Presentation on theme: "C HAPTER 15 The Global Marketplace. Copyright 2007, Prentice-Hall Inc.15-2 Discuss how the international trade system, economic, political-legal, and."— Presentation transcript:
C HAPTER 15 The Global Marketplace
Copyright 2007, Prentice-Hall Inc.15-2 Discuss how the international trade system, economic, political-legal, and cultural environments affect a companys international marketing decisions. Describe three key approaches to entering international markets. Explain how companies adapt their marketing mixes for international markets. Identify the three major forms of international marketing organization. Roadmap: Previewing the Concepts
Copyright 2007, Prentice-Hall Inc.15-3 Background Established in 1893 in Atlanta pharmacy. 1900: Coke was available in foreign countries. 1940s: built bottling plants abroad to supply soldiers. Growth fueled by strong marketing: Id like to buy the world a Coke TV ad. Now in emerging markets. How They Did It Balances brand building and global standardization with local adaptation. Consistent positioning, packaging, and taste. Brands, flavors, ads, price, distribution and promotions are adapted to local markets. Sprite: a global success. COCA-COLA – Successfully Going Global
Copyright 2007, Prentice-Hall Inc.15-4 The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming and accounts for 20 percent of GDP worldwide. Global competition is intensifying. Higher risks with globalization. Global Marketing in the 21 st Century
Copyright 2007, Prentice-Hall Inc.15-5 Globalization by U.S. Firms Coca-Cola has been a leader in globalization. Marketing in Action
Copyright 2007, Prentice-Hall Inc.15-6 Global Firms A global firm is one that, by operating in more than one country, gains marketing, production, R&D, and financial advantages that are not available to purely domestic competitors.
Copyright 2007, Prentice-Hall Inc.15-7 Figure 15-1 Major International Marketing Decisions
Copyright 2007, Prentice-Hall Inc.15-8 Key Influences in the Global Marketing Environment The International Trade System Economic Environment Political-Legal Environment Cultural Environment
Copyright 2007, Prentice-Hall Inc.15-9 Looking at the Global Marketing Environment The International Trade System: –Restrictionstariffs, quotas, embargos, exchange controls, and nontariff trade barriers. The World Trade Organization and GATT: –Helps tradereduces tariffs and other international trade barriers. Regional Free Trade Zones: –Groups of nations organized to work toward common goals in the regulation of international trade.
Copyright 2007, Prentice-Hall Inc What types of U.S. companies would like to see higher tariffs and what types would like to see lower tariffs or no tariffs? Why is this the case? Lets Talk! GATT promotes international trade by reducing tariffs.
Copyright 2007, Prentice-Hall Inc Explore the European Union! Regional free trade zones such as the European Union help to simplify the process of going global. Explore their Web site for information that could be helpful to a marketer wishing to go global. Marketing in Action Map of the European Union as of March 2006
Copyright 2007, Prentice-Hall Inc Economic Environment Industrial Structure: –Shapes a countrys product and service needs, income levels, and employment levels. Four types: –Subsistence economies –Raw material exporting economies –Industrializing economies –Industrial economies
Copyright 2007, Prentice-Hall Inc Attitudes toward international buying Government bureaucracy Political stability Monetary regulations –Countertrade Barter Compensation Counterpurchase Political-Legal Environment
Copyright 2007, Prentice-Hall Inc Cultural Environment Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms and behavior vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally.
Copyright 2007, Prentice-Hall Inc The Importance of Culture Ignoring cultural differences can result in strong consumer backlash. Nike was forced to pull these shoes from distribution after learning that the stylized shoe logo resembled Allah when written in Arabic. Marketing in Action
Copyright 2007, Prentice-Hall Inc Impact of Marketing on Culture A common criticism of globalization is that it promotes the Americanization of foreign countries, and a loss of cultural identity. Globalization proponents argue that the cultural exchange of ideas and values works both ways.
Copyright 2007, Prentice-Hall Inc Reason to consider going global: –Foreign attacks on domestic markets. –Foreign markets with higher profit opportunities. –Stagnant or shrinking domestic markets. –Need larger customer base to achieve economies of scale. –Reduce dependency on single market. –Follow customers who are expanding. Deciding Whether to Go International
Copyright 2007, Prentice-Hall Inc Before going abroad, the company should try to define its international marketing objectives and policies. –What volume of foreign sales is desired? –How many countries to market in? –What types of countries to enter? Deciding Which Markets to Enter
Copyright 2007, Prentice-Hall Inc Identify a list of possible countries. Rank each with respect to market size, market growth, cost of doing business, competitive advantage, and risk. Goal is to estimate market potential, using these factors as well as demographic and geographic characteristics, and sociocultural, economic, and legal-political factors. Deciding Which Markets to Enter
Copyright 2007, Prentice-Hall Inc Marketing to China Many marketers are attracted to the Chinese market due to its substantial population size and potential for growth. Colgates efforts have expanded their market share from 7% to 35% in less than a decade. Marketing in Action
Copyright 2007, Prentice-Hall Inc Market Entry Strategies Exporting: –Indirect: Working via independent international marketing intermediaries. –Direct: Company handles its own exports.
