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Marketing
Chapter 7
Global Marketing
Dhruv Grewal
Michael Levy
McGraw-Hill/Irwin
Copyright © 2008 by the McGraw-Hill Companies, Inc. All rights reserved.
7-2
Proctor and Gamble China’s Success
Keys to success:
Partner, relationships, product, and price adjustments
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7-3
Growth of Global Market
Globalization of Production
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7-4
General Agreement on Tariffs and
Trade (GATT)
International
Monetary Fund (IMF)
World Trade
Organization (WTO)
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7-5
Assessing Global Markets
7-6
Economic Analysis
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7-7
Test Your Knowledge
The greater the __________ of a country, generally, the better
the opportunity a firm will have in that particular country.
A)
B)
C)
D)
political freedom
wealth
population
cultural similarities
7-8
Evaluating General Economic
Environment
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Trade deficit vs. trade surplus
Gross Domestic Product (GDP)
Gross National Income (GNI)
7-9
Purchasing Power Parity
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7-10
Global Human Development Index
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7-11
Evaluating Market Size and Population
Growth Rate
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7-12
Evaluating Real Income
1. Evaluate income
2. Adjust product
packaging
3. Adjust product pricing
4. Win
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7-13
Analyzing Infrastructure and Technological
Capabilities
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Transportation
Communication
Distribution Channel
Commerce
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7-14
Test Your Knowledge
Why is the communication system in a foreign market so
important?
A)
To allow consumers to access information about
the products and services available.
B)
To allow consumers to tell their friends about new
products.
C)
To assist foreign-based workers in providing
information to the home office.
D)
To ensure government knowledge of trade
agreements.
7-15
Analyzing Government Actions
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7-16
Tariff and Quotas
Tariffs
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Tax
Artificially raises
prices
Lowers demand
Quotas
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Maximum limit
Reduces
availability of
imported goods
Both benefit domestically made products
because they reduce foreign competition
7-17
Boycott
Groups such as Ethical Consumer publish current
boycott lists.
Discussion question
Have you ever boycotted
a product?
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7-18
Ethical Dilemma 7.2: Protesting the War
with the Wallet
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Dissatisfied global consumers
Voiced dissatisfaction with US war
policy
Avoidance of U.S. products and
services
How do firms respond to these
actions?
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7-19
Exchange Control
Exchange rate
Countertrade
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7-20
Trade Agreements
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7-21
Test Your Knowledge
A __________ consists of those countries that have signed a
particular trade agreement.
A)
foreign coalition
B)
global band
C)
trading bloc
D)
trading coalition
7-22
The European Union (EU)
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
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Monetary and Trade Union
Euro (not in the UK)
Membership not consists of
Western and Eastern European
countries
Newest petitioner Turkey
7-23
Analyzing Sociocultural Factors
Uncertainty
Avoidance
Power
Distance
Culture
Time
Orientation
Masculinity
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Individualism
7-24
Country Clusters
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7-25
Choosing a Global Entry Strategy
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Export
Franchising
Strategic alliance
Joint venture
Direct investment
Discussion question
Why do you think most firms first try exporting?
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7-26
Choosing a Global Marketing Strategy:
Target Market (STP)
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Cultural nuances
Subcultures
View of product and
consumer role
Different positioning
Adaptation
Single positioning
strategy
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
7-27
Test Your Knowledge
In the past, global marketplace dominance was determined by
such things as ability to develop and promote brand name
products, and later in new product development. What are firms
currently exploiting in their bid for dominant globalization?
A)
trade agreements
B)
financial superiority
C)
cheap labor
D)
technological skills
7-28
Adapting for Global Success
How do firms successfully introduce a
new product to a global market?
7-29
Case in Point: Nescafe in China
Challenge
Nestle wants to introduce its top
global instant coffee brand
Nescafe to China.
Answer
Chinese consumers were not
coffee drinkers thus needed to be
educated in how to consume the
product. Nescafe “3 in 1”, coffee,
creamer and sweetener in one.
Ideal mix for Chinese market easily
reconstituted for best taste.
Results
Nescafe dominates the in-home
coffee category in China.
