Principles of Marketing

Lecture-41

Summaryof

Lecture-40

Creating Competitive Advantage

Competitor Analysis

Steps Identifying Competitors

Assessing Competitors

Selecting Competitors to Attack or Avoid

Competitive Strategies

Competitive Positions

Market Leader

Market Challenger

Market Follower

Market Nicher

Global Marketplace

Today’s Topics

Global Marketing

Reasons for Global Marketing

Growth –Access to new markets

–Access to resources

Survival–Against competitors with lower costs (due to increased access to resources)

Global competitors attacking the domestic market,

Foreign markets might offer higher profit opportunities,

Domestic markets might be shrinking,

Need an enlarged customer base to achieve economies of scale,

Reduce dependency on any one market,

Customers might be expanding abroad.

Getting involved in international

marketing: A five step process

DO WE GET INVOLVED IN

INTERNATINAL MARKETING?

IF YES, WHICH

MARKETS?

HOW MUCH COMMITMENT

IN EACH MARKET?

HOW SHOULD WE

REORGANIZE OUR

OPERATIONS?

IMPACT ON DOMESTIC-

BASED MARKETING?

Global Marketplace

Global competition is intensifying and few industries are now safe from foreign competition.

To compete, many companies are continuously improving their products, expanding into foreign markets and becoming Global FirmsGlobal Firms.

Global firms face several major problems:

– Variable exchange rates,

– Unstable governments,

– Protectionist tariffs and trade barriers,

– Corruption.

Global Vision

Recognizing and reacting to international marketing opportunities;

Being aware of threats from foreign competitors in all markets;

Effectively using international marketing mix opportunities

Decisions in International/Global

Marketing

Looking at the global marketing environment

Looking at the global marketing environment

Deciding whether to go international

Deciding whether to go international

Deciding which markets to enter

Deciding which markets to enter

Deciding how to enter the market

Deciding how to enter the market

Deciding on the global marketing program

Deciding on the global marketing program

Deciding on the global marketing organizationDeciding on the global marketing organization

Looking at the Global Marketing

Environment

The International Trade SystemThe International Trade System

The World Trade Organization and GATTThe World Trade Organization and GATT

Regional Free Trade ZonesRegional Free Trade Zones

The International Trade System

–Tariffs, quotas, embargos, exchange controls, nontariff trade barriers

–World Trade Organization and GATT

–Regional free trade zones

• European Union

• North American Free Trade Agreement

• Other free trade areas

Just a reminder….

A nation’s basic conditions in transportation networks,

communication systems, ad energy facilities.

Infrastructure

The price of one nation’s currency in terms of another

country’s currency.

Exchange Rate

A tax levied on imported goods.

Tariff

An administrative trade restriction that limits the number

of units of a certain good that can enter a country for resale.

Import Quota

An administrative trade

restriction that imposes a

complete ban on imports

of a specified product.

Embargo

The controversial trade practice

of selling a product in a foreign

market at a lower price than it

commands in the producer’s

domestic market.

Dumping

An international trade accord

that has helped to reduce

worldwide tariffs.

General Agreement on Tariffs and Trade

(GATT)

A 125-member organization that

succeeds GATT in overseeing trade

agreements, mediating disputes, and

reducing trade barriers, unlike GATT

provisions, WTO decisions are

binding.

World Trade Organization (WTO)

An accord to remove trade barriers among Canada, Mexico, and the United

States.

North American Free-Trade Agreement (NAFTA)

Looking at the Global Marketing

Environment

Economic Environmental

Factors

Country’sIndustrial Structure

Country’sIndustrial Structure

Subsistence Economies

Subsistence Economies

Raw MaterialExporting

Economies

Raw MaterialExporting

Economies

IndustrializingEconomies

IndustrializingEconomies

IndustrialEconomiesIndustrial

Economies

Income Distribution

Political-Legal Environmental Factors

GovernmentBureaucracyGovernmentBureaucracy

Attitudes Toward

International Buying

Attitudes Toward

International Buying

Monetary RegulationsMonetary

RegulationsPoliticalStabilityPoliticalStability

Cultural Environmental

Factors

How CustomersThink About and

Use Products

Cultural Traditions,Preferences, and

Behaviors

BusinessNorms andBehavior

Deciding Which Markets

to Enter

• Consistent with objectives and culture of firm

• Demographic Characteristics

• Economic Factors

• Sociocultural factors

• Technological factors

Define Organization’s Marketing Objectives and Policies

Define Organization’s Marketing Objectives and Policies

What Volume of Foreign Sales is Desired?What Volume of Foreign Sales is Desired?

How Many Countries Should the Firm Go Into?How Many Countries Should the Firm Go Into?

What Types of Countries Should be Entered?What Types of Countries Should be Entered?

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Deciding How to Enter the

Market

Direct InvestmentDirect Investment

Joint VenturingJoint Venturing

ExportingExporting

Am

ou

nt

of

Co

mm

itm

en

t, R

isk,

Co

ntr

ol,

an

d P

rofi

t P

ote

nti

al

GreaterGreater

LesserLesser

• 1st level: Exporting

• 2nd level: Joint Venturing

–Franchising

–Licensing

–Contract manufacturing

–Joint ownership

• 3rd level: Direct Investment

Deciding on the Global Marketing

Program

StraightExtension

CommunicationAdaptation

ProductAdaptation

DualAdaptation

Pro

mo

tio

n

Don’t ChangeProduct

AdaptProduct

Product

Don’tChange

Promotion

AdaptPromotion

Product InventionDevelop New Product

Five International Product and Promotion Strategies

Straight product expansion

• Marketing the product with no changes

Product adaptation

• Altering the product to meet local conditions or the wants of the foreign market

Product invention

• Creating new products or services for foreign markets

Global Pricing Strategies

Companies face many problems

• Price escalation

• Pricing to foreign subsidiaries

• Recent economic and technological forces

• The Internet

Possibilities in setting prices include:

–Charge a uniform price all around the world.

–Charge what consumers in each country could pay.

–Use a standard markup of its costs everywhere.

Whole-Channel Concept for Distribution

SellerSeller

Seller’s HeadquartersSeller’s Headquarters

Channels Between NationsChannels Between Nations

Channels Within NationsChannels Within Nations

Final User or BuyerFinal User or Buyer

Global Promotion Strategies

Standardized global communication

• Advertising themes are standardized from country to country with slight modifications

Communication adaptation

• Advertising messages are fully adapted to local markets

Managing International

Marketing Activities

Step 1: Organize export department

Step 2: Create an international division

Step 3: Become a global organization

Think Globally Act Locally

Enough for today. . .

Summary

Global Marketing

Global Marketplace

Looking at the global marketing environment

Looking at the global marketing environment

Deciding whether to go international

Deciding whether to go international

Deciding which markets to enter

Deciding which markets to enter

Deciding how to enter the market

Deciding how to enter the market

Deciding on the global marketing program

Deciding on the global marketing program

Deciding on the global marketing organizationDeciding on the global marketing organization

Think Globally Act Locally

Next….

e-Marketing

Principles of Marketing

Lecture-41