Principles of Marketing - UNBSJ BA 2303 Principles of Marketing - UNBSJ Reaching Global Markets Instructor – Terry Conrod

Learning Objectives BA 2303 Describe the scope and nature of world trade from a global perspective and its implications for Canada. Identify the major trends that have influenced the landscape of global marketing. Identify the environmental factors that shape global marketing efforts. Name and describe the alternative approaches companies use to enter global markets. Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

DYNAMICS OF WORLD TRADE BA 2303 DYNAMICS OF WORLD TRADE World Trade Global Perspective Countertrade Trade Feedback Effect Canadian Perspective Gross Domestic Product (GDP) Balance of Trade

BA 2303 Illustrative world trade flows for manufactured goods and commodities (billions of dollars)

Porter’s “diamond” of national competitive advantage BA 2303 Porter’s “diamond” of national competitive advantage Competitive Advantage of Nations Factor conditions Demand conditions Related supporting industries Company strategy, structure, and rivalry

What is the trade feedback effect? Concept Check What is the trade feedback effect? Answer: The trade feedback effect is when a country's imports affect its exports and exports affect its imports.

BA 2303 Concept Check What variables influence why some companies and industries in a country succeed globally while others lose ground or fail? Answer: According to Michael Porter, they include: • Factor conditions, such as natural resources • Demand conditions • Related and supporting industries • Company strategy, structure and rivalry

MARKETING IN A BORDERLESS ECONOMIC WORLD BA 2303 MARKETING IN A BORDERLESS ECONOMIC WORLD Decline of Economic Protectionism Protectionism Tariffs Quota World Trade Organization

How protectionism affects world trade BA 2303 How protectionism affects world trade

MARKETING IN A BORDERLESS ECONOMIC WORLD BA 2303 MARKETING IN A BORDERLESS ECONOMIC WORLD Rise of Economic Integration European Union North American Free Trade Agreement Other Trade Agreements

MARKETING IN A BORDERLESS ECONOMIC WORLD BA 2303 MARKETING IN A BORDERLESS ECONOMIC WORLD A New Reality: Global Competition among Global Companies for Global Customers Global Competition Strategic alliances Global Companies Multi-domestic marketing strategy Global marketing strategy Global Brand Global Consumers Emergence of Networked Global Marketplace

Concept Check What is protectionism? Answer: BA 2303 Concept Check What is protectionism? Answer: Protectionism is the practice of shielding one or more sectors of a country's economy from foreign competition through the use of tariffs or quotas.

BA 2303 Concept Check Among which countries was the North American Free Trade Agreement was designed to promote free trade? Answer: The North American Free Trade Agreement (NAFTA), effective since 1994, lifted many trade barriers between Canada, the United States, and Mexico.

BA 2303 Concept Check What is the difference between a multidomestic marketing strategy an a global marketing strategy? Answer: Multidomestic marketing strategy is a multinational firm's offering as many different product variations, brand names, and advertising programs as countries in which it does business. A global marketing strategy is the standardization of marketing activities when there are cultural similarities and adopting them when culture differ.

A GLOBAL ENVIRONMENTAL SCAN Cultural Diversity Cross-cultural analysis Values Customs Cultural Symbols Semiotics Language Back translation Cultural ethnocentricity Consumer ethnocentrism

A GLOBAL ENVIRONMENTAL SCAN Economic Considerations Stage of Economic Development Economic Infrastructure Consumer Income and Purchasing Power Currency exchange rates Political-Regulatory Climate Political Stability Trade Regulations

How purchasing power differs around the world BA 2303 How purchasing power differs around the world

Semiotics involves the study of: BA 2303 Concept Check Semiotics involves the study of: Answer: Cultural symbols and their role in the assignment of meaning for people.

BA 2303 Concept Check When foreign currencies can buy more Canadian dollars, are Canadian products more or less expensive for a foreign consumer? Answer: Canadian products are less expensive for a foreign consumer when foreign currencies can buy more Canadian dollars.

GLOBAL MARKET-ENTRY STRATEGIES

BA 2303 Concept Check What mode of entry could a company follow if it has no previous experience in global marketing? Answer: Indirect exporting is ideal for the company that has no overseas contacts but wants to market abroad.

