1. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-1 REACHING GLOBAL MARKETS C HAPTER

2. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-2 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 1.Identify the major trends that have influenced the landscape of global marketing in the past decade. 2.Identify the environmental factors that shape global marketing efforts.

3. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-3 AFTER READING THIS CHAPTER YOU SHOULD BE ABLE TO: 3.Name and describe the alternative approaches companies use to enter global markets. 4.Explain the distinction between standardization and customization when companies craft worldwide marketing programs.

4. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-4 MATTEL’S GLOBAL MARKETING IS MORE THAN CHILD’S PLAY

5. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-5 Decline of Economic Protectionism  Protectionism Protectionism  Tariff Tariff  Quota Quota  World Trade Organization (WTO) World Trade Organization (WTO) DYNAMICS OF WORLD TRADE

6. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-6 FIGURE 7-1 FIGURE 7-1 How protectionism affects world trade

7. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-7 Rise of Economic Integration  European Union  North American Free Trade Agreement (NAFTA)  Asian Free Trade Agreements Euro DYNAMICS OF WORLD TRADE

8. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-8 FIGURE 7-2 FIGURE 7-2 The countries of the European Union in 2006; Bulgaria and Romania are expected to join in 2007

9. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-9 Euro TV Ad What are the benefits of economic integration?

10. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-10  Global Competition Global Competition A New Reality: Global Competition among Global Companies for Global Consumers DYNAMICS OF WORLD TRADE

11. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-11 Diet Pepsi What is global competition?

12. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-12  Global Companies A New Reality: Global Competition among Global Companies for Global Consumers International Firm Multinational Firm Transnational Firm Global Brand Global Brand  Global Marketing Strategy Global Marketing Strategy  Multidomestic Marketing Strategy Multidomestic Marketing Strategy DYNAMICS OF WORLD TRADE

13. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-13 FIGURE 7-A FIGURE 7-A Global companies and marketing strategies

14. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-14  Global Consumers Global Consumers A New Reality: Global Competition among Global Companies for Global Consumers Emergence of a Networked Global Marketspace DYNAMICS OF WORLD TRADE

15. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-15 McDonald’s Website What is a networked global marketspace?

16. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-16 Concept Check 1. What is protectionism? A: Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition, using through the use of tariffs or quotas.

17. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-17 Concept Check 2. What is the difference between a multidomestic marketing strategy and a global marketing strategy? A: A multidomestic marketing strategy means that firms have as many different product variations, brand names, and advertising programs as countries in which they do business. A global marketing strategy standardizes marketing activities when there are cultural similarities and adapts them when cultures differ.

18. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-18 A GLOBAL ENVIRONMENTAL SCAN Cultural Diversity Foreign Corrupt Practices Act (1977) Foreign Corrupt Practices Act (1977)  Cultural Symbols Cultural Symbols  Cross-Cultural Analysis Cross-Cultural Analysis  Values Values  Customs Customs Back Translation Back Translation  Language

19. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-19 FIGURE 7-B FIGURE 7-B Cultural appreciation

20. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-20 Eiffel Tower (Paris) and Parthenon (Athens) What cultural lesson did Coca-Cola learn?

21. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-21 A GLOBAL ENVIRONMENTAL SCAN Economic Considerations  Economic Infrastructure  Consumer Income and Purchasing Power  Currency Exchange Rates Currency Exchange Rates

22. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-22 Coca-Cola (Russia) How do marketers adapt to a country’s infrastructure?

23. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-23 A GLOBAL ENVIRONMENTAL SCAN Political-Regulatory Climate  Political Stability  Trade Regulations

24. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-24 Concept Check 1. Cross-cultural analysis involves a study of _______. A: similarities and differences among consumers in two or more nations or societies

25. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-25 Concept Check 2. When foreign currencies can buy more U.S. dollars, are U.S. products more or less expensive for a foreign consumer? A: less expensive

26. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-26 GLOBAL MARKET-ENTRY STRATEGIES  Indirect Exporting  Direct Exporting Exporting Licensing  Franchising Joint Venture Direct Investment

27. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-27 FIGURE 7-3 FIGURE 7-3 How purchasing power differs around the world

28. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-28 Nestle in China What global market-entry strategy and why?

29. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-29 Concept Check 1. What mode of entry could a company follow if it has no previous experience in global marketing? A: indirect exporting through intermediaries

30. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-30 Concept Check A: In licensing, the firm offers the right to a trademark, patent, or trade secret in return for a royalty or fee. In a joint venture, a foreign and a local firm invest together to produce some product or service. The two companies share ownership, control, and profits of the new entity. 2. How does licensing differ from a joint venture?

31. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-31 CRAFTING A WORLDWIDE MARKETING PROGRAM  Product Adaptation  Product Invention Product and Promotion Strategies  Product Extension

32. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-32 FIGURE 7-4 FIGURE 7-4 Five product and promotion strategies for global marketing

33. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-33 Gillette For Women Venus Why use an identical global message for Greece, Germany, and the U.S.?

34. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-34 CRAFTING A WORLDWIDE MARKETING PROGRAM  Dumping Dumping Distribution Strategy Pricing Strategy  Gray Market or Parallel Importing Gray Market or Parallel Importing

35. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-35 FIGURE 7-5 FIGURE 7-5 Channels of distribution in global marketing

36. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-36 Concept Check A: (1) in the same form as in its home market (product extension); (2) with some changes (product adaptation); and (3) as a totally new product (product invention). 1. Products may be sold globally in three ways. What are they?

37. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-37 Concept Check 2. What is dumping? A: Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost.

38. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-38 GETTING TO KNOW THE WTO GOING ONLINE

39. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-39 1. Countries are constantly seeking WTO membership. How many countries are now members of this organization? Which country is the newest member? Going Online

40. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-40 2. What are the 10 most common misunderstandings about the WTO identified by this organization? Going Online

41. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-41 CNS BREATHE RIGHT STRIPS: GOING GLOBAL VIDEO CASE 7

42. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-42 VIDEO CASE 7 CNS Breathe Right

43. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-43 FIGURE 1 FIGURE 1 CNS three- stage approach to penetrate and develop new markets VIDEO CASE 7 CNS Breathe Right

44. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-44 1. What are the advantages and disadvantages for CNS taking Breathe Right strips into international markets? VIDEO CASE 7 CNS Breathe Right

45. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-45 2. What are the advantages to CNS of (a) using its three-stage process to enter new global markets and (b) having specific criteria to move through the stages? VIDEO CASE 7 CNS Breathe Right

46. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-46 3. Using the CNS criteria, with what you know, which countries should have the highest priority for CNS? VIDEO CASE 7 CNS Breathe Right

47. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-47 4. Which single segment of potential Breathe Right strip users would you target to enter new markets? VIDEO CASE 7 CNS Breathe Right

48. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-48 5. Which marketing mix variables should CNS emphasize the most to succeed in a global arena? Why? VIDEO CASE 7 CNS Breathe Right

49. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-49 EXAMPLES OF VALUES, CUSTOMS, CULTURAL SYMBOLS, AND LANGUAGE SUPPLEMENTAL LECTURE NOTE 7-1

50. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-50 REINTRODUCING THE MINI ® BRAND TO THE U.S. IN-CLASS ACTIVITY 7-1

51. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-51 History of the Classic Mini

52. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-52 MINI Brand Launch at the 2002 NAIAS

53. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-53 MINI Cooper Convertible and MINI Cooper S Convertible

54. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-54 MINI Cooper Convertible

55. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-55 MINI Cooper Convertible Brochure

56. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-56 MINI Cooper Convertible Billboard

57. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-57

58. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-58 Protectionism Protectionism is the practice of shielding one or more industries within a country’s economy from foreign competition through the use of tariffs or quotas.

59. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-59 Tariff A tariff is a government tax on goods or services entering a country, primarily serving to raise prices on imports.

60. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-60 Quota A quota is a restriction placed on the amount of of a product allowed to enter or leave a country.

61. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-61 World Trade Organization The World Trade Organization (WTO) is a permanent institution that sets rules governing trade between its members through panels of trade experts who decide on trade disputes between members and issue binding decisions.

62. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-62 Global Competition Global competition exists when firms originate, produce, and market their products and services worldwide.

63. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-63 Multidomestic Marketing Strategy A multidomestic marketing strategy is used by multinational firms that have as many different product variations, brand names, and advertising programs as countries in which they do business.

64. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-64 Global Marketing Strategy A global marketing strategy is used by transnational firms that employ the practice of standardizing marketing activities when there are cultural similarities and adapting them when cultures differ.

65. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-65 Global Brand A global brand is a brand marketed under the same name in multiple countries with similar and centrally coordinated marketing programs.

66. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-66 Global Consumers Global consumers consist of customer groups living in many different countries or regions of the world who have similar needs or seek similar features and benefits from products or services.

67. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-67 Cross-Cultural Analysis Cross-cultural analysis involves the study of similarities and differences among consumers in two or more nations or societies.

68. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-68 Values Values is a society’s personally or socially preferable modes of conduct or states of existence that tend to persist over time.

69. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-69 Customs Customs are what is considered normal and expected about the way people do things in a specific country.

70. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-70 The Foreign Corrupt Practices Act (1977) is a law, amended by the International Anti-Dumping and Fair Competition Act (1998), that makes it a crime for U.S. corporations to bribe an official of a foreign government or political party to obtain or retain business in a foreign country. Foreign Corrupt Practices Act (1977)

71. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-71 Cultural symbols are things that represent ideas or concepts. Cultural Symbols

72. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-72 Back translation is when a translated word or phrase is retranslated into the original language by a different interpreter to catch errors. Back Translation

73. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-73 A currency exchange rate is the price of one country’s currency expressed in terms of another country’s currency. Currency Exchange Rate

74. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-74 Exporting is producing goods in one country and selling them in another country. Exporting

75. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-75 A joint venture is when a foreign country and a local firm invest together to create a local business. Joint Venture

76. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-76 Direct investment entails a domestic firm actually investing in and owning a foreign subsidiary or division. Direct Investment

77. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-77 Dumping is when a firm sells a product in a foreign country below its domestic price or below its actual cost. Dumping

78. Copyright © 2007 by The McGraw-Hill Companies, Inc. All Rights Reserved. Slide 7-78 A gray market is a situation where products are sold through unauthorized channels of distribution. Also called parallel importing. Gray Market