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19 - 1Copyright 2012 Pearson Education, Inc.

Publishing as Prentice Hall

i t s good and

good for you

Chapter Nineteen

The Global Marketplace

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The Global Marketplace

Global Marketing Today

Looking at the Global Marketing Environment

Deciding Whether to Go Global Deciding Which Markets to Enter

Deciding How to Enter the Market

Deciding on the Global Marketing Program Deciding on the Global Marketing

Organization

Topic Outline

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A global firm

Operates in more than one country

Gains marketing, production, R&D, andfinancial advantages not available to

purely domestic competitors

The global firm sees the world as onemarket

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Global firms ask a number of basicquestions:

What market position should we try toestablish in our own country, in our

economic region, and globally?

Who will our global competitors be, andwhat are their strategies and resources?

Where should we produce or source ourproduct?

What strategic alliances should we formwith other firms around the world?

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Looking at the GlobalMarketing Environment

Restrictions on trade between nations

include:

Tariffs

Quotas

Exchange controls

Nontariff trade barriers

The International Trade System

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Tariffs are taxes on certain importedproducts designed to raise revenue or toprotect domestic firms

Quotas are limits on the amount of foreignimports a country will accept in certain

product categories to conserve onforeign exchange and protect domesticindustry and employment


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Copyright 2012 Pearson Education, Inc.



Exchange controls are a limit on the amount offoreign exchange and the exchange rate against

other currencies

Nontariff trade barriers are biases against bids orrestrictive product standards that go againstAmerican product features


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General Agreement on Tariffs and Trade(GATT):

A 61-year-old treaty

Designed to promote world trade

Reduces tariffs and other international tradebarriers

The International Trade SystemThe World Trade Organization and GATT

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World Trade Organization

Enforces GATT rules

Mediates disputes

Imposes trade sanctions

The International Trade SystemThe World Trade Organization and GATT
http://www.wto.org/

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Looking at the Global MarketingEnvironment

Economic communities are

free trade zones

European Union (EU)

North American Free Trade

Agreement (NAFTA)

Central American Free Trade

Association (CAFTA)

The International Trade SystemRegional Free Trade Zones

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19 - 11Copyright 2012 Pearson Education, Inc.Publishing as Prentice Hall


Economic factors reflect

a countrys

attractiveness as a

market:

Industrial structure

Income distribution

Economic Environment

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Subsistence economies

Raw material exporting economies Industrializing economies

Industrial economies

Economic EnvironmentIndustrial Structure

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Low-income households

Middle-income households High-income households

Economic EnvironmentIncome Distribution

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Countrys attitude toward international

buying

Government bureaucracy

Political stability

Monetary regulations

Political-Legal Environment
http://www.cnn.com/

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Business norms

Cultural preferences, traditions, behaviors

Cultural EnvironmentImpact of Culture on Marketing Strategy

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Looking at the Global MarketingEnvironment

The need to adapt to local cultural values and

traditions rather than imposing their own

Cultural EnvironmentImpact of Marketing Strategy on Cultures
http://www.tokyodisneyresort.co.jp/index_e.html

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Deciding Whether to Go Global

Can the company understand the consumers?

Can it offer competitively attractive products?

Will it be able to adapt to local culture? Can they deal with foreign nationals?

Do the companys managers have the

experience? Has management considered regulation and

political environment of other countries?

Factors to consider

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Define international marketingobjectives and policies

Foreign sales volume

How many countries to market to Types of countries to market to based

on:

Geography

Income and population

Political climate

Deciding Which Markets to Enter

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Deciding Which Markets to Enter

Rank potential globalmarkets based on:

Market size

Market growth Cost of doing

business

Competitiveadvantage

Risk level

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http://www.fas.usda.gov/info/agexporter/1999/articles/whoswho.html

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Exporting is when the company produces its goodsin the home country and sells them in a foreignmarket. It is the simplest means involving the

least change in the companys product lines,organization, investments, or mission.

Indirect exporting

Direct exporting

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Joint venturing is when a firm joins withforeign companies to produce or marketproducts or services

Licensing

Contract manufacturing Management contracting

Joint ownership

Joint venturing differs from exporting in thatthe company joins with a host countrypartner to sell or market abroad

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Licensing is when a firm enters

into an agreement with a

licensee in a foreign market.

For a fee or royalty, the

licensee buys the right to use

the companys process,

trademark, patent, tradesecret, or other item of

value.

Joint Venturing

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Contract manufacturing is when a firmcontracts with manufacturers in theforeign market to produce its product orprovide its service. Benefits include fasterstartup, less risk, and the opportunity to

form a partnership or to buy out the localmanufacturer.

Joint Venturing

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Management contracting is when the domestic firmsupplies management skill to a foreign companythat supplies capital. The domestic firm isexporting management services rather thanproducts.

Joint Venturing

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Joint ownership is when one company joins forceswith foreign investors to create a local businessin which they share joint ownership and control.Joint ownership is sometimes required foreconomic or political reasons.

Joint Venturing

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Direct investment is the development offoreign-based assembly ormanufacturing facilities and offers a

number of advantages including

Labor

Logistics

Control Government incentives

Lower costs

Raw material

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Deciding on the GlobalMarketing Program

Standardized marketing mix involves selling the

same products and using the same marketing

approaches worldwide

Adapted marketing mix involves adjusting the

marketing mix elements in each target market,

bearing more costs but hoping for a largermarket share and ROI

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Straight product extension means marketing aproduct in a foreign market without any change

Product adaptation involves changing the productto meet local conditions or wants

Product invention consists of creating somethingnew for a specific country market

Maintain or reintroduce earlier products Create new products

Product

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Deciding on theGlobal Marketing Program

Product

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Companies can either adopt the same

communication strategy they use at home

or change it for each market

Promotion

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Deciding on theGlobal Marketing Program

Uniform pricing is the same price in all marketsbut does not consider income or wealth

where the price may be too high in some ornot high enough in other markets

Standard markup pricing is a price based on apercentage of cost but can cause problems in

countries with high costs

Price

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Deciding on theGlobal Marketing Organization

Typical management of international

marketing activities include:

Establishing an exporting department with asales manager and staff

Creating an international division organized

by geography, products, or operating units

Becoming a complete global organization

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19 35Copyright 2012 Pearson Education Inc

All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,

mechanical, photocopying, recording, or otherwise, without the prior written

permission of the publisher. Printed in the United States of America.



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Pom 14 Inppt 19 CF