Chapter 1 The Global Marketplace

ROAD MAP: Previewing the Concepts Chapter 1 ROAD MAP: Previewing the Concepts How does the global marketing environment affect a company’s international marketing decisions? Key approaches to entering international markets: How do companies adapt their marketing mixes for international markets? Three major forms of international marketing organization: Export department, international divisions, global organization Professor Takada

Global Marketing in the 21st Century Chapter 1 Global Marketing in the 21st Century The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows. International trade is booming. Global competition is intensifying. Higher risks with globalization. Professor Takada

Global Firm A firm that operates in more than one Chapter 1 Global Firm A firm 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. Professor Takada

Chapter 1 Professor Takada

Major International Marketing Decisions Chapter 1 Major International Marketing Decisions Professor Takada

Four Stages of Internationalization No regular export activities Export via independent agents Establish sales subsidiaries Establish production facilities abroad Professor Takada

Nescafe Markets in Russia Professor Takada

Chapter 1 ROAD MAP: How does the global marketing environment affect a company’s international marketing decisions? International trade system Economic environment Political-legal environment Cultural environment Three key approaches to entering international markets: Exporting, joint venturing, and direct investment How do companies adapt their marketing mixes for international markets? Three major forms of international marketing organization: Export department, international divisions, global organization Professor Takada

Looking at the Global Marketing Environment Chapter 1 Looking at the Global Marketing Environment The International Trade System: Restrictions—tariffs, quotas, embargos, exchange controls, and non-tariff trade barriers. The World Trade Organization and GATT: Helps Trade—reduces tariffs and other international trade barriers. Regional Free Trade Zones: Groups of nations organized to work toward common goals in the regulation of international trade. Professor Takada

Regional Free Trade Zones European Union NAFTA MERCOSUL APEC Professor Takada

Industrial Structure Income Distribution Chapter 1 Industrial Structure Shapes a country’s product and service needs, income levels, and employment levels. Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrial Economies Income Distribution Professor Takada

Political-Legal Environment Chapter 1 Political-Legal Environment Attitudes Toward International Buying Government Bureaucracy Political Stability Monetary Regulations Professor Takada

Chapter 1 Cultural Environment Sellers must examine the ways consumers in different countries think about and use products before planning a marketing program. Business norms vary from country to country. Companies that understand cultural nuances can use them to advantage when positioning products internationally. Professor Takada

Chapter 1 Cultural Differences When Nike learned that this stylized “Air” logo resembled “Allah” in Arabic script, it apologized and pulled the shoes from distribution. Professor Takada

Cultural Dimensions Individualism vs. Collectivism High vs. Low Power Distance Masculine vs. Feminine Weak vs. Strong Uncertainty Avoidance Professor Takada

Deciding Whether to Go Global Chapter 1 Deciding Whether to Go Global Reasons to consider going global: Foreign attacks on domestic markets Foreign markets with higher profit opportunities Stagnant or shrinking domestic markets Need larger customer base to achieve economies of scale Reduce dependency on single market Follow customers who are expanding Professor Takada

Deciding Which Markets to Enter Chapter 1 Deciding Which Markets to Enter Before going abroad, the company should try to define its international marketing objectives and policies. What Volume of Foreign Sales is Desired? How Many Countries to Market In? What Types of Countries to Enter? Choose Possible Countries and Rank Based on Market Size, Market Growth, Cost of Doing Business, Competitive Advantage, and Risk Level Professor Takada

Chapter 1 Colgate Goes to China Using aggressive promotional and educational programs, Colgate has expanded its market share from 7% to 35% in less than a decade. Professor Takada

Chapter 1 ROAD MAP: How does the global marketing environment affect a company’s international marketing decisions? Key approaches to entering international markets How do companies adapt their marketing mixes for international markets? Three major forms of international marketing organization: Export department, international divisions, global organization Professor Takada

Five Modes of Entry into Foreign Markets Indirect exporting Direct exporting Licensing Joint ventures Direct investment Commitment, Risk, Control, Profit Potential Professor Takada

