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Page 1: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Marketing

Spring 2003

Page 2: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Some Abouts About me About this course About the project About the

examination About grading

Page 3: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Text Structure Introduction to global marketing The global marketing

environment Global market opportunities Global marketing strategy Global marketing program Global marketing management

Page 4: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

List of Questions What is global marketing? Do we have to go global? Why? Where shall we go? What shall we know before plunging

ourselves into the storming sea? How can we survive and thrive in a

foreign market?

Page 5: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Marketing

-- Introduction

Page 6: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

What is Global Marketing?

Page 7: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

What is marketing? The process of planning and

executing the conception, pricing, promotion, and distribution of ideas, goods, services, organizations, and events to create and maintain relationships that will satisfy individual and organizational objectives.

Page 8: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The Three Principles of Marketing

Customer Value Value Equation: V=B/P

Differential Advantage Focus

Page 9: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

What is global marketing? Practicing marketing in the global

environment. An organization that engages in

global marketing focuses its resources on global market opportunities and threats

Page 10: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Globalization An open economic system

Non-discrimination

Global brands

Global structures

Page 11: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Exports % share of world production

0

5

10

15

20

25

1913 1950 2000

Page 12: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Annual % Growth of trade and GDP

1959 – 96

0

2

4

6

8

10

12

World USA

GDP GDPTrade

Trade

GDP GDP

Page 13: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Effects of globalization on business

Cheap offshore production Reduced transport costs Virtual communication Standardization of logistics Global marketing

Page 14: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Export & Import By Regions  2002/01-10

进出口 出口 进口

总 值 50,025,801 26,249,924 23,775,878 19.7 20.6 18.7

亚洲 28,989,873 13,725,513 15,264,360 23.2 20.3 26 非洲 1,001,081 561,926 439,156 10.8 12.9 8.3 欧洲 9,116,406 4,750,486 4,365,920 13.9 18 9.8

拉丁美洲 1,438,463 783,826 654,637 16.2 13.3 19.8 北美洲 8,494,617 6,001,213 2,493,404 16.6 25 0.4 大洋洲 984,621 426,226 558,395 17.3 27.6 10.6

累计比上年同期增减% 国家(地区 ) 进出口额 出口额 进口额

Page 15: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Corporate Globalization-China’s Case

Walmart World Women Basket Ball

Games Haier in USA Tsingdao Beer

Page 16: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Marketing VS Domestic Marketing

More difficult: language, law, culture, trade and non-trade barriers, market research, and communication;

More complicated: currency, measures and weights, customs, monetary exchange, transportation, insurance, and counter-claim

More risky: credibility, currency exchange, political risk, transportation, and pricing

More opportunities and more profitable, hopefully.

Page 17: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Should we go global? Internal analysis

Resources, managerial mindset, strengths, weaknesses,etc.

External analysis Competition, opportunities, threats,

benefits, risks, etc. Cost VS Income

Page 18: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Management Orientation Management’s assumptions or

beliefs-both conscious and unconscious-about the nature of the world

Ethnocentric Polycentric Regiocentric Geocentric

Page 19: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Ethnocentric Home country is superior. Domestic Company:

No opportunities outside the home country;

International Company Products and practices that succeed in

the home country will be successful anywhere;

Foreign operations are secondary or subordinate

Nissan

Page 20: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Polycentric Each country is unique. Multinational Company:

Each subsidiary should develop its own business and marketing strategies according to the specific situation in that country.

Problem: Cost, control, headquarter out of game

Page 21: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Regiocentric & Geocentric Regiocentric: Each region is unique and

an integrated regional strategy is to be developed to serve that region.

Geocentric: The entire world is a potential market and integrated world market strategies should be developed.

Global or transnational company. Global Localization: Think globally, act

locally.

Page 22: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Philips VS Matsushita Philips Electronics

Polycentric: 7 models of TV based on 4 chassis, Variety

Matsushita Geocentric: global strategy, 2 models

of TV based on a single chassis, low price

Page 23: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Driving and Restraining Forces Affecting Global Integration and Global

Marketing

Page 24: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Driving Forces Technology

Internet, Satellite Dish, Globe Spanning TV Regional Economic Agreements

NAFTA, EU, ASEAN, GCC, APEC Market Needs and Wants

Converging, Global Brand, Transportation and Communication

Improvements Jet Plane, Large Cargo Ship, email, fax,

videoconferencing, cost deduction

Page 25: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Driving Forces Cont. Product development costs Quality World Economic Trends

More opportunities Less resistance World-wide deregulation and

privatization

Page 26: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Driving Forces Cont. Leverage

Experience transfers Scale economies Resource utilization Global strategy

The Global/Transnational Corporation

Page 27: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Restraining Forces Management Myopia Organization Culture

Integrate global vision and perspective with local market initiative and input

Mutual respect National controls and barriers

Tariff barriers and non-tariff barriers

Page 28: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The Global Economic Environment

Page 29: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Changes in The World Economy

Emergence of global markets Economic integration Global companies, global brands Capital movements far exceed the

volume of global merchandise and services trade

$4 trillion VS. London Eurodollar Market, $100 trillion, VS. Foreign exchange $250 trillion

Page 30: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Changes in The World Economy

Productivity VS. Employment Application of new technologies Increase in production efficiency Plant emigration Internal reforms

Page 31: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Changes in The World Economy

World economy becomes the dominant economic unit

The end of the cold war Collapse of USSR, ISC, E. European China, Vietnam, Cuba, North Korea

Page 32: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Economic Systems Market Allocation

Market economy Role of the state

Command Allocation Planned economy Role of the state

Mixed System Which plays the leading

role?

