Transcript Chapter 19
Priciples of Marketing by Philip Kotler and Gary Armstrong Chapter 19 The Global Marketplace PEARSON Objective Outline 1 Global Marketing Today Looking at the Global Marketing Environment Deciding Whether to Go Global Deciding Which Markets to Enter Discuss how the international trade system and the economic, political-legal, and cultural environments affect a company’s international marketing decisions. Deciding How to Enter the Market 2 Describe three key approaches to entering international markets. Objective Outline Deciding on the Global marketing Program 3 4 Explain how companies adapt their marketing strategies and mixes for international markets. Deciding on the Global Marketing Organization Identify the three major forms of international marketing organization. Global Marketing Today A global firm is one that, by operating in more than one country, gains marketing, production, research and development (R&D), and financial advantages that are not available to purely domestic competitors. Looking at the Global Marketing Environment Before deciding whether to operate internationally, a company must understand the international marketing environment. The international Trade System Tariffs • Taxes on certain imported products designed to raise revenue or protect domestic firms. • Tariffs are often used to force favorable trade behaviors from other nations. Quotas • Limits on the amount of foreign imports that they will accept in certain product categories. • The purpose of a quota is to conserve on foreign exchange and protect local industry and employment. Exchange controls • Limit the amount of foreign exchange and the exchange rate against other currencies. Nontariff trade barriers • Restrictive product standards, or excessive host-country regulations or enforcement. The World Trade Organization The General Agreement on Tariffs and Trade (GATT), established in 1947 and modified in 1994, was designed to promote world trade by reducing tariffs and other international trade barriers. It established the World Trade Organization (WTO), which replaced GATT in 1995 and now oversees the original GATT provisions. The WTO also imposes international trade sanctions and mediates global trade disputes. Regional Free Trade Zones Economic community (or free trade zones) are groups of nations organized to work toward common goals in the regulation of international trade. • European Union (EU) • North American Free Trade Agreement (NAFTA) • Central American Free Trade Association (CAFTA) Economic Environment an Industrial emerging economies economy, fast growth in manufacturing of • In The country’s industrial structure shapes These economies are richare in major one or exporters more natural Two economic factors reflect the country’s results manufactured in rapid overall goods, economic services, and investment funds. its product and service needs, income resources but poor in other ways. growth. Industrialization They trade goods typically among creates themselves a exporting new rich and also class export and a attractiveness as aemployment market: its industrial structure levels, levels. second economic factor iscomes the country’s income In aThe subsistence economy, the vast majority people Much ofand their revenue fromof these growing them middle todistribution. otherof class, types both of economies demanding fornew rawtypes materials of and The four types industrial structures are engage simple agriculture. resources. anddistribution. itsin• income goods. goods. as semifinished follows: Industrialized nations may haveand low-, medium-, They consume most of their output barter restand forhigh imported These countries are good markets forthe large As more The varied developed manufacturing stagnate activities and ofbecome these industrial income households. simple goods and services. equipment, tools andmarkets supplies, and trucks. increasingly nations competitive, their largeresidents many middle class make arethem now rich Even or emerging economies maymarketers be attractive markets They offer market opportunities. poor Iffew there are and many foreign and a wealthy markets growth for sorts in emerging markets. for all targeting kinds of goods. upper class, theyallopportunities are alsoofagoods. market for luxury goods. These days, companies in a wide range of industries—from cars to computers to candy—are increasingly targeting even lowand middle-income consumers in emerging economies. Raw material Subsistence Emerging Industrial exporting economies economies economies economies Political-Legal Environment Some nations are very receptive to foreign firms; others are less accommodating. Companies must also consider a country’s monetary regulations. Sellers want to take their profits in a currency of value to them. Most international trade involves cash transactions. Cultural Environment When designing global marketing strategies, companies must understand how culture affects consumer reactions in each of its world markets. The Impact of Culture on Marketing Strategy Thus, understanding cultural traditions, preferences, and behaviors can help companies not only avoid embarrassing mistakes but also take advantage of cross-cultural opportunities. The Impact of Marketing Strategy on Cultures Whereas marketers worry about the impact of global cultures on their marketing strategies, others may worry about the impact of marketing strategies on global cultures. Deciding Whether to Go Global • Before going abroad, the company must weigh several Anyrisks of several factors might draw a company and answer many questions about its ability to globally. intooperate the international arena. • Global competitors might attack the company’s home market by offering better products or lower prices. • • • • • • • • Can the company learn to understand the preferences and buyer behavior of consumers in other countries? these competitors The company might want to counterattack Can it offer competitively in their home markets to tieattractive up their products? resources. Will it be able to adapt to other countries’ business cultures and deal effectively with foreign nationals? The company’s customers might be expanding abroad and Do the company’s managers have the necessary international require international servicing. experience? Has management considered the impact of regulations and the Or, most environments likely, international markets might simply provide political of other countries? better opportunities for growth. Deciding Which Markets to Enter • Before going abroad, the company should try to define its international marketing objectives and policies. It shouldglobal decidemarkets what volume it wants. •• Possible shouldofbeforeign rankedsales on several factors including: • market size • The company also needs to choose