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CHAPTER
REACHING
GLOBAL
MARKETS
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-1
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
1. Identify the major trends that have
influenced the landscape of global
marketing in the past decade.
2. Identify the environmental factors that
shape global marketing efforts.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-2
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
3. Name and describe the alternative
approaches companies use to enter
global markets.
4. Explain the distinction between
standardization and customization
when companies craft worldwide
marketing programs.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-3
MATTEL’S GLOBAL MARKETING IS
MORE THAN CHILD’S PLAY
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-4
DYNAMICS OF WORLD TRADE
• Decline of Economic Protectionism
 Protectionism
 Tariff
 Quota
 World Trade Organization (WTO)
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-5
FIGURE 7-1 How protectionism affects
world trade
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-6
DYNAMICS OF WORLD TRADE
• Rise of Economic Integration
 European Union
• Euro
 North American Free Trade Agreement
(NAFTA)
 Asian Free Trade Agreements
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-7
FIGURE 7-2 The countries of the European
Union in 2006; Bulgaria and Romania are
expected to join in 2007
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-8
Euro TV Ad
What are the benefits of economic integration?
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Slide 7-9
DYNAMICS OF WORLD TRADE
• A New Reality: Global Competition
among Global Companies for Global
Consumers
 Global Competition
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Slide 7-10
Diet Pepsi
What is global competition?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-11
DYNAMICS OF WORLD TRADE
• A New Reality: Global Competition
among Global Companies for Global
Consumers
 Global Companies
• International Firm
• Transnational Firm
• Multinational Firm
 Global Marketing
Strategy
 Multidomestic
Marketing Strategy
• Global Brand
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-12
FIGURE 7-A Global companies and
marketing strategies
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-13
DYNAMICS OF WORLD TRADE
• A New Reality: Global Competition
among Global Companies for Global
Consumers
 Global Consumers
• Emergence of a Networked Global
Marketspace
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-14
McDonald’s Website
What is a networked global marketspace?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-15
Concept Check
1. What is protectionism?
A: Protectionism is the practice of
shielding one or more industries
within a country’s economy from
foreign competition, using through
the use of tariffs or quotas.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-16
Concept Check
2. What is the difference between a
multidomestic marketing strategy and a
global marketing strategy?
A: A multidomestic marketing strategy means that
firms have as many different product variations,
brand names, and advertising programs as
countries in which they do business. A global
marketing strategy standardizes marketing
activities when there are cultural similarities and
adapts them when cultures differ.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-17
A GLOBAL ENVIRONMENTAL SCAN
• Cultural Diversity
 Cross-Cultural Analysis
 Values
 Customs
• Foreign Corrupt Practices Act (1977)
 Cultural Symbols
 Language
• Back Translation
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-18
FIGURE 7-B Cultural appreciation
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Slide 7-19
Eiffel Tower (Paris) and Parthenon (Athens)
What cultural lesson did Coca-Cola learn?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-20
A GLOBAL ENVIRONMENTAL SCAN
• Economic Considerations
 Economic Infrastructure
 Consumer Income and Purchasing Power
 Currency Exchange Rates
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-21
Coca-Cola (Russia)
How do marketers adapt to
a country’s infrastructure?
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Slide 7-22
A GLOBAL ENVIRONMENTAL SCAN
• Political-Regulatory Climate
 Political Stability
 Trade Regulations
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-23
Concept Check
1. Cross-cultural analysis involves a
study of _______.
A: similarities and differences among
consumers in two or more nations or
societies
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-24
Concept Check
2. When foreign currencies can buy
more U.S. dollars, are U.S. products
more or less expensive for a foreign
consumer?
A: less expensive
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-25
GLOBAL MARKET-ENTRY
STRATEGIES
• Exporting
 Indirect Exporting
 Direct Exporting
• Licensing
 Franchising
• Joint Venture
• Direct Investment
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-26
FIGURE 7-3 How purchasing power differs
around the world
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-27
Nestle in China
What global market-entry strategy and why?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-28
Concept Check
1. What mode of entry could a company
follow if it has no previous
experience in global marketing?
A: indirect exporting through
intermediaries
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-29
Concept Check
2. How does licensing differ from a
joint venture?
A: In licensing, the firm offers the right to a
trademark, patent, or trade secret in return for a
royalty or fee. In a joint venture, a foreign and
a local firm invest together to produce some
product or service. The two companies share
ownership, control, and profits of the new
entity.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-30
CRAFTING A WORLDWIDE
MARKETING PROGRAM
• Product and Promotion Strategies
 Product Extension
 Product Adaptation
 Product Invention
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-31
FIGURE 7-4 Five product and promotion
strategies for global marketing
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-32
Gillette For Women Venus
Why use an identical global message for
Greece, Germany, and the U.S.?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-33
CRAFTING A WORLDWIDE
MARKETING PROGRAM
• Distribution Strategy
• Pricing Strategy
 Dumping
 Gray Market or Parallel Importing
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-34
FIGURE 7-5 Channels of distribution in
global marketing
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-35
Concept Check
1. Products may be sold globally in
three ways. What are they?
A: (1) in the same form as in its home
market (product extension); (2) with
some changes (product adaptation);
and (3) as a totally new product
(product invention).
