Presentation on theme: "The Global Marketplace"— Presentation transcript:
1The Global Marketplace Chapter NineteenThe Global Marketplace
2The Global Marketplace Topic OutlineGlobal Marketing TodayLooking at the Global Marketing EnvironmentDeciding Whether to Go GlobalDeciding Which Markets to EnterDeciding How to Enter the MarketDeciding on the Global Marketing ProgramDeciding on the Global Marketing Organization
3Global Marketing Today A global firmOperates in more than one countryGains marketing, production, R&D, and financial advantages not available to purely domestic competitorsThe global firm sees the world as one market
4Global Marketing Today Global firms ask a number of basic questions:What market position should we try to establish in our own country, in our economic region, and globally?Who will our global competitors be, and what are their strategies and resources?Where should we produce or source our product?What strategic alliances should we form with other firms around the world?
5Looking at the Global Marketing Environment The International Trade SystemRestrictions on trade between nations include:TariffsQuotasExchange controlsNontariff trade barriersNote to InstructorForeign governments may charge tariffs, taxes on certain imported products designed to raise revenue or to protect domestic firms. For example, China slaps a 25 percent tariff on United States and other imported autos. Or they may set quotas, limits on the amount of foreign imports that they will accept in certain product categories. The purpose of a quota is to conserve on foreign exchange and to protect local industry and employment. American firms may also face exchange controls, which limit the amount of foreign exchange and the exchange rate against other currencies.
6Looking at the Global Marketing Environment The International Trade SystemTariffs are taxes on certain imported products designed to raise revenue or to protect domestic firms Quotas are limits on the amount of foreign imports a country will accept in certain product categories to conserve on foreign exchange and protect domestic industry and employment
7Looking at the Global Marketing Environment The International Trade SystemExchange controls are a limit on the amount of foreign exchange and the exchange rate against other currencies Nontariff trade barriers are biases against bids or restrictive product standards that go against American product features
8Looking at the Global Marketing Environment The International Trade SystemThe World Trade Organization and GATTGeneral Agreement on Tariffs and Trade (GATT):A 61-year-old treatyDesigned to promote world tradeReduces tariffs and other international trade barriers
9Looking at the Global Marketing Environment The International Trade SystemThe World Trade Organization and GATTWorld Trade OrganizationEnforces GATT rulesMediates disputesImposes trade sanctionsNote to InstructorIt is well worth a click to the WTO homepage to understand their function. This Web site explains the WTO, lists news and provide resources.
10Looking at the Global Marketing Environment The International Trade SystemRegional Free Trade ZonesEconomic communities are free trade zonesEuropean Union (EU)North American Free Trade Agreement (NAFTA)Central American Free Trade Association (CAFTA)
11Looking at the Global Marketing Environment Economic EnvironmentEconomic factors reflect a country’s attractiveness as a market:Industrial structureIncome distribution
12Looking at the Global Marketing Environment Economic EnvironmentIndustrial StructureSubsistence economiesRaw material exporting economiesIndustrializing economiesIndustrial economiesNote to InstructorSubsistence economies: The vast majority of people engage in simple agriculture.Raw material exporting economies: These economies are rich in one or more natural resources but poor in other ways.Industrializing economies: In an industrializing economy, manufacturing accounts for 10 to 20 percent of the country’s economy.Industrial economies: Industrial economies are major exporters of manufactured goods, services, and investment funds. They trade goods among themselves and also export them to other types of economies for raw materials and semi-finished goods.
13Looking at the Global Marketing Environment Economic EnvironmentIncome DistributionLow-income householdsMiddle-income householdsHigh-income households
14Looking at the Global Marketing Environment Political-Legal EnvironmentCountry’s attitude toward international buyingGovernment bureaucracyPolitical stabilityMonetary regulationsNote to InstructorStudents should be aware that there are many news and media sources that cover international events. This link goes to cnn.com but the might also want to read sections of the wsjonline.com
15Looking at the Global Marketing Environment Cultural EnvironmentImpact of Culture on Marketing StrategyBusiness normsCultural preferences, traditions, behaviors
16Looking at the Global Marketing Environment Cultural EnvironmentImpact of Marketing Strategy on CulturesThe need to adapt to local cultural values and traditions rather than imposing their ownNote to InstructorThis link is to Tokyo Disney. It is interesting to surf the site and see how the theme park has been adapted for Japanese society.
