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Chapter 2: Global, Ethical, and Sustainable Marketing
Chapter 2
Global, Ethical, and Sustainable Marketing
I. CHAPTER OVERVIEW
In this chapter, students are introduced to global marketing and explore ways in which economic,
political, legal, and cultural issues influence global as well as domestic marketing strategies and
outcomes. These issues also affect whether or not businesses choose to enter a global market.
Students also learn that if a business does enter a global market, the level of commitment is
directly related to the level of control. The chapter discusses how marketers make product, price,
place, and promotion decisions in foreign markets. Ethical business practices are important for
the firm to do its best for stakeholders and to avoid the consequences of low ethical standards.
Many firms practice sustainability when they develop target marketing, product, price,
place/distribution, and promotion strategies designed to protect the environment.
II. CHAPTER OBJECTIVES
Understand the big picture of international marketing and the decisions firms must make
when they consider globalization.
Explain how international organizations such as the World Trade Organization (WTO),
economic communities and individual country regulations facilitate and limit a firm’s
opportunities for globalization.
Understand how factors in a firm’s external business environment influence marketing
strategies and outcomes in both domestic and global markets.
Explain some of the strategies and tactics that a firm can use to enter global markets.
Understand the importance of ethical marketing practices.
Explain the role of sustainability in marketing planning.
III. CHAPTER OUTLINE
►MARKETING MOMENT INTRODUCTION
Ask the class for new product suggestions and conduct a simple vote (raise of hands) to choose
one of the product suggestions for an in-depth discussion of global challenges for marketing that
product across cultures and borders.
p. 31 REAL PEOPLE, REAL CHOICES—HERE’S MY
PROBLEM AT JOHNSON & JOHNSON
When Johnson & Johnson launched the Earthwards® process in
2009, Keith and his team used it to encourage J&J’s products
teams to make significant improvements to 60 products. Today,
Johnson & Johnson has integrated and expanded the original
Us
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
process across the company. It uses the Earthwards® approach to
drive continuous innovation. As he considered the best strategy
to promote Earthwards®, Keith knew that one of his biggest
challenges was to convince J&J’s 127,000 employees around the
globe to buy into the idea. He needed a way to drive awareness
and interest in the Earthwards® approach to sustainable product
development across Johnson & Johnson. Generating awareness,
understanding and adoption of the process was a key
performance metric against which his team would be measured.
Keith had only limited resources to accomplish this objective. He
considered his options:
1. Host regional green marketing conferences to showcase
key tools and resources available to key stakeholders.
2. Develop a customer intranet site, including an online
scorecard to take Earthwards® submissions from an Excel
spreadsheet to an online database accessible by all
employees.
3. Develop a high-touch strategy of identifying leaders
within Johnson & Johnson for meetings and training
sessions.
The vignette ends by asking the student which option he/she
would choose.
Keith chose option #2.
Website: www.earthwards.jnj.com
p. 32 1. TAKE A BOW: MARKETING ON THE GLOBAL
STAGE
Firms doing business in this global economy face uncertainty in
the future of the global marketplace. Consumers and world
leaders have argued that the development of free trade and a
single global marketplace will benefit us all because it allows
people who live in developing countries to enjoy the same
economic benefits as citizens of more developed countries.
There are other reasons for a single marketplace. One important
reason comes from fears of the Greenhouse Effect, the turning
of our atmosphere into a greenhouse due to carbon dioxide, The
result, many believe, is global warming, a warming of the earth
which will have disastrous effects on the planet.
There is another single marketplace issue. The Arab Spring, a
series of anti-government protests and uprisings in Arab
countries aided by social media, gave hope that dictatorships in
the Middle East would become democracies. Instead, new violent
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
p. 33
radical groups such as ISIS took over.
1.1 World Trade
World trade refers to the flow of goods and services among
different countries—the total value of all the exports and imports
of the world’s nations. Today, we see increasing growth in world
trade with world exports of merchandise increasing from $12
trillion in 2009 to nearly $19 trillion in 2014.
In some countries, because sufficient cash or credit is simply not
available, trading firms work out elaborate deals in which they
trade (or barter) their products with each other or even supply
goods in return for tax breaks from the local government. This
countertrade accounts for as much as 25 percent of world
trade.
Figure 2.1
Snapshot: North
American
Merchandise
Trade Flows
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p. 34
1.2 Should We Go Global?
When firms consider going global, they must think about this in
four steps:
Step 1. “Go” or “no go”—is it in our best interest to
focus exclusively on our home market or should we
cast our net elsewhere as well?
Step 2. If the decision is “go,” which global
markets are most attractive? Which country or
countries offer the greatest opportunity for us?
Step 3. What market-entry strategy, or rather, what
level of commitment is best?
Step 4. How do we develop marketing mix
strategies in the foreign markets? Should we
standardize what we do in other countries, or
develop a unique localized marketing strategy for
each country?
1.2.1 The Globalization Decision
1.2.2 Look at Domestic and Global Market Conditions and
Opportunities
Many times, a firm decides to go global because domestic
demand is declining while demand in foreign markets grows.
1.3 Consider Your Competitive Advantage
Firms hope to create competitive advantage over rivals. When
firms compete in a global marketplace, this challenge is even
greater because there are more players involved, and typically,
some of these local firms have a “home-court advantage.” If it
wants to go global, a firm needs to examine the competitive
advantage that makes it successful in its home country. Will this
Figure 2.2
Process:
Steps in the
Decision Process
for Entering
Global Markets
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
competitive advantage also extend to other countries?
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2. UNDERSTAND INTERNATIONAL, REGIONAL,
AND COUNTRY GLOBAL TRADE CONTROLS
Often governments erect roadblocks (or at least those pesky
speed bumps) designed to favor local businesses over outsiders
that hinder a company’s efforts to expand into foreign markets.
2.1 Initiatives in International Cooperation and
Regulation
The World Trade Organization (WTO) replaced the General
Agreement on Tariffs and Trade (GATT) and helped reduce the
problems that protectionism creates. The World Trade
Organization has made giant strides in creating a single open
world market. The objective of the WTO is to “to ensure that
trade flows as smoothly, predictably and freely as possible.”
Two additional organizations have a strong influence on the
advancement of global trade: the World Bank and the
International Monetary Fund (IMF).
The primary purpose of the IMF, also founded in 1944, is to
ensure the stability of the international monetary exchange by
controlling fluctuations in foreign exchange rates, the price of
one currency in terms of another currency. Stabilizing exchange
rates prevents problems with the balance of payments, a
statement of how much trade a country has going out compared
to how much it has coming in.
2.2 Protected Trade: Quotas, Embargoes, and Tariffs
In some cases, a government adopts a policy of protectionism in
which it enforces rules on foreign firms designed to give home
companies an advantage.
Many governments set import quotas on foreign goods to
reduce competition for their domestic industries. Quotas can
make goods more expensive to a country’s citizens because the
absence of cheaper foreign goods reduces pressure on domestic
firms to lower their prices.