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-36
Concept Check
2. What is dumping?
A: Dumping is when a firm sells a
product in a foreign country below
its domestic price or below its actual
cost.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-37
GOING ONLINE
GETTING TO KNOW THE WTO
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Slide 7-38
Going Online
1. Countries are constantly seeking
WTO membership. How many
countries are now members of this
organization? Which country is the
newest member?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-39
Going Online
2. What are the 10 most common
misunderstandings about the WTO
identified by this organization?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-40
VIDEO CASE 7
CNS BREATHE RIGHT STRIPS:
GOING GLOBAL
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Slide 7-41
VIDEO CASE 7
CNS Breathe Right
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Slide 7-42
VIDEO CASE 7
CNS Breathe Right
FIGURE 1 CNS threestage approach to
penetrate and develop
new markets
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-43
VIDEO CASE 7
CNS Breathe Right
1. What are the advantages and
disadvantages for CNS taking
Breathe Right strips into
international markets?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-44
VIDEO CASE 7
CNS Breathe Right
2. What are the advantages to CNS
of (a) using its three-stage process
to enter new global markets and
(b) having specific criteria to move
through the stages?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-45
VIDEO CASE 7
CNS Breathe Right
3. Using the CNS criteria, with what
you know, which countries should
have the highest priority for CNS?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-46
VIDEO CASE 7
CNS Breathe Right
4. Which single segment of potential
Breathe Right strip users would you
target to enter new markets?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-47
VIDEO CASE 7
CNS Breathe Right
5. Which marketing mix variables
should CNS emphasize the most to
succeed in a global arena? Why?
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-48
SUPPLEMENTAL
LECTURE NOTE 7-1
EXAMPLES OF VALUES,
CUSTOMS, CULTURAL
SYMBOLS, AND LANGUAGE
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-49
IN-CLASS ACTIVITY 7-1
REINTRODUCING THE
®
MINI BRAND
TO THE U.S.
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Slide 7-50
History of the Classic Mini
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Slide 7-51
MINI Brand Launch at the 2002 NAIAS
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Slide 7-52
MINI Cooper Convertible and
MINI Cooper S Convertible
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Slide 7-53
MINI Cooper Convertible
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Slide 7-54
MINI Cooper Convertible Brochure
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Slide 7-55
MINI Cooper Convertible Billboard
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-56
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-57
Protectionism
Protectionism is the practice of shielding
one or more industries within a country’s
economy from foreign competition
through the use of tariffs or quotas.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-58
Tariff
A tariff is a government tax on goods or
services entering a country, primarily
serving to raise prices on imports.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-59
Quota
A quota is a restriction placed on the
amount of of a product allowed to enter or
leave a country.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-60
World Trade Organization
The World Trade Organization (WTO)
is a permanent institution that sets rules
governing trade between its members
through panels of trade experts who
decide on trade disputes between
members and issue binding decisions.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-61
Global Competition
Global competition exists when firms
originate, produce, and market their
products and services worldwide.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-62
Multidomestic Marketing
Strategy
A multidomestic marketing strategy is
used by multinational firms that have as
many different product variations, brand
names, and advertising programs as
countries in which they do business.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-63
Global Marketing Strategy
A global marketing strategy is used by
transnational firms that employ the
practice of standardizing marketing
activities when there are cultural
similarities and adapting them when
cultures differ.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-64
Global Brand
A global brand is a brand marketed under
the same name in multiple countries with
similar and centrally coordinated
marketing programs.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-65
Global Consumers
Global consumers consist of customer
groups living in many different countries
or regions of the world who have similar
needs or seek similar features and benefits
from products or services.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-66
Cross-Cultural Analysis
Cross-cultural analysis involves the
study of similarities and differences
among consumers in two or more nations
or societies.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-67
Values
Values is a society’s personally or
socially preferable modes of conduct or
states of existence that tend to persist over
time.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-68
Customs
Customs are what is considered normal
and expected about the way people do
things in a specific country.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-69
Foreign Corrupt Practices
Act (1977)
The Foreign Corrupt Practices Act
(1977) is a law, amended by the
International Anti-Dumping and Fair
Competition Act (1998), that makes it a
crime for U.S. corporations to bribe an
official of a foreign government or
political party to obtain or retain business
in a foreign country.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-70
Cultural Symbols
Cultural symbols are things that represent
ideas or concepts.
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Slide 7-71
Back Translation
Back translation is when a translated
word or phrase is retranslated into the
original language by a different
interpreter to catch errors.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-72
Currency Exchange Rate
A currency exchange rate is the price of
one country’s currency expressed in terms
of another country’s currency.
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Slide 7-73
Exporting
Exporting is producing goods in one
country and selling them in another
country.
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Slide 7-74
Joint Venture
A joint venture is when a foreign country
and a local firm invest together to create a
local business.
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Slide 7-75
Direct Investment
Direct investment entails a domestic firm
actually investing in and owning a foreign
subsidiary or division.
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Slide 7-76
Dumping
Dumping is when a firm sells a
product in a foreign country below
its domestic price or below its actual cost.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-77
Gray Market
A gray market is a situation where
products are sold through unauthorized
channels of distribution. Also called
parallel importing.
Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved.
Slide 7-78