1. Developing a Global Vision
Chapter 3
Developing a Global Vision
Developing a Global Vision
Chapter 3
Prepared by
Deborah Baker
Texas Christian University
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

2. Learning Objectives 1. Discuss the importance of global marketing.
2. Discuss the impact of multinational firms on the world economy.
3. Describe the external environment facing global marketers.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

3. Learning Objectives (continued)
4. Identify the various ways of entering the global marketplace.
5. List the basic elements involved in developing a global marketing mix.
6. Discover how the Internet is affecting global marketing.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

4. Discuss the importance of global marketing.
Chapter 3
Developing a Global Vision
Learning Objective 1
On Line
Discuss the importance of global marketing.
On Line
Universal Studios
Compare Universal Studios’ Web sites for its Japanese and American theme parks. What is distinctly Japanese about the theme park in Japan? Is the Japanese-language page for the Japanese park different from the English page for the Japanese park? Explain what you find.
Discussion/Team Activity:
What factors have contributed to a global marketplace?
Have the class brainstorm considerations for introducing a new soft drink (or other products) into the global marketplace. The list should include product taste, packaging, labeling, distribution channels, advertising, etc.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

5. Marketing that targets markets throughout
Chapter 3
Developing a Global Vision
Global Marketing 1
Marketing that targets markets throughout
the world.
Notes:
The word global refers to a boundless mobility and competition in social, business, and intellectual arenas. Global marketing is no longer an option for business—instead, it is imperative. Businesses in the United States must have a global vision to react to international marketing opportunities, and also to remain competitive in home markets. Moreover, foreign competition entering the U.S. market is found in almost every industry.
An example of the boundary-free aspects of global vision can be demonstrated in the automobile industry. Not only are the sales of foreign automobiles strong in the U.S., foreign companies such as Honda, Toyota, Mercedes, and BMW manufacture their autos in U.S. factories and employee U.S. workers.
Discussion/Team Activity:
Ask the class to discuss companies that are considered top global brands. What characteristics have made these companies global leaders? “The Best Global Brands”, Business Week, August 5, 2002
1. Coca-Cola, 2. Microsoft, 3. IBM, 4. GE, 5. Intel, 6. Nokia, 7. Disney, 8. McDonald’s, 9. Marlboro, 10. Mercedes
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

6. Recognize and react to international marketing opportunities
Chapter 3
Developing a Global Vision
Global Vision 1
Recognize and react to international marketing opportunities
Be aware of threats from foreign competitors
Use international distribution networks
Notes:
A global vision can be lucrative for a company, with many firms obtaining 60-70% of its revenue from international divisions.
However, most small- and medium-sized firms are nonparticipants in global trade and marketing. Only very large multinational companies have attempted to compete worldwide.
Discussion/Team Activity:
1. Discuss ways that small-and medium-sized firms can compete in a global environment with limited resources.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

7. Importance of Global Marketing1
U.S. exports a fifth of industrial production and one-third of its farm products
One of every sixteen jobs in U.S. is supported by exports
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

8. Importance of Global Marketing1
A third of U.S. corporate profits is from international trade and investment
Exports accounted for 20% of growth in economic activity (2000)
U.S. is world’s leading exporter of grain
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

9. The Negatives of Global Trade
Chapter 3
Developing a Global Vision
The Negatives of Global Trade 1
Millions of Americans have lost jobs
Millions fear losing jobs
Workers face pay-cut demands
Service and white-collar jobs are vulnerable to operations move
Notes:
Many jobs often go to the countries with the weakest laws governing labor, safety, and the environment. The pay is often substandard and work is in “sweatshop” conditions.
There is also a concern that globalization is destroying national cultures, that it is destroying the environment, and that poor countries are not participating in the wealth that globalization creates.
Discussion/Team Activity:
Discuss examples of the downside of globalization.
Debate the ethical issues associated with foreign “sweatshops.”
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