How does licensing differ from a joint venture? BA 2303 Concept Check How does licensing differ from a joint venture? Answer: Licensing is a contractual agreement whereby a company allows another firm to use its brand name, patent, trade secret, or other property for a royalty fee. A joint venture is an arrangement in which a foreign company and a local firm invest together to create a local business, sharing ownership, control, and profits of the new company.

CRAFTING A WORLDWIDE MARKETING PROGRAM BA 2303 CRAFTING A WORLDWIDE MARKETING PROGRAM Product and Promotion Strategies Product extension Product adaptation Product invention

Five product and promotion strategies for global marketing

CRAFTING A WORLDWIDE MARKETING PROGRAM BA 2303 CRAFTING A WORLDWIDE MARKETING PROGRAM Distribution Strategy Pricing Strategy Dumping Grey market

Channels of distribution in global marketing

Products may be sold globally in three ways. What are they? Concept Check Products may be sold globally in three ways. What are they? Answer: The three ways products may be sold globally are: (1) Product extension, (2) Product adaptation, and (3) Product invention.

Concept Check What is dumping? Answer: BA 2303 Concept Check What is dumping? Answer: Dumping is when a firm sells a product in a foreign country below its domestic price or below it actual cost.

BA 2303 Countertrade Countertrade is the process of using barter rather than money for making global sales.

BA 2303 Trade Feedback Effect The trade feedback effect is the phenomenon of imports affecting exports and vice versa.

Gross Domestic Product BA 2303 Gross Domestic Product The gross domestic product is the monetary value of all goods and services produced in a country during one year.

BA 2303 Balance of Trade The difference between the monetary value of a nation’s exports and imports is called the balance of trade.

BA 2303 Protectionism Protectionism is the practice of shielding one or more sectors of a country’s economy from foreign competition through the use of tariffs or quotas.

BA 2303 Tariffs Tariffs are a government tax on goods and services entering a country.

BA 2303 Quota A quota is a restriction placed on the amount of a product allowed to enter or leave a country.

BA 2303 Global Competition Global competition exists when firms originate, produce, and market their products and services worldwide.

BA 2303 Strategic Alliances Global strategic alliances are agreements among two or more independent firms to co-operate for the purpose of achieving common goals.

Multidomestic Marketing Strategy BA 2303 Multidomestic Marketing Strategy Multinationals using a multidomestic marketing strategy have as many different product variations, brand names, and advertising programs as countries in which they do business.

Global Marketing Strategy A global marketing strategy is the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

BA 2303 Global Consumers Global consumers consist of customer groups living in many countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

Cross-Cultural Analysis BA 2303 Cross-Cultural Analysis A cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies.

BA 2303 Customs Customs are the norms and expectations about the way people do things in a specific country.

BA 2303 Cultural Symbols Cultural symbols are things that represent ideas and concepts.

BA 2303 Semiotics Semiotics is concerned with the correspondence between symbols and their role in the assignment of meaning for people.

BA 2303 Back Translation In back translation, a translated word or phrase is retranslated into the original language by a different interpreter.

Consumer Ethnocentrism BA 2303 Consumer Ethnocentrism Consumer ethnocentrism is the tendency to believe that is inappropriate or immoral to purchase foreign- made products.

Currency Exchange Rate BA 2303 Currency Exchange Rate A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency.

BA 2303 Exporting Exporting is producing goods in one country and selling them in another.

BA 2303 Joint Venture When a foreign company and a local firm invest to create a local business, it is called a joint venture.

BA 2303 Direct Investment Direct Investment entails a domestic firm actually investing in and owning a foreign subsidiary or division.

BA 2303 Dumping Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost.

BA 2303 Grey Market A grey market is a situation where products are sold through unauthorized channels of distribution.

BA 2303 Global Brand A brand marketed under the same name in multiple countries with similar and centrally co-ordinated marketing programs.

BA 2303 Licensing Offering the right to a trademark, patent, trade secret, or other similarly valued items of intellectual property in return for a royalty or a fee.