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
An embargo is an extreme quota that prohibits commerce and
trade with a specified country altogether.
Governments also use tariffs, or taxes on imported goods, to
give domestic competitors an advantage in the marketplace by
making foreign competitors’ goods more expensive than their
own products.
Discussion question: Ask students to discuss products they know that are associated with import
quotas, an embargo, and tariffs. How do they feel about these protected trade roadblocks in the
context of the products they mentioned?
p. 36 2.3 Economic Communities
Groups of countries may also band together to promote trade
among them and make it easier for member nations to compete
elsewhere. These economic communities coordinate trade
policies and ease restrictions on the flow of products and capital
across their borders.
Economic communities are important to marketers because they
set policies in areas such as product content, package labeling,
and advertising regulations.
Table 2.1
Some Major
Economic
Communities
around the World
Website: www.wto.org
Discussion question: Ask students what they think about the various economic communities.
How would/will they affect their lives as consumers?
p. 37 3. ANALYZE THE EXTERNAL MARKETING
ENVIRONMENT
Whether or not you have decided to venture into a foreign
market, it is essential to understand your external environment.
For firms that choose to limit themselves to their domestic
market, having a sharp picture of the marketing environment
allows them to make good decisions about marketing strategies.
If you’ve decided to go global, understanding local conditions in
potential new country or regional markets helps you to figure out
just where to go.
Figure 2. 3
Snapshot:
Elements of the
External
Environment
Troubleshooting Tip: Just as in the last chapter, it is important to emphasize that the marketing
environmental factors listed in this section of the chapter represent nicely the “OT” of the
SWOT analysis—additionally, it is important for students to recognize that these “OT” factors
are not directly controllable by the company.
p. 37 3.1 The Economic Environment
Understanding the economy of a country in which a firm does
business is vital to the success of marketing plans. Countries with
the highest incomes have experienced lower growth rates (2.4
percent in 2016) compared to much higher growth rates in lower
income countries (5.3 percent) and 5.9 percent in countries with
Table 2.2
Selected
Comparisons of
Economic and
Demographic
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
p. 38
the lowest level of development, the least developed countries
(LDCs).
3.1.1 Indicators of Economic Health
The most commonly used measure of economic health of a
country is the gross domestic product (GDP): the total dollar
value of goods and services a country produces within its borders
in a year. A similar but less frequently used measure of economic
health is the gross national product (GNP), which measures the
value of all goods and services a country’s individuals or
organizations produce, whether located within the country’s
borders or not. In addition to total GDP, marketers may also
compare countries based on per capita GDP: the total GDP
divided by the number of people in a country.
GDP and exchange rates alone do not provide the information
marketers need to decide if a country’s economic environment
makes for an attractive market. They must consider economic
infrastructure, the quality of distribution, financial, and
communications systems.
Characteristics
p. 40 3.1.2 Level of Economic Development
Level of economic development takes into consideration the
broader economic picture of a country.
A country’s standard of living is an indicator of the average
quality and quantity of goods and services a country consumes.
Economists describe the following three basic levels of
development:
A country at the lowest stage of economic development is
an LDC. In most cases, its economic base is agricultural.
In least developed countries, the standard of living is low,
as are literacy levels. Bottom of the pyramid (BOP) is
the name for four billion consumers who live on less than
$2 a day.
When an economy shifts its emphasis from agriculture to
industry, standards of living, education, and the use of
technology improve. These countries are developing
countries. In such locales, there may be a viable middle
class, often largely composed of entrepreneurs working
hard to run successful small businesses. Because over
eight out of 10 consumers now live in developing
countries, the number of potential customers and the
presence of a skilled labor force attract many firms to
Sachet packaging
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
these areas. The largest of the developing countries,
Brazil, Russia, India and China, are referred to as the
BRIC countries or simply as the BRICs. These four
countries are the fastest growing of the developing
countries and they represent over 42 percent of the
world’s population.
A developed country boasts sophisticated marketing systems,
strong private enterprise, and bountiful market potential for many
goods and services. Such countries are economically advanced,
and they offer a wide range of opportunities for international
marketers. The United States, the United Kingdom, Australia,
Canada, France, Italy, Germany, and Japan are the most
economically developed countries in the world. In 1975, they
established the Group of Seven (G7) to serve as an informal
forum for these nations (Russia’s membership was revoked
because of its involvement in the Crimean crisis).
p. 41 3.1.3 The Business Cycle
The business cycle is the overall pattern of changes or
fluctuations of an economy. All economies go through cycles of
prosperity (high levels of demand, employment and income),
recession (falling demand, employment and income), and
recovery (gradual improvement in production, lowering
unemployment, and increasing income). A severe recession is a
depression; a period during which prices fall but there is little
demand because few people have money to spend and many are
out of work. Inflation occurs when prices and the cost of living
rise while money loses its purchasing power because the cost of
goods escalates.
p. 41 3.2 The Competitive Environment
Firms must keep abreast of what the competition is doing so they
can develop new product features, new pricing schedules, or new
advertising to maintain or gain market share.
An increasing number of firms around the globe engage in
competitive intelligence (CI) activities, the process of gathering
and analyzing publicly available information about rivals. The
firm uses this information to develop superior marketing
strategies.
►Marketing Moment In-Class Activity
Have students identify information about companies that is publicly available. How can you get
the information? What type of information is available? What does this information tell you
about the company in terms of target market, marketing strategy, pricing strategy, etc.
p. 42 3.2.1. Competition in the Microenvironment
Competition in the microenvironment means the product
alternatives from which members of a target market may choose.
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
p. 42
We think of these choices at three different levels. At a broad
level, marketers compete for consumers’ discretionary income:
the amount of money people have left after paying for necessities
such as housing, utilities, food, and clothing. A second type of
choice is product competition, in which competitors offering
different products attempt to satisfy the same consumers’ needs
and wants. The third type of choice is brand competition, in
which competitors offering similar goods or services vie for
consumer dollars.
3.2.2. Competition in the Macroenvironment
When we talk about examining competition in the
macroenvironment, we mean that marketers need to understand
the big picture—the overall structure of their industry.
Four structures describe differing amounts of competition.
A monopoly exists when one seller controls a market.
In an oligopoly, there are a relatively small number of
sellers, each holding substantial market share, in a market
with many buyers.
In a state of monopolistic competition, many sellers
compete for buyers in a market.
Finally, perfect competition exists when there are many
small sellers, each offering the same good or service.
Website: Asia Insight: www.asiainsight.com
p. 43 3.3 The Technological Environment
Changes in technology profoundly affect marketing activities.
Amazon had been working on drones, unmanned aircraft
controlled by a GPS, to deliver packages. A patent is a legal
document that grants inventors exclusive rights to produce and
sell a particular invention in that country. Marketers monitor
government patent applications to discover innovative products
they can purchase from the inventor.
Website: H&M virtual fashion: www.hm.com
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3.4 The Political and Legal Environment
The political and legal environment refers to the local, state,
national, and global laws and regulations that affect businesses.
