1. DESIGNING GLOBAL MARKET OFFERINGS
CHAPTER 12
DESIGNING GLOBAL MARKET OFFERINGS

2. IMPORTANT TOPICS OF THIS CHAPTER
Factors to Consider Before Going Global
Selecting Foreign Markets
Foreign Market Entry
Product Adaption for Global Marketing
Management & Organization of Global Activities

3. DECIDING TO GO ABROAD Attractiveness of Global Market:
Counter attack strategy
Profit opportunities in Global market
Market development opportunities
Larger market share
More independence and flexibility
Possible Risks in Global Market:
Cultural differences in needs/wants
Differences in business culture
Strict regulations and bureaucracy
Lack of experience

4. DECIDING TO GO ABROAD (CONT)
Challenges in Global Market
Unstable governments
Foreign-exchange problems
Tariff and other trade barriers
Corruption and bribery
Technological pirating
High cost of product and communication adaptation
Lack of managers with international experience

5. DECIDING WHICH MARKETS TO ENTER
Few countries
Many countries:
obstacles:
high cost
population size and income
competition
Country attractiveness:
geographic factor
income and population
political climate and product choice

6. DECIDING WHICH MARKETS TO ENTER (C0NT.)
Regional Free trade Zones:
EU:
Single largest market.
Most important trade partner for the USA.
Reduce barriers for free flows of products, services and employment.
Common currency (Euro dollar).
Larger European companies.
Airbus.
NAFTA

7. DECIDING HOW TO ENTER Exporting: Direct:
Domestic base
Overseas sales branch
Traveling sales representative
Foreign-based distributors/agent
Indirect-occasional, or active exporting:
Domestic-based export merchant
Domestic-based export agent
Cooperative organizations
Export-management company

8. DECIDING HOW TO ENTER (CONT.)
Licensing:
Little risk.
Controlling problems.
Implementation:
Management contract.
Contract manufacturing.
Franchising.
Joint Ventures:
Necessary for economic and political reasons.

9. DECIDING HOW TO ENTER (CONT.)
Direct Investment:
Cheaper labor, raw materials and government incentives.
Creates better image.
Deeper relationships with government, customers, suppliers and distributors.
Full control of operations and market .
Force to purchase more domestic parts and materials.
Risks involved:
Economic difficulties of the host country
Political instability and negative perception

10. DECIDING HOW TO ENTER (CONT.)
The Internalization Process:
Sponsored by the government policy:
Steps to follow:
No export activities
Exporting via independent local agents.
Establishing sales subsidiaries.
Establishing production facilities abroad.

11. DECIDING ON THE MARKETING PROGRAM
Standardized Marketing Mix:
Product:
Straight extension.
Product adaptation:
Regional version, country version, city version, and retailer version.
Product invention:
Backward.
Forward.
Promotion:
Communication adaptation.
Dual adaptation.

12. Five International Product and Promotion Strategies
Straight
extension
Do not change
product
promotion
Develop new
product
Product
invention
Product
adaptation
Adapt
product
Communi-
cation
adaptation
Adapt
promotion
Dual
adaptation

13. DECIDING ON THE MARKETING PROGRAM (CONT.)
Price:
Setting uniform price everywhere.
Setting a market-base price in each country.
Setting a cost-base price in each country.
Setting transfer price:
Higher price:
Higher income tax
Lover price:
Price dumping
Arm-length price:
Competitors price.
Gray market price.

14. DECIDING ON THE MARKETING PROGRAM (CONT.)
Place:
International marketing headquarters
Channels between nations
Channels within foreign nation

15. DECIDING ON THE MARKETING ORGANIZATION
Export Department
International Division:
Geographical organizations:
Asia, Europe, etc.
World product groups:
International vice-president
International subsidiaries
Global Organizations:
Managing across borders:
Global strategy:
Single market strategy.
Multinational strategy:
Strong national response.
Glocal strategy:
Some adaptation.

16. EUROPEAN UNION European Market
In 1993, 12 nations (England, Germany, France, Ireland, Italy, Spain, Portugal, Greece, Holland, Belgium,Denmark, Luxembourg.) million people.
In 1995, 15 nations(Austria, Sweden and Finland), 360 million people.
Worth of 4 trillion dollars business opportunities.
US is selling more than 500 billion dollars of goods, and has surplus.

17. EUROPEAN UNION (CONT.) Problems:
Consumers do not have uniform patterns and homogenous preferences because of differences in cultures, languages and economic situations.
The EU now is more accessible, but it will not be the single national market. Governments con not make markets. If they do, 360 million euro-consumers should suddenly be transforming into 360 million Euro-clones, drinking Euro-beer, eating euro-hamburger, and watching Euro-satellite television

18. EUROPEAN UNION (CONT.) Expectations: Advantages:
More centralized purchasing and uniform pricing strategy.
Singular patent system(certification) throughout Europe.
Centralized R&D effort.
Implementation of European EAN system similar to UPC codes in the US.
Advantages:
Elimination of border control helps to save transportation cost.
Develop effective linkage with all the members
Saving and reducing the Value Added Tax (VAT) and different tax rates.

19. EUROPEAN UNION (CONT.) Challenges: Cultural and language differences.
Large number of privately owned firms.
Dissimilarity among the members of the EC about the way products are viewed.
Realign the currency-European Currency Unit(UCU).
Control Inflation.
Reduce Unemployment.
Re-establish strong economic base for all the members.