10. The Advantages of Global Trade1
Rise from poverty for foreign nations
Per capita income increases
Productivity and living standard increase
Inflation not as threatening
Open economy spurs innovation
Export jobs may pay more
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

11. Impact of Terrorism on Global Trade1
Globalization is slower and costlier
Paying more to provide security
Stocking of more inventory
Tighter immigration policies
Obsession with political risk
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

12. Discuss the impact of multinational firms on the world economy.
Learning Objective 2
Discuss the impact of multinational firms on the world economy.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

13. Multinational Corporation
Chapter 3
Developing a Global Vision
Multinational Corporation 2
A company that is heavily engaged in international trade, beyond exporting and importing.
Notes:
Multinational corporations are those heavily engaged in international trade, moving products and services across national boundaries.
A multinational corporation is a more than a business entity. It is a private “government,” a “citizen,” a carrier of technology, and an agent for the adoption of a common, uniting set of ideals.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

14. Leading Multinational Firms
Chapter 3
Developing a Global Vision
Leading Multinational Firms 2
Notes:
Exhibit 3.1 lists the world’s largest corporations. This list is compiled from Fortune, July 22, 2002.
Discussion/Team Activity:
1. Discuss how these companies have achieved success in global markets.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

15. Multinational Advantage
Chapter 3
Developing a Global Vision
Multinational Advantage 2
Overcome trade problems
Sidestep regulatory problems
Shift production from one plant to another
Leverage ideas around the world
Save in labor costs
Notes:
Overcome trade problems: Taiwan and South Korea had an embargo against Japanese cars, but Honda USA is able to ship Accords into these countries.
Sidestep regulatory problems: When U.S. pharmaceutical company SmithKline and Britain’s Beecham merged, they could avoid licensing and regulatory hassles in their largest markets.
Shift production from one plant to another: Plants run more efficiently and costs are kept down. Dow Chemical now manufactures a chemical in Germany that had previously been imported from the United States.
Ideas can be leveraged around the world: The chipmaker ST Microelectronics reduced the assembly time for certain chips at its Malaysia factory, and is now transferring the enhanced technique to its Morocco plant.
Multinationals can save in labor costs, even in unionized countries: For example, the wages are lower in Mexico.
Discussion/Team Activity:
1. Discuss the pros and cons regarding using cheaper labor markets.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

16. Global Marketing Standardization
Chapter 3
Developing a Global Vision
Global Marketing Standardization 2
Production of uniform products that can be
sold the same way
all over the world.
Notes:
Multinational corporations operate somewhat differently in each country, with a strategy of providing different product features, packaging, and advertising.
Communication and technology have made the world smaller, and thus the emergence of global markets for standardized products, as opposed to segmented foreign markets with different products. This concept is global marketing standardization.
Even though global marketing standardization should enable companies to lower production and marketing costs, superior sales and profits do not necessarily follow from standardization.
Discussion/Team Activity:
Discuss products and services that are successfully marketed as globally standardized products.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

17. Global Marketing Standardization
Chapter 3
Developing a Global Vision
Global Marketing Standardization 2
On Line
World markets are becoming more alike
Standardized products can be sold the same way worldwide
Successful companies may vary products for global markets
On Line
Coca-Cola Company
How does Coca-Cola’s mission statement reflect its commitment to global markets? Does this site as a whole reflect this commitment?
Colgate-Palmolive
Compare the Colgate-Palmolive site with the Coca-Cola site. Which more strongly conveys a global image?
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

18. Describe the external environment facing global marketers.
Learning Objective 3
Describe the external environment facing global marketers.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

19. The External Environment
Chapter 3
Developing a Global Vision
The External Environment 3
Natural Resources
Demographic Makeup
Economic and Technological Development
Culture
Environmental Factors
Political Structure
Notes:
Many of the same external environmental factors discussed in Chapter 3 also apply to global markets.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

20. Chapter 3
Developing a Global Vision
Culture 3
The common set of values shared by its citizens that determine what is socially acceptable.
Notes:
Culture underlies the family, the educational system, religion, and the social class system.
Culture influences product preferences and the marketing mix.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

