operating in overseas markets. The PEST environment is notstatic, and it has both a direct and an indirect impact on firm opportunities and firmperformance.

James Barnett, the former Vice President of the Goodyear Tire and RubberCompany, has stated that that when you think of the global economy you should thinkof the word “complexity”. Firms, whether large are small, must make their waythrough a thicket of complicated issues if they wish to succeed in doing businessoverseas. Yet, the challenge is often worth the trouble because opportunities in

international markets are enormous; this is especially the case for firms that bypasstraditional distribution channels and market their products directly to their customers.

Emerging markets should be particularly attractive to direct marketers. TheGlobalEDGE resource web site and Michigan State University produces an index of market potential indicators which shows which countries are the most attractive formarket entry. The 24 countries listed in the index include emerging markets in Asia(i.e. China, South Korea, and India), Eastern Europe (Czech Republic and Poland) andSouth America (Mexico, Brazil, and Argentina). These countries have high rates of

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growth and therefore have a high level of market potential. However, many emergingeconomies also court a great deal of risk for international firms. For example,Venezuela, Columbia and Indonesia are included in the 24-country index even thougheach presents unique and difficult challenges in terms of political, financial and

economic risk. The applicability of such risk to particular international firms can bereadily assessed using the PEST framework. We recommend that direct marketersactively pursue opportunities in foreign markets, but only after thoroughly assessingthe potential benefits and possible costs that those opportunities present.

Globalization, technological innovation, and the spread of free-market governancehas created new and interesting opportunities for managers who decide to use directmarketing to sell their products overseas. For managers, considering internationaldirect marketing, a careful assessment of market prospects and a thoughtful evaluationof the PEST environment should maximize potential opportunities while minimizingthe risks associated with foreign markets.

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Ponder, K. (2005a), “Selling to ‘neighbours’ – tres European”, Direct Selling News, Vol. 1 No. 10.

Ponder, K. (2005b), “Building acierto (success) in Latin America”, Direct Selling News, Vol. 1 No. 1.

Ponder, K. (2006a), “The billion dollar club: how the top countries compare”, Direct Selling News,Vol. 2 No. 1.

Ponder, K. (2006b), “Direct selling in Japan: challenges of culture and currency”, Direct Selling News, Vol. 2 No. 3.

Ponder, K. (2006c), “India on the rise”, Direct Selling News, Vol. 2 No. 2.

The World Bank (2006), from Euromonitor www.euromonitor.com/

Wallace, B. (2005), “Assessing Asian opportunities”, Telecommunications International , Vol. 39No. 6, pp. S3-S6.

Wall Street Journal (2003), “Avon Products Inc.: earnings forecast is raised on internationalperformance”, Wall Street Journal , March 31, p. B4.

Wang, C.C.L. (2001), “The rise and fall of direct selling in China: lessons for internationalmarketers”, Journal of International Marketing & Marketing Research., Vol. 26 No. 3,pp. 139-50.

Wood, D. (2005), “Five ways to avoid cell regulation”, Brandweek, Vol. 46 No. 2, p. 20.

Worlton, A.E. (2003), Asia Opts for EU-Style Privacy, WRF Privacy in Focus, Washington DC,available at: www.wrf.com

Further reading

Bannon, L. and Vitschum, C. (2003a), “One-toy-fits-all: how industry leanred to love the globalkid”, Wall Street Journal , April 29th, p. A1.

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Bannon, L. and Vitschum, C. (2003b), “A challenge to barbie, toy franchises”, The Economist ,April 19th, p. 66.

Florida, R. (2005), “The world is spiky”, The Atlantic Monthly, October, pp. 48-51.

Ricks, D.A. (2006), Blunders in International Business, 4th ed., Blackwell Publishing,

Cambridge, MA.

Scribbins, K. (2002), “Privacy@net, an international comparative study of consumer privacy onthe internet”, available at: www.consumerinternaitonal.org/campaigns/index.html#electronic (accessed at 6 January).

Smith, H.J. (2001), “Information privacy and marketing: what the US should (and shouldn’t) learnfrom Europe”, California Management Review, Vol. 43 No. 2, pp. 8-33.

Corresponding authorTimothy J. Wilkinson can be contacted at: [email protected]


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