Marketing Environment (Global Marketing) 03 Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Objectives  Understand international marketing and decisions firms make when they consider globalization  Explain how international organizations such as the World Trade Organization (WTO), economic communities, and individual country regulations impact a firm’s opportunities for globalization  Understand how factors in a firm’s external business environment influence marketing strategies and outcomes in both domestic and global markets  Explain strategies firms use to enter global markets

Considering Going Global? The Global Marketplace Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall World Trade: The flow of goods and services among different countries-the value of all the exports and imports of the world’s nations

Countertrade Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall Countertrade- accounts for between 20 and 25 percent of all world trade. Is a type of trade in which goods are paid for with other items instead of with cash. In some countries, firms “trade” when cash or credit is not available. Barter is a common form of countertrade 3-4

3-5 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-1 North American Trade Flows (in Billions of Dollars)

3-6 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-2 Steps in the Decision Process for Entering Global

3-7 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Global Means Growth

3-8 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 1-Deciding to Go Global   Must consider market conditions and competitive advantage when making a decision Chinese firms such as Chery are now exporting their brands to other countries, including the U.S. US firms like Costco have expanded to Europe and Asia

3-9 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. 2-Understand International, Regional and Country Regulations   Initiatives in international regulation and cooperation help trade General Agreement on Tariffs and Trade (GATT) World Trade Organization (WTO)   Protectionism restricts trade Quotas, embargoes, and tariffs   Economic communities help to promote trade World Trade Organization

Global Marketing Environment Global Marketing Environment A. ECONOMIC ENVIRONMENT Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall B. COMPETITIVE ENVIRONMENT C. TECHNOLOGICAL ENVIRONMENT D. POLITICAL/LEGAL ENVIRONMENT E. SOCIOCULTURAL ENVIRONMENT 3-Analyze the Marketing Environment 3-10

3-11 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Figure 3-3 Elements of the External Environment The World Fact book

3-12 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. A. Economic Environment: Indicators of Economic Health   Key economic indicators: Gross domestic product (GDP): Total dollar value of goods/services a country produces within its borders in a year Gross national product (GNP): Value of all goods and services produced by a country’s citizens or organizations Economic infrastructure Quality of country’s distribution, financial, and communications systems

3-13 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. A. Economic Environment: Level of Economic Development   Least developed country (LDC) Economic base is often agricultural   Developing countries Economy shifts emphasis from agriculture to industry   Developed countries Offer wide range of opportunities for international marketers

3-14 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. A. Economic Environment: The Business Cycle  :  All economies go through periods of: Prosperity Recession Recovery Depression Inflation Economy.com Do sales of all goods and services suffer in a recession? What are some goods and services that may in sell better during a recession than during times of prosperity?

3-15 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. B. Competitive Environment: Analyzing the Market and Competition   Competitive intelligence: Gathering and analyzing publicly available information about rivals to develop superior marketing strategies Collected from news media, the Internet, and publicly available government documents

3-16 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. B. Competitive Environment: Competition in the Micro Environment   Competition in the micro environment Competition for consumer’s discretionary income Product competition Brand competition ( Can you name some examples of competition at each level for the iPhone?)

3-17 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. B. Competitive Environment: Competition in the Macro Environment   Competition in the macro environment (overall structure of industry) Monopoly Oligopoly Monopolistic competition Perfect competition

3-18 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. C. Technological Environment   Technology: Provides firms with important competitive advantages Profoundly affects marketing activities Can transform industries   Patent: Legal document giving inventors exclusive rights to produce/sell a particular invention in that country

3-19 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. D. Political and Legal Environment: Legal Influences on Business   Local, state, national, and global laws and regulations affect businesses   Purpose of American law: To make sure businesses compete fairly with each other To make sure that businesses don’t take advantage of consumers

3-20 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. D. Political and Legal Environment: Political Constraints on Business   Retaliatory actions against American businesses sometimes occur as a result of political activity or war   Political constraints on trade are commonly imposed: Economic sanctions Nationalization Expropriation

3-21 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. D. Political and Legal Environment: Regulatory Constraints on Business   Regulatory constraints on trade often restrict the marketing of goods Local content rules   Human rights issues may limit foreign countries’ business opportunities ) U.S. Generalized System of Preferences (GSP)

3-22 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. E. Sociocultural Environment   Key sociocultural considerations: Demographics Cultural values   Individualism   Collectivism Social norms and customs Language Ethnocentrism

ExportingDirect investment COMMITMENT - RISK Contractual Agreements Strategic Alliances 4-Market Entry Strategies Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall 3-23

4-Market Entry Strategies  Exporting: a firm sells its products in global markets to offset downturns in its domestic market.  Contractual Agreements: with a company in the foreign country to conduct some or all of its business there.  Strategic Alliance/Joint Venture: made with one or more firms in the target country. Allows firms easy access to new markets, because they may receive preferential treatment in the partner’s home country.  Direct Investment: A firm expands internationally through ownership, usually by buying a business in the host country outright. 3-24

3-25 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. Table 3.6 Market Entry Strategies country risk.com country risk.com

3-26 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?   Product-level decisions: the marketing- mix strategy: Standardization vs. localization   Standardization: Offer the same products in all markets   Localization: Offer a customized marketing mix for each country

3-27 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?   Tweaking the marketing mix Product decisions:   Straight extension strategy   Product adaptation strategy   Product invention strategy   Backward invention Promotion decisions:   Whether or not to modify

3-28 © 2012 Pearson Education, Inc. publishing as Prentice-Hall. How “Global” Should a Global Marketing Strategy Be?   Tweaking the marketing mix Price decisions:   Products are often more expensive to produce for foreign markets – –Free trade zones – –Gray market goods – –Dumping Distribution decisions:   Getting the product to remote locations is often difficult