Dr. Close

Go Global  Target throughout the world  Global vision of multi-national firms  Fear? Why?

The Fear of Trade and Globalization  Millions of Americans have lost jobs  Millions fear losing jobs  Threat of outsourcing if workers do not accept pay cuts  Vulnerability to operations moving offshore  Then, why is international marketing so hot?

Rewards of Global Marketing  Recognizing and reacting to international marketing opportunities  Using effective global marketing strategies  Being aware of threats from foreign competitors  Other rewards?

Did you know?…  U.S. exports a fifth of industrial production.  One of every 10 jobs in U.S. is supported by exports.  U.S. businesses export over $800 billion.  Exports account for 25 percent of U.S. economic growth.  U.S. is world’s leading exporter of farm products.

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Goals  Offensive goals  Increase long term growth and profit prospects  Maximize total sales revenue  Take advantage of economies of scale  Improve overall market position

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Goals  Defensive goals  To compete with foreign companies on their own turf  Gain access to technological innovations in other countries  Take advantage of differences in operating costs  Preempt competitors’ global moves  Avoid being locked out of future markets by arriving too late

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved The Competitive Advantage of Nations  Porter's diamond presents four factors that determine the competitive advantage of disadvantage of a nation  Factor conditions  Demand conditions  Related and supporting industries  Company strategy, structure, and rivalry

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Porter’s Diamond of National Advantage

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Issues  Cultural Misunderstanding  Managers tend to use their own cultural values and priorities as a frame of reference  Political Uncertainty  Government instability  Social unrest  Armed conflict  Import Restrictions  Tariffs, quotas, and other types of restrictions hinder global business

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Issues  Exchange Controls and Ownership Restrictions  Established by nations experiencing BOP problems  Economic Conditions

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Organizing the Multinational Company  Multidomestic company – Pursues different strategies in each of its foreign markets  The global company – Views the world as one market and pits its resources against competition in an integrated fashion  Three alternative structures  Worldwide product divisions  Divisions responsible for all products sold within a geographic region  A matrix system – A combination of both these arrangements

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Factors Fostering Global Strategy  External Factors  Market Factors – Degree of homogeneous market needs, transferable brands, and the ability to globalize distribution channels  Economic Factors – Worldwide economies of scale, learning curves, global resourcing, etc.  Environmental Factors – Communications ability, favorable governmental policies, etc.  Competitive Factors – Global moves by competitors, preemptive strikes

External Environments

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Factors Fostering Global Strategy  Internal Factors  Structure – Ease of installing a centralized global authority  Management processes – Capabilities and resources available to perform operational functions on a global scale  Culture – Ability to project a global identity, increased tolerance  People – Availability of foreign nationals, frequent travel, commitments to multicountry careers

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Ten Commandments of Global Branding  Understanding similarities and differences in the global branding landscape  Do not take short cuts in global branding  Establish marketing infrastructure  Embrace integrated marketing communications  Establish brand partnerships  Balance standardization and customization  Balance global and local control  Establish operable guidelines  Implement a global brand equity measurement system  Leverage brand elements

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Research  Population characteristics – Managers should be familiar with total population and the regional, urban, rural, and interurban distribution  Ability to buy – Four broad measures to be examined  Gross national product or per capita national income  Distribution of income  Rate of growth in buying power  Extent of available financing

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Marketing Research  Willingness to buy – Cultural framework of consumer motives and behavior is integral to the understanding of foreign customer  Differences in Research Tasks and Processes  Language barriers  Data content  Timeliness  Availability in the U.S.

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Product Strategy  Global marketing research can help determine whether there is an unsatisfied need  For which a new product could be developed to serve foreign market  That could be met with an existing domestic product, either as is or adapted to foreign market

Product and Promotion One Product One Message Product Adaptation Message Adaptation Product InventionSameProductSameMessage ChangeMessageChangeProduct

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Distribution Strategy

Global Pricing  Rigidity in price structures found in many foreign markets also poses an issue…  Must consider transportation and insurance costs, taxes and tariffs  Determine what customers will spend  Ensure that foreign buyers will pay price  May need to simplify a product to lower price  Don’t assume that low-income countries are willing to accept lower quality

McGraw-Hill/Irwin ©2009 The McGraw-Hill Companies, All Rights Reserved Global Advertising and Sales Promotion Strategy  Language barriers  Media are traditionally used  Limited media available – Unable to reach out to target audience  Deciding on the type of agency – To prepare and place the firm’s advertisement  Sales promotion  Used as a strategy for bypassing restrictions on advertisements placed by some foreign governments  Effective means for reaching people in rural locations where media support for advertising is virtually nonexistent

Which are more risky global growth strategies? Licensing Legal process allowing use of manufacturing/patents/knowledge Contract Manufacturing Private-label manufacturing by a foreign country Joint Venture Domestic firm buys/joins a foreign company to create new entity Export Sell domestically produced products to buyers in other countries Direct Investment Active ownership of a foreign company/manufacturing facility

Developing a Global Marketing Mix PROMOTION One Product, One Message Product Invention Product Adaptation Message Adaptation PLACE Channel Choice Channel Structure Country Infrastructure PRICE Dumping Countertrade Exchange Rates Purchasing Power

Your thoughts?  What are your ideas for selling abroad?  How difficult is global marketing?  What are the potential risks and returns?