1. Serving Global Markets
Chapter 7
Serving Global Markets

2. Chapter Objectives
Describe the importance of international marketing from the perspectives of the individual firm and the nation.
Identify the major components of the environment for international marketing.
Outline the basic functions of GATT, WTO, NAFTA, and the proposed FTAA, and the European Union.
Compare the alternative strategies for entering international markets.
Differentiate between a global marketing strategy and a multi-domestic marketing strategy.
Describe the alternative marketing mix strategies used in international marketing.
Explain the attractiveness of the U. S. as a target market for foreign marketers.

3. The Importance of Global Marketing
Global marketing is rapidly becoming a necessity
For 20 years, U.S. exports have grown about 10 percent annually
The Internet makes it possible for every marketer to become an international marketer
International Trade accounts for at least 25% of U.S. GDP
Exporting: Marketing domestically produced goods and services abroad
Importing: Purchasing foreign goods, services, and raw materials

4. U.S. Current Trade Facts
The U.S. accounted for over 10% of world export trade and 18% of total world imports in 2006.
U.S. exports accounted for 10.4% of the nation’s GDP in 2006.
U.S. exports were up from $81billion in 2005 to $1 trillion in Export growth in manufactured goods included nuclear materials, electric machinery, vehicles, and aircraft.
U.S. imports increased from $1.6 trillion in 2005 to $1.8 trillion in Greater demand for oil, combined with high fuel prices, contributed to the trade deficit.
Source: U.S. Department of Commerce

5. U.S. Trade Facts
The United States exports about a fifth of its industrial production.
Almost a third of U.S. corporate profits come from international trade and foreign investment.
The United States is the world’s leading exporter of farm $60 billion per year.
Almost half of non-farm exports consist of chemicals, office machinery, computers, automobiles, aircraft, electrical machinery, and industrial machinery.
Daily trade between U.S. and Canada is $1 billion.
Source: Thomson Higher Education

6. Top Ten Merchandise Exporting States
California
Texas
New York
Michigan
Washington
Illinois
Ohio
Florida
New Jersey
Pennsylvania
Source:

7. Figure 7.1, P.221
Top 10 U.S. Trading Partners

8. Table 7.1, P.222 [I believe Exxon is now #1, Wal-Mart #2.]
The World’s 10 Largest Marketers Ranked by Sales

9. Warner Lambert A Global Leader In Pharmaceuticals
The copy reads: “We’re making the world feel better”

10. Service and Retail Exports
U.S. is a big exporter of services and retailing
U.S. is the world’s largest exporter of services
Over $145 billion is spent annually by foreign nationals visiting the U.S.
The most profitable U.S. service exports are business and technical services
Financial services industry is going global via the Internet
Entertainment is another major service export

11. Financial Services: a New Global Frontier

12. Benefits of Going Global
Additional revenues
New insights into consumer behavior
Alternative distribution strategies
Advance notice of new products
Positioned well to compete effectively with foreign competitors

13. The International Marketplace
Market Size
Over 6 billion people (1.3 billion people in China)
Goods and services need to be adapted to meet needs in developing countries
Urban population increasing faster than a rural
As a nation develops, an increasingly affluent, educated, and cosmopolitan middle-class emerges
Marketers in developing countries may face infrastructure challenges

14. Change marketing mix, or change local buyer behavior
Behavior differs among both nations and market segments within each nation
Change marketing mix, or change local buyer behavior
Leatherman marketers fill customer needs around the globe with their unique product.

15. Buyer Behavior Research Must Focus on:
Demand: Do foreign consumers need the company’s good or service?
Competitive environment: How do supplies currently reach the market?
Economic environment: What is the state of the nation’s economic health?
Social-cultural environment: How do cultural factors affect business opportunities?
Political-legal environment: Do any legal restrictions complicate entering the market?
Technological environment: To what degree are technological innovations used by consumers in the market?

16. The International Marketing Environment
International Marketing mix
International technological environment
International economic environment
International political-legal environment
International social-cultural environment

17. International Economic Environment
A nation’s size, per-capita income, and stage of economic development determine its desirability for international expansion
Other considerations include:
Country infrastructure
Exchange rate implications

18. International Social-Cultural Environment
A nation’s culture, including language, education, religious attitudes, and social values, must be considered
Examples:
Movies must often be adapted for foreign markets
Restaurant menus are often printed in several languages
The use of pictures can also help when language is a problem

19. Table 7.2, P.230
The World’s Most Frequently Spoken Languages

20. American Airlines Targeting Latin American Travelers With Spanish and Portuguese In-flight Magazines

21. International Technological Environment
The Internet transcends political, economic, and cultural barriers, reaching into every corner of the Globe
It is critical to understand how the Web is reshaping social and cultural values

22. International Political-Legal Environment
Marketers must know the current laws and regulations for each country in which they operate
U.S. businesses impacted by International Law, U.S. Law, and Host country Laws
Political conditions often influence international marketing
Political risk assessment (PRA)
Friendship, Commerce, and Navigation (FCN) treaties
ISO certification requirements

23. Pepsi
Offering small prizes to everyone in this ad overseas, obeying a law that forbids offering a few “dream” prizes

24. Forbes Global offers coverage of international business and finance news as it sends the message of capitalism around the globe

25. McDonalds, like so many other international firms had to consider the following while making the decision to go international.
International law
U.S. law, and
Legal requirements of host nations
Any other issues?