3.4.1 American Laws
Laws in the United States governing business have two purposes.
Some such as the Sherman Antitrust Act and the Wheeler–Lea
Act make sure that businesses compete fairly with each other.
Others, such as the Food and Drug Act and the Consumer
Products Safety Commission Act, make sure that businesses do
Table 2.3
Significant
American
Legislation
Relevant to
Marketers
Table 2.4
U.S. Regulatory
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
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not take advantage of consumers.
3.4.2 Political Constraints on Trade
Global firms know that the political actions a government takes
can drastically affect their business operations. Short of war, a
country may impose economic sanctions that prohibit trade with
another country (as the United States has done with several
countries, including Cuba and North Korea), so access to some
markets may be cut off. Nationalization occurs when the
domestic government reimburses a foreign company (often not
for the full value) for its assets after taking it over.
Expropriation occurs when a domestic government seizes a
foreign company’s assets (and that firm is just out of luck). Now
that the United States has normalized relations with Cuba, it
remains to be seen if these firms seek reimbursement for their
lost property.
3.4.3 Regulatory Constraints on Trade
Governments and economic communities regulate what products
are allowed in the country, what products should be made of, and
what claims marketers can make about them. Local content
rules are a form of protectionism stipulating that a certain
proportion of a product must consist of components supplied by
industries in the host country or economic community.
3.4.4 Human Rights Issues
Some governments and companies are vigilant about denying
business opportunities to countries that mistreat their citizens.
They are concerned about conducting trade with local firms that
exploit their workers or that keep costs down by employing
children or prisoners for slave wages.
3.4.5 The U.S. Generalized System of Preferences
The U.S. Generalized System of Preferences (GSP) is a
program established by Congress to promote economic growth in
the developing world. GSP regulations allow developing
countries to export goods duty-free to the United States.
Agencies and
Responsibilities
Websites:
Environmental Protection Agency (EPA): www.epa.gov
Federal Communications Commission: www.fcc.gov
Federal Trade Commission (FTC): www.ftc.gov
Food and Drug Administration (FDA): www.fda.gov
Discussion question: What human rights issues are particularly of concern among your students?
Why?
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
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3.5 The Sociocultural Environment
Another element of a firm’s external environment is the
sociocultural environment. This term refers to the characteristics
of the society, the people who live in that society, and the culture
that reflects the values and beliefs of the society. Whether at
home or in global markets, marketers need to understand and
adapt to the customs, characteristics, and practices of its citizens.
3.5.1 Demographics
Demographics are statistics that measure observable aspects of a
population, such as size, age, gender, ethnic group, income,
education, occupation, and family structure.
3.5.2 Values
Every society has a set of cultural values, or deeply held beliefs
about right and wrong ways to live, that it imparts to its
members. For example, for most Americans, punctuality is a core
value; indeed, business leaders often proclaim that “time is
money.” For countries in Latin America and other parts of the
world, this is not at all true.
In collectivist cultures, such as those found in Venezuela,
Pakistan, Taiwan, Thailand, Turkey, Greece, and Portugal, people
tend to subordinate their personal goals to those of a stable
community. In contrast, consumers in individualist cultures,
such as the United States, Australia, Great Britain, Canada, and
the Netherlands, tend to attach more importance to personal
goals, and people are more likely to change memberships when
the demands of the group become too costly.
3.5.3 Social Norms
Social norms are specific rules dictating what is right or wrong,
acceptable or unacceptable.
3.5.4 Language
Language barriers can affect product labeling and usage
instructions, advertising, and personal selling.
3.5.5 Consumer Ethnocentrism
Ethnocentrism refers to the belief that one’s own norms and the
products made in your country are superior. Consumer
ethnocentrism refers to consumers’ beliefs about products
produced in their country versus those from another.
►Marketing Moment In-Class Activity
Have students identify countries and products or stereotypes they associate with those countries.
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
For example, chocolate may be associated with Switzerland while wine may be associated with
France. What products do students associate with Brazil? Nothing? What does that mean if you
are the minister of trade for Brazil? What other countries did students associate with ‘wine’?
What does that say about the global wine industry?
p. 48 4. HOW “GLOBAL” SHOULD A GLOBAL
MARKETING STRATEGY BE?
Going global is not a simple task. If a firm decides to expand
beyond its home country, it must make important decisions about
how to structure its business and whether to adapt its product
marketing strategy to accommodate local needs.
p. 49 4.1 Company-Level Decisions: The Market Entry
Strategy
Just like a romantic relationship, a firm deciding to go global
must determine the level of commitment it is willing to make to
operate in another country. At one extreme, the firm simply
exports its products; while at the other extreme it directly invests
in another country by buying a foreign subsidiary or opening its
own stores. The decision about the extent of commitment entails
a trade-off between control and risk. Direct involvement gives
the firm more control over what happens in the country, but risk
also increases if the operation is not successful.
Table 2. 5
Market-Entry
Strategies
p. 49 4.1.1 Exporting
If a firm chooses to export, it must decide whether it will attempt
to sell its products on its own or rely on intermediaries to
represent it in the target country. These specialists, or export
merchants, understand the local market and can find buyers and
negotiate terms. An exporting strategy allows a firm to sell its
products in global markets and cushions it against downturns in
its domestic market.
p. 49 4.1.2 Contractual Agreements
The next level of commitment a firm can make to a foreign
market is a contractual agreement with a company in that country
to conduct some or all of its business there.
In a licensing agreement, a firm (the licensor) gives another
firm (the licensee) the right to produce and market its product in
a specific country or region in return for royalties on goods sold.
Franchising is a form of licensing that gives the franchisee the
right to adopt an entire way of doing business in the host country.
p. 50 4.1.3 Strategic Alliances
Firms seeking an even deeper commitment to a foreign market
develop a strategic alliance with one or more domestic firms in
the target country. These relationships often take the form of a
joint venture: Two or more firms create a new entity to allow
the partners to pool their resources for common goals. Strategic
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
alliances also allow companies easy access to new markets,
especially because these partnerships often bring with them
preferential treatment in the partner’s home country.
p. 50 4.1.4 Direct Investment
An even deeper level of commitment occurs when a firm
expands internationally through ownership, usually by buying a
business in the host country outright. Instead of starting from
scratch in its quest to become multinational, buying part or all of
a domestic firm allows a foreign firm to take advantage of a
domestic company’s political savvy and market position in the
host country.
p. 50
p. 50
4.2 Marketing Mix Strategies
In addition to “big picture” decisions about how a company will
operate in other countries, managers must decide how to market
the product in each country. They may need to modify the
famous four P’s—product, price, promotion, and place—to suit
local conditions.
4.2.1 Standardization versus Localization
Advocates of standardization argue that the world has become so
small that basic needs and wants are the same everywhere. In
contrast, those in favor of localization feel that the world is not
that small; you need to tailor products and promotional messages
to local environments. These marketers feel that each culture is
unique, with a distinctive set of behavioral and personality
characteristics.