21. Culture 3 Language Religion Superstitions Etiquette Customs Traditions
Chapter 3
Developing a Global Vision
Culture 3
Language
Religion
Superstitions
Etiquette
Customs
Traditions
Notion of time
Notes:
Each country has its own unique customs and traditions that determine business practices and influence negotiations.
Language is an important aspect when translating product names, slogans, production instructions, and promotional messages.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

22. Economic and Technological Development
Chapter 3
Developing a Global Vision
Economic and Technological Development 3
On Line
Type of
Society
Description
Traditional
Pre-Industrial
Takeoff
Industrializing
Agricultural, Little Upward Mobility
Social and Economic Change
New Industries
Spread of Technology
Fully
Industrial
Exporter, Technology as Driver
of New Innovation
On Line
United Nations
How does the United Nations talk about economic development? Visit the Economic and Social Council’s Web page to find out how the UN is involved in helping developing nations prosper.
Notes:
The second factor in the external environment is the level of economic development in countries where a global marketer operates.
Marketing opportunities can be better appreciated with the knowledge of where a country is in the five stages of economic growth and technological development.
Discussion/Team Activity:
Name different countries and discuss the type of society each one represents. Discuss opportunities for products and services in each of the types of societies. Discuss products and services that may not fit.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

23. Political Structure Extremes
Chapter 3
Developing a Global Vision
Political Structure Extremes 3
No private ownership Minimal individual freedom
Little central government
Maximum personal freedom
Notes:
The third variable is political structure. Government policies run the spectrum from no private ownership and minimal individual freedom to little central government and maximum personal freedom. As rights of private property increase, government-owned industries tend to decrease.
The freest economies in order are: Hong Kong, Singapore, Ireland, New Zealand, Luxembourg, the United States, the Netherlands, and Australia. The most repressed is North Korea.
Many Eastern European nations, such as Hungary and Poland, have been moving quickly with market reforms. Latin American countries, such as Brazil and Mexico, are reducing government control over many sectors of the economy.
The threat of nationalization, whereby the government takes ownership of certain industries or companies, is a concern for companies doing business abroad.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

24. Legal Structures Encourage or Limit Trade
Chapter 3
Developing a Global Vision
Legal Considerations 3
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
Legal Structures Encourage or Limit Trade
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

25. Tariff Quota Boycott Exchange Control Market Grouping Trade Agreement
Chapter 3
Developing a Global Vision
Legal Considerations 3
Tariff
Quota
Boycott
Exchange Control
Market Grouping
Trade Agreement
A tax levied on goods entering a country
Limit on the amount of a product entering a country
Exclusion of products from a country
Foreign exchange must be sold to a control agency
Common trade alliance
An agreement to stimulate international trade
Discussion/Team Activity:
1. Discuss examples of each of the legal considerations described above.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

26. Trade Agreements: Uruguay Round
Chapter 3
Developing a Global Vision
Trade Agreements: Uruguay Round 3
Reduces tariffs by one-third world-wide
Patent/copyright protection
Services under international rules
Reduction of farm subsidies
Notes:
The Uruguay Round, adopted in 1994, is an agreement to lower trade barriers worldwide. The agreement has reduced tariffs by one-third worldwide and should raise global income by $235 billion annually. The agreement covers services, intellectual property rights, and trade-related investment measures such as exchange controls.
The Uruguay Round made the following changes in world trading practices: * Protection of patents, copyrights, and trademarks for twenty years. * Licensing standards for professionals cannot discriminate against foreign applicants. * Reduction in farm subsidies, opening new opportunities for exports and imports. * The phase-out of strict quotas limiting imports from developing countries. * A new trade agreement, the World Trade Organization (WTO), replaced the old General Agreement on Tariffs and Trade (GATT).
Discussion/Team Activity:
1. Discuss the impact of counterfeit products on global trade.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

