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MKTG
4CHAPTERDeveloping a Global Vision
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Objectives•Discuss the importance of global marketing
•Discuss the impact of multinational firms on the world economy
•Describe the external environment facing global marketers
•Identify ways of entering the global market
•List the elements involved in developing a global marketing mix
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Emerging-Market Companies
Adapted from “Emerging Giants,” Business Week, July 31, 2006.
COMPANY COUNTRY INDUSTRY
América Móvil Mexico Telecom services
Cemex Mexico Building materials
China Mobile China Telecom services
CNOOC China Oil and gas
CVRD Brazil Mining
Embraer Brazil Aerospace
Gazprom Russia Oil and gas
Haier China Home appliances
Hisense China Electronics
Huawei China Telecom equipment
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Go Global
Target throughout the world Global vision of multi-national firms Fear? Why?Fear? Why?
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The Fear of Trade and Globalization
Millions of Americans have lost jobs Millions fear losing jobs Threat of outsourcing if workers do not
accept pay cuts Vulnerability to operations moving
offshore Then, why is international marketing so Then, why is international marketing so
hot?hot?
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Did you know?… U.S. exports a fifth of industrial production. One of every 10 jobs in U.S. is supported by
exports. U.S. businesses export over $800 billion. Exports account for 25 percent of U.S.
economic growth. U.S. is world’s leading exporter of farm
products.
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Rewards of Global Marketing Recognizing and reacting to
international marketing opportunities
Using effective global marketing strategies
Being aware of threats from foreign competitors
Other rewards?Other rewards?
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External Environments
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Demographics (1)
Birthrate Babies born/1000 people in population In U.S, slower since baby boom (declining;
grandparents example) Japan & Western Europe is also slower More spending/child (indulged)
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U.S. Birthrate 1935-2005
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U.S. Demographics (2) U.S. is a Transient society
16% moves each year (40% of those, out of country)
A nation of strangers leads to chains Regional
Growth Fastest in the West California (most populous; 1/8 Americans)
Density Most on the East Coast (Why??) Key for businesses: local area, traffic counts,
food
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Economic Development (1)
What are attractive markets? GNI (Gross National Income): total market
value of goods/services produced in an economy
Higher GNI Allows more trade Exchange concept = favors richer countries &
people Criticism here
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Economic Development (2)
What are attractive markets? (continued) Lower GNP
Developing world Growth Example: U.S. and Canada will take 5x as long to
double their population as compared to Nicaragua & Saudi Arabia
Less competition (M&M/Mars: Eastern Europe) Challenges
Literacy: ¾ world (baby food, U.S. fast food) Low income: 60% of world makes less than $2/day Ethics (Nestle and what other company?)
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International Trade
MERCOSUR (Latin America) URUGUAY ROUND (>148 nations to
reduce tariffs) WTO (replaced GATT) NAFTA CAFTA EU IMF
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International Options
Exporting/importing (Wal-Mart) Licensing (Sponge Bob) Franchising (McDonalds) Contract manufacturing Joint venture Direct foreign investment
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Which are more risky?
Licensing Legal process allowing use of manufacturing/patents/knowledge
ContractManufacturing
Private-label manufacturing by a foreign country
Joint Venture Domestic firm buys/joins a foreign company to create new entity
Export Sell domestically produced products to buyers in other countries
Direct Investment Active ownership of a foreign company/manufacturing facility
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Export Intermediaries
Buyer for ExportBuyer for Export Assumes all ownership risks and sells globally for its own account.
Assumes all ownership risks and sells globally for its own account.
Export BrokerExport Broker Plays the traditional broker’s role by bringing buyer and seller together.
Plays the traditional broker’s role by bringing buyer and seller together.
Export AgentExport Agent Acts like a manufacturer’s agent for the exporter in the foreign market.
Acts like a manufacturer’s agent for the exporter in the foreign market.
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Global Marketing Mix Strategies One product, one message Change existing product for a new
country market (Krispy Crème, anything else?)
Message adaptation Price changes (exchange rates,
dumping) Barter
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Product and Promotion
One ProductOne Message
Product Adaptation
MessageAdaptation
Product Invention
SameSameProductProduct
SameSameMessageMessage
ChangeChangeMessageMessage
ChangeChangeProductProduct
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Pricing
Must consider transportation and insurance costs, taxes and tariffs
Determine what customers will spend
Ensure that foreign buyers will pay price
May need to simplify a product to lower price
Don’t assume that low-income countries are willing to accept lower quality
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Developing a Global Marketing Mix
PROMOTION
One Product, One MessageProduct InventionProduct
AdaptationMessageAdaptation
PLACE
Channel Choice
Channel Structure
Country Infrastructure
PRICE
Dumping
Countertrade
Exchange Rates
Purchasing Power
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Your thoughts?
What are your ideas for selling abroad?
How difficult is global marketing?
What are the potential risks and returns?
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Summary
Demography International trade Economic development International options Global marketing mix