21 Tapping into Global Markets

Chapter Questions What factors should a company review before deciding to go abroad? How can companies evaluate and select specific foreign markets to enter? What are the differences between marketing in a developing and a developed market? What are the major ways of entering a foreign market? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-2

Chapter Questions To what extent must the company adapt its products and marketing program to each foreign country? How do marketers influence country-of-origin effects? How should the company manage and organize its international activities? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-3

What is a Global Firm? A global firm is one that operates in more than one country and captures R&D, production, logistical, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors. Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-4

Major Decisions in International Marketing Deciding whether to go Deciding which markets to enter Deciding how to enter Deciding on the marketing program Deciding on the marketing organization Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-5

Reasons for Pursuing Global Markets Better profit opportunities Larger customer base to achieve economies of scale Less dependence on any one market Desire to counterattack global competitors in their home markets Customers require international service Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-6

Risks to Going Abroad Lack of knowledge of foreign culture Lack of understanding of foreign needs Lack of understanding of foreign regulations Lack of managers with international expertise Changes in the country environment Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-7

Four Stages of Internationalization Stage 1: No regular export activities Stage 2: Export via independent agents Stage 3: Establish sales subsidiaries Stage 4: Establish production facilities abroad Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-8

Momentum in Market Entry Waterfall Approach Sprinkler Approach Born Global Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-9

Local Dynamos Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-10

Regional Free Trade Zones European Union NAFTA MERCOSUL APEC ASEAN Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-11

Key Emerging Markets Brazil Russia India China Indonesia South Africa Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-12

Five Modes of Entry into Foreign Markets Indirect exporting Direct exporting Licensing Joint ventures Direct investment Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-13

Indirect Exporting Methods Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-14

Direct Exporting Methods Domestic-based export department Overseas sales branch or subsidiary Traveling export sales representatives Foreign-based distributors or agents Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-15

Licensing Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-16

Joint Ventures Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-17

Direct Investment Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-18

Table 21.2 Global Marketing Advantages Economies of scale Lower marketing costs Power and scope Consistency in brand image Ability to leverage Uniformity of marketing practices Disadvantages Differences in consumer needs, wants, usage patterns Differences in consumer response to marketing mix Differences in brand development process Differences in environment Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-19

Cultural Dimensions Individualism vs. collectivism Masculine vs. feminine High vs. low power distance Weak vs. strong uncertainty avoidance Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-20

What Marketing Aspects Might Be Adapted for International Marketing? Product features Labeling Colors Materials Sales promotion Advertising media Brand name Packaging Advertising execution Prices Advertising themes Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-21

Commandments of Global Branding Understand similarities and differences in the global branding landscape Do not take shortcuts in brand building Establish a marketing infrastructure Embrace integrated marketing communications Establish brand partnerships Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-22

Commandments of Global Branding Balance standardization and customization Balance global and local control Establish operable guidelines Implement a global brand-equity measurement system Leverage brand elements Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-23

Figure 21.3 Five International Product and Communication Strategies Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-24

Levels of Product Adaptation Production of regional product versions Production of country versions Production of city versions Production of retailer versions Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-25

Price Choices Set a uniform price everywhere Set a market-based price in each country Set a cost-based price in each country Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-26

What is a Gray Market? A gray market consists of branded products diverted from normal or authorized distributions channels in the country of product origin or cross international borders; dealers in lower priced countries sell products in higher priced countries Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-27

Whole-Channel Concept for International Marketing Seller International headquarters Channels between nations Channels within nations Final buyers Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-28

Country of Origin Effects Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-29

The Marketing Organization Export Departments International Divisions Global Organization Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-30

For Review What factors should a company review before deciding to go abroad? How can companies evaluate and select specific foreign markets to enter? What are the differences between marketing in a developing and a developed market? What are the major ways of entering a foreign market? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-31

For Review To what extent must the company adapt its products and marketing program to each foreign country? How do marketers influence country-of-origin effects? How should the company manage and organize its international activities? Copyright © 2011 Pearson Education, Inc.  Publishing as Prentice Hall 21-32