27. Political and Legal Considerations
Chapter 3
Developing a Global Vision
Political and Legal Considerations 3
On Line
FTAA
NAFTA
European Union
Examples
On Line: World Trade Organization (WTO)
Do you really know what the World Trade Organization is about? Get informed by reading the facts at the WTO Web site?
Notes:
Globalization has highlighted examples of the influence of the political and legal external environment factors, specifically the North American Free Trade Agreement and the European Union.
NAFTA, ratified in 1993, created the world’s largest free trade zone. The agreement includes Canada, the United States, and Mexico. The main impact of NAFTA has been the opening of Mexican markets to U.S. companies and removing Mexican licensing requirements, quotas, and tariffs that limited transactions.
Mercosur is a free trade agreement between Brazil, Argentina, Uruguay, and Paraguay. A new trade agreement, Free Trade Area of the Americas, is likely to replace Mercosur, and would operate as the largest trading zone in the world.
The European Union was ratified in 1993 by twelve member countries in Europe. The main premise of the treaty deals with developing a unified European market, but it also created a common monetary unit and an independent central bank.
The EU is a very attractive market with the purchasing power almost equal to that of the U.S. However, with different languages and individual country cultures, Europe will always be more diverse than the U.S. and product differences will continue.
Discussion/Team Activity:
Access the NAFTA Website at for more information.
Discuss the pros and cons of NAFTA on the U.S. economy.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

28. Marketing Considerations
Chapter 3
Developing a Global Vision
Demographic Makeup 3
Marketing Considerations
Population density
Urban or rural
Personal income
Rise of global middle class
Supply of professionals
Notes:
Population density information alone is not particularly useful to marketers. They also need to know if populations are urban or rural, the level of personal income and distribution of wealth, the presence of a middle class, and the number of professionals living in a country.
In this decade more than 90 percent of the world’s population growth will occur in developing countries and only 10 percent in the industrialized nations.
Discussion/Team Activity:
What marketing opportunities exist in developing countries where population growth is occurring?
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

29. International dependencies Shifts of wealth Inflation and recession
Chapter 3
Developing a Global Vision
Natural Resources 3
Differences in
Resources create…
International dependencies
Shifts of wealth
Inflation and recession
Export opportunities if resources are abundant
Stimulus for military intervention
Notes:
Petroleum shortages have created wealth for oil-producing countries such as Norway, Saudi Arabia, and the United Arab Emirates.
Other natural resources that affects international marketing include climate and water resources (affecting agricultural conditions), precious metals, and timber.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

30. Identify the various ways of entering the global marketplace.
Learning Objective 4
Identify the various ways of entering the global marketplace.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

31. Global Marketplace Questions
Chapter 3
Developing a Global Vision
Global Marketplace Questions 4
What are our options in selling abroad?
How difficult is global marketing?
What are the potential risks and returns?
Notes:
The global environment should be carefully considered prior to entering the global marketplace. Answers to the above questions would likely encourage U.S. firms to enter the international arena.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

32. Earn additional profits
Why “Go Global”? 4
Earn additional profits
Leverage a unique product or technological advantage
Possess exclusive market information
Utilize “economies of scale”
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

33. Risk Levels for Global Entry
Chapter 3
Developing a Global Vision
Risk Levels for Global Entry 4
On Line
Low
risk/
low
return
High
high
Risk
Return
Export
Licensing
Contract
Manu-
facturing
Joint
Venture
Direct
Invest-
ment
On Line
4Kids Entertainment
Does 4Kids still license Marvel Comics? Visit the 4Kids site to find out. What properties does the company license currently? How well does the company use its site to publicize international licensing agreements?
Notes:
Exhibit 3.3 diagrams the risk levels for entering the global marketplace.
Exporting is usually the least complicated and least risky alternative for entering the global marketplace, however it is also the lowest rate of return. On the other hand, direct investment is the highest rate of return, but also the highest risk.
Exhibit 3.4 in the text explains the services offered by the U.S. Commercial Service to help beginning exporters as well as established global businesses. Services include marketing research, trade events, locating qualified buyers and partners, and global business consulting.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

