Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Global Dimensions of Marketing Developed by Cool Pictures and MultiMedia Presentations Copyright © 2003 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Chapter 4

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 1.Describe the importance of international marketing from the perspectives of the individual firm and the nation. 2.Identify the major components of the environment for international marketing. 3.Outline the basic functions of GATT, WTO, NAFTA, the proposed FTAA, and the European Union. 4.Compare the alternative strategies for entering international markets.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Objectives 5.Differentiate between a global marketing strategy and a multidomestic marketing strategy. 6.Describe the alternative marketing mix strategies used in international marketing. 7.Explain the attractiveness of the U. S. as a target market for foreign marketers.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The World’s 10 Largest Marketers RankCompanyCountry of Origin 1ExxonMobilUnited States 2Wal-Mart StoresUnited States 3General MotorsUnited States 4Ford Motor Co.United States 5DaimlerChryslerGermany 6Royal Dutch/ShellBritain/Netherlands 7British PetroleumBritain 8General ElectricUnited States 9MitsubishiJapan 10Toyota MotorJapan RankCompanyCountry of Origin 1Wal-Mart StoresUnited States 2ExxonMobilUnited States 3General MotorsUnited States 4British PetroleumBritain 5Ford Motor Co.United States 6Daimler ChryslerGermany 7Royal Dutch/ShellBritain/Netherlands 8General ElectricUnited States 9Toyota MotorJapan 10CiticorpUnited States

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Warner Lambert A Global Leader in Pharmaceuticals The copy reads: “We’re making the world feel better”

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. To Be Successful Internationally Marketers must do their homework Capitalize on similarities Evaluate all market segments

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Investing in Foreign Market Considerations 1.Demand - Do foreign consumers need the company’s good or service? 2.Competitive environment - How do supplies currently reach the market? 3.Economic environment - What is the state of the nation’s economic health? 4.Social-cultural environment - How do cultural factors affect business opportunities 5.Political-legal environment - Do any legal restrictions complicate entering the market? 6.Technological environment - To what degree are technological innovations used by consumers in the market?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The World’s Most Frequently Spoken Languages Language plays an important role in international marketing Marketers must make sure message is translated and conveys the intended meaning. Abbreviations and slang words and phrases may also cause misunderstandings. RankLanguageNumber of Speakers 1Chinese (Mandarin)1.2 billion 2English478 million 3Hindi437 million 4Spanish392 million 5Russian284 million

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Trade Barriers Fall Into Two Major Categories  Tariffs –Revenue tariffs are designed to raise funds for the importing government. –Protective tariffs, which are usually higher than revenue tariffs, are designed to raise the retail price of an imported produce to match or exceed that of a similar domestic product.  Administrative Barriers range from special permits and detailed inspections requirements to quotas on foreign-made items. –Import quotas limit the number of units of products in certain categories –Embargo—a complete ban on the import of a product. –Exchange control means that firms that gain foreign exchange by exporting must sell foreign currencies to the central bank or other foreign agency and importers must buy foreign currencies from the same organization.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Multinational Economic Integration General Agreement on Tariffs and Trade (GATT). International trade accord that has helped reduce world tariffs World Trade Organization (WTO). Organization that replaces GATT and oversees agreements and makes binding decisions in mediating disputes, and reducing trade barriers. North American Free-Trade Agreement (NAFTA). Accord removing trade barriers among Canada, Mexico, and the United States. Free Trade Area of the Americas (FTAA). Proposed free trade area stretching the length of the entire Western hemisphere and designed to extend free trade benefits to additional nations in North, Central, and South America. European Union (EU). Customs union that is moving in the direction of an economic union by adopting a common currency, removing trade restrictions, and permitting free flow of goods and workers throughout the member nations.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The European Union The treaty of Paris in 1957 created the European Union. At that time there were only six member countries. Today most Western European countries are members. In January of of the EU countries converted to the Euro. What three countries do you think did not convert to the Euro?

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved.  The best known multinational economic community is the European Union.  Fifteen countries belong to the EU.  The EU has 350 million people and combined gross domestic product of $5 trillion. European Union (EU)

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. What Drives Globalization Why Marketers Decide to Go Global Globalization of Customers New customers in Emerging Markets Enhanced Customer Responsiveness Technology Advances Reduced Trade Barriers Globalization of Competitors *Change driven by the customer = 66% Source: Data from ”Shaping the Value Chain for Outstanding Performance,” PricewaterhouseCoopers survey of 200 leading European businesses, found in Fortune, special advertising section, June 26, 2000, p,58.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Steps in Deciding to Market Globally 1.Secure top management’s support. 2.Research the export process and potential markets. 3.Choose from among three basic strategies for entering international markets: Importing Exporting Contractual agreements

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Levels of Involvement in International Marketing

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Multinational Corporations to Global Marketers A multinational corporation is a firm with significant operations and marketing activities outside its home country. International business companies are no longer exclusively U.S. based. Multinationals often employee huge foreign workforces relative to their American staffs. Multinationals have become global corporations that reflect the interdependence of world economies.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Marketing Approaches Two alternative approaches: 1.Global marketing strategy defines a standard marketing mix and implements it with minimal modifications in all foreign markets. 2.Multidomestic marketing strategy assumes that differences between market characteristics and competitive situations in certain nations require firms to customize their marketing decisions to effectively reach individual marketplaces.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Alternative International Product and Promotional Strategies

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. International Distribution Strategy Involves Two Steps 1.The firm must decide on a method of entering the foreign market. 2.It must determine how to distribute the product within the foreign market through that entry channel.

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. The World’s 10 Most Valuable Global Brands Brand Value (in $billions) Source: Data from Interbrand Corp., J.P. Morgan Chase & Co; found in “The Best Global Brands,” Business Week, August 5, 2002, p93. Coca-ColaMicrosoftIBMGEIntelNokiaDisneyMcDonaldsMarlboroMercedes

Copyright © 2004 by South-Western, a division of Thomson Learning, Inc. All rights reserved. Going International Mercedes Benz Earlier it was established that a multinational corporation is a firm with significant operations and marketing activities outside its home country. In how many countries do you think Mercedes Benz does business?