Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Chapter 18 The Global Marketplace

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Found in 1956 in Florenceville, N.B. Global leader among food processors Produces about 1/3 of the french-fried potatoes produced internationally World’s largest french fry supplier to McDonald’s preferred by Jollibee and Burger King Employs 20,000 people, generated $5.71 billion in revenues in 2005 selling products in more than 110 countries Winner of Canada’s export awards two times Ships hundreds of millions of kgs. of frozen product a year customized for local tastes and requirements Use imports from Canada to build its Chinese business Establish in-country operations after careful research and experimentation Worked closely with the Chinese government when entering into China Similar tactics in India. Case Study McCain Foods Limited

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Global Marketing in the 21 st Century The world is shrinking International trade is booming Cultural diversity is a reality of our major cities: Montreal, Toronto, Vancouver. The scope of every manager is the world Global competition is intensifying

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Global Marketing in the 21 st Century Many companies have made the world their market

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Definitions Globalization –The growing integration of economies and societies around the world Global Firm –A firm that, by operating in more than one country, gains R&D, production, marketing, and financial advantages in its costs and reputation that are not available to purely domestic competitors.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Major Decisions in International Marketing A company faces six major decisions in international marketing

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Looking at the Global Marketing Environment The International Trade System –Tariffs, quotas, embargos, exchange controls, nontariff trade barriers –World Trade Organization and GATT –Regional economic communities or free trade zones EU - European Union NAFTA - North American Free Trade Agreement MERCOSUR Other free trade areas

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Looking at the Global Marketing Environment Economic Environment –Industrial structure Subsistence economies Raw material exporting economies Industrializing economies Industrial economies –Income distribution

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Looking at the Global Marketing Environment Political-Legal Environment –Attitudes toward international buying –Government bureaucracy –Political stability –Monetary regulations Exchange rates, exchange controls, etc. –Countertrade Barter, compensation/buyback, counterpurchase

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Looking at the Global Marketing Environment Cultural Environment –Impact of Culture on Marketing Strategy Cultural traditions, preferences, business norms and behavior vary from country to country. –Impact of Marketing Strategy on Cultures Exposure to foreign products and media cause changes in values, much to the chagrin of some within local markets “Globalization” or “Americanization”

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Not all companies need to venture into international markets –The domestic marketplace is easier and safer However, companies need to monitor international businesses Deciding Whether to Go International

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Several factors may drawn a firm into the international arena –Growth opportunities outside of domestic markets –As a counterattack against competition at home –Reduce dependence on existing markets –Need a larger customer base to achieve economies of scale The company needs to evaluate its abilities and the consumer and business environments in other countries Deciding Whether to Go International

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Before going abroad: –Define international marketing objectives and polices, and foreign sales volume goals –Decide how many countries to target –Evaluate the countries’ attractiveness based on the product, cultural distance, income and population, political climate, and other factors such as: market size, market growth, cost of doing business, competitive advantage, etc. –Rank each of the possible international markets Deciding Which Markets to Enter

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding Which Markets to Enter Possible global markets should be ranked on several factors.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding Which Markets to Enter In 1983 Domino’s opened its first international store in Canada, then Australia In 1985 Asia and England In 1988 Colombia Domino’s continues to grow its international locations with more than 2000 stores outside the U.S. How do you think Domino’s chooses its countries? ??

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Market Entry Strategies The company must determine the best mode of entry. Each subsequent entry strategy involves more commitment and risk, but also more control and potential profits.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Exporting –Direct vs. indirect Joint Venturing –Licensing, contract manufacturing, management contracting, joint ownership Direct Investment –Assembly facilities, manufacturing facilities Deciding How to Enter the Market

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Program The decision on the global marketing program is a constant search for a balance between standardization and adaptation. Marketers suggest that companies should “think globally but act locally” and advocate a “glocal” strategy.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Program Standardized Marketing Mix –Same basic product, advertising, distribution, and other elements of the marketing mix are used in all international markets. Adapted Marketing Mix –The marketing mix elements are adjusted for each international target market.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Program Global Promotion Strategies –Standardized global communication Advertising themes are standardized from country to country with slight modifications –Communication adaptation Advertising messages are fully adapted to local markets

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Program Global Pricing Strategies –Companies face many problems Price escalation Pricing to foreign subsidiaries Recent economic and technological forces The Internet

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Program Global Distribution Channels –Whole-channel view Seller’s headquarters organization Channels between nations Channels within nations Numbers and types of intermediaries Size and character of retail units abroad

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Deciding on the Global Marketing Organization Managing International Marketing Activities –Step 1: Organize export department –Step 2: Create an international division –Step 3: Become a global organization

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition International Marketing Organizations International division organizations –Geographical organization –World product groups –International subsidiaries

Copyright © 2008 Pearson Education CanadaPrinciples of Marketing, Seventh Canadian Edition Learning Goals 1.Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. 2.Describe three key approaches to entering international markets. 3.Explain how companies adapt their marketing mixes for international markets. 4.Identify the three major forms of international marketing organizations.