prentice hall, copyright 2009 1 the global marketplace chapter 15 next exit

The Global The Global MarketplaceMarketplace

Chapter 15Next Exit

2

15-2Prentice Hall, Copyright 2009

Rest Stop:Rest Stop: Previewing the ConceptsPreviewing the Concepts

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

2. Describe three key approaches to entering international markets.

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

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


Why Go Global?

Basketball is the #2 global sport, behind soccer. NBA finals were televised in 215 countries.

Going global means growth. 10% of league’s overall revenues and 25% of licensed apparel sales comes from outside United States.

Growing presence of foreign born stars adds to the NBA’s global appeal.

The NBA –The NBA – A “Hot” Global BrandA “Hot” Global BrandCase StudyCase Study

How Did They Do It?

Nine international offices, over 100 international staff and a Hispanic marketing office in Miami, Florida.

132 NBA sponsored international events in the off-season.

NBA Europe Live program takes off-season training for the four NBA teams to Europe.

International expansion in the future may target China.


Global Marketing TodayGlobal Marketing Today

Several trends characterize the global marketplace today:– The world is shrinking rapidly with the

advent of faster communication, transportation, and financial flows.

– International trade is booming.– Global competition is intensifying.– Risks associated with globalization are

increasing.


Global Firm DefinedGlobal Firm Defined

A firm that, by operating in more than one country, gains R&D, production,

marketing, and financial advantages in its costs and reputation that are not

available to purely domestic competitors.

Prentice Hall, Copyright 2009 15-6

Figure 15.1Figure 15.1Major International Marketing Major International Marketing

DecisionsDecisions


Looking at the Global Marketing Looking at the Global Marketing EnvironmentEnvironment

The International Trade System:– Many restrictions exist:

• Tariffs• Quotas• Embargos• Exchange controls• Nontariff trade barriers

– E.g., Protectionist regulations prevent the United States and other Western banks from entering China’s huge retail banking market.



The World Trade Organization and GATT:– Helps trade by

reducing tariffs and other international trade barriers

– Imposes sanctions– Mediates global

disputes



Regional Free Trade Zones: – European

Union (EU)– North

American Free Trade Agreement (NAFTA)


The European Union

Regional free trade zones such as the European Union help to simplify the process of going global.

Visit http://europa.eu/ and explore the European Union’s Web site for information that could be helpful to a marketer wishing to go global.

Marketing in Action



Economic environment:– Industrial structure shapes a country’s

product and service needs, income levels, and employment levels.

– Four types of industrial structure:• Subsistence economies

• Raw material exporting economies

• Industrializing economies

• Industrial economies



Economic environment:– Income distribution is an important factor.

• Many luxurybrandmarketersare rushingto takeadvantageof China’sconsumermarkets.



Political-legal environments vary by:– Attitudes toward international buying– Government bureaucracy– Political stability– Monetary regulations

Countertrade is a growing practice which takes several forms:– Barter– Compensation– Counterpurchase



Before planning a marketing program, sellers must:– Understand a nation’s culture– Examine the ways in which consumers in

different countries think about and use products • Mistakes can be embarrassing and costly.


Ignore Culture at Your Peril

China imposed a nationwide ban on this “blasphemous” ad featuring LeBron James crushing several culturally revered Chinese figures.

Marketing in Action



Cultural environment:– Business norms and

behavior vary by country.– Companies that

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



Cultural environment:– Critics contend that

large American multinationals are “Americanizing” the world’s cultures.• In China, most people

never drank coffee prior to Starbucks entry into the market.


Reasons to consider going global:– Foreign attacks on domestic markets may

be countered by counterattacks abroad.– Home market may be stagnant or shrinking

while foreign markets offer higher profit opportunities.

– Customers may be expanding globally and require international servicing.

Risks must be weighed against the firm’s ability to operate globally.

Deciding Whether to Go GlobalDeciding Whether to Go Global


Before going abroad, the company should try to define 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?

Possible countries should be ranked based several factors.

The market(s) with the greatest ROI should be chosen.

Deciding Which Markets to EnterDeciding Which Markets to Enter


Fuel for ThoughtFuel for Thought

P&G’s decision to enter the Chinese toothpaste market with Crest makes sense as China is the largest toothpaste market in the world.

Size isn’t everything though.

What brands or products might NOT succeed in China, despite its enormous market size? Why?