Page 33: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Stages of Market Development

Based on GNP Per Capita Lower-Income Countries

<$766 Lower-Middle-Income Countries

$766-$3036 China 10239.8/129=$799 Shanghai >$2000

Upper-Middle-Income Countries $3036-$9386

High-Income Countries >$9386

Page 34: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Low-Income Countries Preindustrial countries, less than $766 Limited industrialization, high percentage

of population in agriculture and farming High birth rates Low literacy rates Heavy reliance on foreign aid Political instability and unrest Africa, south of Sahara

Page 35: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Lower-Middle-Income Countries

Less developed countries (LDC) Early stage of industrialization Consumer markets expanding Low labor cost Labor-intensive products

manufacturing

Page 36: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Upper-Middle-Income Countries

Industrializing countries Percentage of people in agriculture

dropping sharply Degree of urbanization increasing High literacy Relatively low wage costs

Page 37: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

High-Income Countries Industrialized Countries Sustained economic growth Knowledge-based Service sector New products and

innovations

Page 38: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Income and PPP Purchasing Power Parity Real Income Standard of Living The concentration of income

Regional, nationally, and within nations “Triad”: US, Canada, EU, and Japan

Income inequality in developing countries

Page 39: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Implication for Marketers

Profitability Chances and challenges Marketing’s Role Market potential

evaluation

Page 40: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Emerging Markets Evaluation

Size Growth Intensity Infrastructure Freedom Risk OverallCountries Rank Rank Rank Rank Rank Rank Rank

HONGKONG 21 6 1 1 4 2 1

SINGAPORE 24 8 14 2 12 1 2

S. KOREA 6 1 4 6 7 7 3

ISRAEL 23 9 3 5 9 3 4

CHINA 1 11 24 17 24 8 5

HUNGARY 22 19 5 4 2 4 6

CZECH REP. 18 23 15 3 2 6 7

POLAND 10 18 12 7 6 11 8

CHILE 19 3 9 10 1 5 9

INDIA 2 16 20 23 17 14 10

MEXICO 5 12 6 14 13 9 11

THAILAND 13 5 21 19 8 13 12

RUSSIA 3 2 22 12 22 23 13

TURKEY 9 7 7 9 20 21 14

Page 41: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Social and Cultural Environments

Differences Similarities Marketers’ two-folded task.

Recognize difference Find similarities

Page 42: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Culture Culture includes both conscious and

unconscious values, ideas, attitudes, and symbols that shape human behavior and that are transmitted from one generation to the next.

Culture is learned, not born with. Culture can be changed.

Page 43: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Implications for Global Markers

Food, drink preferences KFC, Colgate, Coco-cola, Green Giant

Foods, and soy sauce Color, flower, and other preferences

White, green, chrysanthemum, Corbie, dog,

Converging global attitudes Cultural universals Be culturally sensitive!

Page 44: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

High and Low-Context Cultures

Low-context: messages are explicit, words carry most of the information in a communication. “I mean what I say”.

High-context: much more information resides in the context of communication, including background, associations, and basic values of the communications rather in the verbal message. “Guess what I really mean.”

Page 45: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

High and Low Context Cultures

Factor High Context Low Context

Lawyer Less important Very important

Space People breath on each other

Bubble of private space, no intrusion

Time Polychronic, things dealt simultaneously

Monochronic, linear

Negotiations

Lengthy, get to know each other

Quick, get things done

Countries

Japan, Middle East,

US, Northern Europe

Page 46: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Communication and Negotiation Language barriers

It’s a “yes” or “no”? “You are invited to take advantage of the

chambermaid”. “Ease your bosoms. This coffee has carefully

selected high quality beans and roasted by our all the experience.”

The lift is being fixed for the next day. During that time we regret you will be unbearable.”

Nonverbal communication Verbal VS. Nonverbal

Page 47: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Social Behavior Sneeze, belch, sharing food Saudi: Don’t ask the host about the health

of his spouse. Don’t show the soles of your shoes. Don’t touch or deliver with the left hand.

Japan, Korea, China, India Venezuela, Indonesia Africa “Madam” or “ma’am”

Page 48: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Analytical Approaches to Cultural Factors

Don’t assume you know everything. Don’t judge others by the culture you are

from. There are no perfect cultures in this world, or

there is no such culture superior than another.

Try to understand the beliefs, values, and motives of another culture

Be open, be understanding.

Page 49: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Maslow’s Hierarchy of Needs

Physiological

Safety

Social

Esteem

Self-actualization

Page 50: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Hofstede’s Cultural Typology Power distance Individualism or Collectivism Masculinity or Femininity Uncertainty avoidance

Page 51: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Power Distance The extent to which the less

powerful members of a society accept or expect that power to be distributed unequally.

High power distance Low power distance

Page 52: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Individualism or Collectivism Individualistic culture: Each

member of society is primarily concerned with his or her own interest and those of the immediate family.

Collectivist culture: All of society’s members are integrated into cohesive in-groups

Page 53: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Masculinity of Femininity Masculinity

A society in which men are expected to be assertive, competitive, and concerned with material success while women fulfill the role of nurturer and take care of the family

Femininity A society in which the social roles of men

and women overlap, with neither gender exhibiting overly ambitious or competitive behavior

Page 54: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Uncertainty Avoidance The extent to which the members of

a society are uncomfortable with unclear, ambiguous, or unstructured situations.

Page 55: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Environmental Sensitivity The extent to which products must

be adapted to the culture-specific needs of different national markets.P

rod

uct

Ad

ap

tatio

n

High

Low

Environmental SensitivityLow

High

Integrated Circuit

Computer

Food

Page 56: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Impact on Marketing Consumer behavior

Campbell in US VS in Italy Instant coffee in UK VS. in Sweden Cake in US VS. in UK

Personal aspect of international business

Page 57: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Suggested Solutions Stake: expatriate failure averages

$75,000, loss of business: $2.5 billion Research Training in cross-cultural competency

“Boot camp” “International exposure” “Workshop”

Page 58: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The Political, Legal, and Regulatory Environments

of Global Marketing

Page 59: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The Political Environment

Sovereignty Political risk Taxes Dilution of Equity Control Expropriation

Page 60: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Sovereignty The supreme and independent political

authority. Control the flow of goods across borders

Stage of development The political and economical system Protectionism: Agriculture

Privatization dilutes the command portion of a mixed economy

Global market integration erodes national economic sovereignty.