Troubleshooting tip: The decision to employ a standardization vs. localization strategy is a very
complex one for a firm, so plan to have an in-depth discussion of the pros and cons related to
each type of strategy.
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p. 51
4.2.2 To P or Not to P: Tweak the Marketing Mix
4.2.3 Product Decisions
A firm seeking to sell a product in a foreign market has three
choices: sell the same product in the new market, modify it for
that market, or develop a brand-new product to sell there.
A straight extension strategy retains the same product
for domestic and foreign markets.
A product adaptation strategy recognizes that in many
cases people in different cultures do have strong and
different product preferences.
A product invention strategy means a company
develops a new product as it expands to foreign markets.
In some cases, a product invention strategy takes the form
of backward invention. A firm may find that it needs to
offer a less complex product than it sells elsewhere.
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
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4.2.4 Promotion Decisions
Marketers must also decide whether it is necessary to modify
their product promotions for a foreign market. Some firms
endorse the idea that the same message will appeal to everyone
around the world, while others feel the need to customize it.
4.2.5 Price Decisions
Costs stemming from transportation, tariffs, differences in
currency exchange rates, and even bribes paid to local officials
often make a product more expensive for a company to
manufacture for foreign markets than in its home country. To
ease the financial burden of tariffs on companies that import
goods, some countries have established free trade zones. These
are designated areas where foreign companies can warehouse
goods without paying taxes or customs duties until they move the
goods into the marketplace. One danger of pricing too high is
that competitors will find ways to offer their product at a lower
price, even if they do this illegally. Gray market goods are
items that are imported without the consent of the trademark
holder. Another unethical and often illegal practice is dumping,
in which a company prices its products lower than they are
offered at home—often removing excess supply from home
markets and keeping prices up there.
4.2.6 Place/Distribution Decisions
Getting your product to consumers in a remote location can be
quite a challenge. It is essential for a firm to establish a reliable
distribution system if it is going to succeed in a foreign market.
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5. ETHICS IS JOB ONE IN MARKETING PLANNING
It’s hard to overemphasize the importance of ethical marketing
decisions. Businesses touch many stakeholders, and they need to
do what’s best for all of them where possible. When major
companies defraud the public, everyone suffers.
5.1 Ethical Philosophies
What constitutes ethical behavior is often different for different
people. We can point to various ethical philosophies and see how
each guides people to make their decisions.
Utilitarian approach: The decision that provides the most
good or the least harm
Rights approach: The decision that does the best job of
protecting the moral rights of all affected
Fairness or justice approach: The decision that treat all
human beings equally
Common good approach: The decision that contributes to
Table 2.6
Some Common
Ethical
Philosophies
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Part 1: Understand the Value Proposition
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the good of all in the community
Virtue approach: The decision is in agreement with
certain ideal virtues
Ethical relativism suggests that what is ethical in one culture is
not necessarily the same as in another culture.
5.2 Codes of Business Ethics
Business ethics are basic values that guide a firm’s behavior. A
code of ethics refers to written standards of behavior to which
everyone in the organization must subscribe.
5.3 Is Marketing Unethical?
There are examples of questionable or unethical marketing.
Criticisms of marketing:
Marketing serves the rich and exploits the poor
Products are not safe
Poor-quality products
Planned obsolescence
Marketing creates interest in products that pollute the
environment
Easy consumer credit makes people buy things they don’t
need and can’t afford
5.4 When Is a Bribe Not a Bribe? Ethical Issues for Global
Business
Understanding the environment where you do business means
staying on top of the ethical values and norms of the business
culture in the marketplace. Bribery occurs when someone
voluntarily offers payment to get an illegal advantage. Extortion
occurs when someone in authority extracts payment under
duress.
6. SUSTAINABILITY: MARKETERS DO WELL BY
DOING GOOD
Firms today have a triple-bottom-line orientation. They don’t just
look at their financial successes but also focus on how they
contribute to their communities (their social bottom line) and
create sustainable business practices (the environmental bottom
line).
6.1 Sustainability Is a Sensible Business Decision
Sustainability adds to the need of the firm to sustain itself and the
long-term future of society. Sustainable companies that satisfy
the long-term needs of customers will survive.
Table 2.7
Highlights of the
American
Marketing
Association
Statement of
Ethics
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
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Find out what other students taking this course would do and
why www.mymktlab.com
Are you more likely to shop at a store that offers recycling?
6.2 Developing a Sustainable Marketing Mix
How some companies already implement sustainable marketing
practices:
Target marketing strategies: They target green customers
who are likely to buy eco-friendly products.
Product strategies: Some firms choose fair trade
suppliers who pay a fair price to producers in developing
countries.
Price strategies: Sustainable marketing practices aim to
establish prices for green products that equal the prices of
other products.
Place/distribution strategies: Locavorism means that
shoppers buy products from farms within 50 to 100 miles
of their homes.
Promotion strategies: Some firms “reuse” old
commercials and tell customers that this is their way of
practicing sustainability.
6.3 Sustainable Customer Behavior
Marketers need to understand what will motivate customers to
seek out, pay for, and use sustainable options.
►METRICS MOMENT
Sustainability metrics are tools that measure the benefits an
organization achieves through the implementation of
sustainability. Unfortunately, unlike many widely used financial
metrics, today there is no standardized method of measuring the
other two elements of the triple bottom line. Hence, it is
extremely hard to compare one company working toward
sustainability with another. The social capital metrics are
possibly the hardest set of metrics to develop—there are simply
too many variables to measure societal progress, and, as a result,
it is extremely difficult to develop standardized metrics.
Apply the Metrics
Today most large firms have a section on their website
that points to their sustainability initiative. Select any
large company that manufactures products. Review their
website and find their section on sustainability.
What are several of the key specific activities the firm
Exhibit:
A campaign for
fair trade bananas
from New
Zealand.
Ripped from the
Headlines:
Ethical/
Sustainable
Decisions in the
Real World
Exhibit:
American
consumers’
values are
changing as
many more of us
are prioritizing
“natural” food
products that
don’t contain
extra additives.
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points to as evidence that they are engaged in
sustainability-related activities?
What specific evidence do they report that quantify their
level of success in sustainability?
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Chapter 2: Global, Ethical, and Sustainable Marketing
IV. END-OF-CHAPTER ANSWER GUIDE
CHAPTER QUESTIONS AND ACTIVITIES
QUESTIONS: TEST YOUR KNOWLEDGE
Describe the market conditions that influence a firm’s decision to enter
foreign markets.
Marketers must consider domestic demand, the market potential abroad, and
a firm’s ability to have a competitive advantage in foreign markets. The
decision may be based on conditions where domestic demand is declining
while demand in foreign markets is growing.
2-2 Explain what world trade means. What is the role of the WTO and
economic communities in
encouraging free trade? What is the role of the World Bank and the
International Monetary
Fund in global trade? What is protectionism? Explain import quotas,
embargoes, and tariffs.
