DESIGNING GLOBAL MARKET OFFERINGS CHAPTER 12 DESIGNING GLOBAL MARKET OFFERINGS

IMPORTANT TOPICS OF THIS CHAPTER Factors to Consider Before Going Global Selecting Foreign Markets Foreign Market Entry Product Adaption for Global Marketing Management & Organization of Global Activities

DECIDING TO GO ABROAD Attractiveness of Global Market: Counter attack strategy Profit opportunities in Global market Market development opportunities Larger market share More independence and flexibility Possible Risks in Global Market: Cultural differences in needs/wants Differences in business culture Strict regulations and bureaucracy Lack of experience

DECIDING TO GO ABROAD (CONT) Challenges in Global Market Unstable governments Foreign-exchange problems Tariff and other trade barriers Corruption and bribery Technological pirating High cost of product and communication adaptation Lack of managers with international experience

DECIDING WHICH MARKETS TO ENTER Few countries Many countries: obstacles: high cost population size and income competition Country attractiveness: geographic factor income and population political climate and product choice

DECIDING WHICH MARKETS TO ENTER (C0NT.) Regional Free trade Zones: EU: Single largest market. Most important trade partner for the USA. Reduce barriers for free flows of products, services and employment. Common currency (Euro dollar). Larger European companies. Airbus. NAFTA

DECIDING HOW TO ENTER Exporting: Direct: Domestic base Overseas sales branch Traveling sales representative Foreign-based distributors/agent Indirect-occasional, or active exporting: Domestic-based export merchant Domestic-based export agent Cooperative organizations Export-management company

DECIDING HOW TO ENTER (CONT.) Licensing: Little risk. Controlling problems. Implementation: Management contract. Contract manufacturing. Franchising. Joint Ventures: Necessary for economic and political reasons.

DECIDING HOW TO ENTER (CONT.) Direct Investment: Cheaper labor, raw materials and government incentives. Creates better image. Deeper relationships with government, customers, suppliers and distributors. Full control of operations and market . Force to purchase more domestic parts and materials. Risks involved: Economic difficulties of the host country Political instability and negative perception

DECIDING HOW TO ENTER (CONT.) The Internalization Process: Sponsored by the government policy: Steps to follow: No export activities Exporting via independent local agents. Establishing sales subsidiaries. Establishing production facilities abroad.

DECIDING ON THE MARKETING PROGRAM Standardized Marketing Mix: Product: Straight extension. Product adaptation: Regional version, country version, city version, and retailer version. Product invention: Backward. Forward. Promotion: Communication adaptation. Dual adaptation.

Five International Product and Promotion Strategies Straight extension Do not change product promotion Develop new product Product invention Product adaptation Adapt product Communi- cation adaptation Adapt promotion Dual adaptation

DECIDING ON THE MARKETING PROGRAM (CONT.) Price: Setting uniform price everywhere. Setting a market-base price in each country. Setting a cost-base price in each country. Setting transfer price: Higher price: Higher income tax Lover price: Price dumping Arm-length price: Competitors price. Gray market price.

DECIDING ON THE MARKETING PROGRAM (CONT.) Place: International marketing headquarters Channels between nations Channels within foreign nation

DECIDING ON THE MARKETING ORGANIZATION Export Department International Division: Geographical organizations: Asia, Europe, etc. World product groups: International vice-president International subsidiaries Global Organizations: Managing across borders: Global strategy: Single market strategy. Multinational strategy: Strong national response. Glocal strategy: Some adaptation.

EUROPEAN UNION European Market In 1993, 12 nations (England, Germany, France, Ireland, Italy, Spain, Portugal, Greece, Holland, Belgium,Denmark, Luxembourg.). 320 million people. In 1995, 15 nations(Austria, Sweden and Finland), 360 million people. Worth of 4 trillion dollars business opportunities. US is selling more than 500 billion dollars of goods, and has surplus.

EUROPEAN UNION (CONT.) Problems: Consumers do not have uniform patterns and homogenous preferences because of differences in cultures, languages and economic situations. The EU now is more accessible, but it will not be the single national market. Governments con not make markets. If they do, 360 million euro-consumers should suddenly be transforming into 360 million Euro-clones, drinking Euro-beer, eating euro-hamburger, and watching Euro-satellite television

EUROPEAN UNION (CONT.) Expectations: Advantages: More centralized purchasing and uniform pricing strategy. Singular patent system(certification) throughout Europe. Centralized R&D effort. Implementation of European EAN system similar to UPC codes in the US. Advantages: Elimination of border control helps to save transportation cost. Develop effective linkage with all the members Saving and reducing the Value Added Tax (VAT) and different tax rates.

EUROPEAN UNION (CONT.) Challenges: Cultural and language differences. Large number of privately owned firms. Dissimilarity among the members of the EC about the way products are viewed. Realign the currency-European Currency Unit(UCU). Control Inflation. Reduce Unemployment. Re-establish strong economic base for all the members.