Page 61: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Political Risk The risk of a change in

government policy that would adversely impact a company’s ability to operate effectively and profitably.

HK, Argentina, Venezuela,

Page 62: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Taxes Diverse geographic activities of

MNC Host country tax avoidance Bilateral tax treaties

Page 63: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Dilution of Equity Control Control ownership of foreign-

owned companies. Equity percentage in local projects

or joint ventures Become an insider

Page 64: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Expropriation Governmental action to dispossess

a company or investor. Compensation Nationalization: Ownership of the

property or assets in question is transferred to the host government.

Confiscation

Page 65: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Expropriation Creeping expropriation: limitations on

repatriation of profits, dividends, royalties, or technical assistance fees from local investments or technology arrangements.

Tariff and non-tariff barriers Intellectual property restrictions Remedies: buy insurance, follow the law

Page 66: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

International Law Rules and principles that nation-

states consider binding upon themselves.

Public law, international commercial law

Common law VS code law

Page 67: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Which Law Applies? Be explicit in the contract The place of the domicile or

principal place of business of one of the parties

The place where the contract was entered

The place of performance of the contract

Page 68: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Intellectual Property Patents and Trademarks Registration Protection Counterfeiting: The unauthorized

copying and product of a product. Imitation: Use of a product name that

differs slightly from a well-known brand Piracy: The unauthorized publication or

reproduction of copyrighted work.

Page 69: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Intellectual Property Protection

The Paris Union: International Convention for the Protection of Industrial Property.

The Patent Cooperation Treaty European Patent Convention TRIPs: Trade Related Intellectual

Property Rights

Page 70: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Antitrust To combat restrictive business

practices and to encourage competition.

Consten’s case, Grundig Ruling: “Territorial protection proved

to be particularly damaging to the realization of the common market.”

IBM and Microsoft in Europe

Page 71: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Licensing Licensing is a contractual agreement in which

a licensor allows a licensee to use patents, trademarks, trade secrets, technology, or other intangible assets in return for royalty payments or other forms of compensation.

What assets? At what price? The right to “make”, “use”, or “sell”? Sublicense? “Exclusive or nonexclusive?”

Creation of competitor.

Page 72: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Trade Secrets Confidential information or

knowledge that has commercial value.

TRIPs requires signatory countries to protect against acquisition, disclosure, or use of trade secrets in a manner contrary to honest commercial practices.

Page 73: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Bribery and Corruption

- A World-wide problem

Page 74: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Conflict resolution Litigation Differences in language, legal

systems, currencies, traditional business customs and patterns, discovery procedure, and enforcement.

Complex, time consuming, costly

Page 75: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Arbitration International Chamber of Commerce The New York Convention AAA and China Beijing’s Conciliation

Center. Swedish Arbitration Institute International Council for Commercial

Arbitration UN Conference on International Trade

Law

Page 76: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The Regulatory Environment Governmental and nongovernmental International Economic Organizations Price control, valuation of imports and

exports, trade practices, labeling, food and drug regulations, employment conditions, collective bargaining, advertising content, competitive practices, etc.

Page 77: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Regional Economic Organizations

WTO EU NAFTA ……

Page 78: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Markets and Buyers

Page 79: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Trends of Global Market Markets in almost every world region

are expected growing. The fastest growing markets are the

developing countries. The fastest growing regions in the

developing world are East Asia The fastest growing country in East

Asia is China.

Page 80: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

The BoomCountries 1974-1993 1994-2003Developed Countries 2.9% 2.7%Developing Countries 3.0% 4.8%East Asia 7.5% 7.6%South Asia 4.8% 5.3%Latin America 2.6% 3.4%East Europe 1.0% 2.7%Sub-Saharan Africa 2.0% 3.9%Middle East, North Africa

1.2% 3.8%

Page 81: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Economic Cooperation & Preferential Trade Arrangements

International economic cooperation

Free Trade Area (FTA) Customs Union Common Market Economic Union WTO and GATT

Page 82: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Regional Trade Areas

Chart 1: RTAs in force and under negotiation as of July 2000, by type of RTA

14824

67

1

FTAs in force

CUs in force

FTAs under negotiation

CUs under negotiation

Page 83: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Chart 2: Geographical Distribution of RTAs, both in force and under negotiation

0

20

40

60

80

100

120

Americas Asia Pacif ic Eastern Europe

& Central Asia

Euro-

Mediterranean

Sub-Saharan Cross Regional

Region

Num

ber

of R

TAs FTAs under negotiation

CUs under negotiation

FTAs in force

CUs in force

Page 84: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Free Trade Area (FTA) A group of countries that have

agreed to abolish all internal barriers to trade among themselves.

Certificates of origin

Page 85: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Customs Union Member countries agree to the

establishment of common external barriers.

The Central American Common Market, Southern Cone Common Market (Mercosur), and the Andean Group

Page 86: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Common Market Removal of internal barriers Establishment of external barriers Elimination of barriers to flow of

factors (labor and capital) within the market

Free markets not only for product, but also for services and capital.

Page 87: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Economic Union Creation of a unified central bank; Usage of a single currency-a struggle; Common policies on agriculture, social

services and welfare, regional development, transportation, taxation, competition and mergers

Political unity, a central government;

Page 88: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

From GATT to WTO GATT: A treaty between 125 nations who

agreed to promote trade among members. Trade-disputes settlement, no power of

enforcement WTO: A forum for trade-related

negotiations. A system to settle trade disputes

Service industry: Market-entry barriers in banking, insurance, telecommunications, etc.

