The Global Marketplace

Chapter 15

Rest Stop: Previewing the Concepts

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

• Describe three key approaches to entering international markets

• Explain how companies adapt their marketing mixes for international markets

15 - 2

Rest Stop: Previewing the Concepts

• Identify the three major forms of international marketing organization

15 - 3

First Stop: Google in China

• By early 2006, Google received Chinese government approval to launch Google.cn

• Despite its successes, it started growing increasingly uncomfortable with China’s censorship restrictions

• In 2010, the company removed all technical operations from mainland China

15 - 4

Figure 15.1 – Major International Marketing Decisions

15 - 6

Trade Barriers

Trade Barriers

Trade Barriers

The Chinese government has set up a “great firewall of China”—electronic and censorship barriers that limit or keep out foreign Web sites such as Google and YouTube, while creating safe havens within which Chinese copycat Web sites such as Baidu and Youku can thrive

The World Trade Organization (WTO)

• Established by the General Agreement on Tariffs and Trade (GATT) in 1995

• Promotes world trade by reducing tariffs and other international trade barriers

• Imposes international trade sanctions and mediates global trade disputes

15 - 10

The World Trade Organization

The WTO promotes trade by reducing tariffs and other international trade barriers

European Union (EU)

• Reduces barriers to free flow of products, services, and labor among member countries

• Develops policies on trade with nonmember nations

15 - 13

The European Union represents one of the world’s largest single markets. Its current member countries contain more than half a billion consumers and account for 20 percent of the world’s exports

Regional Free Trade Zones

• North American Free Trade Agreement• Established free trade zone among United States,

Mexico, and Canada

• Central American Free Trade Agreement• Established free trade zone between the United

States and Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua

• Union of South American Nations

15 - 14

Economic Environment

• Factors that reflect a country’s attractiveness as a market:• Industrial structure• Income distribution

• Industrial structure shapes its product and service needs, income levels, and employment levels

15 - 15

Types of Industrial structure

15 - 16

Types of Industrial structure

15 - 17

Income Distribution

• Industrialized nations – May have low-, medium-, and high-income households

• Subsistence economies – Consist mostly of households with very low family incomes

Income Distribution

In India, Ford’s $7,700 Figo targets low- to middle-income consumers who are only now able to afford their first car

Political-Legal Environment

• In considering whether to do business in a given country, companies should consider:• Country’s attitude toward international buying• Government bureaucracy• Political stability• Monetary regulations

15 - 20

The Impact of Culture on Marketing Strategy

• Consumers in different countries think about and use certain products differently

• Business norms and behaviors also vary from country to country

• Companies that understand cultural nuances can:• Avoid expensive and embarrassing mistakes• Take advantage of cross-cultural opportunities

15 - 21

The Impact of Culture on Marketing Strategy

• Companies that understand cultural nuances can use them to their advantage in the global markets

IKEA customers in China want a lot more from its stores than just affordable Scandinavian-design furniture

The Impact of Marketing Strategy on Cultures

15 - 23

Many iconic American brands are prospering globally, even in some of the most unlikely places. At this Tehran restaurant, American colas are the drink of choice. Coke and Pepsi have grabbed about half the national soft drink sales in Iran. (Also, did you notice the familiar TABASCO hot sauce bottle?)

Deciding Whether to Go Global – Factors

• Attack on a company’s home market by global competitors

• Expanding customer base in international markets

• Better opportunities for growth

15 - 24

Market At Work

• Coca-Cola has emphasized international growth in recent years to offset stagnant or declining U.S. soft drink sales

With sales stagnating in its mature markets, Coca-Cola is looking toemerging markets—such as Africa—to meet its ambitious growth goals. Its African distribution network is rudimentary but effective

Deciding Which Markets to Enter

• Company should:• Define its international marketing objectives and

policies• Decide what volume of foreign sales it wants• Choose in how many countries it wants to

market• Decide on types of countries to enter• Carefully evaluate each country

15 - 26

Figure 15.2 – Market Entry Strategies

15 - 27

Exporting

• Entering foreign markets by selling goods produced in the company’s home country, often with little modification• Indirect exporting – Involves less investment

because the firm does not require an overseas marketing organization or network

• Direct exporting – Investment and risk are greater in this strategy, but so is the potential return

15 - 28

Types of Joint Ventures

15 - 30

Types of Joint Ventures

15 - 31

Direct Investment

• Advantages:• Lower costs• Improved image in the host country• Deeper relationships• Full control over investment

• Disadvantages:• Restricted or devalued currencies• Falling markets

Deciding on the Global Marketing Program

15 - 33

Deciding on the Global Marketing Program

15 - 34

Marketing Mix Adaptation

In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharja Mac—two all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun

Figure 15.3 – Five Global Product and Communications Strategies

Global Product Strategies

Global Promotion Strategies

• Companies can either• Adopt the same communication strategy they

use in the home market• Change it for each local market

• Even in highly standardized communications campaigns, adjustments might be required for language and cultural differences

15 - 38

Marketing at Work

• While translating brand names and slogans, phonetic appeal, associations with historical figures, legends, and other factors should also be considered

Some standardized names do nottranslate well globally. You won’t likely find this French lemonade brand at your local Kroger store.

Global Price Considerations

• Companies could:• Charge what consumers in each country would

bear• Use a standard markup of its costs everywhere

• Companies’ foreign prices are usually higher than their domestic prices for comparable products

15 - 41

Global Price Considerations

15 - 42

Levi Strauss recently launched the Denizen brand, created for teens and young adults in emerging markets such as China, India, and Brazil who cannot afford Levi’s-branded jeans

Figure 15.4 – Whole-Channel Concept for International Marketing

15 - 44

Global Distribution Channels

15 - 45

In its efforts to sell rugged, affordable phones to Indian consumers, Nokia forged its own distribution structure, including a fleet of distinctive blue Nokia-branded vans that prowl rutted country roads to visit remote villages.

Deciding on the Global Marketing Organization

• International marketing efforts can be managed in three different ways:• Organizing an export department• Creating international divisions:

• Geographical organizations• World product groups• International subsidiaries

• Becoming a global organization

15 - 46

Deciding on the Global Marketing Organization

15 - 47

European household, health, and consumer goods producer Reckitt Benckiser has a truly global organization. “Most of our top managers . . . view themselves as global citizens rather than as citizens of any given nation.”

Rest Stop: Reviewing the Concepts

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

• Describe three key approaches to entering international markets

• Explain how companies adapt their marketing mixes for international markets

15 - 48

Rest Stop: Reviewing the Concepts

• Identify the three major forms of international marketing organization

15 - 49

15 - 50

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.

Copyright © 2013 Pearson Education, Inc. Copyright © 2013 Pearson Education, Inc. Publishing as Prentice HallPublishing as Prentice Hall