Download Why Go Global?

The Global
Marketplace
Chapter 15
Next Exit
Rest Stop: Previewing the Concepts
1. Discuss how the international trade
2.
3.
4.
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.
Identify the three major forms of
international marketing organization.
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Case Study
The NBA – A “Hot” Global Brand
Why Go Global?
Basketball is the #2 global
sport, behind soccer. NBA
finals were televised in 215
countries.
Going global means growth.
10% of league’s overall
revenues and 25% of
licensed apparel sales
comes from outside United
States.
Growing presence of foreign
born stars adds to the
NBA’s global appeal.
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How Did They Do It?
Nine international offices,
over 100 international staff
and a Hispanic marketing
office in Miami, Florida.
132 NBA sponsored
international events in the
off-season.
NBA Europe Live program
takes off-season training for
the four NBA teams to
Europe.
International expansion in the
future may target China.
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Global Marketing Today
 Several trends characterize the global
marketplace today:
– The world is shrinking rapidly with the
advent of faster communication,
transportation, and financial flows.
– International trade is booming.
– Global competition is intensifying.
– Risks associated with globalization are
increasing.
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Global Firm Defined
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.
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Figure 15.1
Major International Marketing
Decisions
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Looking at the Global Marketing
Environment
 The International Trade System:
– Many restrictions exist:
• Tariffs
• Quotas
• Embargos
• Exchange controls
• Nontariff trade barriers
– E.g., Protectionist regulations prevent the
United States and other Western banks
from entering China’s huge retail banking
market.
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Looking at the Global Marketing
Environment
 The World Trade
Organization and
GATT:
– Helps trade by
reducing tariffs and
other international
trade barriers
– Imposes sanctions
– Mediates global
disputes
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Looking at the Global Marketing
Environment
 Regional
Free Trade
Zones:
– European
Union (EU)
– North
American
Free Trade
Agreement
(NAFTA)
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Marketing in Action
The European Union
Regional free trade zones such as the
European Union help to simplify the process
of going global.
Visit http://europa.eu/ and explore the
European Union’s Web site for information
that could be helpful to a marketer wishing to
go global.
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Looking at the Global Marketing
Environment
 Economic environment:
– Industrial structure shapes a country’s
product and service needs, income levels, and
employment levels.
– Four types of industrial structure:
• Subsistence economies
• Raw material exporting economies
• Industrializing economies
• Industrial economies
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Looking at the Global Marketing
Environment
 Economic environment:
– Income distribution is an important factor.
• Many luxury
brand
marketers
are rushing
to take
advantage
of China’s
consumer
markets.
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Looking at the Global Marketing
Environment
 Political-legal environments vary by:
–
–
–
–
Attitudes toward international buying
Government bureaucracy
Political stability
Monetary regulations
 Countertrade is a growing practice which
takes several forms:
– Barter
– Compensation
– Counterpurchase
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Looking at the Global Marketing
Environment
 Before planning a marketing program,
sellers must:
– Understand a nation’s culture
– Examine the ways in which consumers in
different countries think about and use
products
• Mistakes can be embarrassing and costly.
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Marketing in Action
Ignore Culture at Your Peril
China imposed a nationwide ban on this
“blasphemous” ad featuring LeBron James crushing
several culturally revered Chinese figures.
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Looking at the Global Marketing
Environment
 Cultural environment:
– Business norms and
behavior vary by country.
– Companies that
understand cultural
nuances can use them to
advantage when
positioning products
internationally.
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Looking at the Global Marketing
Environment
 Cultural environment:
– Critics contend that
large American
multinationals are
“Americanizing” the
world’s cultures.
• In China, most people
never drank coffee prior
to Starbucks entry into
the market.
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Deciding Whether to Go Global
 Reasons to consider going global:
– Foreign attacks on domestic markets may
be countered by counterattacks abroad.
– Home market may be stagnant or shrinking
while foreign markets offer higher profit
opportunities.
– Customers may be expanding globally and
require international servicing.
 Risks must be weighed against the
firm’s ability to operate globally.
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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?
 Possible countries should be ranked
based several factors.
 The market(s) with the greatest ROI
should be chosen.
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Fuel for Thought
P&G’s decision to enter the
Chinese toothpaste market with
Crest makes sense as China is
the largest toothpaste market in
the world.
Size isn’t everything though.
What brands or products might
NOT succeed in China, despite its
enormous market size? Why?