Page 89: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Regional Economic Organizations

APEC: Asian Pacific Economic Cooperation

North American Free Trade Agreement Central American Common Market Andean Group Southern Cone Common Market Caribbean Community and Common

Market

Page 90: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Regional Economic Organizations Association of Southeast Asian

Nations The European Union Cooperation Council for the Arab

States of the Gulf Economic community of West

African States South African Development

Coordination Conference

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Page 96: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Marketing Information Systems and

Research

Page 97: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Acquire Global Information Superabundance in developed

countries Scarcity in LDC and

underdeveloped countries Where and how to get the right

information Scanning

Page 98: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Marketing Information System

MIS defined Gathering, analyzing, classifying,

storing, retrieving, and reporting EDI: Electronic Data Interchange Beneton’s MIS Timely, cost-efficiently, actionable

Page 99: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Subject Agenda for a Global MIS

Markets Competition Foreign exchange Prescriptive information Resource information General conditions

Page 100: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Markets Demand estimates Consumer behavior Products Channels Communication media availability

and cost Market responsiveness

Page 101: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Competition Corporate strategies Business strategies Functional strategies

Page 102: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Foreign Exchange Balance of payments Interest rates Attractiveness of country currency Expectations of analysts

Page 103: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Prescriptive Information Laws, regulations, rulings

concerning taxes, earnings, dividends in both hose countries and home country

Page 104: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Resource Information Availability of human, financial,

information, and physical resources

Page 105: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

General Conditions Overall review of sociocultural,

political, technological environments

Page 106: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Scanning Modes Surveillance

Informal information gathering Viewing and monitoring

Search Formal information gathering Investigation and Research

Page 107: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Rule of Thumb Create an efficient and effective

scanning system in both the home country and the host countries

Create a MIS system Expanding information coverage to

other regions of the world

Page 108: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Sources of Marketing Information

Human sources Overseas executives Friends, acquaintances, professional

colleagues, consultants, and prospective new employees

Personal relationship Direct perception

Seeing, feeling, hearing, smelling, or tasting

The design of Lexus

Page 109: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Formal Marketing Research Project-specific, systematic

gathering of data in the search scanning mode.

Identify the research problem Develop a research plan Collect data Analyze data Interpret and report findings

Page 110: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Step 1: Problem Definition A problem well defined is half

solved. Assess the nature of the market

opportunity. Existing Potential

Page 111: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Existing Market Market size, level of demand, rate

of product consumption Self-evaluation: competitiveness,

product appeal, price, distribution, promotional coverage and effectiveness

Page 112: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Potential Market Latent market

Undiscovered segment. Prime move advantage P&G in China

Incipient market Market booms when a particular

economic, technological, political, or sociocultural trend continues.

Page 113: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Step 2: Developing a Research Plan

How much can I get from the information?

How much do I have to spend for the information?

Research objective, methodologies, budgets, time.

Page 114: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Step 3: Data Collection Primary data

Observation Survey research Experiment

Secondary data Internal, external

Page 115: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Observation Method Counting Watching People meter Videotaping Virtual reality

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Survey Method Interviews and Questionnaires

Telephone Interviews Focus Groups Mail Surveys Fax Surveys Online Surveys

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Telephone Interviews Spoken instead of visual Quick, inexpensive Results could be biased Random dialing Answering machines and caller ID

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Personal Interviews Face to face interaction Detailed information Sensitive question Slow Expensive Mall intercepts

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Focus Groups Information-gathering procedure in marketing

research that typically brings together 8 to 12 individuals to discuss a given subject.

Quick and inexpensive Participants interaction Moderator Video taping, one-way mirror,

videoconferencing

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Mail Surveys Low-cost, Anonymity Low response rate, slow Not suitable complex questions Who filled out the questionnaire? Bias due to difference between

respondents and nonrespondents

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Fax Surveys Similar to mail surveys

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Online Surveys Web Survey Email Survey Online focus group Speedy, higher response rates, cost

reduction, truthful answers Probability sample? Groups underrepresented on the

Internet, ownership of computers Authenticity of the respondent

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Experimental Method Scientific investigation in which a

researcher manipulates a test group(s) and compares the results with those of a control group that did not receive the experimental controls or manipulations.

Test marketing Experiment group VS Control group

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Sampling Probability sample Nonprobability sample Sample size Standard statistical test

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Step 4: Data Analysis Demand pattern analysis Income elasticity measurements

Engels’ Law Market estimation by analogy Comparative analysis

Intra-company cross-national comparison

Cluster analysis

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Market Estimation by Analogy Cross-sectional analysis Xa/Ya=Xb/Yb

Xa=demand for product X in country a Ya=factor that correlate with demand

for product X in country a Xb=demand for product X in country b Yb=factor that correlate with demand

for product X in country b.

Page 127: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Market Estimation by Analogy

Displacing a time series Xa1/Ya1=Xb2/Yb2

Xa1=demand for product X in country a during time period 1

Ya1=factor associated with demand for X in country a during time period 1

Xb2=demand for X in country b during time period 2

Yb2=factor correlating with demand for X in country b during time period 2.

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Step 5: Interpreting and Reporting

Clear Concise Actionable Management oriented, no

technical jargons

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Current Issues in Global MR Data availability Data deflation or inflation Comparability Response rate

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Does MR really work? It’s late. I don’t know what I want. Differentiation-Coke VS. Pepsi in

Israel There is no market for fax. Really?

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Integrated MIS Systemize the collection and analysis

of competitive intelligence to serve the needs of the organization as a whole.

Are top executives well informed? Do middle managers fully understand

the competitive situation? Do managers in different functional

areas share intelligence regularly?

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Integrated MIS Does the company encounter

marketing blunders due to lack of intelligence?

Do we have an intranet where every employee can have access to online database?

Overload of data or underload of analysis

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Segmentation, Targeting, and Positioning

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Segmentation & Targeting Segmentation

Division of the total market into smaller, relatively homogeneous groups according to various characteristics.

