global market

The Global MarketplaceThe Global Marketplace

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ROAD MAP: Previewing the Concepts

• Discuss how the international trade Discuss how the international trade system, economic, political-legal, and system, economic, political-legal, and cultural environments affect a company’s cultural environments affect a company’s international marketing decisions.international marketing decisions.

• Describe three key approaches to entering Describe three key approaches to entering international markets.international markets.

• Explain how companies adapt their Explain how companies adapt their marketing mixes for international markets.marketing mixes for international markets.

• Identify the three major forms of Identify the three major forms of international marketing organization.international marketing organization.

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Global Marketing in the 21st Century

• The world is shrinking rapidly with The world is shrinking rapidly with the advent of faster communication, the advent of faster communication, transportation, and financial flows.transportation, and financial flows.

• International trade is booming and International trade is booming and accounts for 25% of U.S. GDP.accounts for 25% of U.S. GDP.

• Global competition is intensifying.Global competition is intensifying.• Higher risks with globalization.Higher risks with globalization.

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U.S. Globalization

Many U.S. companies have made the world their market.

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Major International Marketing Decisions

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Looking at the Global Marketing Environment

The International Trade System:Restrictions—tariffs, quotas, embargos, exchange

controls, and non-tariff trade barriers.

The World Trade Organization and GATT:Helps Trade—reduces tariffs and other

international trade barriers.

Regional Free Trade Zones:Groups of nations organized to work toward

common goals in the regulation of international trade.

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•What types of U.S. companies What types of U.S. companies would like to see higher tariffs would like to see higher tariffs and what types would like to see and what types would like to see lower tariffs or no tariffs? Why is lower tariffs or no tariffs? Why is this the case?this the case?

Discussion Question

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Industrial Structure• Shapes a country’s product and service needs, Shapes a country’s product and service needs,

income levels, and employment levels.income levels, and employment levels.

Subsistence Economies

Raw Material Exporting Economies

Industrializing Economies

Industrial Economies

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Political-Legal Environment

Attitudes Toward International Buying

Government Bureaucracy

Political Stability

Monetary Regulations

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Cultural Environment• Sellers must examine the ways Sellers must examine the ways

consumers in different countries think consumers in different countries think about and use products before planning about and use products before planning a marketing program.a marketing program.

• Business norms vary from country to Business norms vary from country to country.country.

• Companies that understand cultural Companies that understand cultural nuances can use them to advantage nuances can use them to advantage when positioning products when positioning products internationally.internationally.

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Cultural Differences

When Nike learned that this stylized “Air” logo resembled “Allah” in Arabic script, it apologized and pulled the shoes from distribution.

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Deciding Whether to Go Global

• Reasons to consider going global:Reasons to consider going global:– Foreign attacks on domestic marketsForeign attacks on domestic markets– Foreign markets with higher profit Foreign markets with higher profit

opportunitiesopportunities– Stagnant or shrinking domestic marketsStagnant or shrinking domestic markets– Need larger customer base to achieve Need larger customer base to achieve

economies of scaleeconomies of scale– Reduce dependency on single marketReduce dependency on single market– Follow customers who are expandingFollow customers who are expanding

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Deciding Which Markets to Enter• Before going abroad, the company should try to define Before going abroad, the company should try to define

its international marketing objectives and policies.its international marketing objectives and policies.

What Volume of Foreign Sales is Desired?

How Many Countries to Market In?

What Types of Countries to Enter?Choose Possible Countries and Rank Based

on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage,

and Risk Level

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Colgate Goes to China

Using aggressive promotional and educational programs, Colgate has expanded its market share from 7% to 35% in less than a decade.

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Market Entry Strategies

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• Exporting:Exporting:– Indirect:Indirect: working through independent working through independent

international marketing intermediaries.international marketing intermediaries.– Direct:Direct: company handles its own company handles its own

exports.exports.

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• Joint Venturing:Joint Venturing:– Joining with foreign companies to Joining with foreign companies to

produce or market products or services.produce or market products or services.• Approaches:Approaches:

– LicensingLicensing– Contract manufacturingContract manufacturing– Management contractingManagement contracting– Joint ownershipJoint ownership

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Joint Ownership

KFC entered Japan through a joint ownership venture with Japanese conglomerate Mitsubishi.

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• Direct Investment:Direct Investment:– The development of foreign-based The development of foreign-based

assembly or manufacturing facilities.assembly or manufacturing facilities.– This approach has both advantages and This approach has both advantages and

disadvantages.disadvantages.

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Deciding on the Global Marketing Program

• Standardized Marketing Mix:Standardized Marketing Mix:– Selling largely the same products and Selling largely the same products and

using the same marketing approaches using the same marketing approaches worldwide.worldwide.

• Adapted Marketing Mix:Adapted Marketing Mix:– Producer adjusts the marketing mix Producer adjusts the marketing mix

elements to each target market, bearing elements to each target market, bearing more costs but hoping for a larger market more costs but hoping for a larger market share and return.share and return.

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Marketing Mix Adaptation

In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharaja Mac—two all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun.

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Five Global Product and Promotion Strategies

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Global Product Strategies• Straight Product Extension:Straight Product Extension:

– Marketing a product in a foreign market Marketing a product in a foreign market without any change.without any change.

• Product Adaptation:Product Adaptation:– Adapting a product to meet local Adapting a product to meet local

conditions or wants in foreign markets.conditions or wants in foreign markets.• Product Invention:Product Invention:

– Creating new products or services for Creating new products or services for foreign markets.foreign markets.

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Global Promotion Strategies

• Can use a standardized theme Can use a standardized theme globally, but may have to make globally, but may have to make adjustments for language or cultural adjustments for language or cultural differences.differences.

• Communication Adaptation:Communication Adaptation:– Fully adapting an advertising message Fully adapting an advertising message

for local markets.for local markets.• Changes may have to be made due to Changes may have to be made due to

media availability.media availability.

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Global Pricing Strategies

• Companies face many problems in setting Companies face many problems in setting their international prices.their international prices.

• Possible approaches include:Possible approaches include:– Charge a uniform price all around the world.Charge a uniform price all around the world.– Charge what consumers in each country will pay.Charge what consumers in each country will pay.– Use a standard markup of costs everywhere.Use a standard markup of costs everywhere.

• International prices tend to be higher than International prices tend to be higher than domestic prices because of domestic prices because of price escalationprice escalation..

• Companies may become guilty of Companies may become guilty of dumpingdumping –a –a foreign subsidiary charges less than its costs foreign subsidiary charges less than its costs or less than it charges in its home market.or less than it charges in its home market.

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International Pricing

Twelve European Union countries have adopted the euro as a common currency, creating “pricing transparency” and forcing companies to harmonize their prices throughout Europe.

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Whole-Channel Concept for International Marketing

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Deciding on the Global Marketing Organization

• Organize an export departmentOrganize an export department• Create international divisionsCreate international divisions

– Geographical organizationsGeographical organizations– World product groupsWorld product groups– International subsidiariesInternational subsidiaries

• Become a global organizationBecome a global organization

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Rest Stop: Reviewing the Concepts

1.1. Discuss how the international trade Discuss how the international trade system, economic, political-legal, and system, economic, political-legal, and cultural environments affect a company’s cultural environments affect a company’s international marketing decisions.international marketing decisions.

2.2. Describe three key approaches to entering Describe three key approaches to entering international markets.international markets.

3.3. Explain how companies adapt their Explain how companies adapt their marketing mixes for international markets.marketing mixes for international markets.

4.4. Identify the three major forms of Identify the three major forms of international marketing organization.international marketing organization.

global market

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