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CHAPTER 15
The
Global
Marketplace
Roadmap: Previewing the Concepts
 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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COCA-COLA – Successfully Going Global
Background
 Established in 1893 in




Atlanta pharmacy.
1900: Coke was available
in foreign countries.
1940s: built bottling plants
abroad to supply soldiers.
Growth fueled by strong
marketing: “I’d like to buy
the world a Coke” TV ad.
Now in emerging markets.
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How They Did It
 Balances brand building



and global standardization
with local adaptation.
Consistent positioning,
packaging, and taste.
Brands, flavors, ads, price,
distribution and promotions
are adapted to local
markets.
Sprite: a global success.
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Global Marketing in the 21st Century
 The world is shrinking rapidly with the
advent of faster communication,
transportation, and financial flows.
 International trade is booming and
accounts for 20 percent of GDP
worldwide.
 Global competition is intensifying.
 Higher risks with globalization.
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Marketing in Action
Globalization by U.S. Firms
Coca-Cola has been a leader in globalization.
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Global Firms
A global firm is one that, by
operating in more than one country,
gains marketing, production, R&D,
and financial advantages that are
not available to purely domestic
competitors.
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Figure 15-1
Major International Marketing Decisions
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Key Influences in the Global Marketing
Environment
 The International
 Political-Legal
Trade System
Economic
Environment
Environment
Cultural
Environment

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
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Looking at the Global Marketing
Environment
 The International Trade System:
– Restrictions—tariffs, quotas, embargos,
exchange controls, and nontariff trade barriers.
 The World Trade Organization and GATT:
– Helps trade—reduces tariffs and other
international trade barriers.
 Regional Free Trade Zones:
– Groups of nations organized to work toward
common goals in the regulation of international
trade.
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Let’s Talk!
What types of U.S.
companies would
like to see higher
tariffs and what
types would like to
see lower tariffs or
no tariffs?
Why is this the
case?
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GATT promotes international trade
by reducing tariffs.
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Marketing in Action
Explore the European Union!
Regional free trade zones
such as the European
Union help to simplify the
process of going global.
Explore their Web site for
information that could be
helpful to a marketer
wishing to go global.
Map of the European Union
as of March 2006
http://europa.eu.int/index_en.htm
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Economic Environment
 Industrial Structure:
– Shapes a country’s product and service
needs, income levels, and employment
levels.
 Four types:
– Subsistence economies
– Raw material exporting economies
– Industrializing economies
– Industrial economies
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Political-Legal Environment
 Attitudes toward international buying
 Government bureaucracy
 Political stability
 Monetary regulations
– Countertrade
 Barter
 Compensation
 Counterpurchase
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Cultural Environment
 Sellers must examine the ways consumers


in different countries think about and use
products before planning a marketing
program.
Business norms and behavior vary from
country to country.
Companies that understand cultural
nuances can use them to advantage when
positioning products internationally.
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Marketing in Action
The Importance of Culture
Ignoring cultural
differences can result
in strong consumer
backlash. Nike was
forced to pull these
shoes from distribution
after learning that the
stylized shoe logo
resembled “Allah”
when written in Arabic.
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Impact of Marketing on Culture
 A common criticism

