Transcript Global Marketing - University of Pittsburgh

Global Marketing
Professor Lawrence Feick
University of Pittsburgh
CBA/BSC Picnic!
• Saturday, September 12, 3-6 PM
• WPU Lawn
• Featuring bands
– The Simpletons
– Blend
• Food
• Prizes
Outline
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The importance of foreign trade
Deciding which countries
Deciding how to enter
Deciding on selling using a localized or
standardized marketing mix
Definitions
• Exports: domestically produced products
sold in foreign markets
• Imports: products produced in a foreign
market and sold in the domestic market
• Balance of trade: approximately = exports imports
The importance of foreign trade
US GDP and foreign trade in nominal billions of USD
Year
GDP
Total Exports
Total Imports
1974
2,026
159
182
1984
3,902
303
336
1997
8,110
965
888
Source: US International Trade Administration, USDC
Who are our top trading partners?
1997 US trade data in millions of USD
Country
US Exports
US Imports
Combined
Balance
Canada
152
168
320
-16
Japan
66
121
187
-45
Mexico
71
86
157
-15
China
36
62
98
-26
UK
36
33
69
+3
Germany
24
43
67
-19
Source: International Trade Administration, USDC
Top 10 US Exports and Imports
Amount
(billions)
Major Import Product
Amount
(billions)
1. Agricultural products
$54.9
1. Computers and office equipment
$62.8
2. Electrical machinery
53.1
2. Crude oil
42.8
3. Computers and office equipmt.
36.4
3. Clothing
39.5
4. General industrial machinery
24.4
4. Telecommunications equipment
34.4
5. Motor vehicle parts
23.4
5. Agricultural products
29.3
6. Specialized industrial machnry.
23.3
6. Cars produced in Canada
24.4
7. Power generating equipment
21.9
7. General industrial machinery
24.1
8. Telecommunications equipmt.
19.0
8. Cars produced in Japan
21.1
9. Scientific instruments
18.6
9. Power generating equipment
20.5
10. Chemicals-organic
16.6
10. Motor vehicle parts
20.1
Major Export Product
Foreign market entry: decisions
Go
International?
Which
Countries?
How to
enter?
Typical triggers to initial
internationalization
• Saturation or competition in domestic
market
• Movement overseas of domestic customers
• Diversification of risk
• Sourcing opportunities in overseas markets
• Government incentives to export
Foreign market entry:
which countries?
Company
factors
Product
factors
Country
choices
Country
factors
Company factors
• Geographic and language distance
• Preexisting ties with customers going
abroad
Product factors
• Product-market fit
• Product adaptability
Country factors: screening
criteria
• Macro variables
– GDP, inflation, population size, political risk
• General market factors
– size, growth, taxes, duties, regulation, support
• Customer characteristics
– segments, preferences, buying power
• Competitor characteristics
– size, strength, importance of the market to them
Foreign market entry:
how to enter?
High
Foreign Direct Investment
Foreign assembly and production
Degree
of Risk
and
Control
Contractual Agreements
Franchising, Licensing,and Contracting
Exporting
Low
Direct and indirect Exporting
Foreign market entry: exporting
• Indirect exporting
– using a trading company
• Direct exporting
– using sales reps or manufacturers reps in the
foreign country
Foreign market entry:
contractual agreements
• Licensing
– for a fee, grant rights to use patent or trademark
to foreign company
• Franchising
– special form of licensing that dictates
operations and marketing procedures
• Contract manufacturing
– produce locally under contract from firm
Foreign market entry:
foreign production
• Assembly
– produce locally from subunits [completely
(CKD) or semi (SKD) knocked down] parts
shipped in
– usually has high labor, small capital investment
• Full production
Typical initial
internationalization
• Opportunistic exports of unadapted
products
• Usually to close, same language markets
• Contracted marketing activities using
distributors, trading companies, etc
Should we standardize the
marketing mix across borders?
• Benefits of standardization
– cost savings, communication benefits, MNC
customers, exploit good ideas, better control
• Benefits of localization
– better meet local customer needs, allow
discretion of local managers
• Which elements of the mix to standardize?
When to standardize...
• Similar macro environments
– socio-cultural, economic, technological,
regulatory, political-legal, competitive
• Intrinsically borderless products
How hard is it to find similar
macro environments?
• Start with culture...
Culture defined
• …values, attitudes, beliefs, artifacts, and …
symbols represented in the pattern of life
adopted by people that help them interpret,
evaluate and communicate as members of
society (Rice 1993)
• …underlying framework that guides an
individual’s perceptions of events …and
selection of responses (Johansson 1997)
Understanding culture
• Includes shared interpretations, meanings,
understandings of a group
• Reflected in knowledge, values, beliefs, art,
music, dance, material artifacts, language
• Culture is learned
• People are to culture as fish are to water
Example: US culture
• Some core values
– individualism, freedom, industriousness, selfdetermination, materialism, impatience, present
focus, youth, secularism
• The importance of subcultures
Example: Other cultures
• How different from US?
– core values?
– subcultures?
Culture’s impact on marketing
• Taste and preferences
– pizza topping preferences
• Values
– impact on ads
• Language
– product names, slogans
Pizza Hut: most popular pizza
toppings by country
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US-pepperoni
England-corn and tuna
India-pickled ginger
Japan-squid
Guatemala-black bean sauce
Australia-eggs
Bahamas-barbecued chicken
A US ad for Guerlain’s
Champs-Elysees perfume
A Middle Eastern adaptation of
the Guerlain ad
Culture’s impact on choices of
brand names
• Nova
• Calpis water
• Kodak
So, when does a standardized
mix seem to work?
• Consumer products bought on functional
characteristics
– stereos, computers, cameras
• Common cross-border segments, especially
high end, image products
– jewelry, cosmetics
Standardized products (continued)
• Industrial products
– airplane engines, semiconductors, medical
equipment, etc
• Services
– banking, accounting, advertising
• Brands positioned on country-of-origin
– Fosters’ beer, Marlboro cigarettes
When is standardizing least likely
to work?
• Consumer products where unique taste
differences are important
– foods
– personal care products
– clothing