World trade refers to the flow of goods and services among different countries—
may take place through cash, credit payments, or countertrade. The World trade
organization
seeks to create a single open world market where trade flows “smoothly, predictably and
freely as possible.” Two additional organizations influence the advancement of global
trade:
the World Bank and the International Monetary Fund (IMF). The IMF stabilizes
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exchange rates to try to prevent problems with the balance of payments.
Some governments adopt policies of protectionism with rules designed to give
home companies an advantage. Such policies may include trade quotas,
embargoes, or tariffs
that increase the costs of foreign goods. Many countries have banded together
to form
economic communities to promote free trade.
Explain how GDP, the categories of economic development, and the business
cycle influence marketers’ decisions in entering global markets. What are the
BRICS countries? What is the Group of Seven (G7)?
The most commonly used measure of economic health of a country is the
gross domestic product (GDP), the total dollar value of goods and services
a country produces within its borders in a year. A similar but less frequently
used measure of economic health is the gross national product (GNP),
which measures the value of all goods and services a country’s individuals or
organizations produce, whether located within the country’s borders or not.
When marketers scout the world for opportunities, it helps if they consider a
country’s level of economic development to understand the needs of people
who live there and the infrastructure conditions with which they must
contend. Economists look past simple facts such as growth in GDP to decide
this; they also look at what steps are being taken to reduce poverty, inequality,
and unemployment.
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The largest of the developing countries, Brazil, Russia, India and China, are
referred to as the BRIC countries or simply as the BRICS. These four
countries are the fastest growing of the developing countries and they
represent over 42 percent of the world’s population. The Group of 7 (G7) is an
informal forum of the seven most economically developed countries that meets
annually to discuss major economic and political issues facing the
international community. Formerly the G8, Russia was excluded from the
group as a result of its invasion of Crimea in 2014.
Explain the types of competition marketers face: discretionary income
competition, product competition, and brand competition.
Discretionary income competition is the amount of money people have left
after paying for necessities such as housing, utilities, food, and clothing. Few
consumers are wealthy enough to buy anything and everything.
Product competition in when competitors offer different products to satisfy
the same consumer needs and wants.
When competitors offer similar goods or services and vie for consumer
dollars, this termed brand competition.
What are a monopoly, an oligopoly, monopolistic competition, and pure
competition?
A monopoly is a market situation in which one firm, the only supplier of a
particular product, is able to control the price, quality and supply of the
product.
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An oligopoly is a market structure in which there are a relatively small
number of sellers, each holding a substantial share of the market compete in a
market with many buyers.
Monopolistic competition is a market in which many firms offer slightly
different products, each with unique consumer benefits.
Pure competition is the market structure in which many small sellers, all of
whom offer similar products, are unable to have an impact on the quality,
price or supply of a product.
What aspects of the political and legal environment influence a firm’s decision
to enter a foreign market? Why are human rights issues important to firms in
their decisions to enter global markets?
When entering a foreign market, a firm must carefully weigh political and
legal risks. They must consider regulatory issues, and human rights issues.
Human rights issues are important because businesses, in general, do not want
to exploit workers or employ children or prisoners for slave wages.
What do marketers mean when they refer to technological and sociocultural
environments? Why do they need to understand these environments in a
global marketplace?
The technological environment provides firms with competitive advantages. The
technological environment profoundly affects marketing activities. Toll-free telephone
numbers, easy computer access to customer databases, and, of course, the Internet have
made it possible for people to buy virtually anything they want (and even some things they
don’t want) without ever leaving their homes. Successful marketers continuously scan the
external business environment in search of ideas and trends to spark their own research
efforts. These need to be understood in a global marketplace to allow the actions taken by
the firm to be most appropriate and effective in meeting customer needs and desires.
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Chapter 2: Global, Ethical, and Sustainable Marketing
The sociocultural environment refers to the characteristics of the society, the
people who live in that society, and the culture that reflects the values and
beliefs of the society. It includes the demographics, values, social, and
language of the society. Whether at home or in global markets, marketers
need to understand and adapt to the customs, characteristics, and practices of
its citizens.
What is ethnocentricism?
Ethnocentricism relates to the tendency to prefer products or the people of
one’s own culture to those from other countries. For firms that seek to enter a
foreign market, this willingness to try products made elsewhere comes slowly.
Describe the four globalization strategies representing levels of involvement
for a firm: exporting, contractual agreements, strategic alliances, and direct
investment.
A firm deciding to go global must determine the level of commitment it is
willing to make to operate in another country. This commitment can range
from a casual involvement to a full-scale “marriage.” The decision about the
extent of commitment entails a trade-off between control and risk. Direct
involvement gives the firm more control over what happens in the country,
but risk also increases if the operation is not successful.
Exporting involves the least risk. If a firm chooses to export, it must decide
whether it will attempt to sell its products on its own or rely on intermediaries
to represent it in the target country. An exporting strategy allows a firm to sell
its products in global markets and cushions the firm against downturns in its
domestic market. Because the exported products are made at home, the firm
is able to maintain control over design and production decisions.
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The next level of commitment a firm can make to a foreign market is a
contractual agreement with a company in that country to conduct some or all
of its business there. Two of the most common forms of contractual agreement
are licensing and franchising.
Firms seeking an even deeper commitment to a foreign market develop a
strategic alliance with one or more domestic firms in the target country. These
relationships often take the form of a joint venture: a new entity owned by two
or more firms is created to allow the partners to pool their resources for
common goals. Strategic alliances also allow companies easy access to new
markets.
A deeper level of commitment occurs when a firm expands internationally by
buying a business outright in the host country. Direct investment allows a
foreign firm to take advantage of a domestic company’s political savvy and
market position in the host country.
What are the arguments for standardization of marketing strategies in the
global marketplace? What are the arguments for localization? What are some
ways a firm can standardize or localize its marketing mix?
Advocates of standardization argue that the world has become so small, with
tastes so homogenized, that basic needs and wants are the same everywhere.
Those in favor of localization feel that the world is not that small and product
and promotional messages should be tailored to local environments. These
marketers feel that each culture is unique and that each country has a
national character; distinctive sets of behavioral and personality
characteristics.
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Chapter 2: Global, Ethical, and Sustainable Marketing
When a firm offers the same products in all its markets, it is following a
standardization strategy. If a firm tailors its products or promotions to the
specific tastes of a region, it is localizing its marketing mix.
Describe the utilitarianism, rights, fairness or justice, common good, and
virtue approaches to ethical decision making. What is ethical relativism?
Utilitarian approach: The decision that provides the most good or the least
harm
Rights approach: The decision that does the best job of protecting the moral
rights of all affected
Fairness or justice approach: The decision that treat all human beings equally
Common good approach: The decision that contributes to the good of all in the
community
Virtue approach: The decision is in agreement with certain ideal virtues
Ethical relativism suggests that what is ethical in one culture is not
necessarily the same as in
another culture.
Why is it increasingly important that firms engage in sustainability? What are
some ways strategies for the Four Ps can include sustainability?