in how many countries it • market growth wants market. • the to cost of doing business • Next, the company needs to decide on the types of countries • competitive advantage to • enter. risk level • A country’s attractiveness depends on the • product • geographical factors • income and population • political climate • other considerations Decide How to Enter the Market Once a company has decided to sell in a foreign country, it must determine the best mode of entry. Exporting We define exportingIndirect as entering foreign markets exportingin the company’s by selling goods produced Direct exporting home• country, often with little modification. Companies typically start with it, working through independent international marketing Exporting involves the least in the • Sellers may eventually movechange into direct intermediaries. exporting, whereby theyorganization, handle their own company’s product lines, • exports. Indirect exporting involves less investment investments, becauseor themission. firm does not require an overseas • The investment and risk are somewhat greater organization inmarketing this strategy, but so is or thenetwork. potential return. • It also involves less risk. International marketing intermediaries bring know-how and services to the relationship, so the seller normally makes fewer mistakes. Contract manufacturing a joint venture in Management contracting is aisjoint venture in in which the is aissimple way for a JointLicensing ownership a cooperative venture whichmanufacturer a company with manufacturers domestic firm suppliescontracts the management know-how to enter which a company creates ainternational local business with to a in a company foreign marketsupplies to produce its product or foreign the capital; the owner domestic marketing. investors in athat foreign market, who share its service. services rather than products. firmprovide exports ship andmanagement control. Joint Venturing A second method of entering a foreign market is by joint venturing—joining with foreign companies to produce or market products or Advantages Disadvantages Disadvantages Advantages services. • Management contracting is a low-risk method of getting into a Often, companies form joint ownership ventures toless merge their •exporting The control foreign market, and it yieldsfrom income fromfirm the has beginning. • Joint venturing differs in that the complementary strengths in developing a global marketing over the licensee than it • •company The thus gains Thecompany arrangement is even more attractive if the contracting joins with a host country partner to sell opportunity. • The drawbacks of contract • entry The benefits are the chance its own firminto has aanforeign optionmarket to buy some sharewould in the over managed company • or partners may over investment, marketing,are or other market abroad. manufacturing to start faster, withdisagree less risk, operations. atThe little risk. later on. policies. decreased control the and the latergains opportunity • Furthermore, if the over • •The licensee The arrangement is not sensible, however, if the company can • ItWhereas differs from direct investment inearnings that anforsuccessful, many U.S. firms like to reinvest growth,and manufacturing either to form a partnership licensee is very production expertise or a put its scarce management talent to better uses or if itprocess can local firms prefer to take these earnings; whereas association isprofits formed withoutsomeone the foreign loss ofin potential profits on with buyoften out the local the firm has given up U.S. these well-known product or makeorgreater by undertaking whole venture. firms emphasize the role marketing,profits, local investors may relytheon manufacturer. and if and when name without having to ofalso •country. Management contracting preventsmanufacturing. the company from selling. contract ends, it may find it start fromupscratch. setting its own operations for a period of time. has created a competitor. Direct Investment The biggest involvement in a foreign market comes through direct investment—the development of foreign-based assembly or manufacturing facilities. • • • • • Advantages Disadvantage The firm may have lower costs in the form of cheaper labor or The main disadvantage of direct investment is that the firm faces raw materials, foreign government investment incentives, and many risks, such as restricted or devalued currencies, falling freight savings. markets, or government changes. The firm may also improve its image in the host country because In some cases, a firm has no choice but to accept these risks if it it creates jobs. wants to operate in the host country. Finally, the firm keeps full control over the investment and therefore can develop manufacturing and marketing policies that serve its long-term international objectives. Deciding on the Global Marketing Program Standardized global marketing is an international marketing strategy that basically uses the same marketing strategy and mix in all of the company’s international markets. Adapted global marketing is an international marketing approach that adjusts the marketing strategy and mix elements to each international target market, which creates more costs but hopefully produces a larger market share and return. Product Straight product extension means marketing a product in a foreign market without making any changes to the product. Product adaptation involves changing the product to meet local requirements, conditions, or wants in foreign markets. Product invention creates new products or services for foreign markets. Promotion Communication adaptation is a global communication strategy of fully adapting advertising messages to local markets. Price Regardless of how companies go about pricing their products, their foreign prices probably will be higher than their domestic prices for comparable products. Recent economic and technological forces have had an impact on global pricing. Distribution Channels • The whole-channel view takes into account the entire global supply Whole-channel view designs international chain and marketing channel. take into account the entire global • channels It recognizesthat that compete well internationally, company to It moves company products fromthe points of must It moves products from their supply chain marketing channel, forging an effectively designand and manage an entire global value delivery production to the borders of countries market entry points to the final network. global within which they arenetwork. sold. effective value delivery consumers. Deciding on the Global Marketing Organization Companies manage their international marketing activities in at least three different ways: • Organize an export department • Create an international division • Become a global organization The End