Some Abouts About me About this course About the project About the examination About grading
Text Structure Introduction to global marketing The global marketing environment Global market opportunities Global marketing strategy Global marketing program Global marketing management
List of Questions What is global marketing? Do we have to go global? Why? Where shall we go? What shall we know before plunging ourselves into the storming sea? How can we survive and thrive in a foreign market?
Global Marketing -- Introduction
What is Global Marketing?
What is marketing? The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives.
The Three Principles of Marketing Customer Value Value Equation: V=B/P Differential Advantage Focus
What is global marketing? Practicing marketing in the global environment. An organization that engages in global marketing focuses its resources on global market opportunities and threats
Globalization An open economic system Non-discrimination Global brands Global structures
Exports % share of world production
Annual % Growth of trade and GDP 1959 96 GDP
Effects of globalization on business Cheap offshore production Reduced transport costs Virtual communication Standardization of logistics Global marketing
Export & Import By Regions 2002/01-10
Corporate Globalization -Chinas Case Walmart World Women Basket Ball Games Haier in USA Tsingdao Beer
Global Marketing VS Domestic Marketing More difficult: language, law, culture, trade and non-trade barriers, market research, and communication; More complicated: currency, measures and weights, customs, monetary exchange, transportation, insurance, and counter-claim More risky: credibility, currency exchange, political risk, transportation, and pricing More opportunities and more profitable, hopefully.
Should we go global? Internal analysis Resources, managerial mindset, strengths, weaknesses,etc. External analysis Competition, opportunities, threats, benefits, risks, etc. Cost VS Income
Management Orientation Managements assumptions or beliefs-both conscious and unconscious-about the nature of the world Ethnocentric Polycentric Regiocentric Geocentric
Ethnocentric Home country is superior. Domestic Company: No opportunities outside the home country; International Company Products and practices that succeed in the home country will be successful anywhere; Foreign operations are secondary or subordinate Nissan
Polycentric Each country is unique. Multinational Company: Each subsidiary should develop its own business and marketing strategies according to the specific situation in that country. Problem: Cost, control, headquarter out of game
Regiocentric & Geocentric Regiocentric: Each region is unique and an integrated regional strategy is to be developed to serve that region. Geocentric: The entire world is a potential market and integrated world market strategies should be developed. Global or transnational company. Global Localization: Think globally, act locally.
Philips VS Matsushita Philips Electronics Polycentric: 7 models of TV based on 4 chassis, Variety Matsushita Geocentric: global strategy, 2 models of TV based on a single chassis, low price
Driving and Restraining Forces Affecting Global Integration and Global Marketing
Driving Forces Technology Internet, Satellite Dish, Globe Spanning TV Regional Economic Agreements NAFTA, EU, ASEAN, GCC, APEC Market Needs and Wants Converging, Global Brand, Transportation and Communication Improvements Jet Plane, Large Cargo Ship, email, fax, videoconferencing, cost deduction
Driving Forces Cont. Product development costs Quality World Economic Trends More opportunities Less resistance World-wide deregulation and privatization
Driving Forces Cont. Leverage Experience transfers Scale economies Resource utilization Global strategy The Global/Transnational Corporation
Restraining Forces Management Myopia Organization Culture Integrate global vision and perspective with local market initiative and input Mutual respect National controls and barriers Tariff barriers and non-tariff barriers
The Global Economic Environment
Changes in The World Economy Emergence of global markets Economic integration Global companies, global brands Capital movements far exceed the volume of global merchandise and services trade $4 trillion VS. London Eurodollar Market, $100 trillion, VS. Foreign exchange $250 trillion
Changes in The World Economy Productivity VS. Employment Application of new technologies Increase in production efficiency Plant emigration Internal reforms
Changes in The World Economy World economy becomes the dominant economic unit The end of the cold war Collapse of USSR, ISC, E. European China, Vietnam, Cuba, North Korea
Economic Systems Market Allocation Market economy Role of the state Command Allocation Planned economy Role of the state Mixed System Which plays the leading role?
Stages of Market Development Based on GNP Per Capita Lower-Income Countries $2000 Upper-Middle-Income Countries $3036-$9386 High-Income Countries >$9386
Low-Income Countries Preindustrial countries, less than $766 Limited industrialization, high percentage of population in agriculture and farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Africa, south of Sahara
Lower-Middle-Income Countries Less developed countries (LDC) Early stage of industrialization Consumer markets expanding Low labor cost Labor-intensive products manufacturing
Upper-Middle-Income Countries Industrializing countries Percentage of people in agriculture dropping sharply Degree of urbanization increasing High literacy Relatively low wage costs
High-Income Countries Industrialized Countries Sustained economic growth Knowledge-based Service sector New products and innovations
Income and PPP Purchasing Power Parity Real Income Standard of Living The concentration of income Regional, nationally, and within nations Triad: US, Canada, EU, and Japan Income inequality in developing countries
Implication for Marketers Profitability Chances and challenges Marketings Role Market potential evaluation
Emerging Markets Evaluation
Social and Cultural Environments Differences Similarities Marketers two-folded task. Recognize difference Find similarities
Culture Culture includes both conscious and unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next. Culture is learned, not born with. Culture can be changed.
