1 7. The Global Marketplace

2 Issues in International Marketing Examining global marketing environment Methods of entering foreign markets Developing a global marketing program

3 Examining Global Marketing Environment Changing environment creates opportunities/threats –Globalized world economy Internet creates networked global marketspace –More global companies International firms & multinational firms –Understanding of cultural realities important –Need for infrastructure important –Complex international financial system –Complex international trade system Trade barriers: –Tariffs (revenue & protective)– Exchange controls –Quotas– Subsidies –Embargoes

4 Examining Global Marketing Environment (Cont.) Positive forces in international trade –General Agreement on Tariffs and Trade –World Trade Organization –Economic trading communities Free trade areas—e.g., NAFTA Customs Union—e.g., SACU, GCC Common Market—e.g., EU

5 Examining Global Marketing Environment (Cont.) Attractiveness of an international market depends greatly on economic, regulatory, & societal environments Economic environment –Industrial structure Subsistence economy Raw-material-exporting economy Industrializing economy Industrial economy –Income distribution

6 Examining Global Marketing Environment (Cont.) Regulatory environment –International, host country, and U.S. law drive regulatory environment –Political stability important—hence, political risk assessment –Monetary regulations Countertrade/barter Compensation (buyback) Counterpurchase

7 Examining Global Marketing Environment (Cont.) Societal environment –Values –Folkways –Customs –Norms –Taboos –Language

8 Methods of Entering Foreign Markets Market entry strategies: –Exporting/importing Indirect/direct –Contractual agreements Foreign Licensing Franchising Subcontracting (i.e., contract manufacturing) Management contracting –Joint venturing (joint ownership) –Direct investment

9 Developing a Global Marketing Program Approaches: –Standardized marketing mix: Global strategy –Adapted marketing mix: Multidomestic strategy Adapting the mix: –Product Straight product extension Product adaptation Product invention –Promotion Communication adaptation –Dual adaptation (product & promotion)

10 Developing a Global Marketing Program (Cont.) Adapting the mix –Price Uniform price “What market can bear” Standard markup of costs –Price escalation Dumping –Impact of economic & technological forces Decreased price differentiation Price transparency Internet