17Deciding Whether to Go Global Factors to considerCan 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 company’s managers have the experience?Has management considered regulation and political environment of other countries?
18Deciding Which Markets to Enter Define international marketing objectives and policiesForeign sales volumeHow many countries to market toTypes of countries to market to based on:GeographyIncome and populationPolitical climateNote to InstructorWhen choosing the number of countries, companies must be careful not to spread themselves too thin or to expand beyond their capabilities by operating in too many countries too soon.
19Deciding Which Markets to Enter Rank potential global markets based on:Market sizeMarket growthCost of doingbusinessCompetitive advantageRisk level
20Deciding How to Enter the Market Note to InstructorWays to enter global markets include:ExportingJoint venturingDirect investmentIt is important that a company truly understands who they are working with if they partner for their global markets. Even finding an exporting agent can be quite difficult. This link brings the instructor to the USDA Foreign Agricultural Service listing of types of export agents and their focus.
21Deciding How to Enter the Market Exporting is when the company produces its goods in the home country and sells them in a foreign market. It is the simplest means involving the least change in the company’s product lines, organization, investments, or mission.Indirect exportingDirect exportingNote to InstructorIndirect exporting is when the firm works through an independent international marketing intermediary. This requires less investment and risk since the firm does not require an overseas organization or network.Direct exporting is when the firm handles its own exports. This requires a greater investment and risk.
22Deciding How to Enter the Market Joint venturing is when a firm joins with foreign companies to produce or market products or servicesLicensingContract manufacturingManagement contractingJoint ownershipJoint venturing differs from exporting in that the company joins with a host country partner to sell or market abroad
23Deciding How to Enter the Market Joint VenturingLicensing 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 company’s process, trademark, patent, trade secret, or other item of value.
24Deciding How to Enter the Market Joint VenturingContract manufacturing is when a firm contracts with manufacturers in the foreign market to produce its product or provide its service. Benefits include faster startup, less risk, and the opportunity to form a partnership or to buy out the local manufacturer.
25Deciding How to Enter the Market Joint VenturingManagement contracting is when the domestic firm supplies management skill to a foreign company that supplies capital. The domestic firm is exporting management services rather than products.
26Deciding How to Enter the Market Joint VenturingJoint ownership is when one company joins forces with foreign investors to create a local business in which they share joint ownership and control. Joint ownership is sometimes required for economic or political reasons.
27Deciding How to Enter the Market Direct investment is the development of foreign-based assembly or manufacturing facilities and offers a number of advantages includingLaborLogisticsControlGovernment incentivesLower costsRaw material
28Deciding on the Global Marketing 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 larger market share and ROI
29Deciding on the Global Marketing Program ProductStraight product extension means marketing a product in a foreign market without any changeProduct adaptation involves changing the product to meet local conditions or wantsProduct invention consists of creating something new for a specific country marketMaintain or reintroduce earlier productsCreate new productsNote to InstructorCell phones need to be adapted for every country due to local communication standards. But beyond that, it is important from a customer standpoint as this example from the book illustrates:Looking for ways to make cell phones practical for people living in developing countries, Nokia has trekked to far corners of the globe, from the narrow alleys of Mumbai to the vast slums of Nairobi. The result is a slew of new features especially designed for places with harsh weather and harsher living conditions. One example: The company created dustproof keypads—crucial in dry, hot countries with many unpaved roads, as Nokia executives learned from visits to customers’ homes in India.
30Deciding on the Global Marketing Program Product
31Deciding on the Global Marketing Program PromotionCompanies can either adopt the same communication strategy they use at home or change it for each market
32Deciding on the Global Marketing Program PriceUniform pricing is the same price in all markets but does not consider income or wealth where the price may be too high in some or not high enough in other markets Standard markup pricing is a price based on a percentage of cost but can cause problems in countries with high costs
33Deciding on the Global Marketing Program Distribution ChannelsWhole-Channel ViewSeller’s headquarters organization supervises the channel and is also a part of the channel Channels between nations move the products to the borders of the foreign nations Channels within nations move the products from their foreign point of entry to the final customers
34Deciding on the Global Marketing Organization Typical management of international marketing activities include:Establishing an exporting department with a sales manager and staffCreating an international division organized by geography, products, or operating unitsBecoming a complete global organization