2. Chapter Global Markets and Marketing Global Markets and Marketing 5 The significance of international marketing to firms. What makes foreign markets attractive. Challenges in designing marketing strategies. Developing Global Brands

3. The Significance of International Trade Access to products otherwise unavailable –Foodstuffs –Minerals and other natural resources What don’t we have in U.S.? Comparative Advantage –Advantage in natural resources –Advantage in human resources

4. Exports as a Percent of GDP in Selected Countries (2006) Country Exports as a % of GPD United States 11% United Kingdom28 France 27 Germany45 Japan16 Canada 36 Mexico28 China39 Source: http://datafinder.worldbank.org/exports-goods-services-gdp Year: 2006 http://datafinder.worldbank.org/exports-goods-services-gdp

8. Environmental Considerations in International Marketing Social and Cultural Forces Economic Environment –Infrastructure –Level of economic development Political and Legal Forces Trade Barriers –Tariff –Tariff: A tax imposed on a product entering a country. –Import quota –Local-content laws –Boycott or embargo Free-Traders vs. ProtectionistsFree-Traders vs. Protectionists

9. Trade agreements both inhibit and encourage international marketing General Agreement on Tariffs and Trade (GATT) -General Agreement on Tariffs and Trade (GATT) - now called the World Trade Organization (WTO) The European Union (EU)The European Union (EU) North American Free Trade Agreement (NAFTA)North American Free Trade Agreement (NAFTA) The Asia-Pacific Economic Cooperation forum (APEC)The Asia-Pacific Economic Cooperation forum (APEC) is a trade pact with 19 member nations that account for 45 percent of world trade.

10. EU Members (and candidates) 2009

12. Canada 30.7 Venezuela 23.2 Brazil 161.8 Uruguay 3.2 Paraguay 5.2 United States 283.0 Mexico 95.8 Colombia 37.7 Ecuador 12.2 Peru 24.8 Argentina 36.1 Chile 14.8 Bolivia 8.0 NAFTA

13. Japan 126.4 South Korea 46.5 Taiwan 21.8 Hong Kong 6.7 Philippines 73.1 Brunei 0.3 Papua New Guinea 4.6 Australia 18.7 Maldives 0.3 Sri Lanka 18.7 Malaysia 22.1 China 1,243 Nepal 22.0 Pakistan 141.9 Bangladesh 127.6 Bhutan 0.6 India 984 Singapore 3.2 Vietnam 76.2 Indonesia 199.7 New Zealand 3.8 Thailand 61.2 APEC

16. Designing the International Marketing Mix Marketing ResearchMarketing Research –Statistical data are scarce and often not reliable. –There is a lack of uniformity among countries regarding the definition of measures. Product PlanningProduct Planning decisions include: –Product adaptation. –Branding and labeling. PricingPricing issues are: –Cost-plus pricing. Price Differential. –Dumping. Foreign Exchange. –Countertrade or barter.

17. Designing the International Marketing Mix (Con’t.) Distribution systemsconsist of:Distribution systems consist of: –Domestic foreign-trade middlemen. –Foreign-trade middlemen located abroad. –Wholesalers and retailers operating within foreign markets. –Manufacturer’s sales branches and offices located in foreign countries. –Bribes, kickbacks, and extortion payments are common in many international distribution systems. –Gray marketing (export diversion) Advertising focuses on:Advertising focuses on: –Standardization. –Adapting media strategy –Adapting media strategy and message details. Pringles Ad

18. Strategic Planning for International Marketing Global StrategyGlobal Strategy - the same marketing plan is employed throughout the world. Regional StrategyRegional Strategy - used when geographic areas have much in common, but are distinct from other geographic areas. Local StrategyLocal Strategy - used when there are few marketing mix dimensions that can be transferred from one market to another

19. Global Branding Strategy What is is? Why such a desire to do it? Few brands/products REALLY do it completely. #1 Global brand of Shampoo?

20. Brand Name Problems... You’ve probably heard some of the classic blunders made by American companies: Chevy Nova in Mexico Clairol Mist Stick in Germany Look at some interesting foreign brands...

21. Poor Candidates for Global Brands Crapsy Fruit: French cereal Happy End: German toilet paper Bimbo: Mexican Toasted Bread Plopp: Scandinavian chocolate Source: Newsweek March 17, 1997 Pocari Sweat: Japanese Sport Drink Skinless: Japanese condoms Zit: German lemonade Super Piss: Scandinavian car lock de-icer

23. International Trade Balance Info.

24. The Role of International Trade Balances balance of paymentsA country’s balance of payments is an accounting record of all its transactions with all the other nations in the world. trade balanceA country’s trade balance is the difference between what it exports and what it imports. trade surplus –When exports exceed imports, trade surplus trade deficit –When imports exceed exports, trade deficit

25. A country’s expenditures across all categories must equal income across all categories If total expenditures are more than total income, the country must borrow to make up the difference. If a country’s debt grows, it is faced with pressure to raise taxes and lower government spending.

26. The U.S. has large expenditures in four categories that significantly affect its balance of payments. Military forces stationed overseas Foreign aid Oil imports American tourist travel abroad To offset these expenditures and maintain equilibrium in the balance of payments, U.S. businesses need to generate a substantial trade balance.