Global Market Segmentation Targeting

Evaluation the segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond.

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Criteria for Effective Segmentation

The market segment must present measurable purchasing power and size.

Marketers must find a way to effectively promote to and serve the market segment.

Marketers must identify segments sufficiently large to give them good profit potential.

The firm must target a number of segments that match its marketing capabilities.

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Types of Segmentation Geographical Demographical Psychographical Behavioral characteristics Product benefits

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Geographical Segmentation Dividing an overall market into homogeneous

groups on the basis of population locations. Population distribution Wealth distribution Urbanization Climate Food preference Terrain

Page 138: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Demographic Segmentation Dividing consumer groups according to

characteristics such as sex, age, income, occupation, education, household size, and stage in the family life cycle.

Income Gender Age: Cohort effect Education Family Life Cycle

Page 139: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Psychographic Segmentation Dividing a population into homogeneous groups

on the basis of psychological and lifestyle profiles. Lifestyle

People’s decisions about how to live their daily lives, including family, job, social, and consumer activities.

VALS: Values and Lifestyles http://future.sri.com

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Behavior Segmentation Usage rate: Light users, medium

users, heavy users User status: Potential users,

nonusers, ex-users, regulars, first-timers, users of competitors’ products

80/20 rule Brand loyalty

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Global Targeting Evaluating, comparing, and select Criteria for Targeting

Current segment size and anticipated growth potential

Competition Compatibility and feasibility

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Global Target Market Strategy

Standardized global marketing Create the same marketing mix for global

operation. Extensive distribution in the maximum number of retail outlets.

Concentrated global marketing Devise a marketing mix to reach a single

segment of the global market. Differentiate global marketing

Target two or more distinct market segments with different marketing mixes.

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Global Product Positioning The location of your product in the

mind of your customer. Global positioning

Pierre Cardin Audi Ikea

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Positioning Sony: Unit sale: 1 million, Profit: 1

billion RMB. Domestic brands combined:

Market share of color TV: 80%, 90% for DVD; Profit: 0.54 billion.

Changhong: unit sale 7,500,000 Toshiba: unit sale 500,000 Profit: equal

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High Tech Positioning Based on technological features Computers, video and stereo

equipments, automobiles Technical products Special-interest products Products that demonstrate well

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High-Touch Positioning Less emphasis on specialized

information, more on image Products that solve a common

problem Global village products

Global brands Products that use universal themes

Materialism, heroism, recreation, procreation

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Sourcing:Exporting and Importing

Page 148: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Export Selling or Export Marketing

Export selling Does not involve tailoring the marketing

mix to suit the requirements of global markets, only “place” is changed

Export marketing Targets the customer in the context of the

total market environment.

Page 149: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Export Marketing An understanding of the target

market environment The use of marketing research and

the identification of market potential

Decisions concerning with every elements of the marketing mix

Page 150: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Buy Chinese Nationalism Customer value Harley Davidson

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Roles of Global Marketing Strategy

Configuration of marketing Coordination of marketing

activities across countries Tapping opportunities in product

development and R & D

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Sourcing Decision Criteria Factor costs and conditions Logistics Country infrastructure Political risk Market access Exchange rate, availability, and

convertibility of local money

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Factor Costs Land, labor, material, and capital costs Can lower wage rates justify relocation?

VW’s approach and SMH’s approach Availability and abundance Three tiers of manufacturing factor costs Drive direct labor costs down Migration of low factor costs

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Logistics Transportation cost RTAs cut down cost Value chain management Video

Page 155: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Country Infrastructure Power, transportation,

communication, service and component suppliers, labor pool, civil order, effective governance, foreign exchange

Page 156: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Political Risk Changes in government policy

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Market Access Limited market access Buy local, product local, sell local

Page 158: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Foreign Exchange Importance of exchange rate Volatility of exchange rate Alternative country options for

supplying markets Video

Page 159: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Export-Related Problems Logistics

Arranging transportation Transport rate determination Handling documentation Obtaining financial information Distribution coordination Packaging Obtaining insurance

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Servicing Exports Providing parts availability Providing repair service Providing technical advice Providing warehousing

Page 161: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Legal Procedure Government policy Product liability Licensing Customers/Duty

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Sales Promotion Advertising Sales effort Marketing information

Page 163: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Foreign Market Intelligence Locating markets Trade restrictions Competition overseas

Page 164: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

National Policies Governing Exports and Imports

Schizophrenic Encouraging export Restricting imports

Government programs supporting exports

Tariffs Nontariff barriers

Page 165: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Government Programs Supporting Export

Tax incentives Tax exemption or lower tax rate on

export earnings Tax refund

Subsidies Direct or indirect financial contributions

Governmental assistance Information, trade fairs, trade missions

Page 166: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Tariffs Customs duties levied on imported

goods Brussels Tariff Nomenclature (BTN),

1959 The Harmonized Tariff System (HTS),

1989 Export and import classification

number

Page 167: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Non-Tariff Barriers Any measure, other than a tariff, that is a

deterrent or obstacle to the sale of products in a foreign market.

