1 CHAPTER FOUR DEVELOPING A GLOBAL VISION Prepared by Jack Gifford Miami University (Ohio) © 2000 South-Western College Publishing

2 THE REWARDS OF GLOBAL MARKETING n Global revolutions are under way in many area of our lives: management, politics, communications, and technology. n Global marketing is not simply an option... but an imperative for business © 2000 South-Western College Publishing

3 GLOBAL VISION n Recognizing and reacting to international marketing opportunities n Being aware of threats from foreign competitors in all markets n Effectively using international marketing distribution networks © 2000 South-Western College Publishing

4 IMPORTANCE OF GLOBAL MARKETING IN THE UNITED STATES n US exports 20% of industrial production and 33% of farm products n Almost 33% of US corporate profits generated from international trade and foreign investment n U.S. businesses export over $500 billion in goods to foreign countries every year n About 10% of all manufacturing businesses are regularly involved in international marketing n Your odds of being involved professionally in international business after graduation in some manner are close to 100%! © 2000 South-Western College Publishing

5 Multinational vs International Marketing n International = is any individual or organization that buys or sells its goods or services from beyond its home nation’s boundaries n Multinational = any individual or organization that has substantial marketing activities in many nations and “thinks globally but acts locally.” They also adopt a corporate culture, business philosophy and marketing strategy that views the world rather than their “home of record” as their domain. A true multinational marketer is a “citizen of the world.” © 2000 South-Western College Publishing

6 Imports vs Exports Just a reminder …. © 2000 South-Western College Publishing

7 THE MULTINATIONAL ADVANTAGE n Can overcome trade problems like embargoes n Ability to sidestep regulatory problems n Multinationals can shift production from one plant to another as market conditions change n Can tap new technologies from around the world n Can often save a lot in labor costs, even in highly unionized countries © 2000 South-Western College Publishing

8 GLOBAL MARKETING STANDARDIZATION n Because of global communications and cross-cultural experiences, there is an emerging global market for standardized consumer products… sometimes with minor variations. © 2000 South-Western College Publishing

9 THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS n Culture n Economic development n Technological development n Political structure n Demographic makeup n Natural resources © 2000 South-Western College Publishing

10 THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS: CULTURE n Culture: “a common set of values shared by a country’s citizens that determine what is socially acceptable behavior” n language, gestures, symbols n customs and traditions n social institutions n assumptions and attitudes n personal beliefs, values, norms, roles Interpersonal relationships social structure © 2000 South-Western College Publishing

11 THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS: ECONOMIC & TECHNOLOGICAL DEVELOMENT n Traditional n Pre industrial n Takeoff n Industrializing n Fully industrialized © 2000 South-Western College Publishing

12 CENTRALLY PLANNED ECONOMY MARKET ORIENTED ECONOMY © 2000 South-Western College Publishing THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS: POLITICAL STRUCTURE MoscowSt. Louis

13 THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS: LEGAL CONSIDERATIONS n Justice and court system n Legal structure n Tariffs n Quotas n Boycotts n Exchange control n Trade alliances n Trade agreements n Trade organizations (WTO) n Special restrictions for certain industries (Hong Kong & textiles) n Japanese Keiretsu n NAFTA n European Union (EU) n Recognition of international accords/agreements © 2000 South-Western College Publishing

14 THE EXTERNAL ENVIRONMENT FACING GLOBAL MARKETERS: DEMOGRAPHIC MAKEUP & NATURAL RESOURCES n DEMOGRAPHICS n Size of middle class n Per capita income n Education n Birth rate n Housing market n Population density n Age distribution n Etc. n In underdeveloped nations, secondary data is often bad or nonexistent ! n Natural Resources n Physical n Human capital n Intellectual capital © 2000 South-Western College Publishing

15 GETTING INVOLVED IN INTERNATIONAL MARKETING: A FIVE STEP PROCESS DO WE GET INVOLVED IN INTERNATIONAL MARKETING? IF YES, WHICH MARKETS? HOW MUCH COMMITMENT IN EACH MARKET? HOW SHOULD WE REORGANIZE OUR OPERATIONS? IMPACT ON DOMESTIC- BASED MARKETING ? © 2000 South-Western College Publishing

16 FACTORS INFLUENCING WHETHER A FIRM BECOMES INVOLVED IN INTERNATIONAL MARKETING n ENCOURAGING FACTORS n Saturated domestic market n Obsolete in domestic market n Govt. or EPA problems n Foreign market opportunities  DISCOURAGING FACTORS  High tariffs or low import quotas  Government restrictions or uncertainty  Negative uncontrollable market variables  Inadequate financial resources or human capital © 2000 South-Western College Publishing

17 VARIOUS WAYS OF ENTERING THE GLOBAL MARKETPLACE BY LEVELS OF RISK n 1st level: Exporting n 2nd level: Joint Venturing n Franchising n Licensing n Contract manufacturing n Joint ownership n 3rd level: Direct Investment LOW RISK HIGH RISK © 2000 South-Western College Publishing

18 Target Market THE GLOBAL MARKETING MIX PRODUCTPRICE PROMOTION PLACE Japan Russia China Sun City, Arizona USA © 2000 South-Western College Publishing

19 THE GLOBAL MARKETING MIX:PRODUCT & PROMOTION n One product, one message n Product innovation n New or drastic changes in existing product n Product adaptation n Message adaptation Japan Russia China Sun City, Arizona USA © 2000 South-Western College Publishing

20 THE GLOBAL MARKETING MIX:PRICING & DISTRIBUTION n Adjustment of price to economic conditions n Dumping n Counter trade n Number of channel levels n Different intermediaries n Unique supply chain technological or communication requirements Japan Russia China Sun City, Arizona USA © 2000 South-Western College Publishing

21 Ethics in Global Marketing n Bribes? Gifts? n Forced Loans? n Protection money? n Slotting fees? Whose standards of right and wrong? © 2000 South-Western College Publishing

22 The key to future world peace and a universally enhanced quality of life depends upon successful and enlightened multinational business entities! © 2000 South-Western College Publishing