34. Entering the Global Marketplace
Chapter 3
Developing a Global Vision
Entering the Global Marketplace 4
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.
Discussion/Team Activity:
Discuss examples of companies that have entered the global marketplace in each of the ways described on this slide.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

35. Export Intermediaries4
Buyer for Export
Assumes all ownership risks and sells globally for its own account.
Export Broker
Plays the traditional broker’s role by bringing buyer and seller together.
Export Agent
Acts like a manufacturer’s agent for the exporter in the foreign market.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

36. List the basic elements involved in developing a global marketing mix.
Chapter 3
Developing a Global Vision
Learning Objective 5
List the basic elements involved in developing a global marketing mix.
Notes:
Firms entering into foreign trade must still adhere to the principles of the marketing mix, based on research information gathered on foreign markets.
Marketing managers must also understand the different ways of entering the global market and the effects of the external environment.
The first step is to understand the target market by conducting marketing research.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

37. Product and Promotion 5 Same Product One Product One Message
Chapter 3
Developing a Global Vision
Product and Promotion 5
On Line
Same
Product
One Product
One Message
Adaptation
Message
Invention
Change
On Line
On Line: Mattel, Scrabble,Hasbro, Monopoly
Visit Mattel’s Scrabble site and Hasbro’s Monopoly site. Which game has more of an international presence on the Internet? Does this surprise you. Why?
McDonald’s
How does McDonald’s alter its menu to suit specific cultural tastes? Visit at least seven country sites and record the different menu items you find.
Notes:
An important decision is to alter the product or the promotion for the global market.
One Product / One Message: Global marketing standardization means developing a single product for all markets and promoting it the same way worldwide. However, even a same product/same message strategy may require changes to suit local needs.
Product Invention: This refers to creating a new product or drastically changing an existing product. For example, consumers in different countries use products differently, requiring different product characteristics.
Product Adaptation: Products are slightly altered to meet local conditions.
Message Adaptation: The same basic product is maintained, but the promotional strategy is altered to position the product effectively in different countries. Promotion varies in different countries. Language barriers, translation problems, and cultural differences create headaches.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

38. Must consider transportation and insurance costs, taxes and tariffs
Pricing 5
Must consider transportation and insurance costs, taxes and tariffs
Determine what customers will spend
Ensure that foreign buyers will pay them
May need to simplify a product to lower price
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

39. Dumping 5
The sale of an exported product at a price lower than that charged for the same or a like product
in the exporter’s
“home” market.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

40. all or part of the payment for goods or services
Chapter 3
Developing a Global Vision
Countertrade 5
A form of trade in which
all or part of the payment for goods or services
is in the form of other goods or services.
Notes:
A common type of countertrade is straight barter. A second form is the compensation agreement where a company provides technology and equipment for a plant, and agrees to take full or partial payment in goods produced by that plant.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

41. Distribution Challenges
Chapter 3
Developing a Global Vision
Distribution Challenges 5
Japanese distribution system is the most complicated in the world
Retail institutions may differ from company’s domestic market
Freight-rail systems may not be compatible
Notes:
Adequate distribution is essential for global marketing success. Many countries, such as Japan, have very complicated distribution systems.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

42. Discover how the Internet is affecting global marketing.
Learning Objective 6
Discover how the Internet is affecting global marketing.
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning

43. Internet e-commerce sites Language translation software
Chapter 3
Developing a Global Vision
Going Global 6
On Line
Internet e-commerce sites
Language translation software
Global shippers
On Line
Let’s Buy It
What kind of deals can you find on LetsBuyIt.com? Would you be willing to buy a car this way? What about an appliance? A gift?
Chapter 3 Essentials of Marketing 4e Lamb Hair McDaniel
©2005 South-Western/Thomson Learning