1. The Global Marketplace
Chapter 15 Next Exit
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2. 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.
Identify the three major forms of international marketing organization.
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3. The NBA – A “Hot” Global Brand
Case Study
The NBA – A “Hot” Global Brand
Why Go Global?
Basketball is the #2 global sport, behind soccer. NBA finals were televised in 215 countries.
Going global means growth. 10% of league’s overall revenues and 25% of licensed apparel sales comes from outside United States.
Growing presence of foreign born stars adds to the NBA’s global appeal.
How Did They Do It?
Nine international offices, over 100 international staff and a Hispanic marketing office in Miami, Florida.
132 NBA sponsored international events in the off-season.
NBA Europe Live program takes off-season training for the four NBA teams to Europe.
International expansion in the future may target China.
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4. Global Marketing Today
Several trends characterize the global marketplace today:
The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.
International trade is booming.
Global competition is intensifying.
Risks associated with globalization are increasing.
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5. Global Firm Defined
A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.
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6. Figure 15.1 Major International Marketing Decisions
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7. Looking at the Global Marketing Environment
The International Trade System:
Many restrictions exist:
Tariffs
Quotas
Embargos
Exchange controls
Nontariff trade barriers
E.g., Protectionist regulations prevent the United States and other Western banks from entering China’s huge retail banking market.
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8. Looking at the Global Marketing Environment
The World Trade Organization and GATT:
Helps trade by reducing tariffs and other international trade barriers
Imposes sanctions
Mediates global disputes
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9. Looking at the Global Marketing Environment
Regional Free Trade Zones:
European Union (EU)
North American Free Trade Agreement (NAFTA)
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10. Marketing in Action
The European Union
Regional free trade zones such as the European Union help to simplify the process of going global.
Visit and explore the European Union’s Web site for information that could be helpful to a marketer wishing to go global.
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11. Looking at the Global Marketing Environment
Economic environment:
Industrial structure shapes a country’s product and service needs, income levels, and employment levels.
Four types of industrial structure:
Subsistence economies
Raw material exporting economies
Industrializing economies
Industrial economies
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12. Looking at the Global Marketing Environment
Economic environment:
Income distribution is an important factor.
Many luxury brand marketers are rushing to take advantage of China’s consumer markets.
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13. Looking at the Global Marketing Environment
Political-legal environments vary by:
Attitudes toward international buying
Government bureaucracy
Political stability
Monetary regulations
Countertrade is a growing practice which takes several forms:
Barter
Compensation
Counterpurchase
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14. Looking at the Global Marketing Environment
Before planning a marketing program, sellers must:
Understand a nation’s culture
Examine the ways in which consumers in different countries think about and use products
Mistakes can be embarrassing and costly.
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15. Ignore Culture at Your Peril
Marketing in Action
Ignore Culture at Your Peril
China imposed a nationwide ban on this “blasphemous” ad featuring LeBron James crushing several culturally revered Chinese figures.
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16. Looking at the Global Marketing Environment
Cultural environment:
Business norms and behavior vary by country.
Companies that understand cultural nuances can use them to advantage when positioning products internationally.
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17. Looking at the Global Marketing Environment
Cultural environment:
Critics contend that large American multinationals are “Americanizing” the world’s cultures.
In China, most people never drank coffee prior to Starbucks entry into the market.
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18. Deciding Whether to Go Global
Reasons to consider going global:
Foreign attacks on domestic markets may be countered by counterattacks abroad.
Home market may be stagnant or shrinking while foreign markets offer higher profit opportunities.
Customers may be expanding globally and require international servicing.
Risks must be weighed against the firm’s ability to operate globally.
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19. Deciding Which Markets to Enter
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?
Possible countries should be ranked based several factors.
The market(s) with the greatest ROI should be chosen.
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20. Size isn’t everything though.
P&G’s decision to enter the Chinese toothpaste market with Crest makes sense as China is the largest toothpaste market in the world.
Size isn’t everything though.
What brands or products might NOT succeed in China, despite its enormous market size? Why?