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Figure 15.2
Market Entry Strategies
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Deciding How to Enter the Market
 Exporting:
– Entering a foreign market by selling goods
produced in the company’s home country,
often with little modification.
 Types of exporting:
– Indirect:
• Working through independent international
marketing intermediaries.
– Direct:
• Company handles its own exports.
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Deciding How to Enter the Market
 Joint venturing:
– Joining with foreign companies to
produce or market a product or
service.
 Approaches:
– Licensing
– Contract manufacturing
– Management contracting
– Joint ownership
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Deciding How to Enter the Market
 Licensing:
– A company enters into
an agreement with a
licensee in a foreign
market, offering the
right to use a patent,
manufacturing
process, trademark,
trade secret, or other
item of value for a fee
or royalty.
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Deciding How to Enter the Market
 Contract manufacturing:
– A company contracts with manufacturers in
a foreign market to produce the product or
provide its service.
 Management contracting:
– A joint venture in which the domestic firm
supplies the management know-how to a
foreign company that supplies the capital;
the domestic firm exports management
services rather than products.
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Deciding How to Enter the Market
 Joint ownership:
– A joint venture in
which a company
joins investors in
a foreign market
to create a local
business in which
the firm shares
joint ownership
and control.
• KFC teamed up
with Mitsubishi
to enter Japan.
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Deciding How to Enter the Market
 Direct investment:
– The development of foreign-based
assembly or manufacturing facilities.
– Advantages:
• Lower costs due to cheap labor or raw
materials.
• Firm may improve image in host country.
• Better adaptation of products to country.
– Disadvantages:
• Currency risks, market failure, government
change.
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Deciding on the
Global Marketing Program
 Standardized marketing mix:
– Using basically the same marketing strategy
and mix in all international markets.
 Adapted marketing mix:
– Adjusting the marketing strategy and mix
elements to each international target
market, bearing more costs but hoping for a
larger market share and return.
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Marketing in Action
Think Global, Act Local
McDonald’s uses the same
basic fast-food look, layout,
and operating model in all of
its restaurants around the
world, but adapts its menu to
local tastes. Filet-O-Shrimp
burgers, Bulgogi Burgers,
and the beefless Maharaja
Mac are some examples.
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Figure 15.3
Five Global Product and
Communications Strategies
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Deciding on the
Global Marketing Program
 Global promotion strategies:
– Firms can either adopt the same
communication strategy they used in the
market or change it for each local market.
– Some global firms use a standardized
advertising theme around the world with
minor adaptations.
– Other firms follow a communication
adaptation strategy by fully adapting an
advertising message for local markets.
– Changes may also have to be made due to
media availability.
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Quick Flick
Harley Davidson’s
global strategy
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Click to play
video
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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.”
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Chevy used the “Nova”
name verbatim, only to
find out that no va
means “It doesn’t go”
in Spanish.
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Deciding on the
Global Marketing Program
 Global pricing strategies:
– Companies face many problems in setting
their international prices.
• Standard pricing methods ignore cost
differentials and local market conditions.
– International prices tend to be higher than
domestic prices because of price
escalation.
• Some global firms create simpler versions of
products to sell abroad.
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Deciding on the
Global Marketing Program
 Global pricing strategies:
– Setting prices for foreign subsidiaries can
be problematic:
• Charging too much results in higher tariff
duties and lower income taxes.
• Charging too little can result in accusations
of dumping if price is less than the product
costs or less than is being charged in the
home market.
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Marketing in Action
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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Deciding on the
Global Marketing Program
 Global distribution channels
differ by:
– The numbers and types of
intermediaries.
• Size and character of retail units differ
as well, presenting challenges.
– The transportation infrastructure.
• Limitations in the distribution network
of China will create challenges for
many marketers.
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Marketing in Action
Distribution Can Be Difficult
Nokia developed its own distribution structure for India,
including a fleet of distinctive blue Nokia-branded vans
which were used to visit remote villages.
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Deciding on the
Global Marketing Organization
 International marketing efforts
can be managed by:
– Organizing an export department.
– Creating international divisions:
• Geographical organizations
• World product groups
• International subsidiaries
– Becoming a global organization.
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Rest Stop: Reviewing the Concepts
1. Discuss how the international trade
2.
3.
4.
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.
Identify the three major forms of
international marketing organization.
41
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Copyright © 2009 Pearson Education, Inc.
Publishing as Prentice Hall
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