McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO:

Describe the nature and scope of world trade from a global perspective and its implications for the United States.

LO1

Identify the major trends that have influenced the landscape of global marketing in the past decade.

LO2

Identify the environmental forces that shape global marketing efforts.

LO3

7-2

LO4

LEARNING OBJECTIVES (LO)

AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO:

Name and describe the alternative approaches companies use to enter global markets.

Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

LO5

7-3

"We Can Out-Compete Any Other Nation"

7-4

http://www.youtube.com/watch?v=TOPY1A2U12Q

Global Perspective

DYNAMICS OF WORLD TRADEWORLD TRADE FLOWS

LO1

United States Perspective

• Countertrade

• Trade Feedback Effect

• Gross Domestic Product (GDP)

• Balance of Trade7-5

FIGURE 7-1FIGURE 7-1 World trade flows for goods and commodities within and between geographic regions ($ billions U.S.)

7-6

FIGURE 7-2FIGURE 7-2 Porter’s diamond of national competitive advantage: 4 key elements on why some countries become world leaders

7-7

Porter’s “Diamond”

DYNAMICS OF WORLD TRADECOMPETITIVE ADVANTAGE OF NATIONS

LO1

• Factor Conditions

• Demand Conditions

• Company Strategy, Structure, and Rivalry

• Related and Supporting Industries

Economic Espionage Act (1996)7-8

Sharp Aquos TV and Bruno Magli ShoesWhat element of Porter’s Diamond of

National Competitive Advantage?

LO1

7-9

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 1—DECLINE OF ECONOMIC PROTECTIONISM

LO2

Protectionism

Tariffs

Quota

World Trade Organization (WTO)

General Agreement onTariffs and Trade (GATT)

7-10

FIGURE 7-3FIGURE 7-3 Protectionism hinders world trade when countries raise prices and limit supply through tariff and quota policies

7-11

European Union

• Euro

North American Free Trade Agreement (NAFTA)

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 2—RISE OF ECONOMIC INTEGRATION

LO2

Asian Free Trade Agreements7-12

FIGURE 7-4FIGURE 7-4 The European Union in early 2010 consists of 27 countries with morethan 500 million consumers

7-13

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 3A—GLOBAL COMPETITION

LO2

Global Competition

Strategic Alliances

7-14

FIGURE 7-AFIGURE 7-A Global companies and marketing strategy

7-15

International Firms

Transnational Firms

Multinational Firms

• Multidomestic Marketing Strategy

• Global Marketing Strategy

• Global Brand

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 3B—GLOBAL COMPANIES

LO2

7-16

Global Consumers

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 3C—GLOBAL CONSUMERS

LO2

7-17

MARKETING IN A BORDERLESS ECONOMIC WORLD

TREND 4—A NETWORKED GLOBAL MARKETPLACE

LO2

7-18

A GLOBAL ENVIRONMENTAL SCANCULTURAL DIVERSITY

LO3

• Foreign CorruptPractices Act (1977)

Cross-Cultural Analysis

Values

Customs

7-19

FIGURE 7-BFIGURE 7-B Cultural appreciation

7-20

A GLOBAL ENVIRONMENTAL SCANCULTURAL DIVERSITY

LO3

Cultural Symbols

#13• Semiotics

7-21

A GLOBAL ENVIRONMENTAL SCANCULTURAL DIVERSITY

LO3

Language

• Unintended Meanings

• Back Translation

Consumer Ethnocentrism

7-22

A GLOBAL ENVIRONMENTAL SCANECONOMIC CONSIDERATIONS

LO3

Stage of Economic Development

• Developed Countries: Japan

• Developing Countries

Made the Move: Brazil

Remain Locked: Tanzania

• Bottom of the Pyramid7-23

A GLOBAL ENVIRONMENTAL SCANECONOMIC CONSIDERATIONS

LO3

Economic Infrastructure

• Communications

• Financial

• Transportation

• Distribution Systems

7-24

A GLOBAL ENVIRONMENTAL SCANECONOMIC CONSIDERATIONS

LO3

Consumer Income and Purchasing Power

• Microfinance: India

Currency Exchange Rate

7-25

FIGURE 7-5FIGURE 7-5 A comparison of the purchasing power differences around the world

7-26

Political Stability

Trade Regulations

A GLOBAL ENVIRONMENTAL SCANPOLITICAL-REGULATORY CLIMATE

LO3

7-27

FIGURE 7-6FIGURE 7-6 Alternative global market-entry strategies

7-28

Exporting

• Indirect Exporting

• Direct Exporting

GLOBAL MARKET-ENTRY STRATEGIESEXPORTING

LO4

7-29

Advantages Disadvantages

Franchising

GLOBAL MARKET-ENTRY STRATEGIESLICENSING

LO4

Contract Manufacturing

ContractAssembly

7-30

Joint Venture

GLOBAL MARKET-ENTRY STRATEGIESJOINT VENTURE

LO4

• Advantages

• Disadvantages

7-31

GLOBAL MARKET-ENTRY STRATEGIESDIRECT INVESTMENT

LO4

• Advantages

• Disadvantages

Direct Investment

7-32

FIGURE 7-7FIGURE 7-7 Five product and promotion strategies for global marketing

7-33

Product Extension

CRAFTING A WORLDWIDEMARKETING PROGRAM

PRODUCT STRATEGIES

LO5

Product Adaptation

Product Invention

7-34

Communication Adaptation

CRAFTING A WORLDWIDEMARKETING PROGRAM

PROMOTION STRATEGIES

LO5

Dual Adaptation

IdenticalMessage

7-35

Countries Impose Pricing Constraints

CRAFTING A WORLDWIDEMARKETING PROGRAM

DISTRIBUTION AND PRICING STRATEGIES

LO5

Channels Can Be Long or Short

Prices May Be Too High or Too Low

• Dumping • Gray Market

Channels and Economic Development

7-36

FIGURE 7-8FIGURE 7-8 Channels of distribution in global marketing

7-37

1. What are the advantages and disadvantages for CNS taking Breathe Right strips into international markets?

2. What are the advantages to CNS of (a) using its three-stage process to enter new global markets

and

(b) having specific criteria to move through the stages?

3. Using the CNS criteria, with what you know, which countries should have highest priority for CNS?

4. Which single segment of potential Breathe Right strip users would you target to enter new markets?

5. Which marketing mix variables should CNS emphasize the most to succeed in a global arena? Why?

CNS Breathe Right Strips: Going Global