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21. Figure 15.2 Market Entry Strategies
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22. Deciding How to Enter the Market
Exporting:
Entering a foreign market by selling goods produced in the company’s home country, often with little modification.
Types of exporting:
Indirect:
Working through independent international marketing intermediaries.
Direct:
Company handles its own exports.
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23. Deciding How to Enter the Market
Joint venturing:
Joining with foreign companies to produce or market a product or service.
Approaches:
Licensing
Contract manufacturing
Management contracting
Joint ownership
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24. Deciding How to Enter the Market
Licensing:
A company enters into an agreement with a licensee in a foreign market, offering the right to use a patent, manufacturing process, trademark, trade secret, or other item of value for a fee or royalty.
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25. Deciding How to Enter the Market
Contract manufacturing:
A company contracts with manufacturers in a foreign market to produce the product or provide its service.
Management contracting:
A joint venture in which the domestic firm supplies the management know-how to a foreign company that supplies the capital; the domestic firm exports management services rather than products.
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26. Deciding How to Enter the Market
Joint ownership:
A joint venture in which a company joins investors in a foreign market to create a local business in which the firm shares joint ownership and control.
KFC teamed up with Mitsubishi to enter Japan.
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27. Deciding How to Enter the Market
Direct investment:
The development of foreign-based assembly or manufacturing facilities.
Advantages:
Lower costs due to cheap labor or raw materials.
Firm may improve image in host country.
Better adaptation of products to country.
Disadvantages:
Currency risks, market failure, government change.
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28. Deciding on the Global Marketing Program
Standardized marketing mix:
Using basically the same marketing strategy and mix in all international markets.
Adapted marketing mix:
Adjusting the marketing strategy and mix elements to each international target market, bearing more costs but hoping for a larger market share and return.
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29. Think Global, Act Local Marketing in Action
McDonald’s uses the same basic fast-food look, layout, and operating model in all of its restaurants around the world, but adapts its menu to local tastes. Filet-O-Shrimp burgers, Bulgogi Burgers, and the beefless Maharaja Mac are some examples.
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30. Figure 15.3 Five Global Product and Communications Strategies
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31. Deciding on the Global Marketing Program
Global promotion strategies:
Firms can either adopt the same communication strategy they used in the market or change it for each local market.
Some global firms use a standardized advertising theme around the world with minor adaptations.
Other firms follow a communication adaptation strategy by fully adapting an advertising message for local markets.
Changes may also have to be made due to media availability.
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32. Quick Flick Harley Davidson’s global strategy Click to play video
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33. Other Classic Blunders
Marketing in Action
Brand Name Blunders
OOPS!!! Not all brand names translate well into English, or from English into a different language.
Other Classic Blunders
“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 doesn’t go” in Spanish.
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34. Deciding on the Global Marketing Program
Global pricing strategies:
Companies face many problems in setting their international prices.
Standard pricing methods ignore cost differentials and local market conditions.
International prices tend to be higher than domestic prices because of price escalation.
Some global firms create simpler versions of products to sell abroad.
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35. Deciding on the Global Marketing Program
Global pricing strategies:
Setting prices for foreign subsidiaries can be problematic:
Charging too much results in higher tariff duties and lower income taxes.
Charging too little can result in accusations of dumping if price is less than the product costs or less than is being charged in the home market.
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36. Impact of Global Pricing
Marketing in Action
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.
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37. Figure 15.4 Whole-Channel Concept for International Marketing
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38. Deciding on the Global Marketing Program
Global distribution channels differ by:
The numbers and types of intermediaries.
Size and character of retail units differ as well, presenting challenges.
The transportation infrastructure.
Limitations in the distribution network of China will create challenges for many marketers.
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39. Distribution Can Be Difficult
Marketing in Action
Distribution Can Be Difficult
Nokia developed its own distribution structure for India, including a fleet of distinctive blue Nokia-branded vans which were used to visit remote villages.
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40. Deciding on the Global Marketing Organization
International marketing efforts can be managed by:
Organizing an export department.
Creating international divisions:
Geographical organizations
World product groups
International subsidiaries
Becoming a global organization.
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41. 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.
Identify the three major forms of international marketing organization.
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