Copyright 2007, Prentice-Hall Inc Market Entry Strategies Joint Venturing: –Joining with foreign companies to produce or market products or services. Approaches: –Licensing –Contract manufacturing –Management contracting –Joint ownership Toyokos Disneyland Resort is operated under a licensing agreement.
Copyright 2007, Prentice-Hall Inc Joint Ownership KFC entered Japan through a joint ownership agreement with Japanese conglomerate Mitsubishi. Marketing in Action
Copyright 2007, Prentice-Hall Inc Market Entry Strategies Direct Investment: –The development of foreign-based assembly or manufacturing facilities. –This approach has both advantages and disadvantages which must be carefully evaluated before making a decision.
Copyright 2007, Prentice-Hall Inc Standardized Marketing Mix: –Selling largely the same products and using the same marketing approaches worldwide. Adapted Marketing Mix: –Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return. Deciding on the Global Marketing Program
Copyright 2007, Prentice-Hall Inc Marketing Mix Adaptation In India, McDonalds serves chicken, fish, and veggie burgers, but no beef. Check out the Maharaja Mac! Marketing in Action
Copyright 2007, Prentice-Hall Inc Figure 15-3 Global Product and Communication Strategies
Copyright 2007, Prentice-Hall Inc Straight Product Extension: –Marketing a product in a foreign market without any change. Product Adaptation: –Adapting a product to meet local conditions or wants in foreign markets. Product Invention: –Creating new products or services for foreign markets. Global Product Strategies
Copyright 2007, Prentice-Hall Inc Global Product Strategy Coca-Colas virtual vendor allows the curious to learn about Coca-Colas global product strategy. Marketing in Action
Copyright 2007, Prentice-Hall Inc Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. –Communication Adaptation: Fully adapting an advertising message for local markets. –Changes may have to be made due to media availability. Global Promotion Strategies Learn how the people at NIVEA approach creating a global communication strategy for the firms brands. Video Snippet
Copyright 2007, Prentice-Hall Inc Promotion Adaptation Guy Larouche uses similar ads in European and Arabian countries, but tones down the sensuality. Marketing in Action
Copyright 2007, Prentice-Hall Inc Brand Name Blunders Other Classic Blunders Marketing in Action OOPS!!! Not all brand names translate well into English, or from English into a different language. Coke translated into Chinese characters was interpreted by the Chinese to mean Bite the wax tadpole. Chevy used the Nova name verbatim, only to find out that no va means It doesnt go in Spanish.
Copyright 2007, Prentice-Hall Inc Companies face many problems in setting their international prices. –Standard pricing methods such as uniform pricing, standard markup of costs everywhere, or charging what the market will bear ignores cost differentials and local market conditions. Global Pricing Strategies
Copyright 2007, Prentice-Hall Inc International prices tend to be higher than domestic prices because of price escalation. Companies may become guilty of dumping when a foreign subsidiary charges less than its costs or less than it charges in its home market. The Internet makes global price differences obvious and the euro has reduced the amount of price differentiation. Global Pricing Challenges
Copyright 2007, Prentice-Hall Inc Economic Impact of Global Pricing The adoption of the euro as a common currency by several nations has created a pricing transparency that is forcing companies to harmonize their prices throughout Europe. Marketing in Action
Copyright 2007, Prentice-Hall Inc Figure 15-4 Whole-Channel Concept for International Marketing
Copyright 2007, Prentice-Hall Inc International firms must take a whole- channel view of distributing products to final consumers. Differences in the numbers and types of intermediaries serving each foreign market require time and money to navigate. Size and character of retail units differ as well, presenting challenges. Global Distribution
Copyright 2007, Prentice-Hall Inc Organize an export department Create international divisions –Geographical organizations –World product groups –International subsidiaries Become a global organization Deciding on the Global Marketing Organization
Copyright 2007, Prentice-Hall Inc Discuss how the international trade system, economic, political-legal, and cultural environments affect a companys international marketing decisions. Describe three key approaches to entering international markets. Explain how companies adapt their marketing mixes for international markets. Identify the three major forms of international marketing organization. Rest Area: Reviewing the Concepts