The Global Marketplace For Brands and Products Marketing 3349 Chip Besio

Great American Brands Caterpillar – 61% of sales from outside US Johnson and Johnson – 49% of sales Otis Elevator – 81% of sales

Great American Brands Mc Donald’s  65% of $23.5 billion Sales from Outside U.S.  32,000 restaurant in 122 countries serve more than 100,000 people per day Mc Donald’s Russia  Opened in Moscow in 1990  26 Cash Registers (more than a Wal-Mart Supercenter)  900 Seats (average US – 50 seats)  240 restaurants in 40 Russian cities – 80 in Moscow  850,000 customers per year – 2 times avg.

Global Marketing into the Twenty-First Century  The world is shrinking rapidly with the advent of faster communication, transportation, and financial flows.  International trade is booming and now accounts for a quarter of the United States’ GDP.  Between 1990 and 2010, global companies grew from 30,000 to 60,000  Between 2000 and 2008 world trade grew by 7%/yr. outstripping GDP growth of 3%  Global competition is intensifying and few U.S. industries are now safe from foreign competition.

Global Companies Exceed GDP in Some Countries  Of the 150 largest economies in the world: 89 are countries, 61 are companies  Wal-Mart the world’s largest company has annual revenues that are larger than all but the top 25 countries.  World trade in 2010 was $19.7 trillion about 28% of world GDP

Global Marketing into the Twenty-First Century  To compete, many U.S. companies are continuously improving their products, expanding into foreign markets, and becoming global firms.  Global firms face several major problems:  High debt, inflation, and unemployment have resulted in highly unstable governments & currencies,  Governments placing more regulations on foreign firms,  Protectionist tariffs and trade barriers,  Corruption.

Major Decisions in International 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 i.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers The International Trade System i.e. Tariff, Quota, Embargo, Exchange Control, and Nontariff Trade Barriers The World Trade Organization and GATT Treaty designed to promote world trade by reducing tariffs and other international trade barriers The World Trade Organization and GATT Treaty designed to promote world trade by reducing tariffs and other international trade barriers Regional Free Trade Zones Group of nations organized to work toward common goals in the regulation of international trade Regional Free Trade Zones Group of nations organized to work toward common goals in the regulation of international trade

Economic Environment Subsistence Economies Industrial Economies Raw Material Exporting Economies Industrializing Economies Types of Industrial Structure

Political-Legal Environment At Least Four Political-Legal Factors Should be Considered in Deciding Whether to do Business in a Given Country: Attitudes Toward International Buying Attitudes Toward International Buying Government Bureaucracy Government Bureaucracy Political Stability Political Stability Monetary Regulations Monetary Regulations

Cultural Environment Sellers Must Examine the Following Before Planning a Marketing Program Within a Given Country. How Customers Think About and Use Products Cultural Traditions, Preferences, and Behaviors Business Norms and Behavior

Deciding Whether to Go International  Reasons companies might consider international expansion:  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.  Most companies do not act until some situation or event thrusts them into the international market.

Deciding Which Markets to Enter 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.

Discussion Connections  Assess China as a market for McDonald’s.  What factors make it attractive?  What factors make it less attractive?  Assess Canada as a market for McDonald’s.  In what ways is Canada more attractive than China?  In what ways is it less attractive?  If McDonald’s could operate in only one of these countries, which one would you choose and why?

Deciding How to Enter the Market Exporting Indirect Direct Exporting Indirect Direct Joint venturing Licensing Contract manufacturing Management Contracting Joint Ownership Joint venturing Licensing Contract manufacturing Management Contracting Joint Ownership Direct investment Assembly facilities Manufacturing facilities Direct investment Assembly facilities Manufacturing facilities

Deciding on the Global Marketing Program Changes in Product, Advertising, Distribution Channels, & Price Adapted Marketing Mix Adjusts the Elements of the Marketing Mix to Each International Target Market. i.e. Japanese Barbie Standardized Marketing Mix Uses Basically the Same Elements of the Marketing Mix in all the Company’s International Markets. i.e Coca-Cola

Five International Product and Promotion Strategies 1. Straight Extension 3. Product Adaptation 5. Product Invention 4. Dual Adaptation 2. Communi- cation Adaptation Product Adapt Product Don’t Change Product Develop New Product Promotion Don’t Change Promotion Adapt Promotion

International Pricing  Companies face many problems in setting their international prices.  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.  International prices tend to be higher than domestic prices because of price escalation.  Companies may become guilty of dumping – when a foreign subsidiary charges less than its costs or less than in its home market.

Whole-Channel Concept for International Marketing Seller Seller’s headquarters organization for international marketing Seller’s headquarters organization for international marketing Channels between nations Channels between nations Channels within nations Channels within nations Final user or buyer

Deciding on the Global Marketing Organization Export Department International Division Global Organization Degree of Involvement in International Marketing Activities HighHigh LowLow