With growing world populations and increasing demand for products,
sustainable business practices are necessary for life in the future. Many firms
practice sustainability when then develop target marketing, product, price,
place/distribution, and promotion strategies designed to protect the
environment and the future of our communities.
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Part 1: Understand the Value Proposition
Companies implement sustainable marketing practices in the following
ways:
Target marketing strategies: They target green customers who are likely to buy
eco-friendly products.
Product strategies: Some firms choose fair trade suppliers who pay a fair price
to producers in developing countries
Price strategies: Sustainable marketing practices aim to establish prices for
green products that equal the prices of other products.
Place/distribution strategies: Locavorism means that shoppers buy products
from farms within 50 to 100 miles of their homes.
Promotion strategies: Some firms “reuse” old commercials and tell customers
that this is their way of practicing sustainability.
Sustainability metrics are tools that measure the benefits an organization
achieves through the
implementation of sustainability.
ACTIVITIES: APPLY WHAT YOU’VE LEARNED
In Class, 10–25 Minutes for Teams Using the data in Table 2.2, select two
countries that
are substantively dissimilar. Then select one of the products below. Use the
data for the two
countries to develop arguments why each of the two countries would and
would not be a
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Chapter 2: Global, Ethical, and Sustainable Marketing
good opportunity for expansion of the market for your product.
1. New and more environmentally friendly method for heating and
cooling houses.
2. A small automobile that runs on electricity.
3. Barbie and Ken dolls and accessories
4. A low-priced, easy to use, sewing machine that does not require
electricity.
2-14 Creative Homework/Short Project With several members of your class,
assume you are in
the marketing department for a low-end retail store chain; you might
think of a chain similar
to Dollar General. Your firm has decided to begin an expansion into the
global market.
Currently you are considering building stores in France, Ecuador, Brazil
and Australia.
Gather information about these countries using the CIA Factbook
available online and
other sources. Using the data you have about each country, develop ideas
on the pros and
cons of entering each country. Which country do you feel is best? Present
your findings to
your class.
2-15 For Further Research (Individual) Consider the six different ethical
philosophies
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in the chapter. Apply these six philosophies to one of the following ethical
dilemmas. What would be the most ethical decision for each? Explain
why you think so.
Which would you be most likely to follow?
Decisions:
1. You see a fellow student cheating. Should you ignore what you saw,
report it, or do
something else?
2. You are the president of a school club, which gives you access to the
club’s money
You need to buy a new tire for your car but you won’t have enough
money for a week.
You are considering borrowing the money from the club and paying it
back in a
week.
3. You have been assigned to a class project team. In a different class, you
have been
on a team with one of the members of your current team, and you
know he or she
refuses to do any work but expects others the team to help him or her
out. What are
your options, and what should you do?
2-16 In Class, 10–25 Minutes for Teams Assume you are the director of
marketing for a U.S.
firm that produces one of the products listed below. Your firm is
considering going after
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Chapter 2: Global, Ethical, and Sustainable Marketing
the Indian market and is faced with the decision of the best entry
strategy. Should your firm
simply export their products, or would a strategic alliance, licensing, a
joint venture, or
direct investment be a better choice? Develop your ideas for a best entry
strategy. Be
specific in your recommendations for a strategy, how to implement the
strategy, and your
reasons for your recommendations.
Products:
1. Tablets (similar to the iPad) targeting the consumer market
2. Expansion of your discount retail store chain
3. Short-term (from an hour up) auto rentals
Teams can present their findings and recommendations to the class.
2-17 Creative Homework/Short Project Consumer ethnocentrism is the
tendency for individuals
to prefer products from one’s own culture. Sometimes people think
products made at home
are better than imported goods. Develop a small study to find out what
students at your
university think about products made at home and abroad. Develop a
survey that asks other
students to evaluate 10 or more products (not brands) that are imported
versus made at
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home. You might wish to ask if they feel the domestic or imported
products are superior in
quality and which they would purchase. Prepare a report on your study
for your class.
Within one class period, you could divide the class up into two groups: the
survey creators
and the respondents. While the survey creators are creating their survey, the
respondents
can discuss what key factors they think will influence their responses on the
survey.
In Class, 10–25 Minutes for Teams Some people argue that our environment is
not in
jeopardy and that sustainability efforts will only make products more
expensive. Plan a
debate in your class with two teams, one arguing for sustainability efforts and
one against.
Students can have a lively debate arguing for and against sustainability
efforts.
2-19 For Further Research (Individual) You are planning a trip to another
country for your
summer vacation. You are considering traveling to Greece, to Peru, to
England, and to
Egypt. Determine the current forex rate for all four countries as well as
the average forex
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Chapter 2: Global, Ethical, and Sustainable Marketing
over the past five years for each. Based solely on the information you
collect about forex
rates, explain where you would go and why.
Go to the library or the Internet to find out as much as you can about the
forex rate for the
United Kingdom Greece, Peru, and Egypt. Prepare a report that explains
which supplier
you would choose based on the information you collect about the forex rate.
2-20 For Further Research (Groups) You are part of an up-and-coming
coffeehouse chain in
the United States, and you know that you need to participate in
competitive intelligence
activities to learn more about your competitors. Using the Internet, collect at
least five
distinct pieces of information about either Starbucks or Dunkin’ Donuts that
will enable
you to improve your marketing strategy.
Entering global markets involves a complex decision process. Marketers
must fully
understand market conditions and environmental factors in order to
determine the best
strategy for entering the market and to create a successful marketing mix.
The
environments important to consider include environments of technology,
economic
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environment, competitive, sociocultural, and political/legal. These
collectively are needed
for the decision process. The library information gathering and the different
environment
will be expanded with the search the students conduct.
APPLY MARKETING METRICS
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Many Western firms see their futures in the growing populations of
developing countries, where eight out of ten consumers now live. Consumers
from countries such as Brazil, India, China and Russia offer new
opportunities for firms because growing numbers of them are accumulating
small but significant amounts of disposable income. Firms like worldwide
cosmetics giant Beirsdorf, producer of Nivea products, are adapting their
products and their marketing activities to meet the needs of these populations.
Often this means selling miniature or even single use packages of shampoo,
dishwashing detergent or fabric softener for only a few cents. The huge Swiss
company Nestlé sells shrimp-flavored instant soup cubes for two cents each in
Ghana while the financial company Allianz, in a joint program with CARE,
sells micro-insurance for five cents a month to the very poor in India.
However, how do these firms measure their success in these new markets?
Firms normally use such marketing metrics as customer awareness or
satisfaction, increases in market share or profits, or return on marketing
investment (ROMI). These metrics may not be right for the new markets in
the developing world where many millions of people buy streamlined versions
of a firm’s products at a fraction of their usual price. What do you think?
Develop a list of possible metrics that firms might use to measure their success
in these new developing markets.