Figure 15.2Figure 15.2Market Entry StrategiesMarket Entry Strategies


Deciding How to Enter the MarketDeciding How to Enter the Market

Exporting:– Entering a foreign market by selling goods

produced in the company’s home country, often with little modification.

Types of exporting:– Indirect:

• Working through independent international marketing intermediaries.

– Direct: • Company handles its own exports.


Joint venturing:– Joining with foreign companies to

produce or market a product or service.

Approaches:– Licensing– Contract manufacturing– Management contracting– Joint ownership



Licensing:– A company enters into

an agreement with a licensee in a foreign market, offering the right to use a patent, manufacturing process, trademark, trade secret, or other item of value for a fee or royalty.



Contract manufacturing:– A company contracts with manufacturers in

a foreign market to produce the product or provide its service.

Management contracting:– A joint venture in which the domestic firm

supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.



Joint ownership:– A joint venture in

which a company joins investors in a foreign market to create a local business in which the firm shares joint ownership and control.• KFC teamed up

with Mitsubishi to enter Japan.



Direct investment:– The development of foreign-based

assembly or manufacturing facilities.– Advantages:

• Lower costs due to cheap labor or raw materials.

• Firm may improve image in host country.

• Better adaptation of products to country.

– Disadvantages:• Currency risks, market failure, government

change.



Deciding on the Deciding on the Global Marketing ProgramGlobal Marketing Program

Standardized marketing mix:– Using basically the same marketing strategy

and mix in all international markets. Adapted marketing mix:

– Adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return.


Think Global, Act LocalMcDonald’s uses the same basic fast-food look, layout, and operating model in all of its restaurants around the world, but adapts its menu to local tastes. Filet-O-Shrimp burgers, Bulgogi Burgers, and the beefless Maharaja Mac are some examples.

Marketing in Action


Figure 15.3Figure 15.3Five Global Product and Five Global Product and

Communications StrategiesCommunications Strategies


Global promotion strategies:– Firms can either adopt the same

communication strategy they used in the market or change it for each local market.

– Some global firms use a standardized advertising theme around the world with minor adaptations.

– Other firms follow a communication adaptation strategy by fully adapting an advertising message for local markets.

– Changes may also have to be made due to media availability.



Quick FlickQuick Flick

Harley Davidson’s global strategy

Click to play video


Brand Name Blunders

Other Classic Blunders

Marketing in Action

OOPS!!! Not all brand names translate well into English, or from English into a different language.

“Coke” translated into Chinese characters was interpreted by the Chinese to mean “Bite the wax tadpole.”

Chevy used the “Nova” name verbatim, only to find out that no va means “It doesn’t go” in Spanish.



Global pricing strategies:– Companies face many problems in setting

their international prices.• Standard pricing methods ignore cost

differentials and local market conditions.

– International prices tend to be higher than domestic prices because of price escalation.• Some global firms create simpler versions of

products to sell abroad.



Global pricing strategies:– Setting prices for foreign subsidiaries can

be problematic:• Charging too much results in higher tariff

duties and lower income taxes.

• Charging too little can result in accusations of dumping if price is less than the product costs or less than is being charged in the home market.


Impact of Global Pricing

The adoption of the euro as a common currency by several nations has created a “pricing transparency” that is forcing companies to harmonize their prices throughout Europe.

Marketing in Action


Figure 15.4Figure 15.4Whole-Channel Concept for Whole-Channel Concept for

International MarketingInternational Marketing



Global distribution channels differ by:– The numbers and types of

intermediaries.•Size and character of retail units differ

as well, presenting challenges.

– The transportation infrastructure.•Limitations in the distribution network

of China will create challenges for many marketers.


Distribution Can Be Difficult

Marketing in Action

Nokia developed its own distribution structure for India, including a fleet of distinctive blue Nokia-branded vans

which were used to visit remote villages.


Deciding on the Deciding on the Global Marketing OrganizationGlobal Marketing Organization International marketing efforts

can be managed by:– Organizing an export department.

– Creating international divisions:•Geographical organizations

•World product groups

• International subsidiaries

– Becoming a global organization.

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Rest Stop:Rest Stop: Reviewing the ConceptsReviewing the Concepts

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

2. Describe three key approaches to entering international markets.

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

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

42


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Copyright © 2009 Pearson Education, Inc. Copyright © 2009 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall

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