Download Global Marketing Strategy

CHAPTER
REACHING
GLOBAL
MARKETS
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
• Describe the nature and scope of world
trade from a global perspective and its
implications for the United States
• Explain the effects of economic
protectionism and the implications of
economic integration for global
marketing practices.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
• Understand the importance of
environmental factors (cultural,
economic, and political) for global
marketing efforts
• Describe alternative approaches firms
use to enter and compete in global
markets
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
AFTER READING THIS CHAPTER
YOU SHOULD BE ABLE TO:
• Identify specific challenges marketers
face when crafting worldwide marketing
programs.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
REACHING GLOBAL MARKETS
NOW THE WORLD CAN BREATH
EASIER…ONE NOSE AT A TIME
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DYNAMICS OF WORLD TRADE
• World Trade Flows
• Global perspective
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
FIGURE 7-1
Illustrative
world trade
flows for
manufactured
goods and
commodities
(billions of
dollars)
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DYNAMICS OF WORLD TRADE
• Global perspective (cont)
 Countertrade
 Trade feedback effect
• United States perspective
 Gross domestic product
 Balance of trade
• Competitive Advantage of Nations
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
DYNAMICS OF WORLD TRADE
• Competitive Advantage of Nations
 Factor conditions
 Demand conditions
 Related supporting industries
 Company strategy, structure, and rivalry
 Economic Espionage
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What is the trade feedback effect?
A: The phenomenon in which a
country’s imports affect its exports
and vice versa.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. What variables influence why some
companies and industries in a country
succeed globally while others lose ground
or fail?
A: Factor conditions; demand
conditions; related and supporting
industries; and company strategy,
structure, and rivalry.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
EMERGENCE OF A BORDERLESS
ECONOMIC WORLD
• Decline of Economic Protectionism
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
EMERGENCE OF A BORDERLESS
ECONOMIC WORLD
• Decline of Economic Protectionism
(cont)
 Tariffs
 Quota
 World Trade Organization
• Rise of Economic Integration
• European Union
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
EMERGENCE OF A BORDERLESS
ECONOMIC WORLD
• Rise of Economic Integration (cont)
• North American Free Trade Agreement
• Asian Free Trade Agreements
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
EMERGENCE OF A BORDERLESS
ECONOMIC WORLD
• A New Reality: Global Competition
among Global Companies for Global
Customers
• Global Competition
 Strategic alliances
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
EMERGENCE OF A BORDERLESS
ECONOMIC WORLD
• A New Reality: Global Competition
(cont)
• Global Companies
 Multidomestic marketing strategy
 Global marketing strategy
• Global Consumers
• Emergence of Networked Global
Marketplace
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. What is protectionism?
A: It is the practice of shielding one or
more sectors of a country’s economy
from foreign competition through the
use of tariffs or quotas.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. The North American Free Trade
Agreement was designed to promote free
trade among which countries?
A: United States, Canada, and Mexico
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
3. What is the difference between a multidomestic
marketing strategy an 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.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A GLOBAL
ENVIRONMENTAL SCAN
• Cultural Diversity
 Cross-cultural analysis
• Values
• Customs
 Foreign Corrupt Practices Act
• Cultural Symbols
 Semiotics
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A GLOBAL
ENVIRONMENTAL SCAN
• Cultural Diversity (cont)
• Language
 Back translation
• Cultural ethnocentricity
 Consumer ethnocentrism
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A GLOBAL
ENVIRONMENTAL SCAN
• Economic Considerations
• Stage of Economic Development
• Economic Infrastructure
• Consumer Income and Purchasing Power
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A GLOBAL
ENVIRONMENTAL SCAN
• Economic Considerations (cont)
• Currency exchange rates
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
A GLOBAL
ENVIRONMENTAL SCAN
• Political-Regulatory Climate
• Political Stability
• Trade Regulations
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1.Semiotics involves the study of
cultural
symbols and their role in
_________________________
the
assignment of meaning for
_________________________
people
_________________________ .
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. When foreign currencies can by more
U.S. dollars, are U.S. products more or
less expensive for a foreign consumer?
A: Less expensive.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
GLOBAL MARKET-ENTRY
STRATEGIES
•
•
•
•
Exporting
Licensing
Joint Venture
Direct Investment
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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 fee or royalty. In a joint venture, a
foreign and a local firm to produce some
product or service. The two companies
share ownership, control, and profits of
the new entity.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CRAFTING A WORLDWIDE
MARKETING EFFORT
• Product and Promotion Strategies
 Product extension
 Product adaptation
 Product invention
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CRAFTING A WORLDWIDE
MARKETING EFFORT
• Distribution Strategy
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
CRAFTING A WORLDWIDE
MARKETING EFFORT
• Pricing Strategy
 Dumping
 Gray market
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
1. Products may be sold globally in three
ways. What are they?
A: Product extension, product
adaptation, and product invention.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
Concept Check
2. What is dumping?
A: Dumping is when a firm sells a
product in a country below its
domestic price or below its actual
cost.
© 2003 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin