Transcript Chapter 5 Developing a Global Vision

5
Developing a Global Vision
Dr. Close
Objectives
•Discuss the importance of global marketing
•Discuss the impact of multinational firms on
the world economy
•Describe the external environment facing
global marketers
•Identify ways of entering the global market
•List the elements involved in
developing a global marketing mix
Emerging-Market Companies
COUNTRY
COMPANY
INDUSTRY
América Móvil
Mexico
Telecom services
Cemex
Mexico
Building materials
China Mobile
China
Telecom services
CNOOC
China
Oil and gas
CVRD
Brazil
Mining
Embraer
Brazil
Aerospace
Gazprom
Russia
Oil and gas
Haier
China
Home appliances
Hisense
China
Electronics
Adapted from “Emerging Giants,” Business Week, July 31, 2006.
Huawei
China
Telecom equipment
Go Global
• Target throughout the world
• Global vision of multi-national firms
• Fear? Why?
The Fear of Trade and
Globalization
 Millions of Americans have lost jobs
 Millions fear losing jobs
 Threat of outsourcing if workers do not
accept pay cuts
 Vulnerability to operations moving
offshore
 Then, why is international marketing so
hot?
Did you know?…
 U.S. exports a fifth of industrial production.
 One of every 10 jobs in U.S. is supported
by exports.
 U.S. businesses export over $800 billion.
 Exports account for 25 percent of U.S.
economic growth.
 U.S. is world’s leading exporter of farm
products.
Rewards of Global Marketing
 Recognizing and reacting to
international marketing opportunities
 Using effective global marketing
strategies
 Being aware of threats from foreign
competitors
 Other rewards?
External Environments
Demographics (1)
• Birthrate
– Babies born/1000 people in population
– In U.S, slower since baby boom (declining;
grandparents example)
• Japan & Western Europe is also slower
• More spending/child (indulged)
U.S. Birthrate 1935-2005
U.S. Demographics (2)
• U.S. is a Transient society
– 16% moves each year (40% of those, out of
country)
– A nation of strangers leads to chains
• Regional
– Growth
• Fastest in the West
• California (most populous; 1/8 Americans)
– Density
• Most on the East Coast (Why??)
• Key for businesses: local area, traffic counts, food
Economic Development (1)
• What are attractive markets?
– GNI (Gross National Income): total market
value of goods/services produced in an
economy
– Higher GNI
• Allows more trade
• Exchange concept = favors richer countries &
people
• Criticism here
Economic Development (2)
• What are attractive markets? (continued)
– Lower GNP
• Developing world
– Growth
– Example: U.S. and Canada will take 5x as long to double
their population as compared to Nicaragua & Saudi
Arabia
– Less competition (M&M/Mars: Eastern Europe)
• Challenges
– Literacy: ¾ world (baby food, U.S. fast food)
– Low income: 60% of world makes less than $2/day
– Ethics (Nestle and what other company?)
International Trade
• MERCOSUR (Latin America)
• URUGUAY ROUND (>148 nations to
reduce tariffs)
• WTO (replaced GATT)
• NAFTA
• CAFTA
• EU
• IMF
International Options
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Exporting/importing (Wal-Mart)
Licensing (Sponge Bob)
Franchising (McDonalds)
Contract manufacturing
Joint venture
Direct foreign investment
Which are more risky?
Export
Sell domestically produced products to
buyers in other countries
Licensing
Legal process allowing use of
manufacturing/patents/knowledge
Contract
Manufacturing
Private-label manufacturing
by a foreign country
Joint Venture
Domestic firm buys/joins a foreign company to
create new entity
Direct Investment
Active ownership of a foreign
company/manufacturing facility
Export Intermediaries
Buyer for Export
Assumes all ownership risks and
sells globally for its own account.
Export Broker
Plays the traditional broker’s role by
bringing buyer and seller together.
Export Agent
Acts like a manufacturer’s agent for
the exporter in the foreign market.
Global Marketing Mix Strategies
• One product, one message
• Change existing product for a new country
market (Krispy Crème, anything else?)
• Message adaptation
• Price changes (exchange rates, dumping)
• Barter
Product and Promotion
Same
Message
Change
Message
Same
Product
Change
Product
One Product
One Message
Product
Adaptation
Message
Adaptation
Product
Invention
Pricing
 Must consider transportation and insurance
costs, taxes and tariffs
 Determine what customers will spend
 Ensure that foreign buyers will pay price
 May need to simplify a product to lower price
 Don’t assume that low-income countries
are willing to accept lower quality
Developing a Global Marketing Mix
PROMOTION
PLACE
Channel Choice
One Product,
Channel Structure
One Message
Country
Product Invention Infrastructure
Product Adaptation
Message
Adaptation
PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power
Your thoughts?
 What are your ideas for selling abroad?
 How difficult is global marketing?
 What are the potential risks
and returns?
Summary
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Demography
International trade
Economic development
International options
Global marketing mix