7-30
The Global Marketing Mix: Product or
Service Strategies
Sell the same
product or service in
both the home
country market and
host country market
Sell totally new
products or
services
Sell a product or
service similar to that
sold in home country
but include minor
adaptations
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
7-31
Adding Value 7.1: MTV Conquers the
World
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Seen in 374.4 million households
164 countries, 34 channels, 18
languages
Mix of standardized and local
content benefited local music and
artists
EX: Salam Dangdut in Indonesia
7-32
Global Marketing Mix: Global Pricing
Strategies
Tariffs
Competitive
factors
Quotas
Price
Economic
Conditions
Anti-dumping
Policies
7-33
Managing the Global Marketing Mix
How do firms manage the
global marketing mix?
7-34
Case in Point: Wal-Mart’s Failed
Experiment
Challenge
Answer
Results
To continue to grow the most
successful retailer in the U.S.,
Wal-Mart.
Wal-Mart enters Germany with
the same value proposition
(EDLP) it has in the U.S.
Stiff competition from entrenched
local competitors, a sluggish
economy as well as problems with
workers and regulators led to
Wal-Mart exiting the market in 2006.
The sale to competitor Metro resulted
in pre-tax loss of $1Billion.
7-35
Global Marketing Mix: Global Distribution
Strategies
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Some global channels are very long and
complex.
Consumer shop local small local stores.
Suppliers must be creative in delivering to
these outlets.
7-36
Global Marketing Mix: Global
Communication Strategies
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Literacy levels vary by country
Firms choose whether to adapt to language
differences
Cultural and religious differences also
matter
7-37
Test Your Knowledge
When creating a global distribution strategy, why is it important
to shorten distribution channels wherever possible?
A)
To increase consumer confidence
B)
To reduce control of supply chain
C)
To reduce time-to-market
D)
To model current culture
7-38
Ethical Issues in Global Marketing:
Environmental Concerns
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Waste Management
80/20 Rule: 80% of waste created
by 20% of the population
Many developing countries don’t
manage waste well
7-39
Cleaning up the Earth
How can countries balance development
and environmental impact?
7-40
Case in Point: Mexico Cleans Up Its Act
Challenge
To manage environmental impact
while undergoing economic
expansion.
Answer
Using funds provided by North
American Commission for
Environmental Cooperation (CEC)
and the North American Development
Bank (NADBank) improved air
quality.
Results
Mexico now produces lower levels of
some pollutants than either the U.S.
or Canada and have lower energy
use per capita. Proving
environmental impact can be
managed.
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Ethical Concerns: Global Labor Issues
Fair Wages
 Working
conditions
 Child Labor

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Ethical Concerns: Impact on Host Country
Culture
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Cultural imperialism
–
–
Active, formal policy
Subtle, general attitude
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Chapter 7 Glossary
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Countertrade: Trade between two countries where goods are traded for other
goods and not for hard currency.
Cultural imperialism: The belief that one’s own culture is superior to that of
other nations.
Exchange rate: The measure of how much one currency is worth in relation
to another.
Globalization of production: Also known as offshoring, refers to
manufacturers’ procurement of goods and services from around the globe to
take advantage of national differences in the cost and quality of various factors
of production.
Gross Domestic Product (GDP): The market value of the goods and
services produced by a country in a year.
Gross National Income (GNI): GDP plus the net income earned from
investments abroad.
Infrastructure: The basic facilities, services, and installations needed for a
community or society to function.
Trade deficit: Occurs when a country imports more goods than it exports.
Trade surplus: Occurs when a country exports more goods than it imports.
7-44
Chapter 7 Glossary for Global Entry
Strategies
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Direct investment: Exit strategy that requires a firm to maintain 100
percent ownership of its plants, operation facilities, and offices in a
foreign country, often through the formation of wholly owned
subsidiaries.
Exporting: Producing goods in one country and selling them in
another.
Franchising: A contractual agreement between a firm, the franchisor,
and another firm or individual, the franchisee.
Joint venture: Formed when a firm entering a new market pools its
resources with those of a local firm to form a new company in which
ownership, control, and profits are shared.
Strategic alliance: Collaborative relationship between independent
firms, though the partnering firms do not create an equity partnership;
that is, they do not invest in one another.