Chapter 5 Developing a Global Vision

Global Vision Identifying and reacting to international marketing opportunities Creating effective global marketing strategies Being aware of worldwide competition

Global Marketing Influences Economies The U.S. exports a fifth of what it manufactures One in ten jobs in the U.S. is supported by exports Almost one-third of U.S. corporate profits come from international trade and foreign investment The U.S. Is the world’s largest exporter of agricultural goods

Benefits Versus Concerns About Global Marketing Concerns: Jobs going overseas Lower salaries Foreign products replace “made in America” Wage cuts Service centers moving offshore Negative image of America in some foreign markets Benefits: Increased competition May bring prices down May result in more innovation Increased standard of living in other countries More markets for American products May result in more individual freedom in some countries

Multinational Firms Move resources, goods, services and skills across national boundaries regardless of the location of the company headquarters

Why Go Global? Earn additional sales and profits Leverage a unique product or technological advantage Possess exclusive marketing information Domestic market is saturated Excess capacity Gain economies of scale

Global Marketing Strategies Standardization Customization Assumes markets around the world are similar Marketing mix is as much the same as possible Gain economies of scale Recognizes the differences in global markets Create marketing mixes to suit each market More costly, but may be worth it

External Environments All of the major environments have to be considered international and domestically Socio-cultural Economic Technological Demographics Physical/natural Political/legal

Global Legal issues Tariff Quota Boycott Exchange control Trade alliances Trade Agreements

Uruguay Round World Trade Organization NAFTA Central American Free Trade Agreement European Union International Monetary Fund

Common Methods for Entering the Global Marketplace Exporting Licensing Franchising Contract manufacturing Joint Venture Direct Investment

The Global Marketing Mix: Product / Promotion One product One message Product Adaptation Message Adaptation Product Invention

The Global Marketing Mix: Distribution Adequate distribution is necessary for success Some countries have complicated systems Lack of distribution infrastructure and cultural differences The company may gain competitive advantage through innovative distribution strategies

Global Marketing Mix - Price Consider transportation costs, taxes and tariffs Determine what customers will spend May need to simplify a product to lower the price Don’t assume that lower income countries are willing to accept lower quality

Exchange Rates The price of one’s currency in terms of another country’s currency

Dumping The sale of an exported product at a price lower than that charged for the same or a like product in the home market.

Countertrade An alternative to exchanging currency for goods A form of trade in which all or part of the payment for goods or services in the form of other goods or services.