Global Markets and Buyers Class 7

Trends in Global Business Internationalization of U.S. Markets Internationalization of U.S. Business Growth of Regional Trade Areas - EU, NAFTA, AFTA, APEC Move toward free market system by countries in Latin America, Asia, Eastern Europe Large Emerging Markets such as Argentina, China, South Korea, Poland, India Evolving global middle income households GATT and World Trade Organization The TRIAD

Successful Economic Union Requirements Economic Compatibility Political Compatibility Geographic Proximity Social Compatibility Weakness in some must be balanced by strengths in others

Market Groups F Patterns of Multinational Cooperation –Regional Cooperation Groups –Free-Trade Area –Customs Union –Common Market –Political Union

European Trade Areas * Five founding members. **Awaiting membership. ***Seeking membership. Belgium ItalyAustria*Liechtenstein DenmarkLuxembourgFinland*Norway* FranceThe NetherlandsIceland* Sweden* GermanyPortugalSwitzerland GreeceSpain IrelandUnited Kingdom EC Countries andEC Countries and Austria AustriaPoland***Finland FinlandSwedenHungary***Iceland Norway Sweden European Community (EC)European Free Trade Area (EFTA) European Unity (EU)European Economic Area (EEA)

The European Economic Area: EU, EFTA, and Associates ICELAND NORWAY SWEDEN FINLAND DENMARK IRELAND UNITED KINGDOM BELGIUM Netherlands GERMANY FRANCE SPAIN Portugal Switz. ITALY Austria TURKEY GREECE ATLANTIC OCEAN MALTA EU EFTA EC Associated

A Comparison of the EU and NAFTA EU363.3$ 7.79$ 21,442 NAFTA ,662 PopulationGNPGNP (millions)($ trillions)*(per capita)* * U.S. $ 1992.

New Multinational Market Groups or Trading Blocks of the 21st Century l European Union l European Economic Area (EC and EFTA) l North American Free Trade Area l Southern Cone-Mercosur l Asean Free Trade Area (AFTA) l Commonwealth of Independent States (CIS) l Central European Free Trade Area (CEFTA)

Trade Groups around the World F F e/ejsubreg.htm e/ejsubreg.htm

Future (Possible) Multinational Market Groups or Trading Blocks of the 21st Century lWestern Hemisphere Free Trade Areas (WHFTA) Canada to Argentina l Asia-Pacific Economic Cooperation (APEC) Pacific Rim Countries including U.S. l U.S./ Canada/Mexico/Japan l South American Free Trade Area (SAFTA) Andean Pact and Mercosur l Chinese Economic Area (CEA) Hong Kong, Taiwan, Coastal Provinces of So. China l U.S./European Union l Many possibilities of Republics of Russia, Baltic States Possible Regional Trade Groups

Trends sweeping developing countries F Transition from socialist to market-driven economies F Liberalization of trade and investment policies F Transfer of public-sector enterprise to the private sector F Rapid development of regional market alliances

Common Traits of Big Emerging Markets l Are physically large. l Have significant populations. l Represent considerable markets for a wide range of products. l Have strong rates of growth or the potential for significant growth. l Have undertaken significant programs or economic reform. l Are of major political importance within their regions. l Are "Regional Economic Drivers". l Will engender further expansion in neighboring markets as they grow.

Big Emerging Markets Asia China1,188.0$ 435.6$ 367$ Indonesia India South Korea , Latin America Mexico , Argentina , Brazil , Africa South Africa , Europe Poland , Turkey , Possible Additions Colombia , Thailand , Venezuela , Vietnam PopulationGDPGDPTrade* (millions)($ billions)(per capita)($ billions) * Imports and exports. SOURCES: "Big emerging Markets," Business America, Special Issue 1994, pp and for additional information, see "Indicators of Market Size for 115 Countries," Crossborder Monitor, August 31,1994.

Developing an international marketing strategy F Segmenting F Targeting F Positioning

Reasons for Global Market Segmentation F Country Screening F Global Market Research F Entry Decisions F Positioning Strategy F Marketing Mix Policy

Bases for Country Segmentation F Demographics F Socioeconomic Variables –stages of economic development F Per capita income F Culture F Political Conditions F Behavior-Based Segmentation F Life Style

Properties of a Market Segment F Properties –Measurable – Sizable – Accessible –Actionable –Competitive Intensity –Growth Potential

“Think” and “Feel” Country Clusters

Plot of Concentration Versus Category Growth: Chocolate Industry

Chocolate Market Two-Cluster Solution

Chocolate Market Three-Cluster Solution

International Positioning Strategies F Global Positioning and Segmentation Strategies –Universal Segment / Uniform Positioning Theme –Universal Segment / Different Positioning Themes –Different Segment / Different Positioning Themes

Global Positioning & Segmentation Strategies

Bases for Global Segments F Geographic F Demographic F Psychographic F Behavior F Benefits

Average Monthly Expenditures for Chinese Households National and Urban Areas Food (includes eating out)$22.10$38.00 Savings Clothing Child's Education Home (includes Rent & Utilities) Daily Goods other than Food Medical Expenses & Drugs Entertainment NationalUrban Areas SOURCE: Gallup China.

F Life Style Exhibit : Typology of European Car Market

Roper Starch Worldwide Global Study F Shopping Styles –Deal Makers (29%) - love the buying process –Price Seekers (27%) - place primary value on the product that they are buying –Brand Loyalists (23%) - purchase name brands and remain true to them –Luxury Innovators (21%) - seek new, prestigious brands 40,000 consumers in 40 countries

How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

How the World Shops Source: “How the World Shops,” Advertising Age, June 5, 1995, p.3.

Emerging Middle Class F Asian Yuppies - Having it all –Levels of income & purchasing patterns in developing countries v. prosperous economies –Demand for goods in emerging markets v. mature markets è Market segmentation issues