Principles of Marketing Lecture-41

Summary of Lecture-40

Creating Competitive Advantage

Competitor Analysis

Steps Identifying Competitors Assessing Competitors Selecting Competitors to Attack or Avoid

Competitive Strategies

Competitive Positions

Market Leader Market Challenger Market Follower Market Nicher

Global Marketplace

Today’s Topics

Global Marketing

Reasons for Global Marketing

Growth – Access to new markets – Access to resources Survival – Against competitors with lower costs (due to increased access to resources)

Global competitors attacking the domestic market, Foreign markets might offer higher profit opportunities, Domestic markets might be shrinking, Need an enlarged customer base to achieve economies of scale, Reduce dependency on any one market, Customers might be expanding abroad.

Getting involved in international marketing: A five step process

DO WE GET INVOLVED IN INTERNATINAL MARKETING? IF YES, WHICH MARKETS? HOW MUCH COMMITMENT IN EACH MARKET? HOW SHOULD WE REORGANIZE OUR OPERATIONS? IMPACT ON DOMESTIC- BASED MARKETING?

Global Marketplace

 Global competition is intensifying and few industries are now safe from foreign competition. Global Firms  To compete, many companies are continuously improving their products, expanding into foreign markets and becoming Global Firms.  Global firms face several major problems: – Variable exchange rates, – Unstable governments, – Protectionist tariffs and trade barriers, – Corruption.

Global Vision

Recognizing and reacting to international marketing opportunities; Being aware of threats from foreign competitors in all markets; Effectively using international marketing mix opportunities

Decisions in International/Global Marketing

Looking at the global marketing environment Deciding whether to go international Deciding which markets to enter Deciding how to enter the market Deciding on the global marketing program Deciding on the global marketing organization

Looking at the Global Marketing Environment

The International Trade System The World Trade Organization and GATT Regional Free Trade Zones

The International Trade System – Tariffs, quotas, embargos, exchange controls, nontariff trade barriers – World Trade Organization and GATT – Regional free trade zones European Union North American Free Trade Agreement Other free trade areas

Just a reminder ….

A nation’s basic conditions in transportation networks, communication systems, ad energy facilities. Infrastructure

The price of one nation’s currency in terms of another country’s currency. Exchange Rate

A tax levied on imported goods. Tariff

An administrative trade restriction that limits the number of units of a certain good that can enter a country for resale. Import Quota

An administrative trade restriction that imposes a complete ban on imports of a specified product. Embargo

The controversial trade practice of selling a product in a foreign market at a lower price than it commands in the producer’s domestic market. Dumping

An international trade accord that has helped to reduce worldwide tariffs. General Agreement on Tariffs and Trade (GATT)

A 125-member organization that succeeds GATT in overseeing trade agreements, mediating disputes, and reducing trade barriers, unlike GATT provisions, WTO decisions are binding. World Trade Organization (WTO)

An accord to remove trade barriers among Canada, Mexico, and the United States. North American Free-Trade Agreement (NAFTA)

Looking at the Global Marketing Environment

Economic Environmental Factors

Country’s Industrial Structure Country’s Industrial Structure Subsistence Economies Subsistence Economies Raw Material Exporting Economies Raw Material Exporting Economies Industrializing Economies Industrializing Economies Industrial Economies Industrial Economies Income Distribution

Political-Legal Environmental Factors

Government Bureaucracy Government Bureaucracy Attitudes Toward International Buying Attitudes Toward International Buying Monetary Regulations Monetary Regulations Political Stability Political Stability

Cultural Environmental Factors

How Customers Think About and Use Products Cultural Traditions, Preferences, and Behaviors Business Norms and Behavior

Deciding Which Markets to Enter

Consistent with objectives and culture of firm Demographic Characteristics Economic Factors Sociocultural factors Technological factors

Define Organization’s Marketing Objectives and Policies Define Organization’s Marketing Objectives and Policies What Volume of Foreign Sales is Desired? How Many Countries Should the Firm Go Into? What Types of Countries Should be Entered? Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level. Rank by Market Size & Growth, Cost of Doing Business, Competitive Advantage, & Risk Level.

Deciding How to Enter the Market

Direct Investment Joint Venturing Exporting Amount of Commitment, Risk, Control, and Profit Potential Greater Lesser

1st level: Exporting 2nd level: Joint Venturing – Franchising – Licensing – Contract manufacturing – Joint ownership 3rd level: Direct Investment

Deciding on the Global Marketing Program

Straight Extension Communication Adaptation Product Adaptation Dual Adaptation Promotion Don’t Change Product Adapt Product Don’t Change Promotion Adapt Promotion Product Invention Develop New Product Five International Product and Promotion Strategies

Straight product expansion Marketing the product with no changes Product adaptation Altering the product to meet local conditions or the wants of the foreign market Product invention Creating new products or services for foreign markets

Global Pricing Strategies

Companies face many problems Price escalation Pricing to foreign subsidiaries Recent economic and technological forces The Internet

Possibilities in setting prices include: – Charge a uniform price all around the world. – Charge what consumers in each country could pay. – Use a standard markup of its costs everywhere.

Whole-Channel Concept for Distribution

Seller Seller’s Headquarters Channels Between Nations Channels Within Nations Final User or Buyer

Global Promotion Strategies

Standardized global communication Advertising themes are standardized from country to country with slight modifications Communication adaptation Advertising messages are fully adapted to local markets

Managing International Marketing Activities

Step 1: Organize export department Step 2: Create an international division Step 3: Become a global organization

Think Globally Act Locally

Enough for today...

Summary

Global Marketing

Global Marketplace

Looking at the global marketing environment Deciding whether to go international Deciding which markets to enter Deciding how to enter the market Deciding on the global marketing program Deciding on the global marketing organization

Think Globally Act Locally

Next….

e-Marketing

Principles of Marketing Lecture-41