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Chapter 2: Global, Ethical, and Sustainable Marketing
Large companies obviously take a huge risk with the adoption of such
practices in developing countries with the hope of a huge return on their
marketing investment. Such risk-return strategies may have to be developed
within the perspective of a longer time period to see ROMI grow, so building
brand strength and equity in a such a developing market may be more valued
by a firm than immediate increases in market share or profits.
Do you think about the approach described above is effective for entering
BRICS markets to appeal to consumers with small but growing disposable
income?
MyMarketingLab for answers to Assisted Graded Questions.
2-22 How would the success of this approach be better measured—that is,
what metrics would
be more useful than the typical metrics used in developed countries? Be
creative and develop a list of several possible metrics that firms might use to
measure their success in these new developing markets. Hint: Keep closely in
mind what firms hope to accomplish by increasing their presence and sales in
those markets.
MyMarketingLab for answers to Assisted Graded Questions.
CHOICES: WHAT DO YOU THINK?
2-23 Critical Thinking and Ethics Assume you are the CMO for a firm that is a
major producer
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of chocolate candy and baking chocolate. The bulk of your chocolate products
are sold in the United States and Europe. For many years, your firm has
purchased cocoa beans (from which chocolate is made) from Country A.
Country A produces 30 percent of the world’s chocolate but recent reports of
child labor have concerned many country leaders and consumers. On some
farms, children are made to work as much as 100 hours a week and are
physically abused. Furthermore, some receive no education whatsoever. You
are considering whether or not your company should change suppliers and
buy cocoa from Country B. Country B is the leader in ethically produced
cocoa. Cocoa is produced in an environmentally sustainable manner and the
country is the world leader of “fair-trade certified” cocoa production.
Unfortunately, the price of cocoa from Country B is nearly twice that of
Country A. this means you would have to significantly increase the price of
your products which you expect to negatively affect the firm’s sales. This, in
turn would likely lead to closing some company facilities and laying off
workers. On the other hand, consumers in your markets are increasingly
concerned about human rights abuses and seek to buy fair trade products.
Develop your thoughts on the following:
The positive and negative outcomes (in addition to those already discussed)
of continuing to purchase cocoa from Country A.
The positive and negative outcomes (other than those already discussed) of
changing suppliers and purchasing cocoa from Country B (in addition to
those already discussed).
Which country would you choose using the Utilitarian approach to decision
making?
Why?
d. Which country would you choose using the rights approach to
decision making? Why?
e. Which country would you personally choose? Why?
MyMarketingLab for answers to Assisted Graded Questions.
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Chapter 2: Global, Ethical, and Sustainable Marketing
2-24 Critical Thinking What role has technology played in the globalization of
businesses? Has
technology leveled the economic playing field, or has it merely in-
creased the distance
between the “haves” and the “have-nots”? Give at least one example of
each and
explain your position.
Students can discuss these questions in small groups and present their ideas
to the class.
2-25 Critical Thinking LDCs are not required by the WTO to meet the same
environment
standards as developed countries. Do you think LDCs should be
excluded from WTO
standards for pollution and other environmental protection issues? Why
or why not?
In small groups, students can discuss this issue.
2-26 Critical Thinking Some countries have been critical of the export of
American culture via
movies, television, music and many American consumer goods by U.S.
businesses. What
about American culture might be objectionable? Can you think of some
products that U.S.
marketers export that can be objectionable to some foreign markets?
What is the solution to
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the problem?
You might begin this conversation by talking about individualist cultures
versus collectivist
cultures. These deeply held beliefs form the basis of practices that may be
considered objectionable.
The students may have specific examples of objectionable culture being
exported from the United States. To help the discussion, you might emphasize
the increasing obesity of our population, seen as gluttony by many nations.
This trend may be emphasized by the food we export. Cars made in the
United States may seem too large and lack the pollution controls of those
manufactured and sold in other countries. American media portrays
Americans as amoral and without religious beliefs. TV and movies show
American cities filled with violent crime. The list is endless and students
should be able to brainstorm quite a number.
2-27 Critical Thinking Some of the U.S. population supports free trade,
whereas others are
unhappy, even angry, that the government has reduced regulations on
imports of such
products as textiles and furniture, causing factories to shut down and
employees to lose their
jobs. They feel that the U.S. government should legislate greater regulation
of imported
goods to give American companies an advantage or at least to lessen the
advantage that
companies in other countries receive from their government. What do you
think? How do
you justify your answer?
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Chapter 2: Global, Ethical, and Sustainable Marketing
The students will respond differently depending on their personal views on the World
Trade Organization. Removing barriers to trade will allow the natural laws of supply and
demand to regulate pricing and the success of business and will in the long term benefit
consumers worldwide. On the other hand, developing countries need to protect their
domestic industries in order to grow their economies. Developed countries may feel they
need to protect their domestic labor force against imported products made in countries
where wages are very low. Not all countries participate equally in the trade flows among
nations and removing barriers may just increase the disparity.
Critical Thinking In 1999, several single European nations banded together to
form the European Union and converted their individual monetary systems
over to the euro. Do you believe there will ever be other economic
communities that would follow this path? Explain your reasoning and, if
necessary, provide some possible examples. What about the possibility of a
single world currency? Could this happen? Why or why not?
The Internet would be a great source to start this discussion. In particular,
students should research this topic in credible sources of information, such as
the Wall Street Journal, the New York Times, and Business Weekly.
Ethics Ethical relativism suggests that what is ethical in one culture may not
be considered ethical in another. What should the attitude of businesses be
when differences occur? Should businesses follow the ethical values and
practices of their own country or of the host country? What should
governments do about this if anything? What is the role of the WTO?
This question is thought provoking and could be a role-play. Students could
argue that in
some countries, bribes are simply part of the way business is carried out. If
American
companies do not take part in this practice, they will not be competitive.
Business deals will
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go to other countries willing to adopt the following attitude: “When in Rome,
do as the
Romans do.” Other students could argue that ethical values transcend
business deals and that
American companies should remain true to their values. They should refer to
the FCPA,
which prohibits American companies from giving bribes.
Ethics Review the AMA Code of Ethical Norms and Values for Marketers,
provided in the chapter. Which of the areas represented within the document
do you anticipate are the most challenging for marketers to consistently
follow? What makes these issues particularly troublesome? Do you think
marketing in general does a good job adhering to the AMA Code? Provide
specific evidence from your knowledge and experience to support your
position.
The students might have differing views on the topic of advertising. This is a
good time to discuss ethics. Ethics are the rules of conduct that people use to
judge whether a behavior is right or wrong. Some students may present
arguments on the dangers of advertising for potentially dangerous products
like alcoholic beverages while others may cite the Consumer Bill of Rights and
consumers “right to choose.” You might discuss that ethical marketing
behavior means making products safe, pricing products fairly, promoting
products honestly, focusing on product quality, and making the product
available to consumers ethically. Students might address the issue of
marketing to children. How do students feel about marketing sugar-laden
products which cause tooth decay to children?
