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Identify the environmental forces that shape global marketing efforts. LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: LO1 Identify the major trends that have influenced world trade and global marketing. LO2 Identify the environmental forces that shape global marketing efforts. 7-2

LEARNING OBJECTIVES (LO) AFTER READING CHAPTER 7, YOU SHOULD BE ABLE TO: Name and describe the alternative approaches companies use to enter global markets. LO4 Explain the distinction between standardization and customization when companies craft worldwide marketing programs. 7-3 Slide 7-3

DELL’S QUEST FOR GROWTH IN EMERGING ECONOMIES 7-4

DYNAMICS OF WORLD TRADE TREND 1—DECLINE OF ECONOMIC PROTECTIONISM LO1 Protectionism Tariff Quota World Trade Organization (WTO) 7-5

FIGURE 7-1 Protectionism hinders world trade when countries raise prices and limit supply through tariff and quota policies 7-6

DYNAMICS OF WORLD TRADE TREND 2—RISE OF ECONOMIC INTEGRATION LO1 European Union Euro North American Free Trade Agreement (NAFTA) Three country flag image attributed to Alex Covarrubias. See http://en.wikipedia.org/wiki/User:AlexCovarrubias Other Free Trade Agreements 7-7

Euro Launch TV Ad What are the benefits of economic integration? LO1 Three country flag image attributed to Alex Covarrubias. See http://en.wikipedia.org/wiki/User:AlexCovarrubias 7-8

FIGURE 7-2 The European Union in early 2010 consists of 27 countries with more than 500 million consumers 7-9

DYNAMICS OF WORLD TRADE TREND 3A—GLOBAL COMPETITION 7-10

FIGURE 7-A Global companies and marketing strategy 7-11

DYNAMICS OF WORLD TRADE TREND 3B—GLOBAL COMPANIES International Firms Multinational Firms Multidomestic Marketing Strategy Transnational Firms Global Marketing Strategy Global Brand 7-12

DYNAMICS OF WORLD TRADE TREND 3C—GLOBAL CONSUMERS 7-13

MARKETING MATTERS The Global Teenager—A Market of 2 Billion Voracious Consumers with $200 Billion to Spend LO1 7-14

DYNAMICS OF WORLD TRADE TREND 4—A NETWORKED GLOBAL MARKETPLACE 7-15

A GLOBAL ENVIRONMENTAL SCAN CULTURAL DIVERSITY LO2 Cross-Cultural Analysis Values Customs Foreign Corrupt Practices Act (1977) 7-16

FIGURE 7-B Cultural appreciation 7-17

A GLOBAL ENVIRONMENTAL SCAN CULTURAL DIVERSITY LO2 Cultural Symbols #13 7-18

A GLOBAL ENVIRONMENTAL SCAN CULTURAL DIVERSITY LO2 Language Unintended Meanings Back Translation 7-19

A GLOBAL ENVIRONMENTAL SCAN ECONOMIC CONSIDERATIONS Economic Infrastructure Communications Transportation Financial Distribution Systems 7-20

A GLOBAL ENVIRONMENTAL SCAN ECONOMIC CONSIDERATIONS Consumer Income and Purchasing Power Currency Exchange Rate 7-21

A GLOBAL ENVIRONMENTAL SCAN POLITICAL-REGULATORY CLIMATE Political Stability Trade Regulations 7-22

FIGURE 7-3 Alternative global market-entry strategies 7-23

GLOBAL MARKET-ENTRY STRATEGIES EXPORTING LO3 Exporting Indirect Exporting Direct Exporting 7-24

MARKETING MATTERS Creative Cosmetics and Creative Export Marketing in Japan LO3 7-25

GLOBAL MARKET-ENTRY STRATEGIES LICENSING LO3 Advantages Disadvantages Contract Manufacturing Contract Assembly Franchising 7-26

GLOBAL MARKET-ENTRY STRATEGIES JOINT VENTURE LO3 Joint Venture Advantages Disadvantages 7-27

GLOBAL MARKET-ENTRY STRATEGIES DIRECT INVESTMENT LO3 Direct Investment Advantages Disadvantages 7-28

FIGURE 7-4 Five product and promotion strategies for global marketing 7-29

CRAFTING A WORLDWIDE MARKETING PROGRAM PRODUCT STRATEGIES LO4 Product Extension Product Adaptation Product Invention 7-30

CRAFTING A WORLDWIDE MARKETING PROGRAM PROMOTION STRATEGIES LO4 Identical Message Communication Adaptation Dual Adaptation 7-31

CRAFTING A WORLDWIDE MARKETING PROGRAM DISTRIBUTION AND PRICING STRATEGIES LO4 Channels and Economic Development Channels Can Be Long or Short Countries Impose Pricing Constraints Prices May Be Too High or Too Low Dumping Gray Market 7-32

FIGURE 7-5 Channels of distribution in global marketing 7-33

CNS BREATHE RIGHT STRIPS: GOING GLOBAL VIDEO CASE 7 7-34

VIDEO CASE 7 CNS 7-35

VIDEO CASE 7 CNS 1. What are the advantages and disadvantages for CNS taking Breathe Right strips into international markets? 7-36

VIDEO CASE 7 CNS 2. What are the advantages to CNS of (a) using its three-stage process to enter new global markets and (b) having specific criteria to move through the stages? 7-37

VIDEO CASE 7 CNS 3. Using the CNS criteria, with what you know, which countries should have highest priority for CNS? 7-38

VIDEO CASE 7 CNS 4. Which single segment of potential Breathe Right strip users would you target to enter new markets? 7-39

VIDEO CASE 7 CNS 5. Which marketing mix variables should CNS emphasize the most to succeed in a global arena? Why? 7-40

Protectionism Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas. 7-41

Tariff A tariff is a government tax on goods or services entering a country, primarily serving to raise prices on imports. 7-42

Quota A quota is a restriction placed on the amount of a product allowed to enter or leave a country. 7-43

World Trade Organization (WTO) The World Trade Organization (WTO) is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions. 7-44

Global Competition Global competition exists when firms originate, produce, and market their products and services worldwide. 7-45

Multidomestic Marketing Strategy A multidomestic marketing strategy involves a multinational firm offering as many different product variations, brand names, and advertising programs as countries in which it does business. 7-46

Global Marketing Strategy A global marketing strategy involves transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ. 7-47

Global Brand A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs. 7-48

Global Consumers Global consumers are consumer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services. 7-49

Cross-Cultural Analysis Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies. 7-50

Values Values are a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time. 7-51

Customs Customs are what is considered normal and expected about the way people do things in a specific country. 7-52

Foreign Corrupt Practices Act (1977) The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. 7-53

Cultural Symbols Cultural symbols are things that represent ideas and concepts in a specific culture. 7-54

Back Translation Back translation is the practice where a translated word or phrase is retranslated into the original language by a different interpreter to catch errors. 7-55

Currency Exchange Rate A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency. 7-56

Exporting Exporting is a global market-entry strategy in which a company produces goods in one country and sells them in another country. 7-57

Joint Venture Joint venture is a global market-entry strategy in which a foreign company and a local firm invest together to create a local business in order to share ownership, control, and profits of the new company. 7-58

Direct Investment Direct investment is a global market-entry strategy that entails a domestic firm actually investing in and owning a foreign subsidiary or division. 7-59

Dumping Dumping occurs when a firm sells a product in a foreign country below its domestic price or below its actual cost. 7-60

Gray Market A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing. 7-61