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LEARNING OBJECTIVES (LO) After reading Chapter 7, you should be able to: Describe the nature and scope of world trade from a global perspective and its implications for Asian countries. Identify the major trends that have influenced the landscape of global marketing in the past decade. LO2 Identify the environmental factors that shape global marketing efforts. LO3 1-2 Understanding and Reaching Global Consumer Markets

LEARNING OBJECTIVES (LO) After reading Chapter 7, you should be able to: Name and describe the alternative approaches companies use to enter global markets. LO4 Explain the distinction between standardization and customization when companies craft worldwide marketing programs. LO5 1-3 Understanding and Reaching Global Consumer Markets

TATA A Global Conglomerate Opening Story – TATA Group of Companies TATA Group, housed in India, operates over 100 companies in 80 countries across six continents. How do they do it? 1-4 Opening Story – TATA Group of Companies

Dynamics of World Trade Trade Flows Global Perspective Countertrade Trade Feedback Effect Asian Perspective Barter Trade still exists, in the form of Countertrade U.S., Japan, W. Europe, Canada and China make up two-thirds of the world’s trade in manufactured goods & services Balance of Trade: Trade Exports – Imports. Results in Trade Surplus (/Deficit) Gross Domestic Product (GDP) Balance of Trade LO1 1-5 World Trade: A Global Perspective

FIGURE 7-1 The United States, China, and Germany are the leaders in global merchandise trade by a wide margin. China and Germany export more manufactured goods and commodities than they import. The United States imports more manufactured goods and commodities than it exports. LO1 1-6 World Trade: A Global Perspective

Dynamics of World Trade Dynamic & Trade Flows Porter’s “Diamond” Factor Conditions Demand Conditions Related and Supporting Industries Company Strategy, Structure, and Rivalry LO1 1-7 World Trade: A Global Perspective

FIGURE 7-2 Porter’s diamond of national competitive advantage: 4 key elements on why some countries become world leaders LO1 1-8 World Trade: A Global Perspective

Sharp Aquos TV & Bruno Magli Shoes What elements of Porter’s Diamond of National Competitive Advantage Where are Sharp & Bruno Magli from? Aside from the food, what are the reputations of products of these countries? What do you think of products from: China, Germany, Switzerland, Thailand, Malaysia, Singapore? LO1 1-9 World Trade: A Global Perspective

Marketing in a Borderless Economic World Trend: Decline of Economic Protectionism Protectionism Tariffs Quota General Agreement on Tariffs and Trade (GATT) America and Malaysia are both examples of countries that utilise Protectionism. What are some examples of the industries/products they protect? World Trade Organization (WTO) LO2 1-10 Major Trends in Global Marketing

FIGURE 7-3 Protectionism hinders world trade through tariffs and quotas policies of countries, raising prices and limiting supply LO2 1-11 Major Trends in Global Marketing

Marketing in a Borderless Economic World Trend: Rise of Economic Integration European Union Euro North American Free Trade Agreement (NAFTA) Singapore is extremely keen to set up FTAs. Why? By the time you read these notes, the EU/Euros may have collapsed, or kicked some other country out. Three country flag image attributed to Alex Covarrubias. See http://en.wikipedia.org/wiki/User:AlexCovarrubias Asian Free Trade Agreements LO2 1-12 Major Trends in Global Marketing

FIGURE 7-4 The European Union in 2007 consists of 27 countries with more than 500 million consumers LO2 1-13 Major Trends in Global Marketing

Marketing in a Borderless Economic World Trend: Global Competition Divisions or Subsidiaries Many Singaporean actors/singers often seek to go abroad to further their careers. Is this considered Global Competition? Strategic Alliances LO2 1-14 Major Trends in Global Marketing

Marketing in a Borderless Economic World Trend: Global Companies International Firms Multinational Firms Multidomestic Marketing Strategy Transnational Firms Global Marketing Strategy Global Brand LO2 1-15 Major Trends in Global Marketing

Marketing in a Borderless Economic World Trend: Global Consumers 1-16 Major Trends in Global Marketing