MINIPROJECT: LEARN BY DOING
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The purpose of this miniproject is to gain experience in understanding what it
takes to move a product that is successful in its home market into a global
market in which it will continue to be successful. Assume that you are the
director of marketing for a firm that produces its own high-end brands of
makeup, skin care, and hair care products for both men and women. The
products have been endorsed by a number of male and female musicians who
are highly popular with young people. The products are sold only in the
company’s own retail outlets.
Describe your local competitive advantage and why you believe this competitive
advantage will serve you globally.
This is a good opportunity to review the concepts of core competency and
competitive
advantage.
Determine which global market(s) is most attractive for your service. Will
you target a
single country or an economic community? Describe your reasoning.
This is a chance for students to consider the pros and cons of
marketing products in
developed or developing countries. They can discuss the pros and
cons standardization and
localization of their service.
Decide which market-entry strategy you will pursue. Again, explain your
reasoning.
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This question offers students the chance to review entry
strategies and select one.
2-34 Describe your marketing mix strategy:
• How might you need to adapt your product?
• What other product decisions do you need to make?
• How will you promote your products?
• How will you price your products?
• What place/distribution decisions must you consider?
Prepare a short presentation to share with your class.
This is a good project to tie in many of the concepts presented in Chapters
1–2. Students will have the opportunity to learn more about a country, think
about values, cultures, and ethics and apply marketing strategies in the form
of the marketing mix to what they have
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V. MARKETING IN ACTION CASE: REAL CHOICES AT FORD
Summary of Case
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Chapter 2: Global, Ethical, and Sustainable Marketing
Ford Motor Company is investing $1.6 billion to construct a plant in Mexico.
This will create 2,800 jobs in the country. U.S. automotive labor costs average
$30 per hour whereas Mexico’s labor costs average $5 per hour. Ford can
lower costs, become more competitive, and increase profit margins. The
investment in Mexico has critics. The issue of jobs leaving the country is a
part of political debate in Washington, D.C. The announcement of Ford’s
plans was made during the recent presidential campaign. One candidate
called for increased tariffs and penalties for U.S. firms, like Ford, that choose
to relocate manufacturing to foreign markets. Increasing its presence in
Mexico is not Ford’s only initiative Ford. The company has expanded to
Spain, Germany, China, the Middle East, and Africa. While Ford’s improves
its financial outlook, how will it deal with the negative attention generated by
moving jobs outside the United States? Is it possible for the company to
increase its profitability and reduce its dependence on foreign production? In
the current political climate should the company rethink its plans?
Suggestions for Presentation
This case could be assigned for various online or in-class discussion activities.
Online Assignment Suggestions
Go to Ford’s website and search around its various links for material
regarding the controversy. What news articles do they mention?
In-Class Assignment Suggestions
In groups or as individuals, discuss the various consumer and world reactions
to this situation.
Divide the class into groups of three to five students and have each group
conduct a strengths, weaknesses, opportunities and threats (SWOT) analysis
to determine how Ford should proceed with t marketing strategies.
You Make the Call
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Part 1: Understand the Value Proposition
2-35. What is the decision facing Ford?
Students should restate the questions posed at the end of the case description
(or create new ones on their own):
How will it deal with the negative attention generated by moving jobs outside
the United States?
Is it possible for Ford to increase its profitability and reduce its dependence on
foreign production?
In the current political climate should the company rethink its plans?
2-36. What factors are important in understanding this decision situation?
The important factors in this decision situation stem directly from the global
marketing environment:
The economic environments of Ford’s various marketplaces as well as of the
countries that Ford can potentially produce their products
The competitive environment—e.g., where are Ford’s competitors
manufacturing their products?
The technological environment—e.g., can Ford create/use better technology to
aid the production of their cars (e.g., increased use of robots) so that moving
production abroad could be avoided in the future?
The political and legal environment—e.g., how has the political landscape
changed for Ford in the wake of its investing in plants in Mexico? Presidential
candidates have promised to keep jobs at home and penalize companies that
take production out of the United States.
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
The sociocultural environment—has there been any shift in Ford’s target
customers since moving production to Mexico in terms of demographics,
values, norms & customs, etc.? If not, should Ford shift its target marketing
strategy?
2-37. What are the alternatives?
As students discuss the various global environmental factors mentioned above,
several alternatives will come into focus—students should be encouraged to
come up with their own alternatives as the discussion develops.
2-38. What decision(s) do you recommend?
This is a very complex and difficult decision facing Ford, so students will
undoubtedly argue passionately and persuasively for many various
recommendations. However, they should be strongly encouraged to discuss the
potential negative and positive outcomes of each of the alternatives.
2-39.What are some ways to implement your recommendation?
Students may make a variety of suggestions for implementation
depending on their
recommendations. These may include specific changes in marketing
strategy, including
promotional activities, pricing, product variations, and many others.
MY MARKETINGLAB
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
Go to mymktlab.com for Auto-graded writing questions as well as the following
Assisted-graded writing questions:
2-40 Creative Homework/Short Project. As a marketing manager, you must consider
whether to delay the production and introduction of a new automobile because of a small
problem with the door locks—they could become nonfunctional when temperatures drop
very low. Using (1) the utilitarian approach, (2) the rights approach, and (3) the common
good approach, what would the different decisions be?
2-41 Ethics. Some companies have been criticized for moving their manufacturing to
other countries where laws protecting the environment are more lenient and goods can be
produced more cheaply because the firms do not have to invest in ways to protect the
environment. What do you think of this practice? What can governments and/or
consumers do to prevent such actions?
WEB RESOURCES
Pearson Education, Inc.: www.mymktlab.com
Starbucks Coffee Company: www.starbucks.com
Walmart: www.walmart.com
World Trade Organization (WTO): www.wto.org
Table 2.1 in chapter lists websites for various economic communities
Copyright © 2018 Pearson Education, Inc.
Chapter 2: Global, Ethical, and Sustainable Marketing
Tourism Authority of Thailand (a developing country):
http://www.tatnews.org
Japanese National Tourism Organization (a developed country):
https://www.jnto.go.jp
Asia Insight (independent full-service market research firm providing customized research
across 14 Asian countries daily, as well as numerous global studies across continents):
www.asiainsight.com
Consumer Product Safety Commission (CPSC): www.cpsc.gov
Environmental Protection Agency (EPA): www.epa.gov
Federal Communications Commission: www.fcc.gov
Federal Trade Commission (FTC): www.ftc.gov
Ford Motor Co.: www.ford.com
Foreign Corrupt Practices Act (FCPA):
www.usdoj.gov/usao/eousa/foia_reading_room/usam/title9/47mcrm.htm
Food and Drug Administration (FDA): www.fda.gov
Copyright © 2018 Pearson Education, Inc.
Part 1: Understand the Value Proposition
Hong Kong Disneyland: www.hongkongdisneyland.com
Cosmopolitan magazine: www.cosmopolitan.com
The American Marketing Association’s Statement of Ethics:
www.marketingpower.com
Copyright © 2018 Pearson Education, Inc.
