Transcript Deciding on the Global Marketing Organization

10b
The Global Marketplace
ROAD MAP: Previewing the Concepts
• How does the global marketing environment
affect a company’s international marketing
decisions?
• Key approaches to entering international
markets:
• How do companies adapt their marketing mixes
for international markets?
• Three major forms of international marketing
organization:
– Export department, international divisions, global
organization
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Global Marketing in the 21st Century
• The world is shrinking rapidly with the
advent of faster communication,
transportation, and financial flows.
• International trade is booming.
• Global competition is intensifying.
• Higher risks with globalization.
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Global Firm
A firm that operates in more than one
country and captures R&D, production,
logistical, marketing, and
financial advantages in its costs and
reputation that are not available to purely
domestic competitors.
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Major International Marketing Decisions
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Four Stages of Internationalization
No regular export activities
Export via independent agents
Establish sales subsidiaries
Establish production
facilities abroad
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Nescafe Markets in Russia
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ROAD MAP:
• How does the global marketing environment affect a
company’s international marketing decisions?
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International trade system
Economic environment
Political-legal environment
Cultural environment
• Three key approaches to entering international markets:
– Exporting, joint venturing, and direct investment
• How do companies adapt their marketing mixes for international
markets?
• Three major forms of international marketing organization:
– Export department, international divisions, global organization
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Looking at the Global Marketing
Environment
The International Trade System:
Restrictions—tariffs, quotas, embargos, exchange
controls, and non-tariff trade barriers.
The World Trade Organization and GATT:
Helps Trade—reduces tariffs and other international
trade barriers.
Regional Free Trade Zones:
Groups of nations organized to work toward common
goals in the regulation of international trade.
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Regional Free Trade Zones
• European Union
• NAFTA
• MERCOSUL
• APEC
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Industrial Structure
• Shapes a country’s product and service needs,
income levels, and employment levels.
Subsistence Economies
Raw Material Exporting Economies
Industrializing Economies
Industrial Economies
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Political-Legal Environment
Attitudes Toward International Buying
Government Bureaucracy
Political Stability
Monetary Regulations
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Cultural Environment
• Sellers must examine the ways consumers
in different countries think about and use
products before planning a marketing
program.
• Business norms vary from country to
country.
• Companies that understand cultural
nuances can use them to advantage when
positioning products internationally.
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Cultural Differences
When Nike learned
that this stylized
“Air” logo resembled
“Allah” in Arabic
script, it apologized
and pulled the shoes
from distribution.
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Cultural Dimensions
Individualism
vs.
Collectivism
High vs. Low
Power Distance
Masculine
vs.
Feminine
Weak vs. Strong
Uncertainty
Avoidance
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Deciding Whether to Go Global
• Reasons to consider going global:
– Foreign attacks on domestic markets
– Foreign markets with higher profit
opportunities
– Stagnant or shrinking domestic markets
– Need larger customer base to achieve
economies of scale
– Reduce dependency on single market
– Follow customers who are expanding
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Deciding Which Markets to Enter
• Before going abroad, the company should try to define
its international marketing objectives and policies.
What Volume of Foreign Sales is Desired?
How Many Countries to Market In?
What Types of Countries to Enter?
Choose Possible Countries and Rank Based on
Market Size, Market Growth, Cost of Doing
Business, Competitive Advantage, and Risk Level
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Colgate Goes to China
Using aggressive promotional and educational programs, Colgate has
expanded its market share from 7% to 35% in less than a decade.
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ROAD MAP:
• How does the global marketing environment
•
affect a company’s international marketing
decisions?
Key approaches to entering international
markets
• How do companies adapt their marketing mixes for
•
international markets?
Three major forms of international marketing
organization:
– Export department, international divisions, global
organization
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Five Modes of Entry into Foreign Markets
Indirect
exporting
Direct
exporting
Licensing
Joint
ventures
Direct
investment
Commitment, Risk, Control, Profit Potential
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Direct Exporting Methods
• Domestic-based export department
• Overseas sales branch or subsidiary
• Traveling export sales representatives
• Foreign-based distributors or agents
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McDonald’s Franchises Are Sold Worldwide
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Market Entry Strategies
• Joint Venturing:
Licensing
• Budweiser-Kirin in Japan; E*TRADE in Canada, Australia/NZ,
and France; Tokyo Disneyland-Oriental Land Co.
Contract manufacturing
• Sears in Mexico and Spain
Management contracting
• Hilton
Joint ownership
• KFC-Mitsubishi
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ROAD MAP:
• How does the global marketing environment affect a company’s
international marketing decisions?
• Three key approaches to entering international markets:
– Exporting, joint venturing, and direct investment
• How do companies adapt their marketing mixes for
international markets?
– Standardized-adapted marketing mix:
• Product
• Promotion
• Pricing
• Channel
• Three major forms of international marketing organization:
– Export department, international divisions, global organization
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Deciding on the Global Marketing Program
• Standardized Marketing Mix:
– Selling largely the same products and using the same
marketing approaches worldwide.
• Adapted Marketing Mix:
– Producer adjusts the marketing mix elements to each
target market, bearing more costs but hoping for a
larger market share and return.
• “Think globally but act locally.”
– A balance between standardization and adaptation.
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Marketing Mix Adaptation
In India, McDonald’s serves chicken, fish, and vegetable burgers, and the
Maharaja Mac—two all-mutton patties, special sauce, lettuce, cheese,
pickles, onions, on a sesame-seed bun.
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Five Global Product and Promotion Strategies
Kellogg cereals, Gillette razors, IBM PC, Heineken beer, Nokia
cellular phone, Hyatt Hotels, L’Oreal
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Global Promotion Strategies
• Can use a standardized theme globally,
but may have to make adjustments for
language or cultural differences.
• Communication Adaptation:
– Fully adapting an advertising message for
local markets.
• Changes may have to be made due to
media availability.
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Communications
• Communications
adaptation
• Dual adaptation
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Global Pricing Strategies
• Companies face many problems in setting their
•
international prices.
Possible approaches include:
– Charge a uniform price all around the world.
– Charge what consumers in each country will pay.
– Use a standard markup of costs everywhere.
• International prices tend to be higher than
•
domestic prices because of price escalation.
Companies may become guilty of dumping –a
foreign subsidiary charges less than its costs or
less than it charges in its home market.
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International Pricing
Twelve European Union countries have adopted the euro as a common
currency, creating “pricing transparency” and forcing companies to
harmonize their prices throughout Europe.
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Whole-Channel Concept for
International Marketing
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Country of Origin Effects
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EU’s PDO and PGI Listings
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ROAD MAP:
• How does the global marketing environment affect a company’s
international marketing decisions?
• Three key approaches to entering international markets:
– Exporting, joint venturing, and direct investment
• How do companies adapt their marketing mixes for international
markets?
• Three major forms of international marketing organization:
– Export department
– International divisions
– Global organization
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Deciding on the Global
Marketing Organization
• Organize an export department
• Create international divisions
– Geographical organizations
– World product groups
– International subsidiaries
• Become a global organization
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Global Organization Strategies
World as Single Market
Multinational
“Glocal”
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Rest Stop: Reviewing the Concepts
1. Discuss how the international trade system,
economic, political-legal, and cultural
environments affect a company’s international
marketing decisions.
2. Describe three key approaches to entering
international markets.
3. Explain how companies adapt their marketing
mixes for international markets.
4. Identify the three major forms of international
marketing organization.
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