Marketing in a Borderless Economic World Trend: Global Consumers Nestle is superb at communicating with consumers in their native language – here, Hungarian. LO2 1-17 Major Trends in Global Marketing

500 Million Consumers, US$100 Billion to Spend Marketing Matters The Global Teenager 500 Million Consumers, US$100 Billion to Spend How much discretionary income do you have? How much disposable income? (this was mentioned in an earlier chapter) How much do you spend? LO2 1-18 Major Trends in Global Marketing

A Global Environmental Scan Cultural Diversity Cross-Cultural Analysis Values Customs Foreign Corrupt Practices Act (1977) International Anti-Dumping and Fair Competition Act (1998) LO3 1-19 Environmental Factors affecting Global Marketing Efforts

A Global Environmental Scan Cultural Diversity Cultural Symbols What cultural lesson did Coca-Cola executives learn when they used the Eiffel Tower and the Parthenon in their recent global advertising campaign? Different cultures imbue different significance to the number 13 and the thumbs-up gesture. #13 Semiotics LO3 1-20 Environmental Factors affecting Global Marketing Efforts

A Global Environmental Scan Cultural Diversity Language Unintended Meanings www.Engrish.com serves an excellent warning to the pitfalls of back-translation and using Google Translate without checking Back Translation Consumer Ethnocentricity LO3 1-21 Environmental Factors affecting Global Marketing Efforts

A Global Environmental Scan Economic Considerations Stage of Economic Development Developed Countries: Japan Developing Countries What state of economic development is Singapore in? Israel? Hungary? Made the Move: Brazil Remain Locked: Sri Lanka LO3 1-22 Environmental Factors affecting Global Marketing Efforts

A Global Environmental Scan Economic Considerations Economic Infrastructure Consumer Income and Purchasing Power The textbook contains examples of how P&G adapted to the economic infrastructure in China. Denizen jeans was created by Levi’s to target the young/youth market in China and developing countries like South America Microfinance: India Currency Exchange Rate LO3 1-23 Environmental Factors affecting Global Marketing Efforts

A Global Environmental Scan Political-Regulatory Climate Political Stability Trade Regulations LO3 1-24 Environmental Factors affecting Global Marketing Efforts

FIGURE 7-6 Alternative Approaches to Global Market Entry 1-25 Entering Global Markets: Alternative Approaches

Comparing Global Market-Entry Strategies Exporting Exporting Indirect Exporting Direct Exporting LO4 1-26 Entering Global Markets: Alternative Approaches

Comparing Global Market-Entry Strategies Licensing Contract Manufacturing Contract Assembly McDonald’s uses a franchise business model: 66% of sales come from non-US countries. Franchising LO4 1-27 Entering Global Markets: Alternative Approaches

Comparing Global Market-Entry Strategies Joint Ventures & Direct Investments Joint Venture Pepsi-Co markets Frito-Lay products like Cheetos, Ruffles and Doritos in Israel, in a joint-venture with the Strauss group. Nestle has made a direct investment to product its ice-cream products like the Drumstick in China Direct Investment LO4 1-28 Entering Global Markets: Alternative Approaches

Crafting a Worldwide Marketing Program Product Strategies Product Extension Product Adaptation Are these strategies standardization or customization? Product Invention LO5 1-29 Standardization vs Customization

FIGURE 7-6 Five product and promotion strategies for global marketing Are these strategies standardization or customization? LO5 1-30 Standardization vs Customization

Crafting a Worldwide Marketing Program Promotion Strategies Identical Message Why can Gillette Venus deliver the same global message throughout the world? Communication Adaptation Dual Adaptation LO5 1-31 Standardization vs Customization

Crafting a Worldwide Marketing Program Distribution (Place) & Pricing Strategies Channels Usually Long and Complex Countries Impose Pricing Constraints Prices May Be Too High or Too Low Dumping is similar to the ‘penetration’ pricing strategy. The grey market of parallel imports is sometimes legal and sometimes a ‘black market’, depending on the particular country Dumping Gray Market LO5 1-32 Standardization vs Customization

FIGURE 7-7 Five product and promotion strategies for global marketing 1-33 Standardization vs Customization