Transcript Chpt12 - courses.psu.edu

CHAPTER 12
DESIGNING GLOBAL MARKET
OFFERINGS
IMPORTANT TOPICS OF
THIS CHAPTER
 Factors
to Consider Before Going Global
 Selecting Foreign Markets
 Foreign Market Entry
 Product Adaption for Global Marketing
 Management & Organization of Global
Activities
DECIDING TO GO ABROAD
 Attractiveness of Global Market:
 Counter attack strategy
 Profit opportunities in Global market
 Market development opportunities
 Larger market share
 More independence and flexibility
 Possible Risks in Global Market:
 Cultural differences in needs/wants
 Differences in business culture
 Strict regulations and bureaucracy
 Lack of experience
DECIDING TO GO ABROAD
(CONT)
 Challenges
 Unstable
in Global Market
governments
 Foreign-exchange problems
 Tariff and other trade barriers
 Corruption and bribery
 Technological pirating
 High cost of product and communication adaptation
 Lack of managers with international experience
DECIDING WHICH MARKETS TO ENTER


Few countries
Many countries:
 obstacles:
• high cost
• population size and income
• competition
 Country
attractiveness:
 geographic
factor
 income and population
 political climate and product choice
DECIDING WHICH MARKETS
TO ENTER (C0NT.)
 Regional
Free trade Zones:
 EU:
– Single largest market.
– Most important trade partner for the USA.
– Reduce barriers for free flows of products, services and
employment.
– Common currency (Euro dollar).
– Larger European companies.
• Airbus.
 NAFTA
DECIDING HOW TO ENTER
 Exporting:
 Direct:
•
•
•
•
Domestic base
Overseas sales branch
Traveling sales representative
Foreign-based distributors/agent
 Indirect-occasional,
•
•
•
•
or active exporting:
Domestic-based export merchant
Domestic-based export agent
Cooperative organizations
Export-management company
DECIDING HOW TO ENTER
(CONT.)
 Licensing:
 Little
risk.
 Controlling problems.
 Implementation:
– Management contract.
– Contract manufacturing.
– Franchising.
 Joint
Ventures:
 Necessary
for economic and political reasons.
DECIDING HOW TO ENTER
(CONT.)
 Direct Investment:
 Cheaper labor, raw materials and government incentives.
 Creates better image.
 Deeper relationships with government, customers, suppliers
and distributors.
 Full control of operations and market .
 Force to purchase more domestic parts and materials.
 Risks involved:
• Economic difficulties of the host country
• Political instability and negative perception
DECIDING HOW TO ENTER
(CONT.)
 The
Internalization Process:
 Sponsored
by the government policy:
– Steps to follow:
• No export activities
• Exporting via independent local agents.
• Establishing sales subsidiaries.
• Establishing production facilities abroad.
DECIDING ON THE
MARKETING PROGRAM
 Standardized
 Product:
Marketing Mix:
– Straight extension.
– Product adaptation:
• Regional version, country version, city version, and retailer
version.
– Product invention:
• Backward.
• Forward.

Promotion:
• Communication adaptation.
• Dual adaptation.
Five International Product
and Promotion Strategies
Product
Do not change
promotion
Do not change
product
Adapt
product
Straight
extension
Product
adaptation
Product
invention
Promotion
Adapt
promotion
Develop new
product
Communication
adaptation
Dual
adaptation
DECIDING ON THE MARKETING
PROGRAM (CONT.)
 Price:
 Setting uniform price everywhere.
 Setting a market-base price in each country.
 Setting a cost-base price in each country.
 Setting transfer price:
– Higher price:
• Higher income tax
– Lover price:
• Price dumping
– Arm-length price:
• Competitors price.
– Gray market price.
DECIDING ON THE MARKETING
PROGRAM (CONT.)
 Place:
 International
marketing headquarters
 Channels between nations
 Channels within foreign nation
DECIDING ON THE
MARKETING ORGANIZATION


Export Department
International Division:

Geographical organizations:
– Asia, Europe, etc.

World product groups:
– International vice-president


International subsidiaries
Global Organizations:

Managing across borders:
– Global strategy:
• Single market strategy.
– Multinational strategy:
• Strong national response.
– Glocal strategy:
• Some adaptation.
EUROPEAN UNION
 European
Market
In 1993, 12 nations (England, Germany, France,
Ireland, Italy, Spain, Portugal, Greece, Holland,
Belgium,Denmark, Luxembourg.). 320 million
people.
 In 1995, 15 nations(Austria, Sweden and Finland),
360 million people.
 Worth of 4 trillion dollars business opportunities.
 US is selling more than 500 billion dollars of goods,
and has surplus.

EUROPEAN UNION (CONT.)
 Problems:
Consumers do not have uniform patterns and
homogenous preferences because of differences in
cultures, languages and economic situations.
 The EU now is more accessible, but it will not be
the single national market. Governments con not
make markets. If they do, 360 million euroconsumers should suddenly be transforming into
360 million Euro-clones, drinking Euro-beer, eating
euro-hamburger, and watching Euro-satellite
television

EUROPEAN UNION (CONT.)
 Expectations:
–
–
–
–
More centralized purchasing and uniform pricing strategy.
Singular patent system(certification) throughout Europe.
Centralized R&D effort.
Implementation of European EAN system similar to UPC codes
in the US.
 Advantages:
– Elimination of border control helps to save transportation cost.
– Develop effective linkage with all the members
– Saving and reducing the Value Added Tax (VAT) and different
tax rates.
EUROPEAN UNION (CONT.)

Challenges:
– Cultural and language differences.
– Large number of privately owned firms.
– Dissimilarity among the members of the EC about the way
products are viewed.
– Realign the currency-European Currency Unit(UCU).
– Control Inflation.
– Reduce Unemployment.
– Re-establish strong economic base for all the members.