Quotas and trade control Discriminatory procurement policies Restrictive customs procedures Selective monetary controls and

discriminatory exchange rate policies Restrictive administrative and technical

regulations

Page 168: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Quotas and Trade Control Government imposed- limits or

restrictions on the number of units or the total value of a particular product or product category

Page 169: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Discriminatory Procurement Policies

Government rules and administrative regulations, company policies that discriminate against foreign suppliers

Buy American Act

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Restrictive Customs Procedures

Classifying and valuing commodities as a basis for levying import duties

Page 171: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Selective Monetary Controls and Discriminatory Exchange Rate Policies

Discriminatory exchange rate policy

Export deposit

Page 172: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Restrictive Administrative & Technical Regulations

Anti-dumping regulations, size regulations, and safety and health regulations

Japanese restrictive technical regulations

Double standards

Page 173: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Choosing Export Markets Create a product-market profile Potential market size Competitor activities Overall marketing mix Target one or more export markets

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Market Selection Criteria Market potential Market access Shipping cost Potential competition Product fit Service requirements

Page 175: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Visiting the Potential Market

Confirm or contradict assumptions regarding market potential

Gather additional data Develop a marketing plan in

cooperation with the local agent or distributor

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Market Access Considerations Tariff systems Preferential tariffs Duties

Page 177: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Tariff Systems Single column tariff

Tariff schedule in which the duty rate applies to imports from all countries on the same basis

Two-column tariff The initial single column of duties is

supplemented by a second column showing reduced rates as determined through tariff negotiations with other countries (MFN)

Preferential tariff A reduced tariff rate applied to imports from

certain countries

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Types of Duties Ad Valorem Duties Specific Duties Alternative Duties Compound or Mixed Duties Antidumping Duties Countervailing Duties

Page 179: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Ad Valorem Duties Duty is expressed as a percentage

of the value of goods HTS: Customs value is landed CIF

cost at the port of entry

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Specific Duties Duties expressed as a specific

amount of currency per unit of weight, volume, length, or number of other units of measurement.

Page 181: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Alternative Duties Both advalorem and specific duties

are used to calculate the tariff, usually the one that yields the higher amount of duty is chosen

Page 182: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Compound or Mixed Duties Duties provided for specific, plus

ad valorem, rates to be levied on the same articles.

Page 183: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Antidumping Duties Dumping

The sale of merchandise in export markets are unfair prices.

Injury is caused to the domestic producers

Special additional import charges equal to the dumping margin

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Countervailing Duties Additional duties levied to offset

subsidies granted in the exporting country.

Page 185: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Other Import Charges Variable import levies

When the prices of imported products would undercut those of domestic products

Temporary import surcharges Provide additional protection for local

industry in response to balance-of-payments deficits

Compensatory import taxes Value-added tax

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Organizing For Exporting Organizing in the home country Organizing in the target market

country

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Organizing in the Home Country

In-house export organization External independent export

organizations

Page 188: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

In-House Export Organization The company’s appraisal of the

opportunities in export marketing Its strategy for allocating resources

to markets on a global basis

Page 189: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

External Independent Export Organizations

Export trading companies Market information gathering Communication with markets Setting prices Ensuring parts availability

Page 190: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Organizing in the Market Country Direct market representation

Control and communication Independent representation

Small sales volume Find good local distributor

Piggyback marketing Arrangement where by one manufacture

obtains distribution of products through another’s distribution channels.

Page 191: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Export Financing/Methods of Payment

Currency availability in the buyer’s country

Creditworthiness of the buyer Seller’s relationship with the buyer Letter of Credit Documentary Collections

Page 192: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Letter of Credit Assurance of being paid Payment obligation: buyer’s bank

instead of the buyer The documents instead of the

goods

Page 193: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Documentary Collections Bill of exchange (draft) A negotiable instrument which is

easily transferable from one party to another

Page 194: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Counter Trade Alternative finance methods for

international trade other than money Scarcity of hard currency Exchange control Inability to finance imports through

bank loans Barter and mixed forms of counter

trade

Page 195: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Simple Barter Direct exchange of goods and

services between two parties Exchange fluctuation, shadow

price

Page 196: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Counterpurchase Each delivery in an exchange is

paid for in cash Two separate contracts

Page 197: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Compensating Trading Two contracts

The supplier agrees to build a plant or provide plant equipment, patents or technology

The supplier agrees to take payment in the form of the plant’s output equal to its investments

Page 198: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Entry & Expansion

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Entry Decision Process Sourcing Marketing organization Distribution Marketing strategy Strategy implementation

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Ownership & Control

Licensing Joint ventures Investment/

Ownership

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Licensing Contract Patent, trade secret, brand,

trademark, company name, technical know-how

Pros and cons Cross-technology exchange

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Joint Ventures Ownership partition Sharing of risk and competitive

advantage Pros and cons

Page 203: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Ownership/Investment Foreign direct investment 100% ownership; WFOE (wholly

foreign owned enterprise) Acquisition VS. direct expansion

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Expansion Strategies

1Narrow Focus

2Country Focus

3Country

Diversification

4Global

Diversification

Concentration Diversification

Concentration

Diversification

Market

Cou

ntr

y

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Alternative Strategies Stages of development

Domestic International Multinational Global Transnational

Page 206: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Competitive Analysis & Strategy

Page 207: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Forces Influencing Competition

Threats of New Entrants

Rivalry Among Existing Competitors

Threat of SubstituteProducts or Services

Bargaining PowerOf Suppliers

Bargaining PowerOf Buyers

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Threat of New Entrants Economies of scale Product differentiation Capital requirement Switching costs Access to distribution channels Government policy Cost advantages Expected competitor response

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Threat of Substitute Products Availability of substitute products Price

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Bargaining Power of Suppliers Size and number Input importance, differentiation,

switching costs Availability of alternative products Supplier product or brandname

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Bargaining Power of Buyers Bulk purchase Undifferentiated supplier’s

products Portion of cost Backward vertical integration

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Rivalry Among Competitors Mature industry, market share High fixed cost industry Lack of differentiation or absence

of switching cost High strategic stakes in an industry

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National Competitive Advantage

Factor conditions Demand conditions Related and supporting industry Firm structure and rivalry

Page 214: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Factor Conditions Human Physical Knowledge Capital Infrastructure

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Demand Conditions The composition of home demand The size and pattern of growth of

home demand The means by which a nation’s

home demand pulls the nation’s products and services into foreign markets

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Related & Supporting Industries

Value chain Proximity

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Firm Strategy, Structure, and Rivalry

Strategy Structure Domestic rivalry

Page 218: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Other Forces Chance Government Non-market factors

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Competitive Advantage Customer value Competitive advantage Successful strategy

