Transcript Chapter 1

Chapter 4
Global Dimensions
of Marketing
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Objectives
1. Describe the importance of international
marketing from the perspectives of the
individual firm and the nation.
2. Identify the major components of the
environment for international marketing.
3. Outline the basic functions of GATT, WTO,
NAFTA, the proposed FTAA, and the
European Union.
4. Compare the alternative strategies for
entering international markets.
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Objectives
5. Differentiate between a global marketing
strategy and a multidomestic marketing
strategy.
6. Describe the alternative marketing mix
strategies used in international marketing.
7. Explain the attractiveness of the U. S. as a
target market for foreign marketers.
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The World’s 10 Largest Marketers
2001
Rank
2002
Company
Country of Origin
1
ExxonMobil
United States
2
Wal-Mart Stores
3
Company
Country of Origin
1
Wal-Mart Stores
United States
United States
2
ExxonMobil
United States
General Motors
United States
3
General Motors
United States
4
Ford Motor Co.
United States
4
British Petroleum
Britain
5
DaimlerChrysler
Germany
5
Ford Motor Co.
United States
6
Royal Dutch/Shell
Britain/Netherlands
6
Daimler Chrysler
Germany
7
British Petroleum
Britain
7
Royal Dutch/Shell
Britain/Netherlands
8
General Electric
United States
8
General Electric
United States
9
Mitsubishi
Japan
9
Toyota Motor
Japan
10
Toyota Motor
Japan
10
Citicorp
United States
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Rank
Warner Lambert
A Global Leader in
Pharmaceuticals
The copy reads:
“We’re making the
world feel better”
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To Be Successful Internationally
 Marketers must do
their homework
 Capitalize on
similarities
 Evaluate all market
segments
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Investing in Foreign Market
Considerations
1. Demand - Do foreign consumers need the
company’s good or service?
2. Competitive environment - How do supplies
currently reach the market?
3. Economic environment - What is the state of the
nation’s economic health?
4. Social-cultural environment - How do cultural
factors affect business opportunities
5. Political-legal environment - Do any legal
restrictions complicate entering the market?
6. Technological environment - To what degree are
technological innovations used by consumers in the
market?
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The Self-Reference Criterion is the
Basis of Most International Business
Problems!
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Acculturation
•
“…adjusting or adapting to a culture other than
one’s own . . .and one of THE major keys to
success in international operations!”
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Levels of human mental programming
• Individual
– No 2 people are exactly alike
• Collective
– Shared with some but not all people
• Ex: language
• Universal
– Biological/inherited (ex: laughing, crying)
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Dimensions of National Culture
•
1)
2)
3)
4)
4 dimensions (Hofstede)
Power distance
Uncertainty avoidance
Individualism
Masculinity
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Elements of Culture
•
Language
•
Nonverbal language
•
Religion
•
Values and attitudes
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Elements of Culture
•
Manners and customs
•
Material elements
•
Aesthetics
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Elements of Culture
•
Education
•
Social institutions
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The World’s Most Frequently Spoken
Languages
• Language plays an important role in international marketing
• Marketers must make sure message is translated and conveys the
intended meaning.
• Abbreviations and slang words and phrases may also cause
misunderstandings.
Rank
Speakers
Language
Number of
1
Chinese (Mandarin)
1.2 billion
2
English
478 million
3
Hindi
437 million
4
Spanish
392 million
5
Russian
284 million
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Trade Barriers Fall Into Two Major
Categories
 Tariffs
– Revenue tariffs are designed to raise funds for the importing
government.
– Protective tariffs, which are usually higher than revenue tariffs,
are designed to raise the retail price of an imported produce to
match or exceed that of a similar domestic product.
 Administrative Barriers range from special permits and detailed
inspections requirements to quotas on foreign-made items.
– Import quotas limit the number of units of products in certain
categories
– Embargo—a complete ban on the import of a product.
– Exchange control means that firms that gain foreign exchange
by exporting must sell foreign currencies to the central bank or
other foreign agency and importers must buy foreign
currencies from the same organization.
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Multinational Economic Integration
• General Agreement on Tariffs and Trade (GATT). International
trade accord that has helped reduce world tariffs
• World Trade Organization (WTO). Organization that replaces
GATT and oversees agreements and makes binding decisions in
mediating disputes, and reducing trade barriers.
• North American Free-Trade Agreement (NAFTA). Accord
removing trade barriers among Canada, Mexico, and the United
States.
• Free Trade Area of the Americas (FTAA). Proposed free trade
area stretching the length of the entire Western hemisphere and
designed to extend free trade benefits to additional nations in
North, Central, and South America.
• European Union (EU). Customs union that is moving in the
direction of an economic union by adopting a common currency,
removing trade restrictions, and permitting free flow of goods and
workers throughout the member nations.
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The European Union
• The treaty of Paris in 1957 created the
European Union. At that time there were only
six member countries. Today most Western
European countries are members.
• In January of 2002 12 of the EU countries
converted to the Euro.
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European Union (EU)
 The best known
multinational
economic community
is the European
Union.
 Fifteen countries
belong to the EU.
 The EU has 350
million people and
combined gross
domestic product of
$5 trillion.
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What Drives Globalization
Why Marketers Decide to Go Global
Globalization of
Competitors 16%
Globalization of
31% Customers
Reduced Trade
Barriers
Technology
Advances
10%
8%
Enhanced
Customer
Responsiveness
8%
New customers
in Emerging
27% Markets
*Change driven by the customer =
66%
Source: Data from ”Shaping the Value Chain for Outstanding Performance,” PricewaterhouseCoopers
survey of 200 leading European businesses, found in Fortune, special advertising section, June 26, 2000,
p,58.
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Steps in Deciding to Market Globally
1. Secure top management’s support.
2. Research the export process and potential
markets.
3. Choose from among three basic strategies
for entering international markets:
• Importing
• Exporting
• Contractual agreements
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Levels of Involvement in
International Marketing
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Multinational Corporations to Global
Marketers
•
•
•
•
A multinational corporation is a firm
with significant operations and
marketing activities outside its home
country.
International business companies are
no longer exclusively U.S. based.
Multinationals often employee huge
foreign workforces relative to their
American staffs.
Multinationals have become global
corporations that reflect the
interdependence of world economies.
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International Marketing Approaches
Two alternative approaches:
1. Global marketing strategy (standardization)
defines a standard marketing mix and implements it
with minimal modifications in all foreign markets.
2. Multidomestic marketing strategy
(adaptation) assumes that differences between
market characteristics and competitive situations in
certain nations require firms to customize their
marketing decisions to effectively reach individual
marketplaces.
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Alternative International Product and
Promotional Strategies
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International Distribution Strategy
Involves Two Steps
1. The firm must decide on a
method of entering the
foreign market.
2. It must determine how to
distribute the product within
the foreign market through
that entry channel.
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The World’s 10 Most Valuable Global
Brands
2002 Brand Value (in $billions)
70
60
50
40
30
20
10
0
Coca-Cola Microsoft
IBM
GE
Intel
Nokia
Disney
McDonalds Marlboro
Source: Data from Interbrand Corp., J.P. Morgan Chase & Co; found in “The Best Global Brands,” Business Week, August 5,
2002, p93.
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Mercedes