Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 1 Global Marketing Strategies

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 2 Globalization Grant Thornton study: 56% of CEOs at medium-sized companies see globalization as an opportunity Grant Thornton study: 56% of CEOs at medium-sized companies see globalization as an opportunity McKinsey study: McKinsey study:  2000: Global markets produced and consumed 20% of the world’s $28 trillion in GDP  2027: Global markets will account for 80% of the world’s $73 trillion GDP

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 3 Why “Go Global?” Offset sales declines in the domestic market Offset sales declines in the domestic market Increase sales and profits Increase sales and profits Extend products’ life cycles Extend products’ life cycles Lower manufacturing costs Lower manufacturing costs Lower the cost of products Lower the cost of products

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 4 Why “Go Global?” Improve competitive position Improve competitive position Raise quality levels Raise quality levels Become more customer-oriented Become more customer-oriented Increase chances of success Increase chances of success

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 5 Questions to Consider Before Going Global 1. Is there a profitable market in which our company has the potential to be successful over the long run? (see Table 12.1) 2. Do we have and are we willing to commit adequate resources of time, people, and capital to a global campaign? 3. Are domestic pressures forcing our company to consider global opportunities?

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 6 Questions to Consider Before Going Global 4. Do we understand the cultural differences, history, economics, values, opportunities, and risks of conducting business in the country we are considering? 5. Is there a viable exit strategy for our company if conditions change or the new venture does not succeed? 6. Can we afford not to go global?

Nine Strategies for Going Global Creating a Web site Relying on trade intermediaries Creating joint ventures Foreign licensing International franchising Counter-trading And bartering Exporting Establishing International locations Importing and outsourcing Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 7

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 8 Strategies For "Going Global" Creating a Web site Creating a Web site

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 9

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 10

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 11 Creating a Web site Creating a Web site Relying on trade intermediaries Relying on trade intermediaries Strategies for "Going Global"

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 12 Trade Intermediaries Export Management Companies (EMCs) Export Management Companies (EMCs) Export Trading Companies (ETCs) Export Trading Companies (ETCs) Manufacturer’s Export Agents (MEAs) Manufacturer’s Export Agents (MEAs) Export merchants Export merchants Resident buying offices Resident buying offices Foreign distributors Foreign distributors

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 13 Joint ventures Joint ventures Creating a Web site Creating a Web site Relying on trade intermediaries Relying on trade intermediaries Strategies for "Going Global"

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 14 Joint Ventures Domestic joint venture – two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad Domestic joint venture – two or more U.S. companies form an alliance for the purpose of exporting their goods and services abroad Foreign joint venture – a domestic firm forms an alliance with a company in the target nation Foreign joint venture – a domestic firm forms an alliance with a company in the target nation  Most important ingredient: Choosing the right partner  Another key to success: Establishing common objectives

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 15 Foreign licensing Foreign licensing International franchising International franchising Creating a Web site Creating a Web site Relying on trade intermediaries Relying on trade intermediaries Joint ventures Joint ventures Strategies for "Going Global"

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 16 Steps to International Franchising Success 1. Identify the country or countries that are best suited to the business concept 2. Generate leads for potential franchisee 3. Select quality candidates 4. Structure the franchise deal Direct franchising Direct franchising Area development Area development Master franchising Master franchising

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 17 Counter-trading and bartering Counter-trading and bartering Exporting Exporting Creating a Web site Creating a Web site Relying on trade intermediaries Relying on trade intermediaries Joint ventures Joint ventures Foreign licensing Foreign licensing International franchising International franchising Strategies for "Going Global"

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 18 Exporting Small companies account for 97% of all companies involved in exporting, but… Small companies account for 97% of all companies involved in exporting, but… They generate just 29% of the U.S. export sales They generate just 29% of the U.S. export sales More than 250,000 U.S. companies now export; twice as many are capable of exporting but are not doing so More than 250,000 U.S. companies now export; twice as many are capable of exporting but are not doing so

Source: Elizabeth Clark, Small and Medium-Sized Exporting Companies: A Statistical Handbook, International Trade Administration, Office of Trade and Industry Information (Washington, DC: 2005), p. 19.

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 20 Steps to Successful Exporting 1. Recognize that even the tiniest companies and least experienced entrepreneurs have the potential to export 2. Analyze your product or service 3. Analyze your commitment 4. Research markets and pick your target

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall Develop a distribution strategy 6. Find your customer  U.S. Department of Commerce  International Trade Administration 7. Find financing for export sales  SBA, EX-IM Bank, OPIC, and others 8. Ship your goods 9. Collect your money (Continued) Steps to Successful Exporting

How a Letter of Credit Works How a Letter of Credit Works $ Foreign buyer agrees to buy products; seller agrees to ship goods if buyer arranges a letter of credit. Buyer requests that his bank grant a letter of credit, which assures exporter payment if she presents documents proving goods were actually shipped. Bank makes out letter of credit to seller and sends it to seller’s bank (called the confirming bank). Seller ships goods to buyer according to letter of credit’s terms and submits shipping documents to bank issuing letter of credit. $ Letter of Credit Seller’s BankBuyer's Bank Buyer’s bank makes payment to seller’s (confirming) bank. Confirming bank then pays seller amount specified in letter of credit. $ BuyerSeller Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 22

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 23 Establishing international locations Establishing international locations Importing and outsourcing Importing and outsourcing Creating a Web site Creating a Web site Relying on trade intermediaries Relying on trade intermediaries Joint ventures Joint ventures Foreign licensing Foreign licensing International franchising International franchising Counter-trading and bartering Counter-trading and bartering Exporting Exporting Strategies for "Going Global"

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 24 Importing and Outsourcing Make sure that importing or outsourcing is right for your business Make sure that importing or outsourcing is right for your business Establish a cost target for your product Establish a cost target for your product Do your research before you leave home Do your research before you leave home Be sensitive to cultural differences Be sensitive to cultural differences Do your groundwork Do your groundwork

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 25 Importing and Outsourcing Protect your company’s intellectual property Protect your company’s intellectual property Select a manufacturer Select a manufacturer Provide an exact model of the product you want manufactured Provide an exact model of the product you want manufactured Stay in constant contact with the manufacturer and try to build a long-term relationship Stay in constant contact with the manufacturer and try to build a long-term relationship

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 26 Barriers to International Trade Attitude - "My company is too small to export" Attitude - "My company is too small to export" Lack of information about how to get started Lack of information about how to get started Lack of export financing Lack of export financing Domestic Barriers:

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 27 Tariffs - Taxes a government imposes on goods and services imported into that country Tariffs - Taxes a government imposes on goods and services imported into that country Quotas - Limits on the amount of a product imported into a country Quotas - Limits on the amount of a product imported into a country Embargoes - Total bans on imports of certain products Embargoes - Total bans on imports of certain products International Barriers: Barriers to International Trade

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 28 Dumping - selling large quantities of a product in a foreign country below cost to gain market share Dumping - selling large quantities of a product in a foreign country below cost to gain market share Political barriers - rules, regulations and risks Political barriers - rules, regulations and risks Business barriers – business practices and laws Business barriers – business practices and laws Cultural barriers - differing languages, philosophies, traditions, and accepted business practices Cultural barriers - differing languages, philosophies, traditions, and accepted business practices Barriers to International Trade International Barriers:

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 29 International Trade Agreements World Trade Organization (WTO) World Trade Organization (WTO)  150 member countries that account for more than 90% of all world trade North American Free Trade Agreement (NAFTA) North American Free Trade Agreement (NAFTA)  Created a single free trade zone with the U.S., Canada, and Mexico Central America Free Trade Agreement (CAFTA) Central America Free Trade Agreement (CAFTA)

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 30 Guidelines for Success in International Markets Make yourself at home in all three of the world's key markets - North America, Europe, and Asia Make yourself at home in all three of the world's key markets - North America, Europe, and Asia Appeal to the similarities within the various regions in which you operate but recognize the differences in their particular cultures Appeal to the similarities within the various regions in which you operate but recognize the differences in their particular cultures Be willing to commit the necessary resources to make your global efforts successful Be willing to commit the necessary resources to make your global efforts successful Develop new products for the world market Develop new products for the world market

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 31 Guidelines for Success in International Markets Use the many resources available to research potential markets and to determine the ideal target for your products Use the many resources available to research potential markets and to determine the ideal target for your products Familiarize yourself with foreign customs and languages Familiarize yourself with foreign customs and languages Learn to understand your customers from the perspective of their culture, not your own Learn to understand your customers from the perspective of their culture, not your own

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 32 "Glocalize" - Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service "Glocalize" - Make global decisions about products, markets, and management, but allow local employees to make tactical decisions about packaging, advertising, and service Make positive and preferably visible contributions to the local community Make positive and preferably visible contributions to the local community Guidelines for Success in International Markets

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 33 Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication technology Train employees to think globally, send them on international trips, and equip them with state-of-the-art communication technology Hire local managers to staff foreign offices and branches Hire local managers to staff foreign offices and branches Guidelines for Success in International Markets

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 34 Do whatever seems best wherever it seems best, even if people at home lose jobs or responsibilities Do whatever seems best wherever it seems best, even if people at home lose jobs or responsibilities Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own Consider using partners and joint ventures to break into foreign markets you cannot penetrate on your own Guidelines for Success in International Markets

Chapter 12 Global Marketing Strategies Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall 35 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright ©2009 Pearson Education, Inc. Publishing as Prentice Hall