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Models of Competitive Strategy

Generic Business intent

Page 221: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Generic Strategies

Cost Leadership Differentiatio

n

Cost FocusFocused

Differentiation

BroadTarget

NarrowTarget

Lower Cost

Differentiation

Competitive Advantage

Com

petitiv

e

Scop

e

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Cost-Leadership Low-cost producer Broadly-defined markets Experience curve and scale

economy Low prices Barrier

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Differentiation Unique value Broad market Premium price

Page 224: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Focused Differentiation Narrow target market Unique products Premium price

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Cost Focus Narrow market Lower price

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Strategic Position Variety-based positioning Customer-needs-based positioning Customer-access-based positioning

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Strategic Intent

Continuous improvement Continuous innovation Continuous acquisition of

new competitive advantage

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Cooperative Strategies

Page 229: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Cooperative or Competitive? Trade barriers down Markets globalized Consumer needs and wants

converged Product life cycles shortened Business environment: dynamism,

turbulence, unpredictability

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Global Strategic Partnerships Participants remain independent Share of benefits and control Ongoing contribution Mergers, acquisitions, joint

ventures

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GSP Attributes Joint long-term strategy, global

leadership Reciprocal relationship Global vision and efforts Horizontal alliance Vertical alliance Partners as well as competitors

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GSP Success Factors

Mission Strategy Governance Culture Organization Management

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Keiretsu In Japan Cooperative strategy in Japan Interbusiness alliance or enterprise

group Bank-ownership of stocks Cross-ownership of stocks The “big six”

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Implications of Chinese Companies

Launch GSA from home Developing core competitive

advantage Know your partners Be long-term oriented

Page 235: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Product Decisions

Page 236: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Product Defined A bundle of physical, service, and

symbolic attributes designed to enhance buyers’ want satisfaction

Consumer-Business Durable-nondurable

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Products Based on Global Vision

National product International product Global product R & D cost incentive

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Global Brands Guided by the same strategic

principles Same name, similar image Similar positioning Marketing mix may vary

Page 239: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Building Global Brand Strategic branding to long-term

profitability Increasing quality, low price,

communication

Page 240: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Product Positioning Serving a specific market segment by

achieving a certain position in buyers’ minds. Attribute or benefit Quality/Price Use/User

Page 241: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

High-Tech VS. High-Touch High-Tech Positioning

Physical product features Technical information

High-Touch Positioning More on image High-involvement

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Product Design Considerations Preferences Cost Laws and regulations Compatibility Country of origin

Page 243: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Geographic Expansion

2. Product Extension, Communications Adaptation

4. Dual Adaptation

1. Dual Extension 3. Product Adaptation Communication ExtensionProduct

Same Different

Com

mu

nic

atio

n Different

Same

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Pricing Decisions

Page 245: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Price Boundary P=f (C, C, D) Price floor Price ceiling Optimum price

Page 246: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

International Pricing Issues Discount and allowance Price elasticity Government perception Anti-dumping law Fluctuating exchange rates Transportation, channel cost Taxes

Page 247: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Global Pricing Strategies Market Skimming Penetration Pricing Market Holding Cost plus/Price escalation Sourcing

Page 248: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Market Skimming Set a high or premium price relative to

competitive offerings Introduction stage No or limited competition Distinguishing, segmentation based on

price Revenue maximization Demand control

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Penetration Pricing Set a low entry price to secure

market acceptance Entry into another industry Saturate the market Lure customers to new stores Highly elastic demand

Page 250: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Cost Plus/Price Escalation Price=Unit

Cost+shipping+Ancillary+Profit Transportation, duty, distributor

margins and taxes Sourcing Local production and marketing

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Dumping Sale of an imported product at a

price lower than that normally charged in a domestic market or country of origin.

Price, damage, causal effects Uruguay Round GATT Anti-Dumping Agreement (ADA)

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Similar Products Product definition Product differentiation Raw material

Page 253: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Normal Price Market Economy

Market price in domestic market Exporter’s price to a third country Structural price

Non-market Economy Selling price in a substitute country Structural price Price of a third country

Page 254: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Price Determination FOB or CIF? Domestic price

Selling at loss Affiliation, Strategic Alliance

Structural cost Direct inputs, indirect inputs, profits

Export price to a third country Distributor dumping

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Damage Determination Amount of sales of the dumping product Selling price of the dumping product Related economic indicators

Profit margin Price trend Market share Employment rate Usage of the productivity

Page 256: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Causal Effect Voluntary price cut by domestic

manufacturers Dumping caused by other non-

dumping imports Small market share Realistic damage VS. potential

damage

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China: The TARGET 500 cases, 4000 products, $10

billion Export-oriented economy Competing over price Lack of organization Reluctance to respond and defend

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India’s Case

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India’s Case序号

国家或地区 已经作出终裁

已经初裁尚未终裁

已经立案尚未初裁

立案后被中止

总计

1 中国 39 9 1 2 51

2 欧盟 12 5 3 20

3 韩国 15 3 18

4 日本 13 4 17

5 美国 11 4 1 16

6 中国台湾省 10 4 2 16

7 新加坡 2 6 4 2 14

8 俄罗斯 11 11

9 泰国 6 3 9

10 印度尼西亚 6 1 7

其他 81

总计   260

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What Should We Do? What can the government do? What can companies do?

Absence is no rescue! 375% duty on Chinese garlic, Chain effects

Find a good attorney Work with local importers and distributors Stop fighting against each other! Tracking the market Product differentiation Foreign direct investment instead of exporting

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Currency Fluctuations A strong RMB Exchange rate clauses

Exchange rate review period Comparison basis Fluctuation range

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Global Pricing Alternatives Extension/Ethnocentric

Price be the same around the world Importers absorb freight and duties

Adaptation/Polycentric Up to subsidiary managers Gray markets

Invention/Geocentric

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Global Distribution

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Channel of Distribution An organized system of marketing

institutions and their interrelationships that promotes the physical flow of goods and services, along with title that confers ownership, from producer to consumer or business user.