Direct Exporting Methods Domestic-based export department Overseas sales branch or subsidiary Traveling export sales representatives Foreign-based distributors or agents Professor Takada

McDonald’s Franchises Are Sold Worldwide Professor Takada

Market Entry Strategies Chapter 1 Market Entry Strategies Joint Venturing: Licensing Budweiser-Kirin in Japan; E*TRADE in Canada, Australia/NZ, and France; Tokyo Disneyland-Oriental Land Co. Contract manufacturing Sears in Mexico and Spain Management contracting Hilton Joint ownership KFC-Mitsubishi Professor Takada

Chapter 1 ROAD MAP: How does the global marketing environment affect a company’s international marketing decisions? Three key approaches to entering international markets: Exporting, joint venturing, and direct investment How do companies adapt their marketing mixes for international markets? Standardized-adapted marketing mix: Product Promotion Pricing Channel Three major forms of international marketing organization: Export department, international divisions, global organization Professor Takada

Deciding on the Global Marketing Program Chapter 1 Deciding on the Global Marketing Program Standardized Marketing Mix: Selling largely the same products and using the same marketing approaches worldwide. Adapted Marketing Mix: Producer adjusts the marketing mix elements to each target market, bearing more costs but hoping for a larger market share and return. “Think globally but act locally.” A balance between standardization and adaptation. Professor Takada

Marketing Mix Adaptation Chapter 1 Marketing Mix Adaptation In India, McDonald’s serves chicken, fish, and vegetable burgers, and the Maharaja Mac—two all-mutton patties, special sauce, lettuce, cheese, pickles, onions, on a sesame-seed bun. Professor Takada

Five Global Product and Promotion Strategies Chapter 1 Five Global Product and Promotion Strategies Kellogg cereals, Gillette razors, IBM PC, Heineken beer, Nokia cellular phone, Hyatt Hotels, L’Oreal Professor Takada

Global Promotion Strategies Chapter 1 Global Promotion Strategies Can use a standardized theme globally, but may have to make adjustments for language or cultural differences. Communication Adaptation: Fully adapting an advertising message for local markets. Changes may have to be made due to media availability. Professor Takada

Communications Communications adaptation Dual adaptation Professor Takada

Global Pricing Strategies Chapter 1 Global Pricing Strategies Companies face many problems in setting their international prices. Possible approaches include: Charge a uniform price all around the world. Charge what consumers in each country will pay. Use a standard markup of costs everywhere. International prices tend to be higher than domestic prices because of price escalation. Companies may become guilty of dumping –a foreign subsidiary charges less than its costs or less than it charges in its home market. Professor Takada

International Pricing Chapter 1 International Pricing Twelve European Union countries have adopted the euro as a common currency, creating “pricing transparency” and forcing companies to harmonize their prices throughout Europe. Professor Takada

Whole-Channel Concept for International Marketing Chapter 1 Whole-Channel Concept for International Marketing Professor Takada

Country of Origin Effects Professor Takada

EU’s PDO and PGI Listings Professor Takada

ROAD MAP: Three major forms of international marketing organization: Chapter 1 ROAD MAP: How does the global marketing environment affect a company’s international marketing decisions? Three key approaches to entering international markets: Exporting, joint venturing, and direct investment How do companies adapt their marketing mixes for international markets? Three major forms of international marketing organization: Export department International divisions Global organization Professor Takada

Deciding on the Global Marketing Organization Chapter 1 Deciding on the Global Marketing Organization Organize an export department Create international divisions Geographical organizations World product groups International subsidiaries Become a global organization Professor Takada

Global Organization Strategies Chapter 1 Global Organization Strategies World as Single Market Multinational “Glocal” Click on the video icon to launch a video snippet about Nivea’s philosophy on international marketing. Professor Takada

Rest Stop: Reviewing the Concepts Chapter 1 Rest Stop: Reviewing the Concepts Discuss how the international trade system, economic, political-legal, and cultural environments affect a company’s international marketing decisions. Describe three key approaches to entering international markets. Explain how companies adapt their marketing mixes for international markets. Identify the three major forms of international marketing organization. Professor Takada