c hapter 15 the global marketplace. copyright 2007, prentice-hall inc.15-2 discuss how the...

CCHAPTER HAPTER 1515

The The Global Global

MarketplaceMarketplace

Copyright 2007, Prentice-Hall Inc. 15-2

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.

Roadmap: Previewing the Concepts


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.

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.

COCA-COLACOCA-COLA – Successfully Going – Successfully Going GlobalGlobal


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.

Global Marketing in the 21st Century


Globalization by U.S. Firms

Coca-Cola has been a leader in globalization.

Marketing in Action


Global Firms

A global firm is one that, by A global firm is one that, by operating in more than one operating in more than one country, gains marketing, country, gains marketing,

production, R&D, and financial production, R&D, and financial advantages that are advantages that are

not available to purely domestic not available to purely domestic competitors.competitors.


Figure 15-1Major International Marketing Decisions


Key Influences in the Global Marketing Environment

The International Trade System

Economic Environment

Political-Legal Environment

Cultural Environment


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.


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?

Let’s Talk!

GATT promotes international trade by reducing tariffs.


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.

Marketing in Action

Map of the European Union as of March 2006

http://europa.eu.int/index_en.htm


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


Attitudes toward international buying Government bureaucracy Political stability Monetary regulations

– Countertrade Barter Compensation Counterpurchase

Political-Legal Environment


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.


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.

Marketing in Action


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.


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.

Deciding Whether to Go International


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?

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.

Deciding Which Markets to Enter


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.

Marketing in Action


Figure 15-2Market Entry Strategies


Market Entry Strategies

Exporting:– Indirect:

Working via independent international marketing intermediaries.

– Direct: Company handles its own exports.



Joint Venturing:– Joining with foreign

companies to produce or market products or services.

Approaches:– Licensing– Contract manufacturing– Management contracting– Joint ownership

Toyoko’s Disneyland Resort is operated under a licensing agreement.


Joint Ownership

KFC entered Japan through a joint ownership agreement with Japanese conglomerate Mitsubishi.

Marketing in Action



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.


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.

Deciding on the Global Marketing Program


Marketing Mix Adaptation

In India, McDonald’s serves chicken, fish, and veggie burgers, but no beef. Check out the Maharaja Mac!

Marketing in Action


Figure 15-3Global Product and Communication

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.

Global Product Strategies


Global Product Strategy

Coca-Cola’s virtual vendor allows the curious to learn about Coca-Cola’s global product strategy.

Marketing in Action

http://www2.coca-cola.com/


Can use a standardized theme globally, but may have to make adjustments for language or cultural differences.– Communication Adaptation:

Fully adapting an advertising message for local markets.

– Changes may have to be made due to media availability.

Global Promotion Strategies

Learn how the people at NIVEA approach creating a global communication strategy for the firm’s brands.

Video Snippet


Promotion Adaptation

Guy Larouche uses similar ads in European and Arabian countries, but tones down the sensuality.

Marketing in Action


Brand Name Blunders

Other Classic Blunders

Marketing in Action

OOPS!!! Not all brand names translate well into English, or from English into a different language.

“Coke” translated into Chinese characters was interpreted by the Chinese to mean “Bite the wax tadpole.”

Chevy used the “Nova” name verbatim, only to find out that no va means “It doesn’t go” in Spanish.


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.

Global Pricing Strategies


International prices tend to be higher than 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.

Global Pricing Challenges


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.

Marketing in Action


Figure 15-4Whole-Channel Concept for

International Marketing


International firms must take a whole-channel 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.

Global Distribution


Organize an export department Create international divisions

– Geographical organizations– World product groups– International subsidiaries

Become a global organization

Deciding on the Global Marketing Organization


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.

Rest Area: Reviewing the Concepts

c hapter 15 the global marketplace. copyright 2007, prentice-hall inc.15-2 discuss how the...

Documents

international slide

global slide

global marketing environment

global marketplace slide

international markets

action slide

century slide

international trade