of globalization is
that it promotes the
“Americanization” of
foreign countries, and
a loss of cultural
identity.
Globalization proponents argue that the
cultural exchange of ideas and values
works both ways.
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Deciding Whether to Go International
 Reason to consider going global:
– Foreign attacks on domestic markets.
– Foreign markets with higher profit
opportunities.
– Stagnant or shrinking domestic markets.
– Need larger customer base to achieve
economies of scale.
– Reduce dependency on single market.
– Follow customers who are expanding.
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Deciding Which Markets to Enter
 Before going abroad, the company
should try to define its international
marketing objectives and policies.
– What volume of foreign sales is desired?
– How many countries to market in?
– What types of countries to enter?
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Deciding Which Markets to Enter
 Identify a list of possible countries.
 Rank each with respect to market size,
market growth, cost of doing business,
competitive advantage, and risk.
 Goal is to estimate market potential,
using these factors as well as
demographic and geographic
characteristics, and sociocultural,
economic, and legal-political factors.
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Marketing in Action
Marketing to China
Many marketers are
attracted to the
Chinese market due
to its substantial
population size and
potential for growth.
Colgate’s efforts
have expanded their
market share from
7% to 35% in less
than a decade.
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Figure 15-2
Market Entry Strategies
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Market Entry Strategies
 Exporting:
– Indirect:
 Working via
independent
international
marketing
intermediaries.
– Direct:
 Company handles its own exports.
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Market Entry Strategies
 Joint Venturing:
– Joining with foreign
companies to produce
or market products
or services.
 Approaches:
–
–
–
–
Licensing
Contract manufacturing
Management contracting
Joint ownership
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Toyoko’s Disneyland
Resort is operated under
a licensing agreement.
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Marketing in Action
Joint Ownership
KFC entered Japan through a joint ownership
agreement with Japanese conglomerate Mitsubishi.
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Market Entry Strategies
 Direct Investment:
– The development of foreign-based
assembly or manufacturing facilities.
– This approach has both advantages and
disadvantages which must be carefully
evaluated before making a decision.
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Deciding on the Global Marketing
Program
 Standardized Marketing Mix:
– Selling largely the same products and
using the same marketing approaches
worldwide.
 Adapted Marketing Mix:
– Producer adjusts the marketing mix
elements to each target market, bearing
more costs but hoping for a larger market
share and return.
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Marketing in Action
Marketing Mix Adaptation
In India, McDonald’s serves chicken, fish, and veggie
burgers, but no beef. Check out the Maharaja Mac!
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Figure 15-3
Global Product and Communication
Strategies
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Global Product Strategies
 Straight Product Extension:
– Marketing a product in a foreign market
without any change.
 Product Adaptation:
– Adapting a product to meet local
conditions or wants in foreign markets.
 Product Invention:
– Creating new products or services for
foreign markets.
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Marketing in Action
Global Product Strategy
Coca-Cola’s
virtual
vendor
allows the
curious to
learn about
Coca-Cola’s
global
product
strategy.
http://www2.coca-cola.com/
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Global Promotion Strategies
 Can use a standardized theme globally, but
may have to make adjustments for language
or cultural differences.
– Communication Adaptation:
 Fully adapting an
Video Snippet
advertising
Learn how the people
message for
at NIVEA approach
local markets.
creating a global
– Changes may
communication
strategy for the
have to be made
firm’s brands.
due to media availability.
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Marketing in Action
Promotion Adaptation
Guy Larouche uses similar ads in European and
Arabian countries, but tones down the sensuality.
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Marketing in Action
Brand Name Blunders
OOPS!!! Not all brand
names translate well
into English, or from
English into a
different language.
Other Classic Blunders
“Coke” translated into
Chinese characters was
interpreted by the
Chinese to mean “Bite
the wax tadpole.”
Copyright 2007, Prentice-Hall Inc.
Chevy used the “Nova”
name verbatim, only to
find out that no va
means “It doesn’t go”
in Spanish.
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Global Pricing Strategies
 Companies face many problems in
setting their international prices.
– Standard pricing methods such as
uniform pricing, standard markup of
costs everywhere, or charging what the
market will bear ignores cost
differentials and local market conditions.
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Global Pricing Challenges
 International prices tend to be higher than
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
domestic prices because of price escalation.
Companies may become guilty of dumping
when a foreign subsidiary charges less than
its costs or less than it charges in its home
market.
The Internet makes global price differences
obvious and the euro has reduced the
amount of price differentiation.
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Marketing in Action
Economic Impact of Global Pricing
The adoption of the euro as a common currency by
several nations has created a “pricing transparency”
that is forcing companies to harmonize their prices
throughout Europe.
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Figure 15-4
Whole-Channel Concept for
International Marketing
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Global Distribution
 International firms must take a wholechannel view of distributing products
to final consumers.
 Differences in the numbers and types
of intermediaries serving each foreign
market require time and money to
navigate.
 Size and character of retail units differ
as well, presenting challenges.
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Deciding on the Global Marketing
Organization
 Organize an export department
 Create international divisions
– Geographical organizations
– World product groups
– International subsidiaries
 Become a global organization
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Rest Area: Reviewing the Concepts
 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.
Copyright 2007, Prentice-Hall Inc.
15-40