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Flows

Physical flow Title flow Payment flow Information flow Promotion flow

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Channel Objectives Creation of utilities Place Time Form Information

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Global Distribution Barriers

A new market, no direct presence Separation of production and markets Little knowledge of the local

distribution system and distributors Government regulations Bargaining power of the local

distributors

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Forms of Presence Direct involvement

Company-owned or franchised sales force, retail stores, etc

Sales office and sales branch Indirect involvement

Independent agents, distributors, wholesalers or retailers

Title and ownership of goods, commission

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Direct Selling Manufacturer selling direct to the end

customer Door-to-door sales Mail order Telemarketing TV selling Internet selling Manufacture-owned stores

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Marketing Intermediaries A business firm, either wholesaler or retailer, that

operates between producers and consumers or business users, also called a middleman.

Wholesaling intermediary A comprehensive term that describes wholesalers as

well as agents and brokers. Retailer

A marketing intermediary selling goods and services to the ultimate consumer

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Wholesaling Intermediaries Manufacture-owned facilities

Sales branch Sales office

Independent wholesaling intermediaries Merchant wholesalers Agents and brokers

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Distribution Intensity The number of intermediaries through

which a manufacturer distributes its goods. Intensive distribution Selective distribution Exclusive distribution

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Intensive Distribution A channel policy in which a manufacturer of a

convenience product attempts to saturate the market.

Place products or services in as many outlets as possible

Cigarettes, snack foods, gums, candy, soft drinks, household chemicals

Location convenience Coverage and sales

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Selective Distribution A channel policy in which a firm chooses

only a limited number of retailers to handle its product line.

Cost reduction Control over marketing programs Shopping products

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Exclusive Distribution A channel policy in which a firm grants exclusive

rights to a single wholesaler or retailer to sell its products in a particular geographic area.

Automobiles, fitness equipments, specialty products

Loss in coverage, gain in prestige Close cooperation between the

producer and distributor, more control

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Closed Sales Territory An exclusive geographic selling region

defined and enforced by a manufacturer for a distributor.

Distributor competition

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Tying Agreements An arrangement that requires a marketing

intermediary to carry a manufacturer’s full product line in exchange for an exclusive dealership.

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Channel Design Decision Market Product Producer Middlemen Competition

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Customer Factors Number, geographic

distribution, income, shopping habits, promotion sensitivity

Number of customers VS. Number of channel intermediaries

Retailer selling volume or average order size

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Product Factors Degree of standardization Business or consumer Perishable or durable Size Service requirements Technology intensive or not? Unit value

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Producer Factors Resources Specialization Length of product line Channel control or channel power

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Middleman Factors Cherry picking Demand, selling cost, profit

margin, commission Direct first, then through

middleman Subsidize the cost of

distributor’s sales reps

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Competitive Factors Competition intensity

HighShort channel LowLong channel

Goal Market shareLong channel Market penetrationShort channel

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Long Channel Big single order

size Easy account

collection and dispatch

Easy to maintain due to limited number of accounts

Close relationship

Difficulty in market penetration

Blind market spot Low profit margin Less information

about market and customers

Too many stakes on wholesalers

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Short Channel Deep market penetration More control over sales

terminals and marketing programs

High gross profit margin Fast market feedback Less control by

distributors

Big number of orders adds to difficulty of order processing and payment collection

Difficult to maintain and help

Less distributor loyalty due small single order size

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Evaluating The Alternatives

Direct distribution Manufactured owned

sales force Finding, hiring, training,

motivating sales force Rent, utility, deco Dedication Product knowledge Base salary plus 1%

commission Less market access

Independent intermediary

Well trained sales force Big Client base No base salary, 5%

commission Product knowledge Competing products More knowledge and

access to the market

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Criteria Economic criteria Control criteria Adaptability criteria

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Economic Criteria

Sellin

g C

osts

($)

Level of Sales ($)

Independent IntermediaryDirect Distribution

A

$50,000$30,000

$4,000

$75,000

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Control Criteria Wholesaler

Less control Less product technical knowledge Carrying competing brands

Sales Office More control

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Adaptive Criteria Adaptability of the channel Flexibility to respond to market

changes, consumer purchasing pattern changes

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Channel Management Process

Marketing research on target market, competitors, available distributors, media

Determining channel structure; Recruiting and training distributors; Evaluation, negotiation, and signing contracts; Terminal design and development; Promotion, sales assistance, terminal

maintenance; Management, training, adjustment, reward, and

improvement

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Selection Home country’s trade department Home country’s embassy or

consulate in the host country, Business Counselor

Local chamber of commerce or local trade organizations

Local distributor commitment

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Selection Network resource; coverage, depth; Control over price, assortment Terminal and sales force management; Credibility; payment reliability; Service capability; Financial resources; Warehousing and transportation Commitment to the product is the key.

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Terms and Responsibilities Price policy

Price list, schedule of discounts, allowances

Conditions of sales Payment terms, producer guarantees,

Distributors’ territorial rights Performance and cancellation Mutual services and responsibilities

Page 295: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Distributor Evaluation Sales volume Sales increase speed Percentage of product sales of the total

distributor sales; Selling cost against sales Inventory level Number of product lines carried Terminal display and price execution Service provided to downstream

distributors and customers

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Motivating Channel Members

Coercive power Reward power Legitimate power Expert power Referent power

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Producer–Distributor Relationships

Enemies Customers or

clients Partners

Conflict Competition Cooperation

Page 298: Global Marketing Spring 2003 Some Abouts About me About this course About the project About the examination About grading

Trends In Global Distribution

Flattened channel Involve as few intermediaries as possible Short channel preferred

Channel power moving from producers to retailers;

Booming of super-large retail chains and disappearance of small stores

Application of high-tech in physical distribution of goods or services