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The Global
Marketplace
Chapter 15
Rest Stop: Previewing the Concepts
• Discuss how the international trade system
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and the 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
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Rest Stop: Previewing the Concepts
• Identify the three major forms of
international marketing organization
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First Stop: Google in China
• By early 2006, Google received Chinese
government approval to launch Google.cn
• Despite its successes, it started growing
increasingly uncomfortable with China’s
censorship restrictions
• In 2010, the company removed all technical
operations from mainland China
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Global firm
• A firm that, by operating in more than one
country, gains R&D, production, marketing,
and financial advantages in its costs and
reputation that are not available to purely
domestic competitors
Figure 15.1 – Major International
Marketing Decisions
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Trade Barriers
Tariffs
• Taxes on certain imported products designed to
raise revenue or protect domestic firms
Quotas
• Limits on the amount of foreign imports that
they will accept in certain product categories
Trade Barriers
Exchange controls
• Limit the amount of foreign exchange and
the exchange rate against other countries
Nontariff trade barriers
• Biases against a company’s bid, restrictive
product standards, or excessive hostcountry regulations
Trade Barriers
The Chinese government has set up a
“great firewall of China”—electronic
and censorship barriers that limit or
keep out foreign Web sites such as
Google and YouTube, while creating
safe havens within which Chinese
copycat Web sites such as Baidu and
Youku can thrive
The World Trade Organization (WTO)
• Established by the General Agreement on
Tariffs and Trade (GATT) in 1995
• Promotes world trade by reducing tariffs and
other international trade barriers
• Imposes international trade sanctions and
mediates global trade disputes
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The World Trade Organization
The WTO promotes trade by reducing tariffs and other international trade barriers
Regional free trade zones
(Economic communities)
• Group of nations organized to work toward
common goals in the regulation of
international trade
European Union (EU)
• Reduces barriers to
free flow of
products, services,
and labor among
member countries
• Develops policies on
trade with
nonmember nations
The European Union represents one of the
world’s largest single markets. Its current
member countries contain more than half a
billion consumers and account for 20
percent of the world’s exports
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Regional Free Trade Zones
• North American Free Trade Agreement
• Established free trade zone among United States,
Mexico, and Canada
• Central American Free Trade Agreement
• Established free trade zone between the United
States and Costa Rica, the Dominican Republic, El
Salvador, Guatemala, Honduras, and Nicaragua
• Union of South American Nations
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Economic Environment
• Factors that reflect a country’s attractiveness
as a market:
• Industrial structure
• Income distribution
• Industrial structure shapes its product and
service needs, income levels, and
employment levels
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Types of Industrial structure
Subsistence economies
• Vast majority of people engage in simple agriculture
• Consume most of their output and barter the rest for
simple goods and services
Raw material exporting economies
• Rich in one or more natural resources but poor in other
ways
• Much of the revenue comes from exporting these
resources
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Types of Industrial structure
Emerging economies (industrializing
economies)
• Fast growth in manufacturing results in rapid overall economic
growth
• As manufacturing increases, the country needs more imports of
raw materials and fewer imports of finished products
Industrial economies
• Major exporters of manufactured goods, services, and investment
funds
• Trade goods among themselves and also export them to other
types of economies for raw materials and semifinished goods
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Income Distribution
• Industrialized nations – May have low-,
medium-, and high-income households
• Subsistence economies – Consist mostly of
households with very low family incomes
Income Distribution
In India, Ford’s $7,700 Figo targets low- to middle-income
consumers who are only now able to afford their first car
Political-Legal Environment
• In considering whether to do business in a
given country, companies should consider:
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Country’s attitude toward international buying
Government bureaucracy
Political stability
Monetary regulations
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The Impact of Culture on Marketing
Strategy
• Consumers in different countries think about
and use certain products differently
• Business norms and behaviors also vary from
country to country
• Companies that understand cultural nuances
can:
• Avoid expensive and embarrassing mistakes
• Take advantage of cross-cultural opportunities
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The Impact of Culture on Marketing
Strategy
• Companies that
understand cultural
nuances can use
them to their
advantage in the
global markets
IKEA customers in China want a lot more
from its stores than just affordable
Scandinavian-design furniture
The Impact of Marketing Strategy on
Cultures
Many iconic American brands
are prospering globally, even in
some of the most unlikely places.
At this Tehran restaurant,
American colas are the drink of
choice. Coke and Pepsi have
grabbed about half the national
soft drink sales in Iran. (Also, did
you notice the familiar TABASCO
hot sauce bottle?)