Implications for Global Markers Food, drink preferences KFC, Colgate, Coco-cola, Green Giant Foods, and soy sauce Color, flower, and other preferences White, green, chrysanthemum, Corbie, dog, Converging global attitudes Cultural universals Be culturally sensitive!
High and Low-Context Cultures Low-context: messages are explicit, words carry most of the information in a communication. I mean what I say. High-context: much more information resides in the context of communication, including background, associations, and basic values of the communications rather in the verbal message. Guess what I really mean.
High and Low Context Cultures FactorHigh ContextLow Context LawyerLess importantVery important SpacePeople breath on each other Bubble of private space, no intrusion TimePolychronic, things dealt simultaneously Monochronic, linear Negotiati ons Lengthy, get to know each other Quick, get things done CountriesJapan, Middle East,US, Northern Europe
Communication and Negotiation Language barriers Its a yes or no? You are invited to take advantage of the chambermaid. Ease your bosoms. This coffee has carefully selected high quality beans and roasted by our all the experience. The lift is being fixed for the next day. During that time we regret you will be unbearable. Nonverbal communication Verbal VS. Nonverbal
Social Behavior Sneeze, belch, sharing food Saudi: Dont ask the host about the health of his spouse. Dont show the soles of your shoes. Dont touch or deliver with the left hand. Japan, Korea, China, India Venezuela, Indonesia Africa Madam or maam
Analytical Approaches to Cultural Factors Dont assume you know everything. Dont judge others by the culture you are from. There are no perfect cultures in this world, or there is no such culture superior than another. Try to understand the beliefs, values, and motives of another culture Be open, be understanding.
Maslows Hierarchy of Needs Physiological Safety Social Esteem Self-actualization
Hofstedes Cultural Typology Power distance Individualism or Collectivism Masculinity or Femininity Uncertainty avoidance
Power Distance The extent to which the less powerful members of a society accept or expect that power to be distributed unequally. High power distance Low power distance
Individualism or Collectivism Individualistic culture: Each member of society is primarily concerned with his or her own interest and those of the immediate family. Collectivist culture: All of societys members are integrated into cohesive in-groups
Masculinity of Femininity Masculinity A society in which men are expected to be assertive, competitive, and concerned with material success while women fulfill the role of nurturer and take care of the family Femininity A society in which the social roles of men and women overlap, with neither gender exhibiting overly ambitious or competitive behavior
Uncertainty Avoidance The extent to which the members of a society are uncomfortable with unclear, ambiguous, or unstructured situations.
Environmental Sensitivity The extent to which products must be adapted to the culture-specific needs of different national markets. Product Adaptation High Low Environmental Sensitivity Low High Integrated Circuit Computer Food
Impact on Marketing Consumer behavior Campbell in US VS in Italy Instant coffee in UK VS. in Sweden Cake in US VS. in UK Personal aspect of international business
Suggested Solutions Stake: expatriate failure averages $75,000, loss of business: $2.5 billion Research Training in cross-cultural competency Boot camp International exposure Workshop
The Political, Legal, and Regulatory Environments of Global Marketing
The Political Environment Sovereignty Political risk Taxes Dilution of Equity Control Expropriation
Sovereignty The supreme and independent political authority. Control the flow of goods across borders Stage of development The political and economical system Protectionism: Agriculture Privatization dilutes the command portion of a mixed economy Global market integration erodes national economic sovereignty.
Political Risk The risk of a change in government policy that would adversely impact a companys ability to operate effectively and profitably. HK, Argentina, Venezuela,
Taxes Diverse geographic activities of MNC Host country tax avoidance Bilateral tax treaties
Dilution of Equity Control Control ownership of foreign-owned companies. Equity percentage in local projects or joint ventures Become an insider
Expropriation Governmental action to dispossess a company or investor. Compensation Nationalization: Ownership of the property or assets in question is transferred to the host government. Confiscation
Expropriation Creeping expropriation: limitations on repatriation of profits, dividends, royalties, or technical assistance fees from local investments or technology arrangements. Tariff and non-tariff barriers Intellectual property restrictions Remedies: buy insurance, follow the law
International Law Rules and principles that nation-states consider binding upon themselves. Public law, international commercial law Common law VS code law
Which Law Applies? Be explicit in the contract The place of the domicile or principal place of business of one of the parties The place where the contract was entered The place of performance of the contract
Intellectual Property Patents and Trademarks Registration Protection Counterfeiting: The unauthorized copying and product of a product. Imitation: Use of a product name that differs slightly from a well-known brand Piracy: The unauthorized publication or reproduction of copyrighted work.
Intellectual Property Protection The Paris Union: International Convention for the Protection of Industrial Property. The Patent Cooperation Treaty European Patent Convention TRIPs: Trade Related Intellectual Property Rights
Antitrust To combat restrictive business practices and to encourage competition. Constens case, Grundig Ruling: Territorial protection proved to be particularly damaging to the realization of the common market. IBM and Microsoft in Europe
Licensing Licensing is a contractual agreement in which a licensor allows a licen...