© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Chapter 8: Global Markets and International Marketing Pride/Ferrell Foundations of Marketing Fourth Edition Prepared by Milton Pressley University of New Orleans

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Objectives 1.Understand the nature of global markets and international marketing. 2.Analyze the environmental forces affecting international marketing efforts. 3.Identify several important regional trade alliances, markets, and agreements. 4.Examine methods of involvement in international marketing activities. 5.Recognize that international marketing strategies fall along a continuum from customization to globalization.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Global Marketing Strategies Developing and performing marketing activities across national boundaries –Provides growth opportunities –Promotes innovation –Fosters marketing of better, less expensive products The International UPS Market Once you connect to the UPS home site, you then have to select your country of service 

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Nature of Global Marketing Strategy International Marketing This Spanish-language ad for Bounty paper towels is part of an extensive international marketing program.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Environmental Forces in International Markets Sociocultural Economic Political, legal and regulatory Ethical and social responsibility Competitive Technological

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Sociocultural Forces Focus of marketing within global market –Language, Symbols –Social norms, values, perceptions Family, religion, education, health and recreation –Negotiations and decision-making –Influences on product acceptance Cultural Differences Kellogg’s is using cultural differences in breakfast food consumption here.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Economic Forces Economic Differences Affecting International Marketing –Standards of living –Credit –Buying power –Income distribution –National resources –Exchange rates Gross Domestic Product (GDP) –measures the value of goods and services produced or provided in any given year & is the best-recognized measure of economic performance in the world

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Comparative Analysis of Selected Countries

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Political, Legal, and Regulatory Forces Trade Restrictions Affecting International Marketing –Import tariff duty on imports –Quota limit on amount of goods a country will accept –Embargo governments suspension of trade w/ a product or country –Exchange controls governments restriction of currency exchange Balance of Trade –difference between nation’s exports & imports –US Trade TickerUS Trade Ticker

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Embargo Information Click on symbol below to see the convenient online guide to international shipping maintained by UPS. It includes a country-by-country listing of embargoed items.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Social Responsibility and Ethics Forces Some companies establish ethics programs and standards for international business conduct. –intellectual property –labor conditions –payoffs and bribes –tips and gifts Self-reference criterion –influence of one's culture on the behavior in a given situation. When put in a situation people tend to respond in a way that is closely associated with their culture

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Perceptions of the Least and Most Corrupt Countries

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Competitive Forces attend to competitive forces in target countries identify the interdependence of global competitors be mindful of global customer

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. A Ranking of the Most Competitive Countries in the World

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Competitive Forces Staying Ahead of the Competition AT&T’s extensive global network provides a competitive advantage.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The World’s Top Ten Most Admired Companies

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. CompanyIndustryOverall Score 3MMedical & Other Precision Equipment6.96 AetnaHealth Care: Insurance Managed Care7.39 AflacInsurance: Life and Health6.68 AlcoaMetals7.05 Anheuser-BushBeverages7.50 AramarkDiversified Outsourcing Services6.62 Archer Daniels Midland Food Production7.06 AT&TTelecommunications7.05 AvnetWholesalers: Electronics6.97 Bank of AmericaMegabanks6.69 Most Admired Firms by Industry Source: mpions/ (accessed Sept. 13, 2009) mpions/ See Complete List at 

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Click On Symbol Below To See Additional Lists, Including: –Most Admired Companies by Location Region –Americas –Europe –Asia/Australia –Top 10 for Financial Soundness –Best & Worst in Innovation More Lists

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Technological Forces Advances in technology have advanced international marketing –Voice mail – –Fax –Cellular phones –The Internet –Others?