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Deciding Whether to Go Global –
Factors
• Attack on a company’s home market by global
competitors
• Expanding customer base in international
markets
• Better opportunities for growth
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Market At Work
• Coca-Cola has
emphasized
international
growth in recent
years to offset
stagnant or
declining U.S. soft
drink sales
With sales stagnating in its mature
markets, Coca-Cola is looking to
emerging markets—such as Africa—to
meet its ambitious growth goals. Its
African distribution network is
rudimentary but effective
Deciding Which Markets to Enter
• Company should:
• Define its international marketing objectives and
policies
• Decide what volume of foreign sales it wants
• Choose in how many countries it wants to
market
• Decide on types of countries to enter
• Carefully evaluate each country
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Figure 15.2 – Market Entry
Strategies
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Exporting
• Entering foreign markets by selling goods
produced in the company’s home country,
often with little modification
• Indirect exporting – Involves less investment
because the firm does not require an overseas
marketing organization or network
• Direct exporting – Investment and risk are
greater in this strategy, but so is the potential
return
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Joint venturing
• Entering foreign markets by joining with
foreign companies to produce or market a
product or service
Types of Joint Ventures
Licensing
• Entering foreign markets through developing an
agreement with a licensee in the foreign market
Contract manufacturing
• Company contracts with manufacturers in a foreign
market to produce the product or provide its service
Management contracting
• Domestic firm supplies the management knowhow to a
foreign company that supplies the capital
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Types of Joint Ventures
Joint ownership
• Company creates a local business with
investors in a foreign market, who share
ownership and control
Direct investment
• Entering a foreign market by developing
foreign-based assembly or manufacturing
facilities
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Direct Investment
• Advantages:
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Lower costs
Improved image in the host country
Deeper relationships
Full control over investment
• Disadvantages:
• Restricted or devalued currencies
• Falling markets
Deciding on the Global Marketing
Program
Adapted global marketing
• 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
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Deciding on the Global Marketing
Program
Standardized global marketing
• International marketing strategy that
basically uses the same marketing strategy
and mix in all of the company’s
international markets
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Marketing Mix Adaptation
In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharja Mac—two
all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun
Figure 15.3 – Five Global Product and
Communications Strategies
Global Product Strategies
Straight product extension
• Marketing a product in a foreign market without making any
changes to the product
Product adaptation
• Adapting a product to meet local conditions or wants in
foreign markets
Product invention
• Creating new products or services for foreign markets
Global Promotion Strategies
• Companies can either
• Adopt the same communication strategy they
use in the home market
• Change it for each local market
• Even in highly standardized communications
campaigns, adjustments might be required
for language and cultural differences
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Communication adaptation
• Global communication strategy of fully
adapting advertising messages to local
markets
Marketing at Work
• While translating
brand names and
slogans, phonetic
appeal, associations
with historical
figures, legends,
and other factors
should also be
considered
Some standardized names do not
translate well globally. You won’t likely find
this French lemonade brand at your local
Kroger store.
Global Price Considerations
• Companies could:
• Charge what consumers in each country would
bear
• Use a standard markup of its costs everywhere
• Companies’ foreign prices are usually higher
than their domestic prices for comparable
products
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Global Price Considerations
Levi Strauss recently launched the Denizen brand, created for teens and young adults in
emerging markets such as China, India, and Brazil who cannot afford Levi’s-branded jeans
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Whole-channel view
• Designing international channels that take into
account the entire global supply chain and
marketing channel, forging an effective global
value delivery network
Figure 15.4 – Whole-Channel
Concept for International Marketing
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Global Distribution Channels
In its efforts to sell
rugged, affordable
phones to Indian
consumers, Nokia
forged its own
distribution
structure, including a
fleet of distinctive
blue Nokia-branded
vans that prowl
rutted country roads
to visit remote
villages.
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Deciding on the Global Marketing
Organization
• International marketing efforts can be
managed in three different ways:
• Organizing an export department
• Creating international divisions:
• Geographical organizations
• World product groups
• International subsidiaries
• Becoming a global organization
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Deciding on the Global Marketing
Organization
European household, health,
and consumer goods producer
Reckitt Benckiser has a truly
global organization. “Most of
our top managers . . . view
themselves as global citizens
rather than as citizens of any
given nation.”
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Rest Stop: Reviewing the Concepts
• Discuss how the international trade system
•
•
and the 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
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Rest Stop: Reviewing the Concepts
• Identify the three major forms of
international marketing organization
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permission of the publisher. Printed in the United States of America.
Copyright © 2013 Pearson Education, Inc.
Publishing as Prentice Hall
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