26. Trade Barriers
Tariffs are taxes levied against imported goods
Revenue Tariffs designed to raise funds for the importing government
Protective Tariffs are usually higher and are designed to raise the retail price of an imported product to match or exceed that of a similar domestic product

27. Administrative Barriers
Import Quotas
Embargos
Subsidies
Exchange Controls
Dumping The controversial practice of selling a product in a foreign market at a price lower than what it commands in the producer’s domestic market

28. Multinational Economic Integration
Free trade area: Region in which participating nations agree to the free trade of goods among themselves, abolishing tariffs and trade restrictions
Customs union
Common market
GATT: International trade accord that has helped reduce world tariffs
World Trade Organization (WTO): succeeds GATT to oversee agreements, mediate disputes, and reduce trade barriers

29. NAFTA Accord removing trade barriers among Canada, Mexico, and the United States
The Free Trade Area of the Americas Proposed free trade area stretching the length of the entire Western hemisphere and designed to extend free trade benefits to additional nations in North, Central, and South America
European Union Customs union that is becoming a true economic union by adopting a common currency and permitting free flow of goods and workers throughout the member nations

30. The 25 Members of the European Union

31. Going Global

32. First Steps in Deciding to Market Globally
Secure top management’s support
Research the export process and potential markets
Sources for Analyzing Foreign Markets

33. International marketers benefit from trade shows such as those held at the TWTC, Taiwan World Trade Center, where thousands of regional and global firms meet to network.

34. Strategies for Entering International Markets
Three basic strategies for entering international markets include:
Exporting
Contractual agreements like franchising, licensing, and subcontracting
International Direct Investment

35. Figure 7.7, P.240
Levels of Involvement in International Marketing

36. Contractual Agreements
Franchising: A contractual arrangement where a wholesaler or retailer (the Franchisee) agrees to make some payment and to meet the operating requirements of a manufacturer or other franchiser in exchange for the right to use the firm’s name and to market its goods or services
Foreign Licensing: an agreement that grants foreign marketers the right to distribute a firm’s merchandise or to use its trademark, patent, or process in a specified geographic area.
Subcontracting: a contractual agreement where a firm hires a local company to produce goods or services in a specific geographic area.

37. Franchising: A Global Strategy for Ruth’s Chris Steak House

38. International Direct Investment
An additional strategy for entering global markets
Requires direct investment in foreign firms, production, and/or marketing facilities
U.S. firms have invested nearly $2.2 trillion overseas
Foreign firms have invested nearly $2.1 trillion in the U.S.

39. From Multinational Corporation to Global Marketer
A multinational corporation is a firm with significant operations and marketing activities outside its home country
Examples: General Electric, Siemens, Toyota, ExxonMobil

40. Developing an International Marketing Strategy
Global marketing strategy Standardized marketing mix with minimal modifications that a firm uses in all of its domestic and foreign markets.
Multi-domestic marketing strategy Application of market segmentation to foreign markets by tailoring the firm’s marketing mix to match specific target markets in each nation

41. The universal image of long-lasting power in an Energizer battery is communicated in Latin America with this poster Part of Energizer’s global marketing strategy.

42. International Product and Promotional Strategies
Same Product
Product Adaptation
New Product
Same
Promotion
Straight Extension
Wrigley’s gum
Coca-Cola
Eastman Kodak
Cameras and Film
Campbell’s soup
Exxon gasoline
Product Invention
Nonelectric sewing machines Manually operated washing machines
Different Promotion
Promotion Adaptation
Bicycles/motorcycles
Outboard motors
Dual Adaptation
Coffee
Some clothing

43. The World’s 10 Most Valuable Brands

44. Promotion Adaptation Strategy in International Marketing

45. International Distribution Strategy
Decide on a method of entering the foreign market
Decide how to distribute the product within the foreign market through that entry channel
International Pricing Strategy
Competitive, economic, political, and legal constraints often limit pricing decisions
Must adapt to local markets and change when conditions change
Countertrade form of exporting whereby goods and services are bartered rather than sold for cash.

46. U.S. Postal Service
Competing with International Overnight Delivery Services on Price and Service Quality

47. The U.S. as a Target for International Marketers
The U.S. is an inviting target for many foreign marketers
It offers a large population with high levels of discretionary income, political stability, a generally favorable attitude toward foreign investment and a relatively stable economy

48. The popularity of British import Teletubbies among U. S
The popularity of British import Teletubbies among U.S. preschoolers is used in a promotion for Jell-O custard sold at Burger King restaurants.

49. End of Chapter Seven