Transcript Kotcha19 - BYU Marriott School

Chapter 19
The Global Marketplace
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Global Marketing into the
Twenty-First Century
The world is shrinking rapidly with the advent of
faster communication, transportation, and
financial flows.
International trade is booming and now accounts
for a quarter of the United States’ GDP.
Between 1996 and 2006, U.S. exports are
expected to increase 51%.
Global competition is intensifying and few U.S.
industries are now safe from foreign competition.
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Global Marketing into the
Twenty-First Century
To compete, many U.S. companies are continuously
improving their products, expanding into foreign
markets, and becoming global firms.
Global firms face several major problems:
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High debt, inflation, and unemployment have resulted in
highly unstable governments & currencies,
Governments placing more regulations on foreign firms,
Protectionist tariffs and trade barriers,
Corruption.
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Major Decisions in International
Marketing (Fig. 19.1)
Looking at the global marketing environment
Deciding whether to go international
Deciding which markets to enter
Deciding how to enter the market
Deciding on the global marketing program
Deciding on the global marketing organization
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Looking at the Global
Marketing Environment
The International Trade System
i.e. Tariff, Quota, Embargo, Exchange
Control, and Nontariff Trade Barriers
The World Trade Organization and GATT
Treaty designed to promote world trade by reducing
tariffs and other international trade barriers
Regional Free Trade Zones
Group of nations organized to work toward
common goals in the regulation of international trade
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Economic Environment
Subsistence
Economies
Industrial
Economies
Types of
Industrial
Structure
Raw Material
Exporting
Economies
Industrializing
Economies
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Political-Legal Environment
At Least Four Political-Legal Factors Should be
Considered in Deciding Whether to do Business in a
Given Country:
Attitudes Toward
International
Buying
Government
Bureaucracy
Monetary
Regulations
Political
Stability
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Liz Dolan, a Marketing Director at Nike, speaks about
forming an image in a foreign country.
Cultural Environment
Sellers Must Examine the
Following Before
Planning a Marketing
Program Within a Given
Country.
How Customers
Think About and
Use Products
Cultural Traditions,
Preferences, and
Behaviors
Business
Norms and
Behavior
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Deciding Whether to Go
International
Reasons companies might consider international
expansion:
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Global competitors attacking the domestic market,
Foreign markets might offer higher profit opportunities,
Domestic markets might be shrinking,
Need an enlarged customer base to achieve economies
of scale,
Reduce dependency on any one market,
Customers might be expanding abroad.
Most companies do not act until some situation or
event thrusts them into the international market.
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Deciding Which Markets to
Enter
Define Organization’s Marketing Objectives
and Policies
What Volume of Foreign Sales is Desired?
How Many Countries Should the Firm Go Into?
What Types of Countries Should be Entered?
Rank by Market Size & Growth, Cost of Doing
Business, Competitive Advantage, & Risk Level.
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Discussion Connections
Assess China as a market for McDonald’s.
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What factors make it attractive?
What factors make it less attractive?
Assess Canada as a market for McDonald’s.
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In what ways is Canada more attractive than China?
In what ways is it less attractive?
If McDonald’s could operate in only one of
these countries, which one would you choose
and why?
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Deciding How to Enter the
Market (Fig. 19.2)
Exporting
•Indirect
•Direct
Joint venturing
Direct investment
•Licensing
•Contract manufacturing
•Management Contracting
•Joint Ownership
•Assembly facilities
•Manufacturing
facilities
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Deciding on the Global
Marketing Program
Adjusts the Elements of
the Marketing Mix to
Each International Target
Market. i.e. Japanese
Barbie
The Maharaja Mac is an example of an
Ad ap ted Marketing Mix
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The Coca-Cola logo is the same throughout the world.
This is an example of a
standar dized marketing mix.
Changes in Product,
Advertising, Distribution
Channels, & Price
Adapted Marketing
Mix
Which other c ompanies
use a standardized marketing mix?
Do some companies use a blend of
adapted and standardized marketing
mix? Whic h ones?
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Standardized
Marketing Mix
Uses Basically the Same
Elements of the
Marketing Mix in all the
Company’s International
Markets. i.e Coca-Cola
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Five International Product and
Promotion Strategies (Fig. 19.3)
Promotion
Don’t
Change
Product
Don’t
Change
Promotion
Adapt
Promotion
Product
1. Straight
Extension
2. Communication
Adaptation
Adapt
Product
3. Product
Adaptation
Develop
New
Product
5. Product
Invention
4. Dual
Adaptation
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International Pricing
Companies face many problems in setting their
international prices.
Possibilities in setting prices include:
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Chare a uniform price all around the world.
Charge what consumers in each country could pay.
Use a standard markup of its costs everywhere.
International prices tend to be higher than
domestic prices because of price escalation.
Companies may become guilty of dumping –
when a foreign subsidiary charges less than its
costs or less than in its home market.
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Whole-Channel Concept for
International Marketing (Fig. 19.4)
Seller
Seller’s
headquarters
organization for
international
marketing
Channels
between
nations
Channels
within
nations
Final
user
or buyer
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Deciding on the Global
Marketing Organization
Export Department
International Division
Global Organization
Degree of Involvement in
International Marketing Activities
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Review of Concept
Connections
Discuss how the international trade system,
economic, political-legal, and cultural
environments affect a company’s international
marketing decisions.
Describe three key approaches to entering
international markets.
Explain how companies adapt their marketing
mixes for international markets.
Identify the three major forms of international
marketing organization.
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