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Regional Trade Alliances, Markets, and Agreements North America Free Trade Agreement (NAFTA) The European Union (EU) The Common Market of the Southern Cone (MERCOSUR) Asia-Pacific Economic Cooperation (APEC) The World Trade Organization (WTO) Various regional trade alliances and specific markets create opportunities or impose constraints on companies doing business internationally, including:

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. NAFTA The North AmericanFree Trade Agreement (NAFTA) –An alliance that merges Canada, Mexico, and the United States into a single market Eliminates barriers Eases investment Simplifies trade

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Guide to the European Union Click on symbol to access an interactive map of the European Union shown in the screen capture above  The EU at a Glance Source: (accessed 9/14/09)

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. MERCOSUR The Common Market of the Southern Cone (MERCOSUR) –An alliance that promotes the free circulation of goods, services, and production factors, and has a common external tariff and commercial policy among member nations in South America Brazil Argentina Chile Bolivia

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Asia-Pacific Economic Cooperation Asia-Pacific Economic Cooperation (APEC) –An alliance that promotes open trade and economic and technical cooperation among member nations throughout the world Australia, Brunei, Canada, Indonesia, Japan, Republic of Korea (South), Malaysia, New Zealand, Philippines, Singapore, Thailand, United States, Republic of China (Taiwan), Hong Kong, People's Republic of China, Mexico, Papua New Guinea, Chile, Peru, Russian Federation and Vietnam.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GATT and WTO General Agreement on Tariffs and Trade (GATT) –reduces worldwide tariffs and increase international trade based on negotiation among member countries –originally signed by 23 nations in 1947 –place where int’l trade problems can be resolved Dumping –selling products outside your country at unfairly low prices World Trade Organization (WTO) –An entity that promotes free trade among member nations –a forum for trade negotiations & dispute resolution –148 member nations

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Modes of Entry Into Int’l Markets: Importing and Exporting Importing - the purchase of products from a foreign source Exporting - the sale of products to foreign markets Business Across Borders Ethos Water supports a cause and exports resources to provide clean water for children in Africa.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Figure 8.1 Levels of Involvement in Global Marketing

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Licensing and Franchising Licensing - an alternative to direct investment that requires a licensee to pay commission or royalties on sales or supplies used in manufacturing Franchising - a form of licensing in which a franchiser, in exchange for a financial commitment, grants a franchisee the right to market its product in accordance with the franchiser’s standards Franchising Subway offers an extensive global franchise network.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Visit the Subway Web Site by clicking on symbol below and explore the opportunities for franchising throughout the world. Exploration

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Contract Manufacturing and Outsourcing Contract Manufacturing - the practice of hiring a foreign firm to produce a designated volume of product to specification Outsourcing - the practice of contracting manufacturing or other tasks to companies in countries where labor and supplies are less expensive

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Joint Ventures - a partnership between a domestic firm and a foreign firm or government Strategic Alliances - partnerships formed to create a competitive advantage on a worldwide basis

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Direct Ownership - a situation in which a company owns subsidiaries or other facilities overseas Multinational Enterprise - firms that have operations or subsidiaries in many countries

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. The Ten Largest Global Corporations

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. International Marketing Mix Issues

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Table 8. 5 International Marketing Mix Issues

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Customization Versus Globalization of International Marketing Mixes Mass customization - the use of standard platforms with custom applications Globalization - the development of marketing strategies that treat the entire world (or its major regions) as a single entity Global Presence Generates Five Opportunities for Creating Value: 1.Adapt to local market differences 2.Exploit economies of global scale 3.Exploit economies of global scope 4.Mine optimal locations for activities and resources 5.Maximize the transfer of knowledge across locations

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Customization Versus Globalization of International Marketing Mixes Globalization Although offering some modifications to packaging, Pepsi treats the world as one market.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Discussion Question Click on the Television below and watch a Russian commercial for Pepsi. Then, discuss whether it tends to be at the customization or globalization end of the continuum.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. After Reviewing This Chapter You Should: 1.Understand the nature of global markets and international marketing. 2.Be able to analyze the environmental forces affecting international marketing efforts. 3.Know several important regional trade alliances, markets, and agreements. 4.Recognize the methods of involvement in international marketing activities. 5.Be aware that international marketing strategies fall along a continuum from customization to globalization.

© 2011 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Key Concepts International marketing Gross domestic product (GDP) Import tariff Quota Embargo Exchange controls Balance of trade Cultural relativism North American Free Trade Agreement (NAFTA) European Union (EU) Common Market of the Southern Cone (MERCOSUR) Asia-Pacific Economic Cooperation (APEC) World Trade Organization (WTO) General Agreement on Tariffs and Trade (GATT) Dumping Importing Exporting Trading company Licensing Franchising Contract manufacturing Outsourcing Joint venture Strategic alliances Direct ownership Multinational enterprise Globalization